SUMMARY

This summary highlights information contained elsewhere in this joint proxy statement/prospectus and may not contain all of the information that is important to you with respect to the merger and the related matters being considered at the applicable special meeting. Sabra and CCP urge you to read carefully this joint proxy statement/prospectus, including the attached annexes, and the other documents to which this joint proxy statement/prospectus refers you for a more complete understanding of the matters being considered at the applicable special meeting. In addition, this joint proxy statement/prospectus incorporates by reference important business and financial information about Sabra and CCP. You may obtain the information incorporated by reference in this joint proxy statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information”. We have included page references to direct you to a more complete description of the topics presented in this summary.

Information about the Companies

Sabra Health Care REIT, Inc. (See page 46)

Sabra, a Maryland corporation, is a self-administered, self-managed REIT that, through its subsidiaries, owns and invests in real estate serving the healthcare industry. 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 and operators throughout the United States and Canada.

As of March 31, 2017, Sabra’s investment portfolio included 182 real estate properties held for investment (consisting of 96 skilled nursing/transitional care facilities, 75 senior housing facilities, 10 senior housing facilities operated by third-party property managers pursuant to property management agreements (which we refer to as “managed properties”), and one acute care hospital), one asset held for sale, 10 investments in loans receivable and 12 preferred equity investments. As of March 31, 2017, Sabra’s real estate properties held for investment included 18,756 beds/units, spread across the United States and Canada. As of March 31, 2017, nearly all of Sabra’s real estate properties (excluding 10 managed properties) were leased under triple-net operating leases with expirations ranging from one to 16 years.

The principal executive offices of Sabra are located at 18500 Von Karman Avenue, Suite 550, Irvine, California 92612, and its telephone number is (888) 393-8248. Sabra’s website address is www.sabrahealth.com. The information provided on Sabra’s website is not part of this joint proxy statement/prospectus and is not incorporated by reference in this joint proxy statement/prospectus by this or any other reference to Sabra’s website in this joint proxy statement/prospectus.

Sabra common stock is listed on the NASDAQ Global Select Market (which we refer to as “NASDAQ”), trading under the symbol “SBRA”.

Additional information about Sabra and its subsidiaries is included in documents incorporated by reference into this joint proxy statement/prospectus. For more information, see “Where You Can Find More Information”.

Care Capital Properties, Inc. (See page 46)

CCP, a Delaware corporation, is a self-administered, self-managed healthcare real estate investment trust, with a diversified portfolio of skilled nursing facilities and other healthcare assets operated by private regional and local care providers. CCP leases its properties to unaffiliated tenants under long-term triple-net leases, pursuant to which tenants are obligated to pay all property-related expenses. In addition, CCP originates and manages a small portfolio of secured and unsecured loans, made primarily to skilled nursing facility operators and other post-acute care providers. As of March 31, 2017, CCP’s portfolio was comprised of 337 properties operated by 39 private regional and local care providers, spread across 36 states and contained a total of approximately 37,000 beds/ units. CCP conducts all of its operations through CCP LP and its subsidiaries.

 

The principal executive offices of CCP are located at 191 North Wacker Drive, Suite 1200, Chicago, Illinois 60606. CCP’s website address is www.carecapitalproperties.com. The information provided on CCP’s website is not part of this joint proxy statement/prospectus and is not incorporated by reference in this joint proxy statement/prospectus by this or any other reference to CCP’s website in this joint proxy statement/prospectus.

CCP common stock is listed on the NYSE, trading under the symbol “CCP”.

Additional information about CCP and its subsidiaries is included in documents incorporated by reference into this joint proxy statement/prospectus. For more information, see “Where You Can Find More Information”.

Risk Factors (See page 37)

Before voting at the Sabra special meeting or the CCP special meeting, you should carefully consider all of the information contained in or incorporated by reference into this joint proxy statement/prospectus, as well as the specific factors under the heading “Risk Factors” beginning on page 37, including the risks that:

 

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the merger is subject to a number of conditions and may not be completed on the terms or timeline currently contemplated, or at all;

 

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the exchange ratio is fixed and will not be adjusted in the event of any change in the stock prices of either Sabra or CCP;

 

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Sabra may be unable to successfully integrate CCP’s business with its business in order to realize the anticipated benefits of the merger;

 

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Sabra and CCP expect to incur substantial costs in connection with the merger;

 

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in connection with the merger, Sabra plans to seek certain amendments or refinance certain indebtedness, and cannot guarantee that it will be able to obtain the amendments or necessary funds on favorable terms or at all;

 

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following the merger, Sabra will have a substantial amount of indebtedness and may need to incur more indebtedness in the future; and

 

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Sabra may incur adverse tax consequences if Sabra or CCP has failed or fails to qualify as a REIT for U.S. federal income tax purposes.

The Merger

The Merger Agreement (See page 112)

Sabra, CCP, Merger Sub, Sabra LP and CCP LP have entered into the merger agreement attached as Annex A to this joint proxy statement/prospectus. The Sabra board of directors and the CCP board of directors have both unanimously approved the merger pursuant to the terms of the merger agreement. Sabra and CCP encourage you to read the entire merger agreement carefully because it is the principal legal document governing the merger.

Form of the Merger (See page 112)

Pursuant to the merger agreement, at the effective time of the merger, CCP will be merged with and into Merger Sub with Merger Sub continuing as the surviving entity. Following the merger, Merger Sub will be merged with and into Sabra, with Sabra continuing as the surviving entity. Simultaneous with the subsequent merger, CCP LP will merge with and into Sabra LP, with Sabra LP continuing as the surviving entity.

 

Upon completion of the merger, we expect that the legacy stockholders of Sabra (in their capacities as such) and the legacy stockholders of CCP (in their capacities as such) will own approximately 41% and 59%, respectively, of the outstanding shares of Sabra common stock, in each case without taking into account whether any legacy Sabra stockholders are also legacy CCP stockholders.

Merger Consideration (See page 113)

Pursuant to the terms and subject to the conditions of the merger agreement, upon consummation of the merger, each share of CCP common stock (other than any shares owned directly by Sabra, CCP or Merger Sub or any of their respective subsidiaries and in each case not held on behalf of third parties) issued and outstanding immediately prior to the effective time of the merger will be automatically converted into the right to receive 1.123 (which we refer to as the “exchange ratio”) newly issued shares of Sabra common stock (which we refer to as the “merger consideration”), with cash paid in lieu of fractional shares. The exchange ratio is fixed and will not be adjusted for changes in the market value of Sabra common stock or CCP common stock. Because of this, the implied value of the merger consideration will fluctuate between now and the completion of the merger. Based on the closing price of Sabra common stock on NASDAQ of $26.68 on May 5, 2017, the last trading day before public announcement of the merger, the exchange ratio represented approximately $29.96 in Sabra common stock for each share of CCP common stock. Based on the closing price of Sabra common stock on NASDAQ of $23.18 on July 6, 2017, the latest practicable trading day before the date of this joint proxy statement/prospectus, the exchange ratio represented approximately $26.03 in Sabra common stock for each share of CCP common stock. For more information, see “Comparative Stock Prices and Dividends”.

The following table presents trading information for Sabra common stock and CCP common stock on May 5, 2017, the last trading day before public announcement of the merger, and July 6, 2017, the latest practicable trading day before the date of this joint proxy statement/prospectus. Equivalent per share value of the merger consideration for CCP stockholders, giving effect to the exchange ratio, is also provided for each of these dates.

 

		Sabra Common Stock (Close)				CCP Common Stock (Close)				Equivalent Per Share Value of Merger Consideration (giving effect to the exchange ratio)
May 5, 2017		$	26.68			$	26.79			$	29.96
July 6, 2017		$	23.18			$	25.70			$	26.03

The value of the merger consideration will fluctuate with changes in the market price of Sabra common stock. As a result, we urge you to obtain current market quotations of Sabra common stock and CCP common stock.

Treatment of CCP Stock Options, Restricted Stock Awards, Restricted Stock Unit Awards and Deferred Stock Unit Awards (See page 113)

At the effective time of the merger, upon the terms and subject to the conditions of the merger agreement, outstanding CCP equity awards will be treated as follows:

 

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Stock Options. Each CCP stock option, whether vested or unvested, that is outstanding and unexercised immediately prior to the effective time of the merger will vest in full (if not already vested), be assumed by Sabra and be converted into a stock option award to purchase a number of shares of Sabra common stock equal to the product of the number of shares of CCP common stock subject to such CCP stock option and the exchange ratio (rounded down to the nearest whole share), at an exercise price per

 

share of Sabra common stock equal to the exercise price per share of CCP common stock under such CCP stock option divided by the exchange ratio (rounded up to the nearest whole cent), and will remain exercisable in accordance with the terms and conditions applicable to the CCP stock option.

 

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Restricted Stock Awards. Each share of CCP restricted stock that is outstanding immediately prior to the effective time of the merger will vest in full and be converted into the right to receive the merger consideration, with cash paid in lieu of fractional shares.

 

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Restricted Stock Unit Awards. Each CCP restricted stock unit (which we refer to as an “RSU”) award (other than the deferred stock unit awards described below) that is outstanding immediately prior to the effective time of the merger will vest in full, be assumed by Sabra and be converted into a stock unit award with respect to a number of whole shares of Sabra common stock (rounded to the nearest whole share) equal to the product of (i) the number of shares of CCP common stock subject to such CCP RSU award and (ii) the exchange ratio, and such Sabra stock unit awards will become payable in connection with the merger. CCP RSU awards that are subject to performance-based vesting terms will vest at the greater of (i) 100% of the target number of shares of CCP common stock subject to such CCP RSU award and (ii) the number of shares of CCP common stock subject to such CCP RSU award that is eligible to be paid to the holder based on actual performance as determined as of the last trading day immediately prior to the effective time of the merger. The holders of CCP RSU awards will also receive a payment in cash equal to the amount of any previously credited but unpaid cash dividends that had accumulated with respect to the CCP RSU awards within ten (10) business days following the effective time of the merger.

 

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Deferred Stock Unit Awards. Each CCP deferred stock unit (which we refer to as a “DSU”) award that is outstanding immediately prior to the effective time of the merger will vest in full (if not already vested), be assumed by Sabra and be converted into a stock unit award with respect to a whole number of shares of Sabra common stock (rounded to the nearest whole share) equal to the product of (i) the number of shares of CCP common stock subject to such CCP DSU award and (ii) the exchange ratio. Each CCP DSU award assumed and converted into a Sabra stock unit award will continue to have the same terms and conditions as applied to the CCP DSU award immediately prior to the effective time of the merger, and will be settled in shares of Sabra common stock on the same settlement date or dates applicable to such CCP DSU award.

Recommendations of the Sabra Board of Directors (See page 137)

After careful consideration, the Sabra board of directors, on May 7, 2017, unanimously (a) approved and adopted the merger agreement and the transactions contemplated thereby, including the merger transactions and the issuance of Sabra common stock in connection with the merger, in each case, on the terms and subject to the conditions set forth in the merger agreement, (b) declared the merger agreement and the transactions contemplated thereby including the merger transactions and the issuance of Sabra common stock in connection with the merger, in each case, on the terms and subject to the conditions set forth in the merger agreement, to be advisable and in the best interests of Sabra and its stockholders, (c) subject to certain exceptions, approved and directed that the issuance of Sabra common stock in connection with the merger be submitted for consideration at the Sabra special meeting and (d) subject to Sabra’s board of directors’ right to change its recommendation pursuant to the terms of the merger agreement, recommended that the Sabra stockholders vote in favor of the approval of the issuance of Sabra common stock in connection with the merger (which we refer to as the “Sabra board recommendation”) and determined to include such recommendation in this joint proxy statement/prospectus.

Accordingly, the Sabra board of directors unanimously recommends that holders of Sabra common stock vote “FOR” the Sabra common stock issuance proposal and “FOR” the Sabra adjournment proposal.

 

For the factors considered by the Sabra board of directors in reaching its decision to approve the merger agreement and make the foregoing recommendations, see “The Merger—Sabra’s Reasons for the Merger; Recommendations of the Sabra Board of Directors”.

Recommendation of the CCP Board of Directors (See page 143)

After careful consideration, on May 7, 2017, the CCP board of directors unanimously (a) approved and adopted the merger agreement and the merger, the subsequent merger and the transactions contemplated by the merger agreement and declared the merger agreement and the transactions contemplated thereby, on the terms and subject to the conditions set forth in the merger agreement, to be advisable and in the best interests of CCP and its stockholders, (b) subject to certain exceptions, directed that the merger agreement be submitted for consideration at the CCP special meeting and (c) subject to CCP’s board of directors’ right to change its recommendation pursuant to the terms of the merger agreement, recommended that CCP’s stockholders vote in favor of the adoption of the merger agreement and determined to include such recommendation in this joint proxy statement/prospectus.

Accordingly, the CCP board of directors unanimously recommends you vote “FOR” the CCP merger proposal, “FOR” the CCP compensation proposal and “FOR” the CCP adjournment proposal.

For the factors considered by the CCP board of directors in reaching its decision to approve the merger agreement and make the foregoing recommendations, see “The Merger—CCP’s Reasons for the Merger; Recommendations of the CCP Board of Directors”.

Opinion of Sabra’s Financial Advisor, UBS Securities LLC (See page 71)

On May 7, 2017, at a meeting of the Sabra board of directors held to evaluate the proposed merger transactions, UBS Securities LLC (which we refer to as “UBS”), delivered to the Sabra board of directors an oral opinion, confirmed by delivery of a written opinion, dated May 7, 2017, to the effect that, as of that date and based on and subject to various procedures, assumptions, matters considered and qualifications and limitations described in its opinion, the exchange ratio provided for in the merger was fair, from a financial point of view, to Sabra.

The full text of UBS’s opinion describes the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by UBS. UBS’s opinion is attached as Annex B to this joint proxy statement/prospectus and is incorporated by reference herein. UBS’s opinion was provided for the benefit of the Sabra board of directors in connection with, and for the purpose of, its evaluation of the exchange ratio provided for in the merger, and does not address any other aspect of the merger transactions. UBS’s opinion does not address the relative merits of the merger transactions or any related transaction as compared to other business strategies or transactions that might be available to Sabra or Sabra’s underlying business decision to effect the merger transactions or any related transaction. UBS’s opinion does not constitute a recommendation to any stockholder as to how such stockholder should vote or act with respect to the merger transactions or any related transaction. Sabra stockholders are encouraged to read UBS’s opinion carefully in its entirety.

The summary of the opinion of UBS set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. For a description of the opinion that the Sabra board of directors received from UBS, see “The Merger—Opinion of Sabra’s Financial Advisor, UBS Securities LLC”.

Opinion of CCP’s Financial Advisor, Merrill Lynch, Pierce, Fenner & Smith Incorporated (See page 79)

CCP has engaged Merrill Lynch, Pierce, Fenner & Smith Incorporated (which we refer to as “BofA Merrill Lynch”), as a financial advisor in connection with the merger. In connection with the merger, BofA Merrill

 

Lynch delivered an oral opinion (which was subsequently confirmed in writing), on May 7, 2017, to the CCP board of directors as to the fairness, from a financial point of view and as of such date, of the exchange ratio provided for in the merger to the holders of shares of CCP common stock.

The full text of BofA Merrill Lynch’s written opinion, dated May 7, 2017, is attached as Annex C to this joint proxy statement/prospectus and sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations and qualifications on the review undertaken by BofA Merrill Lynch in rendering its opinion. BofA Merrill Lynch provided its opinion to the CCP board of directors for the benefit and use of the CCP board of directors (in its capacity as such) in connection with and for purposes of its evaluation of the exchange ratio provided for in the merger from a financial point of view. BofA Merrill Lynch’s opinion does not address any other aspect of the merger and no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that might be available to CCP or in which CCP might engage or as to the underlying business decision of CCP to proceed with or effect the merger. BofA Merrill Lynch’s opinion does not address any other aspect of the merger and does not constitute a recommendation to any CCP stockholder as to how to vote or act in connection with the merger or any other matter.

Opinion of CCP’s Financial Advisor, Barclays Capital Inc. (See page 86)

CCP engaged Barclays Capital Inc. (which we refer to as “Barclays”) to act as a financial advisor to CCP in connection with a potential transaction involving CCP. At the CCP board of directors meeting on May 7, 2017, Barclays rendered its oral opinion (which was subsequently confirmed in writing) to the CCP board of directors that, as of such date and based upon and subject to the qualifications, limitations and assumptions set forth in the written opinion, the exchange ratio of 1.123 shares of Sabra common stock per share of CCP common stock provided in the merger was fair, from a financial point of view, to the holders of CCP common stock.

The full text of Barclays’ written opinion, dated as of May 7, 2017, is attached to this joint proxy statement/prospectus as Annex D and incorporated by reference herein. Barclays’ written opinion sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations upon the review undertaken by Barclays in rendering its opinion. You are encouraged to read the opinion carefully in its entirety. The summary of Barclays’ opinion set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion. Barclays’ opinion is addressed to the CCP board of directors, addresses only the fairness, from a financial point of view, of the exchange ratio to be offered to the holders of CCP common stock and does not constitute a recommendation to any stockholder of CCP as to how such stockholder should vote with respect to the merger or any other matter.

Interests of Sabra Directors and Executive Officers in the Merger (See page 101)

In addition to their interests in the merger as stockholders, the directors and executive officers of Sabra have interests in the merger that may be different from, or in addition to, those of Sabra stockholders generally. The Sabra board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement and the transactions contemplated by the merger agreement, including the merger transactions and the issuance of Sabra common stock in connection with the merger.

Pursuant to the merger agreement, immediately after the effective time of the merger, the Sabra board of directors will have eight members, five of whom were directors of Sabra immediately prior to the effective time of the merger, with Richard K. Matros continuing as the chairman of the Sabra board of directors and Sabra’s chief executive officer. The remainder of the current senior leadership team of Sabra is not expected to change as a result of the merger.

 

Sabra’s non-employee directors will also receive accelerated payment of certain previously vested Sabra stock unit awards upon the effective time of the merger.

Interests of CCP Directors and Executive Officers in the Merger (See page 102)

In addition to their interests in the merger as stockholders, the directors and executive officers of CCP have interests in the merger that may be different from, or in addition to, those of CCP stockholders generally. The CCP board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement and the transactions contemplated by the merger agreement.

These interests include (i) the accelerated vesting of CCP equity awards, (ii) certain severance and other separation benefits that may be payable upon a qualifying termination of employment following the effective time of the merger and (iii) that CCP’s chief executive officer as well as two other current directors of CCP are expected to become members of the Sabra board of directors following the effective time of the merger.

Directors and Management Following the Merger (See page 108)

Pursuant to the merger agreement, as of the effective time of the merger, Sabra is required to increase the size of its board of directors from five to eight directors, five of whom are expected to be the directors of Sabra immediately prior to the effective time of the merger, with Mr. Matros continuing as the chairman of the Sabra board of directors, and three of whom are expected to be current directors of CCP, including Raymond J. Lewis, CCP’s chief executive officer, Ronald G. Geary and Jeffrey A. Malehorn. For additional information regarding the directors and executive officers of Sabra following the merger, including the directors designated by CCP, please refer to Sabra’s proxy statement on Schedule 14A filed on April 25, 2017 and CCP’s proxy statement on Schedule 14A filed on April 7, 2017, the relevant portions of which are incorporated into this document by reference through their respective Annual Reports on Form 10-K for the year ended December 31, 2016.

The merger agreement provides that the CCP designees will serve until the next annual meeting of stockholders of Sabra and until their respective successors are duly elected and qualified or their earlier death, resignation or removal.

The current senior leadership team of Sabra is not expected to change as a result of the merger and will be led by Mr. Matros, the chairman and chief executive officer of Sabra.

Regulatory Approvals (See page 109)

In connection with the issuance of Sabra common stock in the merger, pursuant to the merger agreement, Sabra has filed a registration statement with the Securities and Exchange Commission (which we refer to as the “SEC”) under the Securities Act of 1933, as amended (which we refer to as the “Securities Act”), of which this joint proxy statement/prospectus forms a part. As a condition to the closing of the merger, the registration statement must not be the subject of any stop order or proceedings by the SEC seeking a stop order.

Expected Timing of the Merger (See page 37)

Sabra and CCP are working to complete the merger as promptly as practicable and expect it to be completed during the third quarter of 2017. However, the merger is subject to various conditions, and it is possible that factors outside the control of both companies could result in the merger being completed at a later time, or not at all. For more information, see “Risk Factors—Risks Relating to the Merger”.

 

Conditions to Completion of the Merger (See page 125)

As more fully described in this joint proxy statement/prospectus and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived. These conditions include:

 

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receipt of the requisite approvals of Sabra stockholders and CCP stockholders;

 

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the approval for listing on NASDAQ of shares of Sabra common stock to be issued in connection with the merger, subject to official notice of issuance;

 

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the SEC having declared effective the registration statement, of which this joint proxy statement/prospectus forms a part, and the registration statement not being the subject of any stop order or proceedings by the SEC seeking a stop order;

 

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the absence of an injunction or other legal restraint or prohibition preventing the consummation of the merger or any material law making the consummation of the merger illegal;

 

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the correctness of all representations and warranties made by the parties in the merger agreement and performance by the parties of their obligations under the merger agreement subject to certain materiality standards, and receipt of an officer’s certificate from each party attesting thereto;

 

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receipt by each of Sabra and CCP of an opinion of counsel to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code;

 

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the receipt by each of Sabra and CCP of an opinion of counsel regarding such party’s qualification as a REIT; and

 

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Sabra having taken all actions necessary to increase the size of its board of directors from five to eight directors, to elect the CCP designees as members of the Sabra board of directors and to amend its charter to increase the number of authorized shares of Sabra common stock to a number at least sufficient for the issuance of Sabra common stock contemplated by the merger agreement.

We cannot be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.

No Solicitation (See page 128)

Sabra and CCP are each subject to a customary “no-shop” provision that requires them to refrain from, and to cease discussions or solicitations with respect to, alternative transactions and subjects them to certain restrictions in considering and negotiating alternative transactions. If either of the parties receives a superior proposal (as defined in “The Merger Agreement—No Solicitation”) or an acquisition proposal (as defined in “The Merger Agreement—No Solicitation”) that is reasonably likely to result in a superior proposal, the receiving party may, subject to specified conditions and requirements set forth in further detail below and in the merger agreement, provide nonpublic information to the proposing party and engage in discussions or negotiations with the proposing party. Each party shall promptly notify the other party of any proposal for an alternative transaction within 24 hours of receipt and provide the other party with a copy of such proposal.

In response to a superior proposal, the board of directors of the party receiving such a superior proposal may, subject to specified conditions and requirements set forth in further detail below and in the merger agreement, change its recommendation with respect to such party’s stockholder vote, and such party may terminate the merger agreement in order to accept such proposal. Prior to effecting such change or terminating the merger agreement, the board of directors of the party receiving the superior proposal must provide the other party with notice, reasons for such action and five calendar days of good-faith negotiations to counter such proposal.

 

Termination of the Merger Agreement (See page 130)

The merger agreement may be terminated prior to the effective time of the merger, whether before or (except where noted below) after the required approvals of the Sabra stockholders and CCP stockholders are obtained:

 

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by mutual written consent of Sabra and CCP;

 

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by either Sabra or CCP, if the merger is not consummated by November 7, 2017;

 

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by either Sabra or CCP, if a court or other governmental entity issues a final and nonappealable order prohibiting the merger;

 

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by either Sabra or CCP, if the required approval of either the Sabra stockholders or the CCP stockholders is not obtained;

 

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by either Sabra or CCP, upon a willful and material breach of the other party’s nonsolicitation obligations under the merger agreement at any time before the time the required approvals of the breaching party’s stockholders are obtained;

 

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by either Sabra or CCP, if there is a breach of the representations or covenants of the other party that would result in the failure of the related closing condition to be satisfied, subject to a cure period;

 

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by Sabra, if, at any time before the required approvals of the CCP stockholders are obtained, the CCP board of directors changes its recommendation in favor of the approval of the CCP merger proposal (see “The Merger Agreement—Change in Recommendation Restrictions and Exceptions” for a description of the limited circumstances in which the CCP board of directors is permitted to change its recommendation);

 

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by CCP, if, at any time before the required approvals of the Sabra stockholders are obtained, the Sabra board of directors changes its recommendation in favor of the approval of the Sabra common stock issuance proposal (see “The Merger Agreement—Change in Recommendation Restrictions and Exceptions” for a description of the limited circumstances in which the Sabra board of directors is permitted to change its recommendation);

 

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by Sabra, at any time before the required approvals of the Sabra stockholders are obtained, to enter into a definitive agreement with respect to a superior proposal, subject to compliance with specified terms of the merger agreement, including payment of a termination fee described below; and

 

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by CCP, at any time before the required approvals of the CCP stockholders are obtained, to enter into a definitive agreement with respect to a superior proposal, subject to compliance with specified terms of the merger agreement, including payment of a termination fee described below.

Expenses and Termination Fees (See pages 130 and 132)

Generally, all fees and expenses incurred in connection with the merger and the transactions contemplated by the merger agreement will be paid by the party incurring those expenses. For more information, see “The Merger Agreement—Fees and Expenses”.

The merger agreement further provides that, upon termination of the merger agreement under specified circumstances, Sabra or CCP, as applicable, may be required to pay the other party a termination fee of $38.5 million or may be required to reimburse such other party for transaction expenses subject to a cap of $15 million. For more information, see “The Merger Agreement—Termination of the Merger Agreement”.

 

No Appraisal or Dissenters’ Rights (See page 110)

Under Maryland and Delaware law, the holders of Sabra common stock and CCP common stock, respectively, are not entitled to appraisal or dissenters’ rights in connection with the merger.

For more information, see “The Merger—No Appraisal or Dissenters’ Rights”.

Description of Indebtedness to be Amended or Refinanced (See page 110)

The following indebtedness of Sabra and CCP does not permit the consummation of the merger and therefore will need to be amended or refinanced in connection with the merger:

Sabra

 

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$500 million unsecured revolving credit facility, of which $32 million was outstanding as of the Sabra record date;

 

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$245 million unsecured term loan due 2021, of which $245 million was outstanding as of the Sabra record date; and

 

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CAD $125 million unsecured term loan due 2021, of which CAD $125 million was outstanding as of the Sabra record date.

CCP

 

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$600 million unsecured revolving credit facility, of which $402 million was outstanding as of the CCP record date;

 

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$200 million unsecured term loan due 2023, of which $200 million was outstanding as of the CCP record date;

 

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$800 million unsecured term loan due 2020, of which $474 million was outstanding as of the CCP record date;

 

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$135 million secured term loan due 2019, of which $98.5 million was outstanding as of the CCP record date; and

 

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$100 million aggregate principal amount of 5.38% senior unsecured notes due 2027, of which $100 million was outstanding as of the CCP record date.

For more information, see “The Merger—Amendments or Refinancing of Certain Indebtedness; Debt Commitment Letter”.

Litigation Related to the Merger (See page 111)

As of July 6, 2017, purported stockholders of CCP have filed five putative class action lawsuits challenging the merger against CCP, its directors and, in one case, Sabra, Merger Sub, CCP LP, and Sabra LP. The lawsuits seek various forms of relief, including an injunction, dissemination of a revised registration statement, declaratory judgment, and award of damages and expenses. For more information about litigation related to the merger, see “The Merger—Litigation Related to the Merger.”

 

Material U.S. Federal Income Tax Consequences of the Merger (See page 135)

Sabra and CCP intend for the merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. It is a condition to Sabra’s obligation to complete the merger that Sabra receive the written opinion of Fried Frank (or other nationally recognized legal counsel reasonably acceptable to Sabra), dated as of the closing date of the merger, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and it is a condition to CCP’s obligation to complete the merger that CCP receive the written opinion of Sidley (or other nationally recognized legal counsel reasonably acceptable to CCP), dated as of the closing date of the merger, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Accordingly, on the basis of the opinions described above, a U.S. holder (as defined under “Material U.S. Federal Income Tax Consequences of the Merger”) of CCP common stock will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of shares of CCP common stock for shares of Sabra common stock in the merger (other than gain or loss with respect to any cash received in lieu of a fractional share of Sabra common stock).

You should read “Material U.S. Federal Income Tax Consequences of the Merger” for a more complete discussion of the material U.S. federal income tax consequences of the merger. The tax consequences of the merger to you will depend on your particular facts and circumstances. You should consult your tax advisor to determine the particular tax consequences of the merger to you.

The Sabra Special Meeting (See page 137)

The Sabra special meeting will be held at Sabra’s headquarters located at 18500 Von Karman Avenue, Suite 550, Irvine, California 92612, at 1:00 p.m. local time, on August 15, 2017.

You may vote at the Sabra special meeting if you owned shares of Sabra common stock at the close of business on the Sabra record date. On the Sabra record date, there were 65,423,864 shares of Sabra common stock issued and outstanding and entitled to vote at the Sabra special meeting. You may cast one vote for each share of Sabra common stock that you owned on that date. Holders of Sabra Series A Preferred Stock are not entitled to receive notice of, or to vote at, the Sabra special meeting.

At the Sabra special meeting, holders of Sabra common stock will be asked to consider and vote on:

 

•

the Sabra common stock issuance proposal; and

 

•

the Sabra adjournment proposal, if necessary or appropriate.

The approval of the Sabra common stock issuance proposal is a condition to the completion of the merger and if the Sabra common stock issuance proposal is not approved, the merger and related transactions will not be completed.

Approval of each of the Sabra common stock issuance proposal and the Sabra adjournment proposal requires the affirmative vote of a majority of all of the votes cast on such proposal by holders of Sabra common stock.

As of the Sabra record date, approximately 2.4% of the outstanding shares of Sabra common stock was beneficially owned by Sabra directors and executive officers and their affiliates. Sabra currently expects that the Sabra directors and executive officers will vote their shares in favor of each of the proposals set forth above, although none has entered into any agreements requiring them to do so.

The Sabra board of directors unanimously recommends that Sabra stockholders vote “FOR” each of the proposals set forth above. For more information, see “The Sabra Special Meeting”.

 

The CCP Special Meeting (See page 143)

The CCP special meeting of stockholders will be held at 191 North Wacker Drive, Conference Center (10th Floor), Chicago, Illinois 60606 on August 15, 2017, at 2:00 p.m. local time.

You may vote at the CCP special meeting if you owned shares of CCP common stock at the close of business on the CCP record date. On the CCP record date, there were 84,070,493 shares of CCP common stock issued and outstanding and entitled to vote at the CCP special meeting. You may cast one vote for each share of CCP common stock that you owned on the CCP record date.

At the CCP special meeting, CCP stockholders will be asked to consider and vote on:

 

•

the CCP merger proposal;

 

•

the CCP compensation proposal; and

 

•

the CCP adjournment proposal, if necessary or appropriate.

The approval of the CCP merger proposal is a condition to the completion of the merger and if the CCP merger proposal is not approved, the merger and related transactions will not be completed.

Approval of the CCP merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of CCP common stock. Approval of each of the CCP compensation proposal and the CCP adjournment proposal requires the affirmative vote of the holders of a majority of the shares of stock having voting power present in person or represented by proxy at the CCP special meeting.

As of the CCP record date, approximately 0.8% of the outstanding shares of CCP common stock was held by CCP directors and executive officers and their affiliates. CCP currently expects that the CCP directors and executive officers will vote their shares in favor of each of the proposals set forth above, although none has entered into any agreements requiring them to do so.

The CCP board of directors unanimously recommends that CCP stockholders vote “FOR” the CCP merger proposal, “FOR” the CCP compensation proposal and “FOR” the CCP adjournment proposal. For more information, see “The CCP Special Meeting”.

 

SELECTED HISTORICAL FINANCIAL DATA OF SABRA

The following tables set forth selected consolidated financial information for Sabra as of and for each of the five years ended December 31, 2016, 2015, 2014, 2013 and 2012, and as of March 31, 2017 and for the three-month period ended March 31, 2017. The selected consolidated financial information as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014 were derived from the audited consolidated financial statements of Sabra contained in Sabra’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on February 22, 2017, which is incorporated by reference into this joint proxy statement/prospectus. The selected consolidated financial information as of December 31, 2014, 2013 and 2012, and for the years ended December 31, 2013 and 2012, were derived from Sabra’s audited consolidated financial statements not included or incorporated by reference into this joint proxy statement/prospectus. The selected consolidated financial information as of March 31, 2017 and for each of the three-month periods ended March 31, 2017 and 2016 was derived from Sabra’s unaudited consolidated financial statements contained in Sabra’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 8, 2017, which is incorporated by reference into this joint proxy statement/prospectus.

The following information should be read together with the consolidated financial statements of Sabra, the notes related thereto and the related reports of management on the financial condition and performance of Sabra, all of which are contained in the reports of Sabra filed with the SEC and incorporated herein by reference. For more information, see “Where You Can Find More Information”.

 

		As of March 31,				As of December 31,
		2017				2016				2015				2014				2013				2012
						(In thousands)
Balance sheet data:
Total real estate investments, net		$	1,993,592			$	2,009,939			$	2,039,616			$	1,645,805			$	915,418			$	827,135
Loans receivable and other investments, net		$	96,489			$	96,036			$	300,177			$	251,583			$	185,293			$	12,017
Cash and cash equivalents		$	12,814			$	25,663			$	7,434			$	61,793			$	4,308			$	17,101
Total assets		$	2,240,126			$	2,265,919			$	2,468,837			$	2,046,165			$	1,162,298			$	883,234
Mortgage notes, net		$	159,905			$	160,752			$	174,846			$	121,401			$	139,103			$	150,226
Revolving credit facility		$	17,000			$	26,000			$	255,000			$	68,000			$	135,500			$	92,500
Term loans, net		$	336,592			$	335,673			$	264,229			$	200,000			$	—			$	—
Senior unsecured notes, net		$	688,879			$	688,246			$	685,704			$	683,167			$	405,302			$	323,327
Total liabilities		$	1,235,773			$	1,250,310			$	1,414,961			$	1,104,342			$	702,134			$	577,746
Total Sabra stockholders’ equity		$	1,004,350			$	1,015,574			$	1,053,770			$	941,866			$	460,164			$	305,488

 

		Three Months Ended March 31,								Year Ended December 31,
		2017				2016				2016				2015				2014				2013				2012
		(In thousands, except share and per share amounts)
Operating data:
Total revenues		$	62,650			$	62,559			$	260,526			$	238,864			$	183,518			$	134,780			$	103,170
Operating expenses			2,420				1,412				5,703				2,576				1,930				—				—
Net income (loss) attributable to common stockholders			16,262				(18,272	)			60,034				69,171				36,710				25,749				19,513
Net income (loss) attributable to common stockholders per share—basic		$	0.25			$	(0.28	)		$	0.92			$	1.11			$	0.79			$	0.69			$	0.53

 

		Three Months Ended March 31,								Year Ended December 31,
		2017				2016				2016				2015				2014				2013				2012
		(In thousands, except share and per share amounts)
Net income (loss) attributable to common stockholders per share—diluted		$	0.25			$	(0.28	)		$	0.92			$	1.11			$	0.78			$	0.68			$	0.52
Other data:
Cash flows provided by operations		$	31,438			$	24,726			$	176,739			$	121,101			$	85,337			$	62,099			$	56,252
Cash flows (used in) provided by investing activities			(961	)			1,964				142,363				(489,226	)			(826,472	)			(297,509	)			(218,650	)
Cash flows (used in) provided by financing activities			(43,347	)			(25,122	)			(300,898	)			314,078				798,620				222,617				137,249
Dividends declared and paid per common share		$	0.42			$	0.41			$	1.67			$	1.60			$	1.51			$	1.36			$	1.32
Weighted average number of common shares outstanding, basic			65,354,649				65,248,203				65,284,251				62,235,014				46,351,544				37,514,637				37,061,111
Weighted average number of common shares outstanding, diluted—net income and FFO attributable to common stockholders			65,920,486				65,414,703				65,520,672				62,460,239				46,889,531				38,071,926				37,321,517
Weighted average number of common shares outstanding, diluted—AFFO attributable to common stockholders			66,325,908				65,825,187				65,904,435				62,659,935				47,147,722				38,364,727				37,829,421
FFO attributable to common stockholders (1)		$	35,399			$	33,907			$	164,439			$	132,411			$	76,128			$	59,030			$	52,257
Diluted FFO attributable to common stockholders per common share (1)		$	0.54			$	0.52			$	2.51			$	2.12			$	1.62			$	1.55			$	1.40
AFFO attributable to common stockholders (1)		$	36,187			$	34,825			$	161,465			$	133,913			$	77,223			$	57,942			$	60,287
Diluted AFFO attributable to common stockholders per common share (1)		$	0.55			$	0.53			$	2.45			$	2.14			$	1.64			$	1.51			$	1.59

 

		Three Months Ended March 31,								Year Ended December 31,
		2017				2016				2016				2015				2014				2013				2012
		(In thousands, except share and per share amounts)
Reconciliation of FFO and AFFO
Net income (loss) attributable to common stockholders		$	16,262			$	(18,272	)		$	60,034			$	69,171			$	36,710			$	25,749			$	19,513
Add:
Depreciation of real estate assets			19,137				17,766				68,472				63,079				43,332				33,281				30,263
Net loss (gain) on sales of real estate			—				4,602				6,122				161				(3,914	)			—				—
Impairment of real estate			—				29,811				29,811				—				—				—				2,481
FFO attributable to common stockholders		$	35,399			$	33,907			$	164,439			$	132,411			$	76,128			$	59,030			$	52,257
Expensed acquisition pursuit costs (2)			563				89				1,197				7,023				3,095				1,455				1,654
Stock-based compensation			2,588				1,818				7,496				6,123				9,851				7,819				8,279
Straight-line rental income adjustments			(4,607	)			(5,593	)			(21,984	)			(24,320	)			(19,821	)			(14,709	)			(4,893	)
Amortization of deferred financing costs			1,277				1,221				5,040				5,143				4,045				3,280				2,685
Non-cash portion of loss on extinguishment of debt			—				556				556				—				1,576				859				628
Change in fair value of contingent consolidation			(822	)			—				(1,526	)			(1,550	)			(1,560	)			800				—
Provision for doubtful straight-line rental income and loan losses			1,390				2,523				5,833				9,031				3,594				—				—
Other non-cash adjustments (3)			399				304				414				52				315				(592	)			(323	)
AFFO attributable to common stockholders		$	36,187			$	34,825			$	161,465			$	133,913			$	77,223			$	57,942			$	60,287

 

(1)

Sabra believes that net income attributable to common stockholders, as defined by GAAP, is the most appropriate earnings measure. Sabra also believes that funds from operations attributable to common stockholders (“FFO”), as defined in accordance with the definition used by the National Association of Real Estate Investment Trusts (“NAREIT”), and adjusted funds from operations attributable to common stockholders (“AFFO”) (and related per share amounts) are important non-GAAP supplemental measures of operating performance. Sabra considers FFO and AFFO to be useful measures for reviewing comparative operating and financial performance because, by excluding gains or losses from real estate dispositions, real estate depreciation and amortization, real estate impairment charges, and for AFFO, by excluding straight-line rental income adjustments, stock-based compensation expense, amortization of deferred financing costs, acquisition pursuit costs, as well as other non-cash revenue and expense items (including provisions and write-offs related to straight-line rental income, provision for loan losses, changes in fair value of contingent consideration, amortization of debt premiums/discounts and non-cash interest income adjustments), FFO and AFFO can help investors compare Sabra’s operating performance between periods or as compared to other companies. See the section entitled “Results of Operations—Funds from Operations and Adjusted Funds from Operations” contained in Sabra’s Quarterly Report on Form 10-Q for the period ending March 31, 2017, for further discussion of FFO and AFFO.

(2)

On October 1, 2016, Sabra early-adopted ASU 2017-01, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as business acquisitions. All real estate acquisitions completed subsequent to October 1, 2016 by Sabra were considered asset acquisitions and Sabra has capitalized acquisition pursuit costs associated with these acquisitions, including those costs incurred prior to

 

October 1, 2016. Acquisitions completed by Sabra prior to October 1, 2016 were deemed business combinations and the related acquisition pursuit costs were expensed as incurred.

(3)	Other non-cash adjustments include amortization of debt premiums/discounts, non-cash interest income adjustments and amortization expense related to Sabra’s interest rate hedges.

 

SELECTED HISTORICAL FINANCIAL DATA OF CCP

The following table sets forth CCP’s selected financial data, some of which was carved out from the financial information of Ventas, Inc. (“Ventas”), as described below. Prior to CCP’s separation from Ventas in August 2015, CCP did not conduct any business operations other than those incidental to its formation and in connection with the transactions related to the separation and distribution.

CCP’s combined consolidated financial statements for periods prior to the separation were carved out from the financial information of Ventas at a carrying value reflective of historical cost in Ventas’s records. These combined consolidated financial statements include an allocation of expenses related to certain Ventas corporate functions, including executive oversight, treasury, finance, legal, human resources, tax planning, internal audit, financial reporting, information technology and investor relations. These expenses were allocated to CCP based on direct usage or benefit where specifically identifiable, with the remainder allocated primarily on a pro rata basis of revenue, headcount or other measures. CCP considers the expense methodology and results to be reasonable for all periods presented. However, the allocations may not be indicative of the actual expense that would have been incurred had CCP operated as an independent, publicly traded company for the full periods presented. In connection with the separation, CCP entered into a transition services agreement with Ventas pursuant to which it received certain support services from Ventas on a transitional basis until August 31, 2016. The historical combined consolidated financial information presented may not be indicative of the results of operations, financial position or cash flows that would have been obtained if CCP had been an independent, standalone entity during the full periods shown.

This selected historical financial data should be read in conjunction with CCP’s audited combined consolidated financial statements, the notes related thereto and the related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in CCP’s Annual Report on Form 10-K for the year ended December 31, 2016 and CCP’s unaudited consolidated financial statements, the notes related thereto and the related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in CCP’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017. See “Where You Can Find More Information”.

 

		As of March 31,				As of December 31,
		2017				2016				2015				2014				2013				2012
		(unaudited)				(audited)				(audited)				(audited)				(audited)				(unaudited)
		(In thousands)
Balance sheet data:
Total real estate investments, net		$	2,463,950			$	2,482,744			$	2,702,755			$	2,191,241			$	2,272,744			$	2,349,416	(3)
Loans receivable and other investments, net			84,158				84,795				51,802				31,117				26,423				35,545	(3)
Cash and cash equivalents			82,287				15,813				16,995				2,424				2,167				6,745
Total assets			2,832,451				2,812,368				2,954,969				2,331,750				2,405,764				2,499,879
Mortgage notes, net			135,000				135,000				—				—				—				—
Revolving credit facility			86,000				24,000				143,000				—				—				—
Term loans, net			674,000				674,000				1,400,000				—				—				—
Senior unsecured notes, net			600,000				600,000				—				—				—				—
Total liabilities			1,647,014				1,647,180				1,739,122				208,671				214,464				230,330	(3)
Total CCP stockholders’ equity			1,185,437				1,165,188				1,215,847				2,123,079				2,191,300				2,265,524

 

		Three Months Ended March 31,								Year Ended December 31,
		2017				2016				2016				2015				2014				2013				2012
		(unaudited)				(unaudited)				(audited)				(audited)				(audited)				(audited)				(unaudited)
		(In thousands, except per share amounts)
Operating data:
Total revenues		$	82,831			$	84,543			$	347,904			$	327,941			$	295,364			$	291,632			$	290,537
Net income attributable to CCP/common stockholders			64,909				29,766				122,743				143,166				157,595				174,290				172,421
Net income attributable to CCP/common stockholders per share—basic		$	0.77			$	0.35			$	1.46			$	1.71			$	1.89			$	2.09			$	2.07
Net income attributable to CCP/common stockholders per share—diluted		$	0.77			$	0.35			$	1.46			$	1.71			$	1.88			$	2.08			$	2.06
Other data:
Cash flows provided by operations		$	44,972			$	50,384			$	249,220			$	267,174			$	255,082			$	249,727			$	250,312
Cash flows (used in) provided by investing activities			(7,855	)			(9,494	)			14,660				(507,111	)			(28,977	)			(4,505	)			(21,899	)
Cash flows (used in) provided by financing activities			(35,039	)			(45,337	)			(265,062	)			254,508				(225,848	)			(249,800	)			(231,240	)
Dividends declared per common share		$	0.57			$	0.57			$	2.28			$	1.14				n/a				n/a				n/a
Weighted average number of common shares outstanding, basic			83,670				83,544				83,592				83,488				83,488				83,488				83,488
Weighted average number of common shares outstanding, diluted—net income and FFO attributable to CCP/common stockholders (1)			83,799				83,620				83,689				83,607				83,658				83,658				83,658
FFO attributable to CCP/common stockholders (1)(2)		$	57,333			$	63,804			$	244,670			$	276,645			$	257,197			$	266,651			$	269,968
Diluted FFO attributable to CCP/common stockholders per common share (1)(2)		$	0.68			$	0.76			$	2.92			$	3.31			$	3.07			$	3.19			$	3.23

 

		Three Months Ended March 31,								For the Year Ended December 31,
		2017				2016				2016				2015				2014				2013				2012
		(In thousands)
Reconciliation of FFO
Net income attributable to CCP/common stockholders		$	64,909			$	29,766			$	122,743			$	143,166			$	157,595			$	174,290			$	172,421
Adjustments:
Real estate depreciation and amortization			24,702				28,456				106,803				111,242				91,199				87,216				85,047
Real estate depreciation related to noncontrolling interests			(33	)			(37	)			(139	)			(270	)			(427	)			(471	)			(573	)
Impairment on real estate investments and goodwill			—				5,499				18,157				23,139				8,769				5,601				13,045
(Gain) loss on real estate dispositions			(32,245	)			120				(2,894	)			(632	)			61				15				28
FFO attributable to CCP/common stockholders		$	57,333			$	63,804			$	244,670			$	276,645			$	257,197			$	266,651			$	269,968

 

(1)

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. However, since real estate values historically have risen or fallen with market conditions, many industry investors deem presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For that reason, CCP considers FFO to be an appropriate measure of operating performance of an equity REIT. CCP uses the NAREIT definition of FFO. NAREIT defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of real estate property and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for joint ventures. Adjustments for joint ventures will be calculated to reflect FFO on the same basis.

(2)	Basic and diluted earnings per share for the periods prior to CCP’s separation from Ventas were retroactively restated for the number of basic and diluted shares outstanding immediately following the separation.

(3)	Amount carved out from the financial information of Ventas at a carrying value reflective of historical cost in Ventas’s records.

 

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following tables show summary unaudited pro forma condensed combined financial information about the combined financial condition and operating results of Sabra and CCP after giving effect to the merger, CCP LP’s issuance and sale of $500.0 million aggregate principal amount of 5.125% Senior Notes due 2026 and use of the proceeds from that sale to repay $500.0 million of existing variable rate debt with an average rate of 1.95% in July 2016 (which we refer to as the “CCP debt refinancing”) and CCP’s acquisition of six behavioral health hospitals in a sale-leaseback transaction in April 2017 (which we refer to as the “CCP behavioral hospital acquisition”). The unaudited pro forma condensed combined financial information assumes that the merger is accounted for by applying the acquisition method of accounting with Sabra treated as the acquiring entity. The unaudited pro forma condensed combined balance sheet data gives effect to the merger and the CCP behavioral hospital acquisition as if each had occurred on March 31, 2017. The unaudited pro forma condensed combined statement of operations data gives effect to the merger, the CCP debt refinancing and the CCP behavioral hospital acquisition as if each had occurred on January 1, 2016, based on the most recent valuation data available. The summary unaudited pro forma condensed combined financial information listed below has been derived from and should be read in conjunction with (i) the more detailed unaudited pro forma condensed combined financial statements, including the notes thereto, appearing elsewhere in this joint proxy statement/prospectus, (ii) the historical financial statements and the related notes of both Sabra and CCP contained in their respective Quarterly Reports on Form 10-Q for the quarter ended March 31, 2017 and in their respective Annual Reports on Form 10-K for the year ended December 31, 2016 and (iii) CCP’s Current Report on Form 8-K, as amended, dated April 28, 2017, all of which are incorporated by reference into this joint proxy statement/prospectus. For more information, see “Unaudited Pro Forma Condensed Combined Financial Statements” and “Where You Can Find More Information”.

The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of the combined operating results or financial position that would have occurred if such transactions had been consummated on the dates and in accordance with the assumptions described herein, nor is it necessarily indicative of the future operating results or financial position of Sabra.

 

Sabra Health Care REIT, Inc.

Unaudited Pro Forma Condensed Combined Balance Sheet

As of March 31, 2017

(In thousands)

 

Assets
Real estate investments, net		$	5,778,343
Loans receivable and other investments, net			157,010
Cash and cash equivalents			30,705
Restricted cash			9,151
Assets held for sale, net			127,078
Lease intangible assets, net			331,990
Prepaid expenses, deferred financing costs and other assets, net			153,635
Total assets		$	6,587,912
Liabilities
Secured debt, net		$	294,905
Revolving credit facility			329,982
Unsecured term loans, net			1,186,690
Senior unsecured notes, net			1,288,879
Accounts payable and accrued liabilities			115,494
Lease intangible liabilities, net			202,708
Deferred income taxes			1,766
Total liabilities			3,420,424
Equity
Preferred stock			58
Common stock			1,600
Additional paid-in-capital			3,460,313
Cumulative distributions in excess of net income			(296,591	)
Accumulated other comprehensive loss			(1,628	)
Total Sabra Health Care REIT, Inc. stockholders’ equity			3,163,752
Noncontrolling interests			3,736
Total equity			3,167,488
Total liabilities and equity		$	6,587,912

 

Sabra Health Care REIT, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Three Months Ended March 31, 2017

(In thousands, except share and per share amounts)

 

Revenues:
Rental income		$	140,975
Interest and other income			5,440
Resident fees and services			3,481
Total revenues			149,896
Expenses:
Depreciation and amortization			47,413
Interest			34,084
Operating expenses			2,420
General and administrative			16,951
Provision for doubtful accounts and loan losses			1,770
Total expenses			102,638
Other income:
Other income			2,129
Net gain on sale of real estate			32,245
Total other income			34,374
Net Income			81,632
Net income attributable to noncontrolling interests			24
Net income attributable to Sabra Health Care REIT, Inc.			81,656
Preferred stock dividends			(2,561	)
Net income attributable to common stockholders		$	79,095
Net income attributable to common stockholders, per:
Basic common share		$	0.49
Diluted common share		$	0.49
Weighted average number of common shares outstanding, basic			159,951,546
Weighted average number of common shares outstanding, diluted			160,518,249

 

Sabra Health Care REIT, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2016

(In thousands, except share and per share amounts)

 

Revenues:
Rental income		$	575,184
Interest and other income			42,605
Resident fees and services			7,788
Total revenues			625,577
Expenses:
Depreciation and amortization			181,577
Interest			131,836
Operating expenses			5,703
General and administrative			59,396
Provision for doubtful accounts and loan losses			5,677
Impairment of real estate			51,471
Total expenses			435,660
Other income (expense):
Loss on extinguishment of debt			(6,017	)
Other income			7,107
Net loss on sale of real estate			(3,228	)
Total other expense			(2,138	)
Net Income			187,779
Net income attributable to noncontrolling interests			49
Net income attributable to Sabra Health Care REIT, Inc.			187,828
Preferred stock dividends			(10,242	)
Net income attributable to common stockholders		$	177,586
Net income attributable to common stockholders, per:
Basic common share		$	1.11
Diluted common share		$	1.11
Weighted average number of common shares outstanding, basic			159,881,148
Weighted average number of common shares outstanding, diluted			160,118,435

 

EQUIVALENT AND COMPARATIVE PER SHARE INFORMATION

The following table sets forth, for the three months ended March 31, 2017 and the year ended December 31, 2016, selected per share information for Sabra common stock on a historical and pro forma combined basis and for CCP common stock on a historical and pro forma equivalent basis. You should read the table below together with the historical consolidated financial statements and related notes of Sabra and CCP contained in their respective Quarterly Reports on Form 10-Q for the period ended March 31, 2017 and Annual Reports on Form 10-K for the year ended December 31, 2016, all of which are incorporated by reference into this joint proxy statement/prospectus. For more information, see “Where You Can Find More Information”.

The Sabra pro forma combined earnings per share were calculated using the methodology as described above under the heading “Summary Unaudited Pro Forma Condensed Combined Financial Information”, and are subject to all the assumptions, adjustments and limitations described thereunder. The unaudited pro forma condensed combined balance sheet data gives effect to the merger and the CCP behavioral hospital acquisition as if each had occurred on March 31, 2017. The unaudited pro forma condensed combined statements of operations data gives effect to the merger, the CCP debt refinancing and the CCP behavioral hospital acquisition as if each had become effective at January 1, 2016, based on the most recent valuation data available. The CCP pro forma equivalent per common share amounts were calculated by multiplying the Sabra pro forma combined per share amounts by the exchange ratio. You should not rely on the pro forma amounts as being indicative of the financial position or results of operations of Sabra that actually would have occurred had the merger been completed as of the date indicated above, nor are they necessarily indicative of the future operating results or financial position of Sabra.

 

		Sabra																CCP
		Historical								Pro Forma for Merger								Historical								Pro Forma Equivalent
		Three Months Ended March 31, 2017				Year Ended December 31, 2016				Three Months Ended March 31, 2017				Year Ended December 31, 2016				Three Months Ended March 31, 2017				Year Ended December 31, 2016				Three Months Ended March 31, 2017				Year Ended December 31, 2016
Basic earnings per share		$	0.25			$	0.92			$	0.49			$	1.11			$	0.77			$	1.46			$	0.56			$	1.25
Diluted earnings per share		$	0.25			$	0.92			$	0.49			$	1.11			$	0.77			$	1.46			$	0.55			$	1.25
Cash dividends declared per share		$	0.42			$	1.67			$	0.42	(1)		$	1.67	(1)		$	0.57			$	2.28			$	0.47	(2)		$	1.88	(2)
Book value per share (period end)		$	15.24				—			$	19.73				—			$	14.16				—			$	22.16				—

 

(1)	Dividends are declared and paid at the discretion of the Sabra board of directors. Subject to the terms of the merger agreement, the Sabra board of directors may change Sabra’s dividend policy at any time and there can be no assurance as to amount or timing of dividends in the future.

(2)	Dividends are declared and paid at the discretion of the CCP board of directors. Subject to the terms of the merger agreement, the CCP board of directors may change CCP’s dividend policy at any time and there can be no assurance as to amount or timing of dividends in the future.