IRVINE, Calif., June 4, 2014 (GLOBE NEWSWIRE) -- Sabra Health Care REIT, Inc. ("Sabra," the "Company" or "we") (Nasdaq:SBRA) (Nasdaq:SBRAP) announced today that it has amended its lease agreement with Texas Regional Medical Center ("TRMC") in connection with the acquisition of a controlling interest in TRMC by a subsidiary of Tenet Healthcare Corporation ("Tenet"). The amended lease agreement has an initial term of 15.5 years with the option for TRMC to extend the lease for four additional terms of five years each and provides for an annual rent escalator equal to the lesser of 2.5% and the actual CPI increase as of the date of determination, not to be less than 1%. This results in annual lease revenues, determined in accordance with GAAP, of $5.5 million. The amended lease agreement also provides TRMC with a fair market value-based purchase option subject to a $62.7 million floor beginning in November 2024. TRMC's obligations under the amended lease agreement are partially guaranteed (subject to a 51% floor) by Tenet.
Lease revenues under the amended lease will initially be lower than those under the lease prior to the amendment, but will increase at an accelerated rate over time. In addition to the revised lease revenues, the shorter lease term will impact the amount of straight-line rental revenues recorded under GAAP by $1.1 million annually. As a result of this amendment, we will recognize a one-time write-off of previously recorded straight-line rental revenues of $2.4 million. Based on our weighted average shares outstanding as of March 31, 2014 (after giving effect to our issuance of 8,050,000 shares of common stock in May 2014), the combination of the write-off in previously recorded straight-line rental revenues and decrease in annual lease revenues will reduce our Funds From Operations ("FFO") and Normalized FFO for 2014 by $0.07 and $0.02, respectively, per diluted common share and by $0.03 per diluted common share for 2015. Adjusted FFO ("AFFO") and Normalized AFFO will be reduced by $0.03 and $0.02 per diluted common share in 2014 and 2015, respectively.
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