Good day, ladies and gentlemen, welcome to the Sabra Health Care REIT First Quarter 2021 Earnings Conference Call. I would now like to turn the call over to Michael Costa, EVP Finance and Chief Accounting Officer. Please go ahead, Mr. Costa. Thank you. Before we begin, I want to remind you that we will be making forward-looking statements in our comments and in response to your questions concerning our expectations regarding our future financial position and results of operations, including the expected impacts of the ongoing COVID-19 pandemic, our expectations regarding our tenants and operators, and our expectations regarding our acquisition, disposition, and investment plans. 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-K for the year ended December 31st, 2020, as well as in our earnings press release included as Exhibit 99.1 to the Form 8-K we furnished 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 on this call to non-GAAP financial results. Investors are encouraged to review these non-GAAP financial measures, as well as the explanation and reconciliation of these measures to the comparable GAAP results included in the Financials page of the Investors section of our website at www.sabrahealth.com. Our Form 10-Q, earnings release, and supplement can also be accessed in the Investors section of our website. With that, let me turn the call over to Rick Matros, Chairman and CEO of Sabra Health Care REIT. Thanks, Mike, thanks for joining us, everybody. Appreciate it. Just a quick note that this is the first reporting period where we've got all four quarters of the pandemic included in our statistics and our financials. Let me start with an update on Enlivant. On the last call, which obviously was not long ago, we talked about that something would be pending in terms of a decision in the near term. Given the impact of the pandemic, particularly the latest surge, on the managed portfolio, both we and, importantly, TPG, have decided that we really need to give the portfolio some time to recover. So there's not really a timeframe on it, but I would expect that at this point they just want to see some recovery and some trajectory over the next few months. At this point, any offer that we would be able to make them is really not much of an offer. While if we were to acquire the remaining 51%, it would certainly be at levels well below the strike price under the old option. They'd like to do a little bit better. We're still in the same position that we've been in all along, and that is if we could strike a price at the right price, then we'll have some nice runway to grow with the portfolio. If not, then we'll have plenty of proceeds to put to use for other investments, and it'll have a minimal impact on the balance of our senior housing versus our skilled nursing. Either way, we feel like we're in a good position, but do fully agree that this just isn't the right time to put something like this on the market. That's it for Enlivant. Let me move now to give you an update on COVID and the impact on the business. For the first time, our operators are speaking with an upbeat tone, which has been really fantastic to hear. Well over 90% of our facilities have no positive cases. Since the first week of March, the number of new positive cases in our facilities has ranged from zero to two facilities a week, and many more than that being cleared. Over 90% of our tenants have reported over 90% uptake for patients and residents and over 60% for staff. 90% vaccinations for our patients and residents and over 60% for staff. Virtually all of our tenants have completed the three clinics. CDC has released national guidelines for cohort restrictions. Those restrictions are now being relaxed, with more visitations and group activities increasing, which does a number of things. One, it's become a leading indicator of census growth. Secondarily, also very importantly, obviously, is it helps to get our expenses back on the path to becoming normalized and back to pre-pandemic levels, which will have, obviously, a direct impact on the margin and on NOI. I just want to point out, though, that the CDC guidelines aren't a mandate. There are different things happening in different markets, and some markets are still more restrictive than other markets. Hopefully, people will sort of come to the same conclusions. Don't want to forget to note that we can never fully express or appreciate what the staff, patients, and residents have endured, but nonetheless, it will never be forgotten. Still not over, obviously, but we just want to express our appreciation. As often as we do, it is still not enough. There's $24.5 billion in the HHS fund left. There's another $8.5 billion for rural providers. We still think that number will grow as healthcare businesses who didn't need the assistance start returning some of that money. We do believe that we will have access to some level of monies in that fund. The decisions haven't been made yet, but we expect that we will have access to some of that. In the rural provider piece, senior housing is being included in that dialogue. We feel much more optimistic that there'll be some funds available for senior living and senior housing as well. Let me move on to reimbursement. There's been a lot of talk and speculation about the CMS proposal in the proposed rule. We now have data to better understand the impact of the pandemic on Medicare revenues. Surprisingly, only 15% of the industry skilled-in-place, a surprisingly small number that reflects the fact the industry did not take advantage of the three-day waiver suspension. This may help the industry's position that the waiver suspension should be extended for a prolonged period of time to better understand the implications of making that suspension permanent. I would also note that for Sabra's operators, all the operators did skilled-in-place, to one extent or another. There was a wide variance, but everybody did skilled-in-place to some extent. A lot of that has to do with the fact that we have really no long-term care providers. We have high acuity operators that have a greater tendency to skilled-in-place. The other number that was a little bit surprising in some of the analysis is that the percent of COVID-19 patients was just under 9%. I think that's misleading only because, as everybody on the call knows, we didn't have testing available for months, so we're pretty confident that we had a lot more patients and residents that had COVID-19 than were actually diagnosed with COVID-19. Despite those two metrics, acuity in these facilities rose dramatically, driven by limited capacity in the hospitals who were only able to admit the very sickest patients, and then those folks were then transferred to SNFs. This is clearly evident in the impact on skilled mix in our portfolio. As acuity has come down, we've seen our skilled mix gradually come down from its high in December and get closer to pre-pandemic levels, although it's still higher than pre-pandemic levels. As it relates to the proposed rule and the 5% increase in Medicare revenues above budget neutrality, it seems clear that much of the increase was driven by this pandemic-related phenomena and the prolonged spike in acuity. CMS will be taking comments on the proposed rule. We'll look at all the underlying data and is sensitive to industry recovery. To the extent that some calibration is necessary, I believe it will be phased in or deferred over different fiscal years to allow the industry to recover. That was pretty strong message, I think, that CMS delivered. It was very conciliatory, and they really do want to see the industry recover. A couple of other notes relative to pandemic-related assistance. PHE was extended for another quarter. FMAP funding was increased. The FMAP funding increase was extended through September 30th 2021. Sequestration suspension was continued through the end of 2021 as well. Now moving on to investments in operations. With a billion and a half in our investment pipeline being reviewed, we believe we're on a path to once again grow the company. Most of the pipeline continues to be senior housing with behavioral addiction and some SNF activity, although there's not much skilled activity at this point, given that federal assistance has provided time for the operators to recover and for those that want to sell their assets, I'm sure they want to get closer to pre-pandemic pricing in terms of getting credit for that kind of NOI. Our top seven skilled operators, which now comprise 66% of the NOI, hit their low point in occupancy in late December and have increased occupancy approximately 431 basis points and are leading the way for the portfolio. The rest of the Sabra portfolio hasn't increased to that extent. The remaining operators outside of those top seven tend to be operators that we only have a few facilities with and are impacted by local market conditions. Overall, still showing increases in census, but not to the extent our top seven are. Our top seven, with the exception of Genesis, do happen to be our most progressive operators in terms of the level of acuity that they take and the variety of clinical programs that they provide. They also comprise some of our top operators relative to having COVID units and taking COVID patients during the course of the pandemic. I noted that skilled mix has been declining since that same point in time. Acuity will level out at closer to pre-pandemic levels. What we don't know is, prior to the pandemic, we did see acuity increasing and length of stay increasing because of PDPM. Obviously PDPM was interrupted pretty early after implementation. We'll see how that goes going forward. I would still expect one of the impacts from PDPM will be a positive impact on length of stay. Our senior housing bottomed out well after the SNF portfolio, but it's since started its recovery as well, with our lease portfolio bottoming out in February. The lease portfolio has now seen 365 basis points of occupancy increase since. Talya will discuss the managed portfolio. I'd note that the remainder of our portfolio, our specialty hospitals, behavioral and addiction facilities, fared exceptionally well during the pandemic, with occupancy increases of approximately 550 basis points over the course of the pandemic. Again, they weren't impacted by the pandemic, so there wasn't a low point to hit. Rent coverage has increased over that period of time as well. This portfolio, as most of you know, comprises an important growing 11% of our NOI, and it's a strong focus for investments for us going forward. With that, I'll turn it over to Talya. Thank you, Rick. Sabra's senior housing managed portfolio continued to experience operating pressures in the first quarter of 2021 due to the global pandemic. When we look at the quarterly operating results on a more detailed basis, as well as April results, we see an inflection point in occupancy. We have stressed over the past quarters that the challenge facing senior housing is occupancy, and that improving occupancy is the vector that will drive the sector's economic recovery. Simultaneous trends of higher move-ins, fewer move-outs, and increasing interest in senior housing driving tours and leads underlie the start of the occupancy recovery, with normalizing expenses further enhancing margin. As we expected, the successful distribution of the vaccine has been the linchpin for the turnaround in senior housing in the United States. The headline numbers on a quarter-over-quarter basis are as follows. Occupancy in the first quarter of 2021, excluding two non-stabilized communities, was 73.1% compared to 76.4% in the prior quarter. RevPOR, also excluding two non-stabilized communities, declined sequentially by 1.7% to $3,718 from $3,783, but was slightly higher than in the first quarter of 2020. Cash net operating income declined 33.4% sequentially, and margin declined by 6% compared to the prior quarter, in part because of continued costs related to COVID and lack of grant income in the first quarter of 2021. The details indicate a more subtle story. The rate of occupancy decline slowed over the course of the quarter in our total wholly owned portfolio, and occupancy improved in April. From December 2020 to January 2021, occupancy declined 1.7%- 75.9%. From January 2021 to February 2021, occupancy declined 0.9%- 75.1%. From February 2021 to March 2021, occupancy was flat at 75.1%. From March 2021 to April 2021, occupancy increased by 0.6%- 75.7%. From the low in mid-March until the latter part of April, occupancy increased 0.9%- 75.9%. Similarly, in our Enlivant JV portfolio, from December 2020 to January 2021, occupancy declined 1.4%- 68.9%. From January 2021 to February 2021, occupancy declined 1.2%- 67.7%. From February to March 2021, occupancy declined 0.3%- 67.4%. From March to April 2021, occupancy grew by 1.5%- 68.9%. From the low in mid-March until the end of April, occupancy increased 2.5%- 69.7%. While occupancy losses decelerated over the first quarter, pandemic related expenses dropped sharply in our wholly owned portfolio. From December 2020 to January 2021, COVID costs declined 10.1% to $396,000. From January to February 2021, COVID costs declined 27.7% to $286,000. From February to March 2021, COVID costs declined 31.9% to $195,000. Similarly, in our Enlivant JV portfolio, from December 2020 to January 2021, COVID costs increased 26% to $764,000. From January to February 2021, COVID costs declined 14.3%, and from February 2021 to March 2021, COVID costs declined 36.5% to be at $416,000. Over the past few quarters, we've all speculated about the extent of pent-up demand for senior housing. Now we have some statistics that suggest the immediate demand is deep. In our Enlivant joint venture, gross move-ins during March were at the highest level in 18 months and close to the historical peak of 2.3 move-ins per facility per month. At the same time, move-outs in March continued their significant decline from January and were at pre-pandemic normalized levels. In April, net move-ins significantly outpaced March results. Lead and tour volumes in March were up 35% compared to March 2019, and April 2021 tracked at a similar pace. Together, these statistics point to a backlog of interest in senior housing, which should support higher lease conversions and result in increased occupancy. Metrics in our Holiday Independent Living portfolio reflect some similar trends, but with a timing lag compared to our assisted living communities. Recall that Enlivant had completed 100% of its vaccine clinics by April. Holiday, as an independent living operator not prioritized by the government, it had to create its own vaccine program. By the end of April, Holiday had already completed two clinics in each of our 18 of our 22 communities. While the pace of move-outs has started to decline sequentially, we expect move-out rates to normalize to pre-pandemic levels as the vaccine clinics are completed. Gross move-ins are starting to rise, with March move-ins nearly 50% higher than February move-ins, and occupancy at the end of April was 78.8%, 2.6% higher than the low in mid-March. Growth in leads has accelerated in every month since December. The other component driving revenue is rate. As discussed earlier, we have seen RevPOR hold up across our managed portfolio over the course of the pandemic, but we recognize that certain operators feel an urgency to increase occupancy and may choose to use rate as a tool. While we haven't seen material discounting within our portfolio, we are seeing greater use of incentives, particularly in our lower acuity communities, where lifestyle rather than care drives the decision to move in. In our higher acuity communities, safety is now a key element in the sales pitch. With that, I will turn the call over to Harold Andrews, Sabra's Chief Financial Officer. Thank you, Talya. I'll give a quick overview of the numbers for Q1 and then provide additional color on our guidance for the second quarter of 2021. First, I want to note that we collected 99.9% of our forecasted rents from the start of the pandemic in February 2020 through April 2021. I would like to point out that we have one operator in New York State who has leased three skilled nursing transitional care facilities from us and who has decided to exit the business. These operations generate approximately $3.8 million of annual cash rents. We expect to utilize deposits to continue to pay the rents through June 2021. We are in the process of transitioning these three facilities to one of our top operators who has significant operations in the state of New York. We expect this transition to take some time due to the extended approval process in New York, which could result in a period of time when we are collecting no rents from these operations. Recovery from the impact of the pandemic will also take time, reducing the rents generated after the transition is completed for an unknown period of time. We do expect rents to return to the current levels in the future, but not likely to occur in 2021. Given that this portfolio represents less than 1% of our total NOI, the impact from the lost rent during this transition and stabilization period is not expected to be material. Now for the numbers for the quarter. For the three months ended March 31st, 2021, we recorded total revenues, rental revenues, and NOI of $152.4 million, $113.4 million, and $121.3 million, respectively, as compared to $152.1 million, $110.7 million, and $124 million for the fourth quarter of 2020. The increase in total revenues and rental revenues of $0.3 million and $2.7 million, respectively, are primarily due to increases in collections related to leases accounted for on a cash basis. Total revenues and NOI were also impacted by a $2.1 million reduction in revenues from our wholly owned senior housing managed portfolio compared to the fourth quarter, including a $0.6 million reduction in government grant income. NOI was further impacted by the results of the Enlivant Joint Venture, which were lower compared to the fourth quarter by $2 million, including a reduction in government grant income of $0.5 million. We did not recognize any government grant income during the first quarter. Finally, COVID-19 related costs in our senior housing managed portfolio totaled $2.7 million for the quarter, a $0.3 million decrease compared to the fourth quarter. $1.8 million of this related to the Enlivant Joint Venture, while $0.9 million was incurred in our wholly owned portfolio. FFO for the quarter was $82.4 million and on a normalized basis was $85.5 million, or $0.40 per share. This compares to normalized FFO of $88.4 million or $0.42 per share in the fourth quarter of 2020 and at the high end of our guidance we gave for the quarter in February. AFFO, which excludes from FFO certain non-cash revenues and expenses, was $82.8 million, and on a normalized basis was $83.2 million or $0.39 per share. This compares to normalized AFFO of $86.9 million or $0.41 per share in the fourth quarter of 2020 and at the high end of our guidance we gave for the quarter in February. These declines in normalized FFO and normalized AFFO are primarily related to the reduction in NOI of $2.7 million previously discussed. For the quarter, we recorded net income attributable to common stockholders of $33.4 million or $0.16 per share. G&A costs for the quarter totaled $8.9 million compared to $8.1 million for the fourth quarter of 2020. G&A costs included $2.3 million of stock-based compensation expense in both quarters. Recurring cash G&A costs of $6.6 million were 5.4% of NOI and in line with our expectations. During the quarter, we recorded a $2 million provision for loan losses and other reserves, primarily related to the loan to the New York operator exiting the business we noted previously. We continue to have very strong liquidity position as of March 31st, 2021 with over $1 billion of cash and availability on our line and are poised to take advantage of acquisition opportunities. During the first quarter, we acquired one addiction treatment center and one senior housing managed community for an aggregate purchase price of $28.5 million with a weighted average cash yield of 7.7%. Subsequent to quarter end, we acquired one additional senior housing managed community for $32.5 million. We issued 5.2 million shares of common stock under our ATM program during the quarter at an average price of $17.75 per share, generating net proceeds of $90.2 million. Additionally, we utilized the forward feature of the ATM program in preparation to fund certain upcoming investments. The 1.3 million shares with an initial weighted average price of $17.94, net of commissions, remain outstanding under the forward sale agreement. As of March 31st, 2021, we have $139.8 million available under the ATM program. We were in compliance with all of our debt covenants as of March 31st, 2021, and continue to have very strong credit metrics as follows. Our leverage is at 4.84 x, 5.48x including our share of the Enlivant Joint Venture debt. Interest coverage is at 5.23x. Fixed charge coverage at 5.05x. Our total debt to asset value stands at 33%. Unencumbered asset value to unsecured debt at 295%, and our secured debt to asset value at only 1%. On May 5th, 2021, the company's board of directors declared a quarterly cash dividend of $0.30 per share. This dividend will be paid on May 28th to common stockholders of record as of May 17th. Dividend represents a payout of approximately 77% of our AFFO and normalized AFFO per share. A couple of comments on our Q2 2021 guidance. We are limiting our guidance again to the second quarter of 2021 due to continued uncertainty around the timing of the recovery from the effects of COVID-19. We expect the following amounts per diluted share for the quarter ending June 30th, 2021. Net income, $0.13-$0.14. FFO, $0.38-$0.39 per share, and AFFO $0.37-$0.38 per share. The above estimates are based on certain key assumptions spelled out in our supplemental, which I will bring attention to just a couple. Estimated amount above do not include any anticipated funds from the Provider Relief Fund for our senior housing managed communities. As we begin to see signs of improvements in the early part of the second quarter, we expect our senior housing managed portfolio average quarterly occupancy to fall within the following ranges. Wholly owned portfolio, 77%-79%. Unconsolidated joint venture portfolio, 68%-70%. We expect to close investments totaling $86 million with a weighted average initial cash yield of 9%. We anticipate funding investments using revolver with match funding the equity component using the ATM program. We expect to maintain leverage below 5.5x, including our unconsolidated joint venture debt, based on expected annualized adjusted EBITDA between $470 million and $472 million as of June 30th, 2021. With that, I will open it up to Q&A. Thank you. To ask a question, you will need to press star one on your touch tone telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Juan Sanabria of BMO Capital Markets. Your line is open. Hi. Good morning, everyone. Just maybe just to start with the question for Harold. Apologies if I missed this as you ran through the numbers, is there any one-time numbers to the positives? I heard you mention a provision for losses on loan losses that bumped the first quarter relative to the second quarter guide, given you're expecting SHOP to improve. No, Juan. There was nothing in there that was kind of one-time out of the ordinary. You're looking at pretty pure, true operating results in the second quarter. There was nothing that I would classify as one-time. Like I said, we actually didn't even get We thought maybe we'd get some government funds in the quarter, but that did not happen. It was purely just their operations. Yeah, Juan, I take your point. Let me just add something. Obviously we see the commentary and the fact that we are really upbeat about the recovery and what we're seeing so far. We also don't know how much is happening because of pent-up demand, what the actual trajectory is going to be over a longer period of time. The commentary goes to, we're really being upbeat about some of the trends we're seeing, but our Q2 guidance is slightly down from Q1 actuals. Really what it comes down to is, like everybody else, we've been really scarred the last year. We don't see any reason to put out something that we think is optimistic or not even optimistic, but we're just more comfortable with putting something out there that's conservative given how early these trends are. It's really as simple as that. There's just no upside. We don't think to putting ourselves out there any more than we did for Q2. You alluded to that in your question, so go ahead and finish out what you were asking, Juan. Okay. I think I get it, but no kind of clawback of cash rent paying tenants from previous periods in the first quarter that elevate things that would dip away or fall off in the second quarter, just to double-check. Yeah, no. You're going to see some level of variability in cash collections from the cash basis operators. If you go back the prior few quarters, you'll see there's kind of a little up and down quarter-over-quarter. Nothing significant there that we're expecting any clawback or redemption. Great. I guess maybe one for Rick on the SNF occupancy. I take your point on the largest operators being the bulk. Could you give the change year-to-date for the total SNF portfolio occupancy and/or what the change has been from the trough to today in occupancy? Yeah. We don't have a number for the total one. That's still being reconciled. We have operators that have different methodologies and things like that. Over the course of the pandemic, our managed portfolio and our top operators have gotten really good at giving us just really right on data that we've required, and we've asked more of them because they have the infrastructure. The smaller operators that we have, we just haven't pushed them because they have much more limited resources, and they have their hands full. It's positive, it's just not as positive as this, but we don't have an actual number. Great, just one last one from me. Anybody on the watch list? We've had some hiccups with some of your triple net peers that have come to light. You mentioned the SNF operator in New York. Anything else to flag that you guys are watching or that we should know about? I'll make one comment, and then Harold can jump in. One, the answer is no. We've had remarkable consistency in our watch list that was in place pre-pandemic, through the pandemic. The comment I want to make about the one operator, this had less to do with sort of their operational performance, but this particular operator, the CEO, who I've known for a long time, has been in the business for decades, and certainly could have retired before this and the pandemic. He called me and just said the pandemic just finished him off. He just can't handle it anymore. He's stressed. He's depressed. He just can't deal with it. That's what precipitated the move as opposed to sort of any concerns about operations. If he hadn't made that phone call, then I'm not sure this would be happening. That's what that's about. Harold, do you have anything else? No, I don't have anything to add. As you said, Rick, the watch list has been very stable, and there's not any material concerns that we have with our operators. I think, as you said, very stable. Thanks, guys. Yep. Thank you. Our next question comes from the line of Rich Anderson of SMBC. Please go ahead. Hey, Rick. I appreciate the comments on the front end of this on CMS and whatever you want to call it, a clawback on the 5% upside of revenue. What do you gauge as being the rush here? I don't quite understand. It's hard enough to pinpoint things under normal times with all the noise both on the revenue side and on the expense side. How are they able to really kind of come up with an informed conclusion? Also, do you expect there to be some sort of concrete sort of law by October 1st of this year, or do you think it gets pushed a year out because of all the confusion out there? To your original point, I think some of us sort of reacted the same way. Why not just let this year pass and then start looking at the data, whether the 5% caught them by surprise. Maybe that was the case. We all saw acuity rising almost from day one. We knew that number was going to continue to grow over the course of the pandemic. If you actually read the full text of the proposed rule, they're pretty tempered in their comments. I know some of the headlines happened, but they're pretty tempered in their comments and very conciliatory. In fact, more conciliatory in the proposed rule than I've ever seen in my career. Is it possible something happens this October? Maybe. I don't think it's going to be major. They really have made a point of indicating that they don't want to do anything to disrupt the recovery of the industry. Yes, I was surprised, but their approach, I think, is quite tempered. Okay. You mentioned the top seven operators making up a big chunk of the business. You also mentioned you have a bunch that are owners of one or two or operators of one or two facilities. Is there an opportunity to sell more and kind of consolidate your portfolio a little bit and maybe not be having some of those one-off situations perhaps as a way to finance Enlivant if that does sort of come to fruition? Well, one, from a timing perspective. I'll take the second part first. From a timing perspective, I don't think Enlivant's all that far off, right? I don't think we would get much done in terms of sales to raise much money. The other, more important part of the answer, I think, is that we like our operators. We haven't had surprises with our operators through the pandemic. When we identified, this goes back, what, four years, when we did CCP, it's hard to believe it's that long, we identified who we wanted to do certain things with sell or restructure or whatever, and then what would be done, and it's been stable ever since. I think some of what we see out there, so there's about 32 of those operators, Rich, with 16 of them showing occupancy increases, the other 16 flat or maybe slightly down. Those are very market specific, and a lot of that has to do with local Department of Health officials, where they haven't eased restrictions yet. As I said in my opening comments, easing of cohort restrictions is a leading indicator of census increase. It's not like there's something inherently wrong or troubling about those operators. This stuff will pass, and those environments will normalize, and they'll probably start spiking once those restrictions are lifted, just as we've seen some spiking with our larger operators with pent-up demand. Okay. Last quick question. You mentioned group activities. Are you seeing any amount of concurrent therapy starting to take shape in your facilities? We are seeing some, and it's really all over the place, as you would expect with restriction easings kind of all over the place, but it is happening. That's going to be obviously super helpful with labor costs, and just overall expenses within the facility. I think-- I shouldn't say I think. We're hopeful that as some of these states and municipalities that haven't eased restrictions, these are the ones that haven't suffered in any way by doing so, that the CDC guidelines will become more uniform, and then we may have some trajectory that we could actually quantify and do something with, which we just don't have now. I'd also say to that point, to my opening comment about facilities that still have COVID, it's really heartening that, if you think about, you've still got a pretty decent percentage of your workforce that isn't vaccinated. You have to assume that there is some exposure to community spread. We're seeing obviously Michigan had spikes, seeing spikes from Washington and parts of Oregon and other places around the country. It's not impacting the buildings. It really goes to the efficacy of the vaccine that here you have facilities with 90-year-olds that have an awful lot of issues, I mean, they're really frail individuals, and it's all holding up. That's what we feel really good about. For those facilities that have been able to ease restrictions more so than others, it's the same thing. They're not seeing positive COVID cases there. There's nothing happening that's negative. Okay, good. Thanks very much. Yeah. Thank you. Our next question comes from Nick Joseph of Citi. Your question, please. Thank you. Appreciate the updated comments on Enlivant. Are there any contractual timing considerations for the JV? No. You can both wait and see on the recovery before making a decision? Right. Thanks. I should say, Nick, I don't anticipate that they're gonna hang. This is a vintage fund. I don't expect they're going to wait until this is fully recovered. I think they want to see some recovery and maybe some trajectory so that there's a case to be made, whether it's to us as a buyer or someone else, that there's a valuation here that at least gives them something. Okay. At least there's some flexibility there. Just on, I guess, the positive commentary overall, just wonder if you can kind of marry that with leverage thoughts and issuing ATM equity, to kind of keep leverage levels where they are, versus letting it drift a little higher in the near term. Sure. Harold, you want to take that? Sure. I think it kind of goes back to what some of the disconnect that people might see also in our positive tone and the fact that our earnings are basically flat quarter-over-quarter. A lot of that's just driven by the share count, shares that we've issued in the first quarter, shares that we will issue in the second quarter to fund acquisitions and maintain leverage. There is, as we start to see clarity on recovery in our managed portfolio, then we can begin to look at leverage on a little bit longer term basis and start to see that equity issuance needed to manage that moderate. I think we're already starting to feel like it will start to moderate now that we've got, as Rick pointed out early on, the pandemic is in there for the full 12 months, which is how we calculate EBITDA for leverage. Remember, we still saw EBITDA decline as the pandemic progressed, and so we're still fighting that a little bit in our equity issuance. I think as we start to see it recover and start to see performance improve, then we can really evaluate where we're at, as well as then we start thinking about how the joint venture will play out. That will give us another opportunity to look at how financing that may occur or exiting would naturally de-lever us and have an impact on our equity issuance. Leverage is still an important aspect for us to maintain it below the rating agency levels, and we've issued equity in the past to do that. We'll continue to do that if it's necessary, but I think we're starting to see as we come out of the pandemic that that should start to abate, and we'll be able to start to just get back to where we're only funding acquisitions through equity. Yeah. Nick, I would just add to that. While we're not sort of loosening up, if you will, as soon as some folks might like us to. Really, since the pandemic started, we determined at that point in time that we were going to take an extremely, not extremely, but a conservative stance on everything to do with our balance sheet, with liquidity. We were the first ones to cut the dividends. Everything for us was about being a good and conservative steward of our capital, so that we would be actually in a stronger position as things ease off, to start growing the company again. We're going to be in a really good position really, to Harold's point, as EBITDA continues to grow with the recovery, and our leverage will then naturally drop even more. We're going to be in a position to have a lot more to play with there on the leverage side, whether we decide to keep it where it is, or it'll be lower than it is now. As EBITDA grows, do we want to keep it lower? We're going to have some real optionality, and there's nothing historically that I prefer more, as a CEO, than having optionality. Makes sense. Thank you. Thank you. Our next question comes from Steven Valiquette of Barclays. Your line is open. Hello, everyone. Thanks for taking the question. Just to come back quickly on that question of the 2Q 2021 FFO guidance being down a little bit sequentially from the first quarter. You mentioned that you're taking a bit more of a conservative stance just due to the pandemic. I guess I'm just curious whether the concern is more on the risk of rent collections in the triple net portfolio, or is it more perhaps RevPOR or pricing on the SHOP assets? It seems like from an occupancy standpoint, there's pretty good visibility for Sabra and really the entire industry, for occupancy to improve sequentially. I'm just guessing the cautiousness is more tied to rate and/or collections. Just want to confirm that. Thanks. No, I'll take that. It's just cautiousness overall. I would say that we don't have any concerns over rent collections that are material. At the same time, we do have managed portfolio I'm sorry, cash basis tenants that pay as they are able to. You do see volatility that we want to be careful with and our expectations there. As I alluded to a little bit earlier, part of what you're seeing in the dynamic is just a function of additional shares being issued, additional shares that are outstanding today that were issued in the first quarter, and then the expectation of some additional shares next quarter. The fact that we're within $0.01, on an absolute dollar basis, it's much closer to flat. As Rick has said, that's being cautious on our expectation across the board. There aren't any specific triple net operators that we have significant concerns with on paying. It's just a matter of the cash basis guys might have some timing differences as well. Just the other quick two comments I'd make on that is we don't have concerns about RevPOR. That's held up pretty well. Maybe there'll be some discounting, but we don't have the kind of operators that sort of give it away like some do. That's not a concern. The other thing relative to managed portfolio, we're just weeks away from hitting our bottom. It's just not that much time for something that's been this damaging to the business. Yep. Okay. Got it. Okay. It just helps to get the confirmation around that and your thought pattern, so appreciate it. Thanks. Thank you. Thank you. Our next question comes from Lukas Hartwich of Green Street. Your line is open. Thanks. Hey, I was hoping you could just talk a little bit more about the opportunity set for behavioral health hospital acquisitions. Is there much deal flow in that segment? I'll take that. The answer is that we're seeing more deal flow than we've seen in prior years. Certainly in addiction treatment, there's a lot of interest by a lot of capital sources, and it's a sector that is evolving quite rapidly and an opportunity for a lot of roll-ups of operators because it's been relatively small scale and very localized in its approach. The operating model there has really evolved very rapidly, even over the course of the last five years. There's a lot of interest there. There are opportunities there, and we are seeing more transactions in that sector than we've ever seen before. I'd say for the time being, yes. That's helpful. Then on the acquisition in Alaska, I'm just curious what the challenges are with asset managing. I think that's your only property in Alaska, so it's pretty far away. Maybe you could just talk about the challenges of asset managing that property. Then maybe, I'm assuming you made that acquisition with the hope to add more properties in that state, so maybe touch on that as well. Sure. There may be an opportunity to expand that property and add some additional units, specifically IL units. That's something that we'll see over time, whether that makes sense, which gives us a bit of a campus there, which would be nice. Frankly, our asset managers have toured the building prior to closing, and they don't seem to be hesitant at all about making the trip up to Alaska. Given all that we have in the Pacific Northwest, it's further, but it's not that much further if you're already up in Washington and Oregon. Yeah. Okay. Thank you. Lukas, if you haven't been up to salmon and how the fishing is really phenomenal. Thank you. Thank you. Our next question comes from Todd Stender of Wells Fargo. Please go ahead. Hi, thanks. Totally recognize it's a little premature to get too enthusiastic about the positive move-in trends. When you look at Holiday, they had two good months, March and April. What are you hearing from Holiday right now? How are they ramping their marketing efforts? Just you've got seasonal demand potentially coming. It sounds like it could get a little bit of upside. Just any color you can provide. I can take that. One of the things that's really interesting about the last year is that large operators, and I include Enlivant and very much so Holiday in this basket, have shifted a lot of efforts to digital sales. For one, the outreach became different during the pandemic because you weren't talking to people face-to-face. They've really moved to owning, to sort of the whole optimization on their website and focusing on outreach through their website as opposed to referral agencies to whom they were much more beholden in the past. It's hard for me to say, sitting here today and given the trends that we described, how all that's going to play out as people start to open their doors and start to come out and really look, how the referral sources may shift or continue to move in the direction that they have been over the last year, and how that impacts move-ins. What we do know is that move-outs as a result of death, frankly, have declined, and we expect that to move to a normalized level for sure. The other piece of the equation is that, to the extent that residents stayed in buildings because there was a fear of moving to higher level of care, for example, because they were safe where they were and they didn't want to change, there may be some pent-up move-outs as a result of needing a higher level of care. Understood. That's helpful. I guess just switching gears, when I look at the cash yields on your senior housing facilities, the one that you bought in Q1 and then you've already bought one in Q2, are pretty high in the high 7s, but it sounds like they include earn-outs. Do you have more of a year one kind of initial going in yield? Far, we've just included what we think is the stabilized number, which includes an earn-out. Okay. That would be more once that gets stabilized in a year, gosh, after 12 months? Yeah. It's sort of a 12- 18 month window for both of those assets. Got it. Okay. Thank you. Sure. Thank you. Our next question comes from Joshua Dennerlein of Bank of America. Your question please. Hey, everyone. Rick, last quarter, you kind of provided your thoughts on when you thought SNF and senior housing occupancy would return to pre-pandemic levels. Any updated thoughts on that front you could share? Yeah, I actually still feel the same way, with the caveat being that, my guess is as good as anybody's, and we don't have enough time yet to really have a trajectory that we can project over a number of months. I still believe that on the skilled side, sometime in the first quarter of 2022, we will be either back to pre-COVID occupancy levels or pretty close. For senior housing, likewise, I still think it's going to be the latter half of 2022. When I say pretty close on either asset class, I mean close enough that the market's going to feel like, yeah, we're going to get there. Okay. Do you think it will be choppy, or do you think it's kind of steady, or do you see like an acceleration over the summer or any kind of color there? Yeah. That's the tough part because you've got some different factors. One, how much is pent-up demand impacting it when you look at a pretty significant increase with our top operators, it feels like there's some pent-up demand in there, right? The other piece of it is it's going to take some time for acuity to sort of normalize because we're still getting people that are somewhat sicker than they used to be. That may impact length of stay and shorten it a little bit. You've got pent-up demand, which is helping, then you've got potential pressure on length of stay. All of which to say is, yeah, I think it's going to be a little choppy. I would expect that. In the summer, on the skilled side, as you know, we normally have a dip in occupancy. Given where we are and given all the delays in surgeries and things like that, I'm not sure we're going to see that same dip. My hope is that, sometime in the summer months, it'll be steady growth that you can really start projecting off of. Okay. On the SNF side, how are you thinking about skilled mix going forward? Do you think we see more Medicare patients come back first because they're being discharged from the hospitals and maybe before they weren't, or is there some other kind of crosswind going on? First of all on this, I don't want to get too technical. They're all Medicare patients when they come in. We have very few operators that take Medicaid-only patients. They're dual eligible. They're Medicare and Medicaid. They come in, they come in under as a Medicare patient. What changes over time is, let's say it's a Medicare rehab patient, they may go home after 20 days. Okay? If it's a patient that's come in under Medicare initially that has a lot of complex nursing issues, which is what PDPM was set up to service, then once they stabilize, they still have too many other health issues to get released at skilled nursing facility. They're going to be there for the long term, and they will convert at that point from Medicare to Medicaid, and they'll be in the facility for however long they're in the facility. That's kind of how that works. Okay. Appreciate it. Thanks, Rick. Thank you. Our next question comes from the line of Omotayo Okusanya of Mizuho. Your line is open. Good afternoon, everyone. I wanted to talk about the 5.5x kind of leverage target that you guys have set up for yourselves. Is that something that's hard set in stone by the credit rating agencies in order for you to maintain your investment-grade rating? Is there some flexibility around that? I understand EBITDA going up as things improve, that gives you a little bit more flexibility. The target itself, that 5.5x limit, where does that come from and why do you kind of limit yourself that way? I'll take that, Tayo. It is not a hard limit by all the rating agencies, but it is what Fitch has identified for us is their target leverage at or below that level for us to maintain our current credit rating. If we were to move into an area where we had sustained leverage above that level, then they would downgrade Sabra, absent other factors, but with our profile today, if it went above that and was sustained at that level, then they would downgrade us. If you'll recall, they put us on a negative outlook, and that negative outlook was specifically because our leverage was above that level. They were telegraphing that if we didn't get it down within the next 12, 18 months, they were going to downgrade our credit rating. That's why we got so focused on it in 2019 and got it down below that level just before the pandemic. When the pandemic hit and we started seeing issues with our performance in the managed portfolio, we knew we had to manage at that level, and frankly, had no expectation that Fitch would do anything with our ratings outlook until after the pandemic was behind us. Because we took such an aggressive stance on that, they actually removed the negative outlook because we demonstrated to them our commitment to maintaining it below that level. In the near term, it's going to be where we keep our leverage below. I will add that when they look at that level, it is exclusive of the joint venture. In other words, we're actually a fair amount below that today, but until we determine the course of action around that joint venture, then we're going to maintain including that joint venture, the level below that. Let's say we got out of that joint venture, then our leverage would drop pretty significantly immediately, and we would obviously then have more flexibility in funding acquisitions. On the flip side, if we go ahead and are able to buy that portfolio, there will be some need to further de-lever because we'll take on the 51% of that portfolio that is more highly levered, even excluding the pandemic's impact. We're just maintaining it today with the current structure, with the current ownership in that joint venture, to give us, obviously, the sense from the rating agency of our commitment to do that. As we've said over and over the last several quarters, if we determine to exit, then we're going to have a lot of flexibility and part of the decision to make that investment and take the ownership of the JV up to 100% is going to be that there's a clear path to strong growth in earnings, including maintaining leverage where it needs to be. Gotcha. Tayo, the other comment I would make is, one of the keywords that Hal used was sustain. Look, they're realistic. They know there are going to be some ups and downs as you do acquisitions once you're really in growth mode and all that, and that's not an issue. They just don't want to see it at a higher level on a sustained basis. What we've demonstrated to them is a commitment and consistency in not doing that. It's not as if you pop up for a quarter because you've had a lot of activity, and then you're going to do some other things and get it back down, it's going to be problematic. Sustain is really the key word. Got you. Okay. I apologize if I missed this earlier on, but Rick, in regards to just states and local government kind of stepping up in regards to providing government support, local government support for the skilled nursing industry, could you talk a little bit about just what you're hearing out there, whether it's kind of still too early for states to make any major moves, just kind of given the sense that the federal government is probably going to be moving away from this over time? Yeah. One, it is too early. However, the dialogue and tone have changed. I think there have been a couple of reasons for that. One, the state budgets just didn't take the kind of hit and have the kind of deficits that were projected at the beginning of the pandemic. When they get all this Medicaid in from the federal government, even though it may not be targeted to skilled nursing, it really provides them even additional relief, which gives them more room to do things for us. I think, if you look at the number of states that did the FMAP increases, I think it's about half the states, might be off a little bit. We felt really good about that they looked at their states and chose to do that. There does seem to be an awareness, that shouldn't be new, but it seems to be, that Medicaid has been historically underfunded in most states. I think tone and dialogue has changed, but it's definitely too early to anticipate what might happen. Great. Thank you. Yeah. Thank you. At this time, I'd like to turn the call back over to CEO, Rick Matros, for closing remarks. Sir? Thank you. Thank you all for joining us. I appreciate your time today and your support. As always, we're available for follow-up. We hope everybody has a good weekend and continue to stay safe out there. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.