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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-Q  
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-34950
SABRA HEALTH CARE REIT, INC.
(Exact Name of Registrant as Specified in Its Charter) 
Maryland 27-2560479
(State of Incorporation) (I.R.S. Employer Identification No.)
18500 Von Karman Avenue, Suite 550
Irvine, CA 92612
(888) 393-8248
(Address, zip code and telephone number of Registrant)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $.01 par valueSBRAThe Nasdaq Stock Market LLC
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of November 1, 2023, there were 231,219,523 shares of the registrant’s $0.01 par value Common Stock outstanding.


SABRA HEALTH CARE REIT, INC. AND SUBSIDIARIES
Index
 
1

References throughout this document to “Sabra,” “we,” “our,” “ours” and “us” refer to Sabra Health Care REIT, Inc. and its direct and indirect consolidated subsidiaries and not any other person.
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q (this “10-Q”) contain “forward-looking” information as that term is defined by the Private Securities Litigation Reform Act of 1995. Any statements that do not relate to historical or current facts or matters are forward-looking statements. Examples of forward-looking statements include all statements regarding our expected future financial position, results of operations, cash flows, liquidity, financing plans, business strategy, tenants, borrowers and Senior Housing - Managed communities (as defined below), the expected amounts and timing of dividends and other distributions, projected expenses and capital expenditures, competitive position, growth opportunities, potential investments, potential dispositions, plans and objectives for future operations, and compliance with and changes in governmental regulations. You can identify some of the forward-looking statements by the use of forward-looking words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “should,” “may” and other similar expressions, although not all forward-looking statements contain these identifying words.
Our actual results may differ materially from those projected or contemplated by our forward-looking statements as a result of various factors, including, among others, the following:
pandemics or epidemics, including COVID-19, and the related impact on our tenants, borrowers and Senior Housing - Managed communities;
increased labor costs and historically low unemployment;
increases in market interest rates and inflation;
operational risks with respect to our Senior Housing - Managed communities;
competitive conditions in our industry;
the loss of key management personnel;
uninsured or underinsured losses affecting our properties;
potential impairment charges and adjustments related to the accounting of our assets;
the potential variability of our reported rental and related revenues as a result of Accounting Standards Update (“ASU”) 2016-02, Leases, as amended by subsequent ASUs;
risks associated with our investment in our unconsolidated joint ventures;
catastrophic weather and other natural or man-made disasters, the effects of climate change on our properties and a failure to implement sustainable and energy-efficient measures;
increased operating costs and competition for our tenants, borrowers and Senior Housing - Managed communities;
increased healthcare regulation and enforcement;
our tenants’ dependency on reimbursement from governmental and other third-party payor programs;
the effect of our tenants, operators or borrowers declaring bankruptcy or becoming insolvent;
our ability to find replacement tenants and the impact of unforeseen costs in acquiring new properties;
the impact of litigation and rising insurance costs on the business of our tenants;
the impact of required regulatory approvals of transfers of healthcare properties;
environmental compliance costs and liabilities associated with real estate properties we own;
our tenants’, borrowers’ or operators’ failure to adhere to applicable privacy and data security laws, or a material breach of our or our tenants’, borrowers’ or operators’ information technology;
our concentration in the healthcare property sector, particularly in skilled nursing/transitional care facilities and senior housing communities, which makes our profitability more vulnerable to a downturn in a specific sector than if we were investing in multiple industries;
the significant amount of and our ability to service our indebtedness;
covenants in our debt agreements that may restrict our ability to pay dividends, make investments, incur additional indebtedness and refinance indebtedness on favorable terms;
adverse changes in our credit ratings;
our ability to make dividend distributions at expected levels;
our ability to raise capital through equity and debt financings;
changes and uncertainty in macroeconomic conditions and disruptions in the financial markets;
risks associated with our ownership of property outside the U.S., including currency fluctuations;
the relatively illiquid nature of real estate investments;
our ability to maintain our status as a real estate investment trust (“REIT”) under the federal tax laws;
compliance with REIT requirements and certain tax and tax regulatory matters related to our status as a REIT;
changes in tax laws and regulations affecting REITs;
2

the ownership limits and takeover defenses in our governing documents and under Maryland law, which may restrict change of control or business combination opportunities; and
the exclusive forum provisions in our bylaws.
We urge you to carefully consider these risks and review the additional disclosures we make concerning risks and other factors that may materially affect the outcome of our forward-looking statements and our future business and operating results, including those made in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022 (our “2022 Annual Report on Form 10-K”), as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission (the “SEC”), including subsequent Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. We caution you that any forward-looking statements made in this 10-Q are not guarantees of future performance, events or results, and you should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. We do not intend, and we undertake no obligation, to update any forward-looking information to reflect events or circumstances after the date of this 10-Q or to reflect the occurrence of unanticipated events, unless required by law to do so.

3

PART I. FINANCIAL INFORMATION
 
ITEM 1.FINANCIAL STATEMENTS
SABRA HEALTH CARE REIT, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
 
September 30, 2023December 31, 2022
 (unaudited) 
Assets
Real estate investments, net of accumulated depreciation of $1,002,484 and $913,345 as of September 30, 2023 and December 31, 2022, respectively
$4,603,014 $4,959,343 
Loans receivable and other investments, net417,947 411,396 
Investment in unconsolidated joint ventures135,755 134,962 
Cash and cash equivalents33,256 49,308 
Restricted cash5,602 4,624 
Lease intangible assets, net32,749 40,131 
Accounts receivable, prepaid expenses and other assets, net152,239 147,908 
Total assets$5,380,562 $5,747,672 
Liabilities
Secured debt, net$47,789 $49,232 
Revolving credit facility32,623 196,982 
Term loans, net534,011 526,129 
Senior unsecured notes, net1,735,055 1,734,431 
Accounts payable and accrued liabilities128,039 142,259 
Lease intangible liabilities, net34,192 42,244 
Total liabilities2,511,709 2,691,277 
Commitments and contingencies (Note 12)
Equity
Preferred stock, $0.01 par value; 10,000,000 shares authorized, zero shares issued and outstanding as of September 30, 2023 and December 31, 2022
  
Common stock, $0.01 par value; 500,000,000 shares authorized, 231,219,523 and 231,009,295 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively
2,312 2,310 
Additional paid-in capital4,491,917 4,486,967 
Cumulative distributions in excess of net income(1,665,045)(1,451,945)
Accumulated other comprehensive income39,669 19,063 
Total equity2,868,853 3,056,395 
Total liabilities and equity$5,380,562 $5,747,672 

See accompanying notes to consolidated financial statements.
4

SABRA HEALTH CARE REIT, INC.
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(dollars in thousands, except per share data)
(unaudited)
 
Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Revenues:
Rental and related revenues (Note 4)$93,085 $84,214 $283,229 $297,268 
Resident fees and services59,748 47,610 174,897 133,973 
Interest and other income8,794 8,940 25,991 28,585 
   
Total revenues161,627 140,764 484,117 459,826 
  
Expenses:
Depreciation and amortization43,242 47,427 140,211 137,855 
Interest28,156 27,071 85,024 77,573 
Triple-net portfolio operating expenses4,304 5,120 13,243 14,983 
Senior housing - managed portfolio operating expenses44,523 36,705 132,124 103,835 
General and administrative10,759 9,676 30,793 28,721 
Provision for (recovery of) loan losses and other reserves328 (217)549 (12)
Impairment of real estate 60,857 7,064 72,602 
   
Total expenses131,312 186,639 409,008 435,557 
  
Other (expense) income:
Loss on extinguishment of debt (140)(1,541)(411)
Other income (expense)2,229 994 2,570 (1,101)
Net loss on sales of real estate(46,545)(80)(75,893)(4,581)
Total other (expense) income(44,316)774 (74,864)(6,093)
(Loss) income before loss from unconsolidated joint ventures and income tax expense(14,001)(45,101)245 18,176 
Loss from unconsolidated joint ventures(645)(4,384)(2,136)(9,715)
Income tax expense(455)(579)(1,509)(1,118)
Net (loss) income$(15,101)$(50,064)$(3,400)$7,343 
  
Net (loss) income, per:
Basic common share$(0.07)$(0.22)$(0.01)$0.03 
    
Diluted common share$(0.07)$(0.22)$(0.01)$0.03 
    
Weighted average number of common shares outstanding, basic231,224,692 230,982,227 231,197,375 230,936,032 
 
Weighted average number of common shares outstanding, diluted231,224,692 230,982,227 231,197,375 231,779,750 

See accompanying notes to consolidated financial statements.
5

SABRA HEALTH CARE REIT, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in thousands)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net (loss) income$(15,101)$(50,064)$(3,400)$7,343 
Other comprehensive income:
Unrealized gain (loss), net of tax:
Foreign currency translation (loss) gain(1,347)1,068 (1,948)3,505 
Unrealized gain on cash flow hedges8,777 7,309 22,554 25,038 
Total other comprehensive income7,430 8,377 20,606 28,543 
Comprehensive (loss) income$(7,671)$(41,687)$17,206 $35,886 

See accompanying notes to consolidated financial statements.

6


SABRA HEALTH CARE REIT, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(dollars in thousands, except per share data)
(unaudited)
 
Three Months Ended September 30, 2022
 Common StockAdditional
Paid-in Capital
Cumulative Distributions in Excess of Net IncomeAccumulated Other Comprehensive IncomeTotal Equity
 SharesAmounts
Balance, June 30, 2022230,968,872 $2,310 $4,482,239 $(1,176,968)$10,145 $3,317,726 
Net loss— — — (50,064)— (50,064)
Other comprehensive income— — — — 8,377 8,377 
Amortization of stock-based compensation— — 2,657 — — 2,657 
Common stock issuance, net7,734 — (127)— — (127)
Common dividends ($0.30 per share)
— — — (69,836)— (69,836)
Balance, September 30, 2022230,976,606 $2,310 $4,484,769 $(1,296,868)$18,522 $3,208,733 
Three Months Ended September 30, 2023
 Common StockAdditional
Paid-in Capital
Cumulative Distributions in Excess of Net IncomeAccumulated Other Comprehensive IncomeTotal Equity
SharesAmounts
Balance, June 30, 2023231,218,658 $2,312 $4,489,107 $(1,579,914)$32,239 $2,943,744 
Net loss— — — (15,101)— (15,101)
Other comprehensive income— — — — 7,430 7,430 
Amortization of stock-based compensation— — 2,900 — — 2,900 
Common stock issuance, net865 — (90)— — (90)
Common dividends ($0.30 per share)
— — — (70,030)— (70,030)
Balance, September 30, 2023231,219,523 $2,312 $4,491,917 $(1,665,045)$39,669 $2,868,853 

See accompanying notes to consolidated financial statements.

7


SABRA HEALTH CARE REIT, INC.
CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)
(dollars in thousands, except per share data)
(unaudited)
 
Nine Months Ended September 30, 2022
 Common StockAdditional
Paid-in Capital
Cumulative Distributions in Excess of Net IncomeAccumulated Other Comprehensive (Loss) IncomeTotal Equity
 SharesAmounts
Balance, December 31, 2021230,398,655 $2,304 $4,482,451 $(1,095,204)$(10,021)$3,379,530 
Net income— — — 7,343 — 7,343 
Other comprehensive income— — — — 28,543 28,543 
Amortization of stock-based compensation— — 6,513 — — 6,513 
Common stock issuance, net577,951 6 (4,195)— — (4,189)
Common dividends ($0.90 per share)
— — — (209,007)— (209,007)
Balance, September 30, 2022230,976,606 $2,310 $4,484,769 $(1,296,868)$18,522 $3,208,733 
Nine Months Ended September 30, 2023
 Common StockAdditional
Paid-in Capital
Cumulative Distributions in Excess of Net IncomeAccumulated Other Comprehensive IncomeTotal Equity
SharesAmounts
Balance, December 31, 2022231,009,295 $2,310 $4,486,967 $(1,451,945)$19,063 $3,056,395 
Net loss— — — (3,400)— (3,400)
Other comprehensive income— — — — 20,606 20,606 
Amortization of stock-based compensation— — 7,090 — — 7,090 
Common stock issuance, net210,228 2 (2,140)— — (2,138)
Common dividends ($0.90 per share)
— — — (209,700)— (209,700)
Balance, September 30, 2023231,219,523 $2,312 $4,491,917 $(1,665,045)$39,669 $2,868,853 

See accompanying notes to consolidated financial statements.
8

SABRA HEALTH CARE REIT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Nine Months Ended September 30,
20232022
Cash flows from operating activities:
Net (loss) income$(3,400)$7,343 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization140,211 137,855 
Non-cash rental and related revenues(6,781)4,970 
Non-cash interest income(380)(1,683)
Non-cash interest expense9,179 8,300 
Stock-based compensation expense5,468 5,367 
Loss on extinguishment of debt1,541 411 
Provision for (recovery of) loan losses and other reserves549 (12)
Net loss on sales of real estate75,893 4,581 
Impairment of real estate7,064 72,602 
Loss from unconsolidated joint ventures2,136 9,715 
Distributions of earnings from unconsolidated joint ventures1,705  
Other non-cash items(3,704)2,167 
Changes in operating assets and liabilities:
Accounts receivable, prepaid expenses and other assets, net(10,660)(5,631)
Accounts payable and accrued liabilities3,013 2,161 
Net cash provided by operating activities221,834 248,146 
Cash flows from investing activities:
Acquisition of real estate(39,630)(83,985)
Origination and fundings of loans receivable(9,614)(4,500)
Origination and fundings of preferred equity investments(11,015)(5,813)
Additions to real estate(63,794)(33,809)
Escrow deposits for potential investments (836)
Repayments of loans receivable8,674 4,885 
Repayments of preferred equity investments4,828 4,173 
Investment in unconsolidated joint ventures(4,797)(128,019)
Net proceeds from the sales of real estate248,222 62,816 
Net proceeds from sales-type lease25,490  
Insurance proceeds6,001  
Distributions in excess of earnings from unconsolidated joint ventures544  
Net cash provided by (used in) investing activities164,909 (185,088)
Cash flows from financing activities:
Net (repayments of) borrowings from revolving credit facility(165,338)147,353 
Proceeds from term loans12,188  
Principal payments on term loans (63,750)
Principal payments on secured debt(1,479)(17,030)
Payments of deferred financing costs(18,135)(6)
Payment of contingent consideration(17,900)(2,500)
Issuance of common stock, net(2,194)(4,394)
Dividends paid on common stock(208,079)(207,861)
Net cash used in financing activities(400,937)(148,188)
Net decrease in cash, cash equivalents and restricted cash(14,194)(85,130)
Effect of foreign currency translation on cash, cash equivalents and restricted cash(880)392 
Cash, cash equivalents and restricted cash, beginning of period53,932 115,886 
Cash, cash equivalents and restricted cash, end of period$38,858 $31,148 
Supplemental disclosure of cash flow information:
Interest paid$72,911 $68,778 
Supplemental disclosure of non-cash investing activities:
Decrease in loans receivable and other investments due to acquisition of real estate$4,644 $14,311 
See accompanying notes to consolidated financial statements.
9

SABRA HEALTH CARE REIT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 
1.     BUSINESS
Overview
Sabra Health Care REIT, Inc. (“Sabra” or the “Company”) was incorporated on May 10, 2010 as a wholly owned subsidiary of Sun Healthcare Group, Inc. (“Sun”) and commenced operations on November 15, 2010 following Sabra’s separation from Sun. Sabra elected to be treated as a real estate investment trust (“REIT”) with the filing of its United States (“U.S.”) federal income tax return for the taxable year beginning January 1, 2011. Sabra believes that it has been organized and operated, and it intends to continue to operate, in a manner to qualify as a REIT. Sabra’s primary business consists of acquiring, financing and owning real estate property to be leased to third-party tenants in the healthcare sector. Sabra primarily generates revenues by leasing properties to tenants throughout the U.S. and Canada. Sabra owns substantially all of its assets and properties and conducts its operations through Sabra Health Care Limited Partnership, a Delaware limited partnership (the “Operating Partnership”), of which Sabra is the sole general partner and a wholly owned subsidiary of Sabra is currently the only limited partner, or by subsidiaries of the Operating Partnership. The Company’s investment portfolio is primarily comprised of skilled nursing/transitional care facilities, senior housing communities (“Senior Housing - Leased”), behavioral health facilities and specialty hospitals and other facilities, in each case leased to tenants who are responsible for the operations of these facilities; senior housing communities operated by third-party property managers pursuant to property management agreements (“Senior Housing - Managed”); investments in joint ventures; investments in loans receivable; and preferred equity investments.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The accompanying consolidated financial statements include the accounts of Sabra and its wholly owned subsidiaries as of September 30, 2023 and December 31, 2022 and for the three and nine month periods ended September 30, 2023 and 2022. All significant intercompany transactions and balances have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair statement of the results for such periods. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. For further information, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC.
GAAP requires the Company to identify entities for which control is achieved through voting rights or other means and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. If the Company were determined to be the primary beneficiary of the VIE, the Company would consolidate investments in the VIE. The Company may change its original assessment of a VIE due to events such as modifications of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposal of all or a portion of an interest held by the primary beneficiary.
10

The Company identifies the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. The Company performs this analysis on an ongoing basis. As of September 30, 2023, the Company determined that it was not the primary beneficiary of any VIEs.
As it relates to investments in loans, in addition to the Company’s assessment of VIEs and whether the Company is the primary beneficiary of those VIEs, the Company evaluates the loan terms and other pertinent facts to determine whether the loan investment should be accounted for as a loan or as a real estate joint venture. If an investment has the characteristics of a real estate joint venture, including if the Company participates in the majority of the borrower’s expected residual profit, the Company would account for the investment as an investment in a real estate joint venture and not as a loan investment. Expected residual profit is defined as the amount of profit, whether called interest or another name, such as an equity kicker, above a reasonable amount of interest and fees expected to be earned by a lender. At September 30, 2023, none of the Company’s investments in loans were accounted for as real estate joint ventures.
As it relates to investments in joint ventures, the Company assesses any partners’ rights and their impact on the presumption of control of the partnership by any single partner. The Company also applies this guidance to managing member interests in limited liability companies. The Company reassesses its determination of which entity controls the joint venture if: there is a change to the terms or in the exercisability of the rights of any partners or members, the general partner or managing member increases or decreases its ownership interests, or there is an increase or decrease in the number of outstanding ownership interests. As of September 30, 2023, the Company’s determination of which entity controls its investments in joint ventures has not changed as a result of any reassessment.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.
Casualty Gains and Losses
Income resulting from insurance recoveries of property damage or business interruption losses is recognized when proceeds are received or contingencies related to the insurance recoveries are resolved.
A vacant facility owned by the Company suffered damages as a result of vandalism and theft. The Company received $6.0 million of net insurance proceeds and recorded a $3.7 million gain related to the property damage during the three and nine months ended September 30, 2023 which is included in other income (expense) on the accompanying consolidated statements of (loss) income.
A fire occurred at one of the Company’s Senior Housing - Managed communities. The Company received $1.1 million of insurance proceeds and recorded $0.5 million of business interruption insurance income during the three and nine months ended September 30, 2023 which is included in other income (expense) on the accompanying consolidated statements of (loss) income. The remaining proceeds were recorded as expense reimbursements in Senior Housing - Managed portfolio operating expenses on the accompanying consolidated statements of (loss) income.

11

3.     RECENT REAL ESTATE ACQUISITIONS (CONSOLIDATED)
During the nine months ended September 30, 2023, the Company acquired one Senior Housing - Leased community and one Senior Housing - Managed community. During the nine months ended September 30, 2022, the Company acquired three Senior Housing - Managed communities. The Senior Housing - Managed community acquired during the nine months ended September 30, 2023 and two of the Senior Housing - Managed communities acquired during the nine months ended September 30, 2022 were part of the Company’s proprietary development pipeline and were previously reflected as preferred equity investments which had a book value of $4.6 million and $14.3 million, respectively, at the time of acquisition. The consideration was allocated as follows (in thousands):
Nine Months Ended September 30,
20232022
Land$3,415 $10,292 
Building and improvements45,333 83,118 
Tenant origination and absorption costs intangible assets2,706 4,887 
Tenant relationship intangible assets20  
Total consideration$51,474 $98,297 
The tenant origination and absorption costs intangible assets and tenant relationship intangible assets had weighted average amortization periods as of the respective dates of acquisition of one year and 22 years, respectively, for the acquisitions completed during the nine months ended September 30, 2023. The tenant origination and absorption costs intangible assets had an amortization period as of the date of acquisition of one year for the acquisitions completed during the nine months ended September 30, 2022.
For the three and nine months ended September 30, 2023, the Company recognized $2.6 million and $6.8 million of total revenues, respectively, and $46,000 of net loss and less than $1,000 of net income, respectively, from the facilities acquired during the nine months ended September 30, 2023. For the three and nine months ended September 30, 2022, the Company recognized $3.9 million and $6.0 million of total revenues, respectively, and $0.3 million and $0.9 million of net loss, respectively, from the facilities acquired during the nine months ended September 30, 2022.
During the three months ended June 30, 2023, the Company, in accordance with the terms of the agreements pursuant to which it purchased the facilities, paid $17.9 million in additional consideration related to two Senior Housing - Managed communities that achieved certain performance metrics. This amount is included in real estate investments, net of accumulated depreciation on the accompanying consolidated balance sheets.

4.    INVESTMENT IN REAL ESTATE PROPERTIES
The Company’s real estate properties held for investment consisted of the following (dollars in thousands):
As of September 30, 2023
Property TypeNumber of
Properties
Number of
Beds/Units
Total
Real Estate
at Cost
Accumulated
Depreciation
Total
Real Estate
Investments, Net
Skilled Nursing/Transitional Care240 26,623 $3,035,231 $(530,290)$2,504,941 
Senior Housing - Leased43 3,473 572,633 (106,063)466,570 
Senior Housing - Managed61 6,041 1,278,352 (250,772)1,027,580 
Behavioral Health18 1,077 492,236 (68,654)423,582 
Specialty Hospitals and Other15 392 225,443 (46,100)179,343 
377 37,606 5,603,895 (1,001,879)4,602,016 
Corporate Level1,603 (605)998 
$5,605,498 $(1,002,484)$4,603,014 
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As of December 31, 2022
Property TypeNumber of
Properties
Number of
Beds/Units
Total
Real Estate
at Cost
Accumulated
Depreciation
Total
Real Estate
Investments, Net
Skilled Nursing/Transitional Care264 29,136 $3,385,221 $(492,495)$2,892,726 
Senior Housing - Leased47 3,550 590,694 (97,716)492,978 
Senior Housing - Managed59 5,942 1,205,283 (222,089)983,194 
Behavioral Health17 965 465,143 (58,481)406,662 
Specialty Hospitals and Other15 392 225,443 (42,038)183,405 
402 39,985 5,871,784 (912,819)4,958,965 
Corporate Level904 (526)378 
$5,872,688 $(913,345)$4,959,343 
September 30, 2023December 31, 2022
Building and improvements$4,815,199 $5,034,470 
Furniture and equipment234,882 262,644 
Land improvements10,241 7,085 
Land545,176 568,489 
Total real estate at cost5,605,498 5,872,688 
Accumulated depreciation(1,002,484)(913,345)
Total real estate investments, net$4,603,014 $4,959,343 
Operating Leases
As of September 30, 2023, the substantial majority of the Company’s real estate properties (excluding 61 Senior Housing - Managed communities) were leased under triple-net operating leases with expirations ranging from less than one year to 19 years. As of September 30, 2023, the leases had a weighted average remaining term of eight years. The leases generally include provisions to extend the lease terms and other negotiated terms and conditions. The Company, through its subsidiaries, retains substantially all of the risks and benefits of ownership of the real estate assets leased to the tenants. The Company may receive additional security under these operating leases in the form of letters of credit and security deposits from the lessee or guarantees from the parent of the lessee. Security deposits received in cash related to tenant leases are included in accounts payable and accrued liabilities on the accompanying consolidated balance sheets and totaled $17.0 million and $13.0 million as of September 30, 2023 and December 31, 2022, respectively, and letters of credit deposited with the Company totaled approximately $57 million as of each of September 30, 2023 and December 31, 2022. In addition, the Company’s tenants have deposited with the Company $11.6 million and $13.3 million as of September 30, 2023 and December 31, 2022, respectively, for future real estate taxes, insurance expenditures and tenant improvements related to the Company’s properties and their operations, and these amounts are included in accounts payable and accrued liabilities on the accompanying consolidated balance sheets.
Lessor costs that are paid by the lessor and reimbursed by the lessee are included in the measurement of variable lease revenue and the associated expense. As a result, the Company recognized variable lease revenue and the associated expense of $3.8 million and $11.4 million during the three and nine months ended September 30, 2023, respectively, and $4.3 million and $13.7 million during the three and nine months ended September 30, 2022, respectively.
The Company monitors the creditworthiness of its tenants by evaluating the ability of the tenants to meet their lease obligations to the Company based on the tenants’ financial performance, including, as applicable and appropriate, the evaluation of any parent guarantees (or the guarantees of other related parties) of such lease obligations. The primary basis for the Company’s evaluation of the credit quality of its tenants (and more specifically the tenant’s ability to pay their rent obligations to the Company) is the tenant’s lease coverage ratio as supplemented by the parent’s fixed charge coverage ratio for those entities with a parent guarantee. These coverage ratios include earnings before interest, taxes, depreciation, amortization and rent (“EBITDAR”) to rent and earnings before interest, taxes, depreciation, amortization, rent and management fees (“EBITDARM”) to rent at the lease level and consolidated EBITDAR to total fixed charges at the parent guarantor level when such a guarantee exists. The Company obtains various financial and operational information from the majority of its tenants each month and reviews this information in conjunction with the above-described coverage metrics to identify financial and operational trends, evaluate the impact of the industry’s operational and financial environment (including the impact of
13

government reimbursement), and evaluate the management of the tenant’s operations. These metrics help the Company identify potential areas of concern relative to its tenants’ credit quality and ultimately the tenant’s ability to generate sufficient liquidity to meet its obligations, including its obligation to continue to pay the rent due to the Company.
During the third quarter of 2022, the Company concluded that its leases with North American Health Care, Inc. should no longer be accounted for on an accrual basis and wrote off $15.6 million of straight-line rent receivable balances related to these leases. The facilities were transitioned to the Ensign Group or Avamere, as applicable, effective February 1, 2023.
For the three and nine months ended September 30, 2023, no tenant relationship represented 10% or more of the Company’s total revenues.
As of September 30, 2023, the future minimum rental payments from the Company’s properties held for investment under non-cancelable operating leases were as follows and may materially differ from actual future rental payments received (in thousands):
October 1 through December 31, 2023$91,919 
2024371,661 
2025366,190 
2026350,583 
2027327,530 
Thereafter1,508,364 
$3,016,247 
Senior Housing - Managed Communities
The Company’s Senior Housing - Managed communities offer residents certain ancillary services that are not contemplated in the lease with each resident (i.e., housekeeping, laundry, guest meals, etc.). These services are provided and paid for in addition to the standard services included in each resident lease (i.e., room and board, standard meals, etc.). The Company bills residents for ancillary services one month in arrears and recognizes revenue as the services are provided, as the Company has no continuing performance obligation related to those services. Resident fees and services include ancillary service revenue of $0.4 million and $1.4 million for the three and nine months ended September 30, 2023, respectively, and $0.4 million and $1.0 million for the three and nine months ended September 30, 2022, respectively.
Capital and Other Expenditures
As of September 30, 2023, the Company’s aggregate commitment for future capital and other expenditures associated with facilities leased under triple-net operating leases was approximately $44 million. These commitments are principally for improvements to its facilities.
Investment in Unconsolidated Joint Ventures
The following is a summary of the Company’s investment in unconsolidated joint ventures (dollars in thousands):
Property Type
Number of
Properties as of
September 30, 2023
Ownership as of
September 30, 2023 (1)
Book Value
September 30, 2023December 31, 2022
Sienna Joint VentureSenior Housing - Managed12 50 %$118,150 $120,269 
Marlin Spring Joint VentureSenior Housing - Managed4 85 %17,605 14,693 
$135,755 $134,962 
(1)    These investments are not consolidated because the Company does not control, through voting rights or other means, the joint ventures.
During the nine months ended September 30, 2023, the Company’s joint venture with Marlin Spring (the “Marlin Spring Joint Venture”) completed the acquisition of one additional senior housing community that is being managed by a third-party property manager. The gross investment in the additional acquisition was CAD $30.0 million, excluding acquisition costs. In addition, the Marlin Spring Joint Venture assumed and financed an aggregate CAD $23.6 million of debt associated with the additional acquisition. The Company’s equity investment in the additional acquisition was CAD $6.1 million.
During the fourth quarter of 2022, due to the confluence of labor shortages, increased labor costs, elevated interest rates and a slower than anticipated recovery in the operating performance of the underlying facilities, the Company concluded that
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the estimated fair value of its investment in its joint venture with affiliates of TPG Real Estate, the real estate platform of TPG (the “Enlivant Joint Venture”) had declined to zero based on updated future cash flow analyses. This decline was deemed to be other-than-temporary, and the Company recorded an impairment charge totaling $57.8 million during the three months ended December 31, 2022.
Effective January 1, 2023, the Company discontinued applying the equity method of accounting to the Enlivant Joint Venture, in which it had a 49% equity interest. Effective May 1, 2023, the Company withdrew and resigned its membership in the Enlivant Joint Venture and accordingly, no longer has an equity interest in the Enlivant Joint Venture as of such date.
During the nine months ended September 30, 2022, the Enlivant Joint Venture was a significant equity method investee of the Company. The following table presents summarized financial information for the Enlivant Joint Venture and, except for basis adjustments and loss from unconsolidated joint venture, reflects the historical cost basis of the assets which pre-dated the Company’s investment in the Enlivant Joint Venture (in thousands):
Nine Months Ended September 30, 2022
Total revenues$237,144 
Operating expenses215,293 
Net loss(7,177)
Company’s share of net loss$(3,525)
Basis adjustments5,755 
Loss from unconsolidated joint venture$(9,280)
Certain amounts in the financial information for the Enlivant Joint Venture have been reclassified to conform to Sabra’s presentation. The Company’s share of net loss in the Enlivant Joint Venture reflects its 49% equity interest and excludes certain equity-like compensation expense and the related income tax impact as such expense is not the responsibility of the Company under the terms of the joint venture agreement.
Net Investment in Sales-Type Lease
As of December 31, 2022, the Company had a $25.5 million net investment in one skilled nursing/transitional care facility leased to a tenant under a sales-type lease, as the tenant is obligated to purchase the property at the end of the lease term. During the three months ended March 31, 2023, the tenant purchased the skilled nursing/transitional care facility for net proceeds of $25.5 million as obligated under the terms of the lease.

5.    IMPAIRMENT OF REAL ESTATE AND DISPOSITIONS
Impairment of Real Estate
During the nine months ended September 30, 2023, the Company recognized $7.1 million of real estate impairment related to one skilled nursing/transitional care facility that has sold.
During the nine months ended September 30, 2022, the Company recognized $72.6 million of real estate impairment related to ten skilled nursing/transitional care facilities that have sold.
To estimate the fair value of the impaired facilities, the Company utilized a market approach which considered binding sale agreements, non-binding offers from unrelated third parties or model-derived valuations with significant unobservable inputs (Level 3 measurements), as applicable.
The Company continues to evaluate additional assets for sale as part of its initiative to recycle capital and further improve its portfolio quality. This could lead to a shorter hold period and could result in the determination that the full amount of the Company’s investment is not recoverable, resulting in an impairment charge or loss on sale which could be material.
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Dispositions
The following table summarizes the Company’s dispositions for the periods presented (dollars in millions):
Nine Months Ended September 30,
20232022
Number of facilities27 11 
Consideration, net of closing costs$256.2 $62.8 
Net carrying value332.1 67.4 
Net loss on sale$(75.9)$(4.6)
Net loss (1)
$(80.3)$(63.1)
(1)    In addition to net loss on sale, net loss includes impairment of real estate of $7.1 million and $65.8 million for the nine months ended September 30, 2023 and 2022, respectively.
The sale of the disposition facilities does not represent a strategic shift that has or will have a major effect on the Company’s operations and financial results, and therefore the results of operations attributable to these facilities have remained in continuing operations.

6.    LOANS RECEIVABLE AND OTHER INVESTMENTS
As of September 30, 2023 and December 31, 2022, the Company’s loans receivable and other investments consisted of the following (dollars in thousands):
As of September 30, 2023
Investment
Quantity
as of
September 30, 2023
Property Type
Principal Balance
as of
September 30, 2023 (1)
Book Value
as of
September 30, 2023
Book Value
as of December 31, 2022
Weighted Average Contractual Interest Rate / Rate of ReturnWeighted Average Annualized Effective Interest Rate / Rate of Return
Maturity Date
as of
September 30, 2023
Loans Receivable:
Mortgage2 Behavioral Health$319,000 $319,000 $319,000 7.6 %7.6 %11/01/26 - 01/31/27
Other10 Multiple52,133 48,703 47,936 7.5 %7.0 %08/31/23 - 05/01/29
12 371,133 367,703 366,936 7.6 %7.6 %
Allowance for loan losses— (6,677)(6,611)
$371,133 $361,026 $360,325 
Other Investments:
Preferred Equity5 Skilled Nursing / Senior Housing56,760 56,921 51,071 11.0 %11.0 %N/A
Total 17 $427,893 $417,947 $411,396 8.1 %8.0 %
(1)    Principal balance includes amounts funded and accrued but unpaid interest / preferred return and excludes capitalizable fees.
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Additional information regarding the Company’s loans receivable is as follows (dollars in thousands):
Nine Months Ended September 30,
20232022
Allowance for loan losses:
Balance at beginning of the period$6,611 $6,344 
Provision for loan losses549 83 
Write-off of uncollectible balances(483) 
Balance at end of the period$6,677 $6,427 
September 30, 2023December 31, 2022
Deteriorated credit quality:
Number of loans receivable investments1 1 
Principal balance$1,214 $1,214 
Book value  
Nonaccrual status:
Number of loans receivable investments3 3 
Book value$ $ 
As of September 30, 2023 and December 31, 2022, the Company did not consider any preferred equity investments to be impaired, and no preferred equity investments were on nonaccrual status.

7.    DEBT
Secured Indebtedness
The Company’s secured debt consists of the following (dollars in thousands):
As of September 30, 2023
Interest Rate Type
Principal Balance as of
September 30, 2023
(1)
Principal Balance as of
December 31, 2022
(1)
Weighted Average
Interest Rate
Weighted Average
Effective Interest Rate
(2)
Maturity
Date
Fixed Rate$48,643 $50,123 2.85 %3.34 %May 2031 - 
August 2051
(1)     Principal balance does not include deferred financing costs, net of $0.9 million as of each of September 30, 2023 and December 31, 2022.
(2)     Weighted average effective interest rate includes private mortgage insurance.
Senior Unsecured Notes
The Company’s senior unsecured notes consist of the following (dollars in thousands):
Principal Balance as of
TitleMaturity Date
September 30, 2023 (1)
December 31, 2022 (1)
5.125% senior unsecured notes due 2026 (“2026 Notes”)
August 15, 2026$500,000 $500,000 
5.88% senior unsecured notes due 2027 (“2027 Notes”)
May 17, 2027100,000 100,000 
3.90% senior unsecured notes due 2029 (“2029 Notes”)
October 15, 2029350,000 350,000 
3.20% senior unsecured notes due 2031 (“2031 Notes”)
December 1, 2031800,000 800,000 
$1,750,000 $1,750,000 
(1)    Principal balance does not include discount, net of $4.1 million and deferred financing costs, net of $10.9 million as of September 30, 2023 and does not include discount, net of $3.5 million and deferred financing costs, net of $12.0 million as of December 31, 2022. In addition, the weighted average effective interest rate as of September 30, 2023 was 4.01%.
The 2026 Notes and the 2027 Notes were assumed as a result of the Company’s merger with Care Capital Properties, Inc. in 2017 and accrue interest at a rate of 5.125% and 5.88%, respectively, per annum. Interest is payable semiannually on February 15 and August 15 of each year for the 2026 Notes and on May 17 and November 17 of each year for the 2027 Notes.
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The 2029 Notes were issued by the Operating Partnership and, until redemption of the Company’s previously outstanding 5.375% senior notes due 2023 in October 2019, Sabra Capital Corporation, wholly owned subsidiaries of the Company, and accrue interest at a rate of 3.90% per annum. Interest is payable semiannually on April 15 and October 15 of each year.
The 2031 Notes were issued by the Operating Partnership, a wholly owned subsidiary of the Company, and accrue interest at a rate of 3.20% per annum. Interest is payable semiannually on June 1 and December 1 of each year, commencing on June 1, 2022.
The obligations under the 2027 Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis, by Sabra and one of its non-operating subsidiaries, subject to release under certain customary circumstances. The obligations under the 2026 Notes, 2029 Notes and 2031 Notes are fully and unconditionally guaranteed, on an unsecured basis, by Sabra; provided, however, that such guarantee is subject to release under certain customary circumstances.
The indentures and agreements (the “Senior Notes Indentures”) governing the 2026 Notes, 2027 Notes, 2029 Notes and 2031 Notes (collectively, the “Senior Notes”) include customary events of default and require the Company to comply with specified restrictive covenants. As of September 30, 2023, the Company was in compliance with all applicable financial covenants under the Senior Notes Indentures.
Credit Agreement
On September 9, 2019, the Operating Partnership and Sabra Canadian Holdings, LLC (together, the “Borrowers”), Sabra and the other parties thereto entered into a fifth amended and restated unsecured credit agreement (the “Prior Credit Agreement”).
The Prior Credit Agreement included a $1.0 billion revolving credit facility (the “Prior Revolving Credit Facility”), a $436.3 million U.S. dollar term loan and a CAD $125.0 million Canadian dollar term loan (collectively, the “Prior Term Loans”). Further, up to $175.0 million of the Prior Revolving Credit Facility could be used for borrowings in certain foreign currencies. The Prior Credit Agreement also contained an accordion feature that allowed for an increase in the total available borrowings to $2.75 billion, subject to terms and conditions.
During the three and nine months ended September 30, 2022, the Company recognized $0.1 million and $0.4 million, respectively, of loss on extinguishment of debt related to write-offs of deferred financing costs in connection with the partial pay downs of the U.S. dollar Prior Term Loan.
Borrowings under the Prior Revolving Credit Facility bore interest on the outstanding principal amount at a rate equal to a ratings-based applicable interest margin plus, Canadian Dollar Offered Rate (“CDOR”) for Canadian dollar borrowings, or at the Operating Partnership’s option for U.S. dollar borrowings, either (a) LIBOR or (b) a base rate determined as the greater of (i) the federal funds rate plus 0.5%, (ii) the prime rate, and (iii) one-month LIBOR plus 1.0% (the “Prior Base Rate”). The ratings-based applicable interest margin for borrowings varied based on the Debt Ratings, as defined in the Prior Credit Agreement, and ranged from 0.775% to 1.45% per annum for CDOR or LIBOR based borrowings and 0.00% to 0.45% per annum for borrowings at the Prior Base Rate. In addition, the Operating Partnership paid a facility fee ranging between 0.125% and 0.300% per annum based on the aggregate amount of commitments under the Prior Revolving Credit Facility regardless of amounts outstanding thereunder.
The U.S. dollar Prior Term Loan bore interest on the outstanding principal amount at a rate equal to a ratings-based applicable interest margin plus, at the Operating Partnership’s option, either (a) LIBOR or (b) the Prior Base Rate. The ratings-based applicable interest margin for borrowings varied based on the Debt Ratings and ranged from 0.85% to 1.65% per annum for LIBOR based borrowings and 0.00% to 0.65% per annum for borrowings at the Prior Base Rate. The Canadian dollar Prior Term Loan bore interest on the outstanding principal amount at a rate equal to CDOR plus an interest margin that ranged from 0.85% to 1.65% depending on the Debt Ratings.
On January 4, 2023, the Borrowers, and the other parties thereto entered into a sixth amended and restated unsecured credit agreement (the “Credit Agreement”). During the nine months ended September 30, 2023, the Company recorded $18.1 million of deferred financing costs related to the Credit Agreement and recognized $1.5 million of loss on extinguishment of debt related to write-offs of deferred financing costs in connection with amending and restating the Prior Credit Agreement. No loss on extinguishment of debt was recognized during the three months ended September 30, 2023.
The Credit Agreement includes a $1.0 billion revolving credit facility (the “Revolving Credit Facility”), a $430.0 million U.S. dollar term loan and a CAD $150.0 million Canadian dollar term loan (collectively, the “Term Loans”). Further, up to $350.0 million of the Revolving Credit Facility may be used for borrowings in certain foreign currencies. The Credit
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Agreement also contains an accordion feature that can increase the total available borrowings to $2.75 billion, subject to terms and conditions.
The Revolving Credit Facility has a maturity date of January 4, 2027, and includes two six-month extension options. The Term Loans have a maturity date of January 4, 2028.
As of September 30, 2023, there was $32.6 million (CAD $44.3 million) outstanding under the Revolving Credit Facility and $967.4 million available for borrowing.
Borrowings under the Revolving Credit Facility bear interest on the outstanding principal amount at a rate equal to a ratings-based applicable interest margin plus, CDOR for Canadian dollar borrowings, or at the Operating Partnership’s option for U.S. dollar borrowings, either (a) Daily Simple SOFR, as defined in the Credit Agreement, or (b) a base rate determined as the greater of (i) the federal funds rate plus 0.5%, (ii) the prime rate, (iii) Term SOFR, as defined in the Credit Agreement, plus 1.0% (the “Base Rate”), and (iv) 1.00%. The ratings-based applicable interest margin for borrowings will vary based on the Debt Ratings, as defined in the Credit Agreement, and will range from 0.775% to 1.450% per annum for Daily Simple SOFR-based borrowings and 0.00% to 0.450% per annum for borrowings at the Base Rate. As of September 30, 2023, the weighted average interest rate on the Revolving Credit Facility was 6.49%. In addition, the Operating Partnership pays a facility fee ranging between 0.125% and 0.300% per annum based on the aggregate amount of commitments under the Revolving Credit Facility regardless of amounts outstanding thereunder.
The U.S. dollar Term Loan bears interest on the outstanding principal amount at a ratings-based applicable interest margin plus, at the Operating Partnership’s option, either (a) Term SOFR or (b) the Base Rate. The ratings-based applicable interest margin for borrowings will vary based on the Debt Ratings and will range from 0.850% to 1.650% per annum for Term SOFR-based borrowings and 0.00% to 0.650% per annum for borrowings at the Base Rate. As of September 30, 2023, the interest rate on the U.S. dollar Term Loan was 6.66%. The Canadian dollar Term Loan bears interest on the outstanding principal amount at a rate equal CDOR plus an interest margin that will range from 0.850% to 1.650% depending on the Debt Ratings. As of September 30, 2023, the interest rate on the Canadian dollar Term Loan was 6.64%.
The Company has interest rate swaps and interest rate collars that fix and set a cap and floor, respectively, for the SOFR portion of the interest rate for $430.0 million of SOFR-based borrowings under its U.S. dollar Term Loan at a weighted average rate of 2.69% and interest rate swaps that fix the CDOR portion of the interest rate for CAD $150.0 million of CDOR-based borrowings under its Canadian dollar Term Loan at a rate of 1.63%. As of September 30, 2023, the effective interest rate on the U.S. dollar and Canadian dollar Term Loans was 3.94% and 2.88%, respectively. In addition, the Canadian dollar Term Loan and the CAD $44.3 million outstanding as of September 30, 2023 under the Revolving Credit Facility are designated as net investment hedges. See Note 8, “Derivative and Hedging Instruments,” for further information.
The obligations of the Borrowers under the Credit Agreement are guaranteed by the Company and certain of its subsidiaries.
The Credit Agreement contains customary covenants that include restrictions or limitations on the ability to pay dividends, incur additional indebtedness, engage in non-healthcare related business activities, enter into transactions with affiliates and sell or otherwise transfer certain assets as well as customary events of default. The Credit Agreement also requires Sabra, through the Operating Partnership, to comply with specified financial covenants, which include a maximum total leverage ratio, a maximum secured debt leverage ratio, a minimum fixed charge coverage ratio, a maximum unsecured leverage ratio, a minimum tangible net worth requirement and a minimum unsecured interest coverage ratio. As of September 30, 2023, the Company was in compliance with all applicable financial covenants under the Credit Agreement.
Interest Expense
The Company incurred interest expense of $28.2 million and $85.0 million during the three and nine months ended September 30, 2023, respectively, and $27.1 million and $77.6 million during the three and nine months ended September 30, 2022, respectively. Interest expense includes non-cash interest expense of $3.1 million and $9.2 million for the three and nine months ended September 30, 2023, respectively, and $2.8 million and $8.3 million for the three and nine months ended September 30, 2022, respectively. As of September 30, 2023 and December 31, 2022, the Company had $21.1 million and $18.2 million, respectively, of accrued interest included in accounts payable and accrued liabilities on the accompanying consolidated balance sheets.
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Maturities
The following is a schedule of maturities for the Company’s outstanding debt as of September 30, 2023 (in thousands): 
Secured
Indebtedness
Revolving Credit
    Facility (1)
Term LoansSenior NotesTotal
October 1 through December 31, 2023$499 $ $ $ $499 
20242,034    2,034 
20252,089    2,089 
20262,147   500,000 502,147 
20272,206 32,623  100,000 134,829 
Thereafter39,668  540,460 1,150,000 1,730,128 
Total Debt48,643 32,623 540,460 1,750,000 2,371,726 
Discount, net   (4,075)(4,075)
Deferred financing costs, net(854) (6,449)(10,870)(18,173)
Total Debt, Net$47,789 $32,623 $534,011 $1,735,055 $2,349,478 
(1)    Revolving Credit Facility is subject to two six-month extension options.
    
8.    DERIVATIVE AND HEDGING INSTRUMENTS
The Company is exposed to various market risks, including the potential loss arising from adverse changes in interest rates and foreign exchange rates. The Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates and foreign exchange rates. The Company’s derivative financial instruments are used to manage differences in the amount of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.
Certain of the Company’s foreign operations expose the Company to fluctuations of foreign interest rates and exchange rates. These fluctuations may impact the value in the Company’s functional currency, the U.S. dollar, of the Company’s investment in foreign operations, the cash receipts and payments related to these foreign operations and payments of interest and principal under Canadian dollar denominated debt. The Company enters into derivative financial instruments to protect the value of its foreign investments and fix a portion of the interest payments for certain debt obligations. The Company does not enter into derivatives for speculative purposes.
Cash Flow Hedges
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps and collars as part of its interest rate risk management strategy. As of September 30, 2023, approximately $9.6 million of gains, which are included in accumulated other comprehensive income, are expected to be reclassified into earnings in the next 12 months.
Net Investment Hedges
The Company is exposed to fluctuations in foreign exchange rates on investments it holds in Canada. The Company uses cross currency interest rate swaps to hedge its exposure to changes in foreign exchange rates on these foreign investments.
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The following presents the notional amount of derivative instruments as of the dates indicated (in thousands):
September 30, 2023December 31, 2022
Derivatives designated as cash flow hedges:
Denominated in U.S. Dollars (1)
$753,750 $436,250 
Denominated in Canadian Dollars (2)
$300,000 $125,000 
Derivatives designated as net investment hedges:
Denominated in Canadian Dollars$56,300 $55,991 
Financial instruments designated as net investment hedges:
Denominated in Canadian Dollars$194,300 $329,500 
Derivatives not designated as net investment hedges:
Denominated in Canadian Dollars$ $309 
(1) Balance as of September 30, 2023 includes two forward starting interest rate swaps with an effective date of August 2024 and an aggregate notional amount of $323.8 million.
(2)    Balance as of September 30, 2023 includes two forward starting interest rate swaps with an effective date of September 2024 and an aggregate notional amount of CAD $150.0 million.
Derivative and Financial Instruments Designated as Hedging Instruments
The following is a summary of the derivative and financial instruments designated as hedging instruments held by the Company at September 30, 2023 and December 31, 2022 (dollars in thousands):    
Count as of September 30, 2023
Fair Value as ofMaturity Dates
TypeDesignationSeptember 30, 2023December 31, 2022Balance Sheet Location
Assets:
Interest rate swapsCash flow5 $11,986 $11,004 2024 - 2028Accounts receivable, prepaid expenses and other assets, net
Interest rate collarsCash flow2 5,133 6,622 2024Accounts receivable, prepaid expenses and other assets, net
Forward starting interest rate swapsCash flow4 18,164  2028Accounts receivable, prepaid expenses and other assets, net
Cross currency interest rate swapsNet investment2 4,048 3,851 2025Accounts receivable, prepaid expenses and other assets, net
$39,331 $21,477 
Liabilities:
CAD borrowings under Revolving Credit FacilityNet investment1 32,623 150,982 2027Revolving credit facility
CAD Term LoanNet investment1 110,460 92,288 2028Term loans, net
$143,083 $243,270 
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The following presents the effect of the Company’s derivative and financial instruments designated as hedging instruments on the consolidated statements of (loss) income and the consolidated statements of equity for the three and nine months ended September 30, 2023 and 2022 (in thousands):
Gain (Loss) Recognized in Other Comprehensive Income
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Cash Flow Hedges:
Interest rate products$11,373 $6,817 $28,462 $20,146 
Net Investment Hedges:
Foreign currency products1,140 2,253 349 2,840 
CAD borrowings under Revolving Credit Facility42 8,790 (2,650)11,157 
CAD term loan2,760 5,988 265 7,463 
$15,315 $23,848 $26,426