What happened
Shares of Sabra Health Care REIT (SBRA -0.22%) surged 20.2% in May, according to data provided by S&P Global Market Intelligence. The healthcare-focused real estate investment trust (REIT) reported its first-quarter results and completed a large-scale acquisition last month.
So what
Sabra Health Care REIT reported solid first-quarter results in May. The healthcare REIT continued to collect rent despite the lingering impacts of the pandemic. Overall, it has collected 99.5% of its forecast rents since the pandemic began. The company also reported that occupancy trends at its skilled nursing properties remain healthy despite some initial headwinds related to the omicron variant of the coronavirus.
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The REIT also reported improvements in its managed senior housing portfolio. Revenue per occupied room (RevPOR) has improved by nearly 6% over the past year for assisted living facilities. Meanwhile, RevPOR at independent living properties is up more than 1% year over year.
Sabra has also taken steps to expand its portfolio. It purchased a managed senior housing community from its development pipeline for $26 million in the first quarter. In May, the company closed the purchase of a high-quality senior housing portfolio in Canada with joint venture partner Sienna Senior Housing. The partners paid a total of $236.5 million for 11 senior housing communities that Sienna will operate.
In other news last month, Sabra Health Care REIT received an upgrade from Mizuho analyst Vikram Malhotra. He increased his rating from neutral to buy while setting a $15 price target. Malhotra believes occupancy should continue to improve. He also ran a sensitivity analysis that shows Sabra can continue covering its 8.6%-yielding dividend.
However, not all analysts are as bullish. Capital One analyst Daniel Bernstein reinstated coverage on the stock in early June. He set his rating at equal weight while reducing his price target from $18 a share to $15.50. Bernstein lowered his view because he remains cautious about the pace of the recovery in the skilled nursing sector.
Now what
While Sabra Health Care REIT still faces some pandemic-related headwinds, conditions in the senior housing sector are improving. Because of that, the REIT should be able to maintain its big-time dividend. That makes it an attractive option for investors willing to take on a bit more risk for the higher yield and upside potential of the senior housing industry's recovery from the headwinds it has faced during the pandemic.
