Sabra Health Care REIT (SBRA) risk factors, FY2024 10-K

Risks Related to Our Business/Operations

1. 01Increased labor costs and labor shortages may adversely affect our business, results of operations, cash flows and financial condition
2. 02An increase in market interest rates could increase our interest costs on borrowings on our Revolving Credit Facility and future debt and could adversely affect our stock price
3. 03Inflation could adversely impact our operating expenses, as well as the operating expenses of our tenants, borrowers and Senior Housing - Managed communities, and could rise at rates that outpace increases in rental income
4. 04Pandemics or epidemics, such as COVID-19, may have a material adverse effect on our business, results of operations, cash flows and financial condition
5. 05In addition, if there are significant disruptions to our business due to a future pandemic or epidemic, our credit ratings may be adversely impacted and we may breach covenants in our debt agreements and be unable to service our debt. Further, significant disruption could cause us to reduce or suspend our dividend
6. 06We are exposed to operational risks with respect to our Senior Housing - Managed communities
7. 07Real estate is a competitive business and this competition may make it difficult for us to identify and purchase suitable healthcare properties, to finance acquisitions on favorable terms, or to retain or attract tenants
8. 08If we lose our key management personnel, we may not be able to successfully manage our business and achieve our objectives
9. 09We may experience uninsured or underinsured losses, which could result in a significant loss of the capital we have invested in a property, decrease anticipated future revenues or cause us to incur unanticipated expenses
10. 10Our assets, including our real estate and loans, are subject to impairment charges, and our valuation and reserve estimates are based on assumptions and may be subject to adjustment
11. 11Our reported rental and related revenues may be subject to increased variability as a result of ASU 2016-02, Leases, as amended by subsequent ASUs (“Topic 842”)
12. 12We are subject to risks and liabilities in connection with our investment in our unconsolidated joint ventures
13. 13Catastrophic weather and other natural or man-made disasters, the physical effects of climate change and a failure to implement sustainable and energy-efficient measures could affect our properties

Risks Related to Our Tenants, Borrowers and Senior Housing - Managed Communities

1. 14Increased operating costs as well as increased competition could result in lower operating income for our tenants, borrowers and Senior Housing - Managed communities and may affect the ability of our tenants and borrowers to meet their obligations to us
2. 15insurance and rent, and these operating costs continue to increase for our tenants, borrowers and Senior Housing - Managed communities
3. 16Our tenants, borrowers and Senior Housing - Managed communities may be adversely affected by increasing healthcare regulation and enforcement
4. 17Our tenants and borrowers depend on reimbursement from governmental and other third-party payor programs, and reimbursement rates from such payors may be reduced
5. 18ability to meet their financial obligations to us, significant limits on reimbursement rates or on the services reimbursed could have a material adverse effect on their business, financial position or results of operations, which could materially adversely affect their ability to meet their financial obligations to us
6. 19We face potential adverse consequences of bankruptcy or insolvency by our tenants, operators, borrowers and other obligors
7. 20We may be unable to find a replacement tenant for one or more of our leased properties or we may be required to incur substantial renovation costs to make our healthcare properties suitable for such tenants
8. 21Potential litigation and rising insurance costs may affect our tenants’ and borrowers’ ability to obtain and maintain adequate liability and other insurance and their ability to make lease or loan payments and fulfill their insurance and indemnification obligations to us

Regulatory Risks

1. 22Required regulatory approvals can delay or prohibit transfers of our healthcare properties, which could result in periods in which we are unable to receive rent for such properties
2. 23Environmental compliance costs and liabilities associated with real estate properties owned by us may materially impair the value of those investments
3. 24A failure by our tenants, borrowers or operators to adhere to applicable privacy and data security laws could harm our business
4. 25A material failure or breach of our or our tenants’, borrowers’ or operators’ information technology, could harm our business
5. 26We depend on investments in the healthcare property sector, making our profitability more vulnerable to a downturn or slowdown in that specific sector than if we were investing in multiple industries
6. 27We have substantial indebtedness and have the ability to incur significant additional indebtedness and other liabilities
7. 28We may be unable to service our indebtedness
8. 29Covenants in our debt agreements restrict our and our subsidiaries’ activities and could adversely affect our business
9. 30Adverse changes in our credit ratings could impair our ability to obtain additional debt and equity financing on favorable terms, if at all, and negatively impact the market price of our securities, including our common stock
10. 31Cash available for distribution to stockholders may be insufficient to make dividend distributions at expected levels and are made at the discretion of our board of directors
11. 32Our ability to raise capital through equity financings is dependent, in part, on the market price of our common stock, which depends on market conditions and other factors affecting REITs generally
12. 33Changes and uncertainty in macroeconomic conditions and disruptions in the financial markets could adversely affect the value of our real estate investments and our business, results of operations, cash flows and financial condition
13. 34We may not be able to sell properties when we desire because real estate investments are relatively illiquid, which could have a material adverse effect on our business, financial position or results of operations
14. 35Our failure to maintain our qualification as a REIT would subject us to U.S. federal income tax, which could adversely affect the value of the shares of our common stock and would substantially reduce the cash available for distribution to our stockholders
15. 36The REIT distribution requirement will decrease our liquidity and may limit our ability to engage in otherwise beneficial transactions
16. 37Complying with REIT requirements may cause us to forego otherwise attractive acquisition opportunities or liquidate otherwise attractive investments, which could materially hinder our performance
17. 38The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for U.S. federal income tax purposes
18. 39Our charter restricts the transfer and ownership of our stock
19. 40Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends
20. 41Our ownership of and relationship with any taxable REIT subsidiaries that we have formed or will form will be limited and a failure to comply with the limits would jeopardize our REIT status and may result in the application of a 100% excise tax
21. 42We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our common stock

Risks Related to Our Organization and Structure

1. 43Provisions of the Maryland General Corporation Law (the “MGCL”) and of our charter and bylaws could inhibit a change of control of Sabra or reduce the value of our stock
2. 44Our bylaws require advance notice of stockholder proposals and director nominations. These provisions, as well as other provisions of our charter and bylaws, may delay, defer, or prevent a transaction or a change in control that might otherwise be in the best interests of our stockholders