Rob Mains - Stifel Nicolaus Emmanuel Korchman - Citi David Schiffmann - Jefferies & Co.

Good day ladies and gentlemen, and welcome the Sabra Health Care REIT Inc. announces first quarter 2013 earnings conference call. This call is being recorded. I would now like to turn the call over to Talya Nevo-Hacohen, Chief Investment Officer. Please go ahead Ms. Nevo.

Thank you very much. Before we begin, I want to remind you that we will be making forward-looking statements in our comments and in response your questions concerning our business strategies and expectations for growth opportunities, expectations regarding our acquisition plans, and expectations regarding our future results of operations. These forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties that could cause actual results to differ materially, including the risks listed in our Form 10-Q to be filed with the SEC, as well as in our earnings press release included as Exhibit 99.1 to the Form 8-K we furnished with the SEC yesterday. We undertake no obligation to update our forward-looking statements to reflect subsequent events or circumstances and you should not assume later in the quarter that the comments we make today are still valid. In addition, references will be made during this call to non-GAAP financial results. Investors are encouraged to review these non-GAAP financial measures, as well as the explanations and reconciliation’s of these measures to the comparable GAAP results included at the end of our earnings press release and the supplemental information materials included as exhibits 99.1 and 99.2 respectively to the Form 8-K we furnished to the SEC yesterday. These materials can also be accessed in the Investor Relations section of our website at www.sabrahealth.com. And with that, let me turn the call over to Rick Matros, Chairman and CEO of Sabra Health Care REIT.

Thanks Talya and hello everyone and thanks for joining our call today. We had a productive first quarter. We realized significant growth in revenues, net income, FFO and AFFO of 35%, 108%, 44% and 13% respectively. We made a $12.8 million mortgage investment with a fixed rate of 9% annually. It includes an option to purchase a 48-unit memory care facility with New Dawn. This is our second facility with New Dawn, our first development deal with New Dawn and you should expect to see announcements on the official development deals with New Dawn on a go forward basis. They may come in one at a time or it maybe in the context of a pipeline, but in any way we’ll be seeing more development deals with our New Dawn team. We also entered into two preferred equity investments, earned up to $7.6 million with an option to purchase a new 141-bed skilled nursing facility upon stabilization. We funded $4.6 million to date. This provides for an annual 15% preferred rate of return. This is another deal for us with the Meridian Team and we expect additional development deals with them as well, and as with New Dawn are working on a development pipeline deal with them. We also completed a preferred equity offering that netted were $138.4 million of proceeds to the company, and implemented a $100 million ATM program, although given the amount of liquidity on hand, we will not activate it until necessary. We reaffirm our previously issued guidance and continue to expect our 2013 investments to be in the $150 million to $200 million range. We expect our focus to remain on the expansion of our asset base in to Senior Housing, although you can still expect to see us close skilled nursing facilities deals as…

Thank you Rick and thanks everybody for joining the call this morning. For the three months ending March 31, 2013 we recorded revenues of $32 million compared to $23.7 million for the first quarter of 2012, an increase of 35%. As of March 31, 2013, 63.2% of our revenue was derived from our leases to subsidiaries of Genesis and 82.3% of our portfolio revenue was derived from skilled nursing related assets. FFO for the three months ended March 31, 2013 was $17.5 million or $0.46 per diluted common share, compared to $11.7 million or $0.32 per diluted common share for the first quarter of 2012, an increase of 43.8% on a per share basis. The FFO which excludes from FFO acquisition pursuit costs and certain non-cash revenues and expenses was $16.6 million or $0.43 per diluted common share, compared to $14 million or $0.38 per diluted common share for the first quarter of 2012, a 13.2% increase on a per share basis. Net income attributable to common stockholders was $9.3 million or $0.25 per diluted common share for the quarter, compared to $4.4 million or $0.12 per diluted common share for the first quarter of 2012. GMA cost for the three months ended March 31, 2013 totaled $4.7 million and includes stock based compensation expense of $2.5 million, and acquisition pursuit costs of $0.2 million. Excluding these non-cashed and transactional related costs, G&A costs were 6.4% of total revenues for the three months ended March 31, 2013, down from 6.9% in the first quarter of 2012. Recurring cash G&A costs were up $0.4 million, compared to Q1, 2012 from $1.6 million to $2.0 million, primarily related to payroll cost increases as we hired two employees subsequent to the first quarter of 2012. Interest expense for the three months ended March…

Thanks Harold. We’ll open it up to Q&A now.

(Operator Instructions). We'll hear first from Michael Carroll with RBC Capital.

Yes, thank you. Hey Rick, with regards to the CMS proposed rules last night, how do you think the reporting of distinct therapy days impacts the profitability of skilled nursing facilities?

Hey Mike, how are you doing? I think it's pretty negligible, because it's the lowest therapy category. So for most of our operators, that category is a pretty small percentage of their overall rehab. So I don't think it's going to affect it very much at all.

Okay, great. And then with your investment pipeline, should we expect that activity in the second quarter will be similarly slow and kind of accelerating in the back half of the year?

I would expect us to have a little bit more activity in the second quarter than the first quarter, but certainly we're back end loaded, but there should be enough tick in the second quarter.

Okay. And then Harold, with regard to the HUD refinancings that we've been talking about for the past several quarters, I thought there was a $60 million trench that was going to come in the first quarter. Was that delayed for some reason?

No, the $60 million trench is still in process. The first quarter effort was really to what we're going to working on and try to get it filed. We should have that filed with HUD in the next week or two, but the expectation has always been that that would come probably the end of July/August timeframe to be completed. Obviously it depends on HUD's cooperation. We're pretty confident that by late summer we'll have that completed.

Okay, then the $30 million trench that was going to come in at the end of the year, is that going to get pushed off into 2014?

I don't think so, but it is HUD, so you can't say for sure, but we're also working on that one simultaneously. We are keeping them separate, so we can get the first one on file, but still expect that toward the latter part of this year.

Okay. And then are there any other trenches that you are working on that may come in 2014 that we should think about modeling in?

Actually once we complete these two, we’ll have all of our mortgage debt refinancing taken care of and so there won’t be any more opportunities. We’ll basically have termed out all of our mortgage debt over 30 years, and have replaced what’s now at GE that comes due in 2015, so that will be the end of the opportunities for us with the existing mortgage debt.

All right, great. Thanks guys.

We’ll take our next question from Rob Mains with Stifel.

Yes, thanks. Good morning Rick. Any change in the competitive environment for acquisitions? You said that usually you are not facing a lot of competition?

No. We don’t see any change there. I think we would expect to see who we normally see. LTC and NHI on senior housing, maybe occasionally SNF and then nothing new on SNF. We’d see Omega, and you saw these before they were public anyways, so the fact that they are public doesn’t really change anything. We haven’t seen the private non-traded as much as we saw in 2011, that still hasn’t changed, but we’ll see.

Okay, and asset pricing is stable as well?

Yes. We haven’t seen any change in asset pricing to-date. I know a couple of the other guys on calls had said they noticed some compression on senior housing level, that’s skilled nursing, we haven’t seen that.

Okay. And then you mentioned that you’d expect Genesis coverage’s to improve going forward, and a part of that is Synergy. Just generically when you look at your SNF Holdings, given that the transition to or from the 11% cut is increasing in the rearview mirror. Do you expect SNF coverage’s in general to gradually improve this year?

Yes. Well, just a couple of comments. Our non-Genesis tenants, although small, all have really strong coverage, actually stronger than Genesis’s coverage. But I would want to market that if it’ going to help obviously, but I would like to think as they become more efficient and parent guarantee aside and get through – because the synergies are going to help the fixed coverage. They are probably not going to really affect the facility level, because most the synergies reveal their head level. But once they and get through synergies and get sort of that diversion away from them, then I would expect to see coverage improve. But I think in fairness to them, if it just stays stable for the time being, while they are focused getting this merger behind them, I think we’d be happy with that.

Okay, that’s helpful. All right, that’s all I have. Thank you.

We’ll hear next from Emmanuel Korchman with Citi.

Hey guys. Just looking out over your deal pipeline, could you maybe give us some idea of what’s going to come, maybe split between relationship deals and deals with new tenants or operators. What’s going to be debt and what’s going to be kind of real estate and maybe a better idea on timing?

It's Talya here. I’d say, you can never be that good of predicting timing; I wish I were, but I can certainly say that there is a reasonable amount of deals coming to us from our existing tenant base. Rick mentioned the New Dawn guys, how we expect to do, we would anticipate doing additional deal with them. There are other tenants that we have done deals with that continue to bring us our transactions to look at. Sometimes they are speculative, they are an auction process and we bid alongside them; sometimes they are deals that they already have tied up. Of course the probability of getting those closed are much higher than they are when we are involved in an auction process or looking at something through a broker or an advisor. So if I probability rate them, I bet it’s closer to a 50/50 split of what we’ll realize through kind of a broad process versus what we’ll be able to acquire through our existing relationship.

And maybe on debt investments versus real estate?

Well, the debt investments are for the most part just associated with development pipelines. Some sort of relationship, so we’ve got a few associated with the development pipeline agreement that we headed out last fall with Stoney River for Phoenix Group, and that’s the same organization. So there we have people who’d provide development loans, a recap prior to stabilization using mortgage debt. So I think to the extent you see us doing mortgage financing or debt financing, it’s going to be primarily in a situation that’s – I would characterize it as long term loan. It‘s just the loan is an interim step to the ownership.

Yes and the only potential exception there, because we are not in the business of being a bank, the only potential exception there is there are a couple of states on a skilled nursing side, where if you do a sale lease back, the State Medicaid system doesn’t take that into consideration in terms of capital structure and then subsequent pass-through to revenue. But if you do it in the form of a mortgage, rather than a sale lease back, then that actually improves the operator’s revenue. So if we wind up doing any skilled nursing deals, and in those states, Maryland and Michigan come to mind, that’s where you might see us do something, but that’s about it.

Great. That was all for me. Thank you.

We will hear next from Omotayo Okusanya with Jeffries Investment Bank. David Schiffmann - Jefferies & Co.: Good afternoon guys. This is David Schiffmann here for Omotayo.

Okay, hey David. David Schiffmann - Jefferies & Co.: I’m just wondering, just based on recent NIC (ph) data that’s come out, sort of suggests a lot of new construction activity for memory care and assisted living, given that that’s your new focus for development. Just wondering what you’re seeing on the ground in your existing markets and kind of for your future developments and how that changes your underwriting if at all?

Well, in terms of what we are seeing on the ground, we are not seeing -- because we focus with smaller (inaudible) operators and local and secondary and tertiary markets, these are the markets these guys live in. So we are not seeing any other new development, other than the projects that these guys undertake. We tend not to see the bigger guys focus on these markets, because the local guys do tend to own them when they are secondary and tertiary, so we are not seeing anything sort of broad based or where we are seeing a development project in the market that we like, we are not seeing two or three or four of the development projects, we are just not seeing that at all. So I still think it’s very market and developer/operator specific, and again, no trends to indicate otherwise. So in terms of the underwriting, it doesn’t really affect how we underwrite.

I’ll add to that a couple of things. One is, while there is an up-tick on an absolute basis, the numbers are actually still quite small in terms of percentages, and then it’s still challenging for operators and developers to get capital. So unless they have their own capital to execute, construction transactions, which if you do, it’s still tough. There are only a handful of lenders outside of HUD that are willing to lend, and so that in that itself, it really creates a very strong governor on the amount of development that can start. The other thing I’d add is, one of the things that we focus on in our underwrite on development projects is market study, and we look NFS supply demand and what we are really looking at and trying to target are those communities, those areas that have an unbelievable demand with very little supply. So the demand indicators are so strong, it’s not like there’s some demand for additional supply, but it’s under served by 7x, 10x, 20x, it’s those kind of markets. So that even if there’s another facility that gets built, there is still under served demand. So we really look at the gaps that exist in terms of supply in various markets. David Schiffmann - Jefferies & Co.: Great. Thank you very much for the color.

(Operator Instructions). At this time I show that we have no further questions. I’d like to turn the call over to Rick Matros for closing remarks.

Thanks and just a couple of closing comments. One, a little bit more on the development stuff. So in terms of how we see the year rolling out, from a timing perspective on getting deals done, I think it will looks like the last two years where we have a lot more in the back end and the front end. But based on again, on current trend and pipeline activity, we don’t have any concern about not hitting our assumptions relative to deal flow. From the perspective of how it differs from the past couple of years, again our focus is going to be on AL Memory Care, and you are going to see more development projects from us, and that’s really critical from our perspective, because given the size of our company, to bring on as many new assets, particularly in the senior housing arena as we see coming on over these next few years, really is almost transformitive for our portfolio. And given the fact that the characteristics of the resident in assisted living is so much different than when most of the assisted living facilities that currently exist were constructed, we think that with enough products in place, that are much more conducive to meeting the needs of an assisted living resident that has many more cognitive and mobility issues than residents even as recently as five years ago, that would reside in nursing homes. And with Memory Care being a relatively new business, having purpose built memory care facilities, that again take into consideration the characteristics of those residents, we think is very positive thing. And the other things to be mindful of when it comes to assisted living and memory care facilities is because it’s a need based resident now and acuity is going to continue to rise, you’ve got staffing needs and so to have a physical plant configuration that lends itself to a more efficient staffing model is critical as well to maintain the quality of the margins in both the assisted living and the memory care facilities. So we are looking forward to that. We are looking forward to doing more repeat business with existing tenants and other than that, we’d see again on the reimbursement side a pretty benign if not slightly positive environment. And with that, both Talya and Harold and I are available for calls. You guys have our numbers and our e-mail. We’ll be responsive to you. We appreciate the support and thank you for your time today. Take care.

Ladies and gentlemen, this does conclude today’s conference. We thank you for your participation. You may now disconnect.