Moody’s reviews Sabra, Care Capital

Moody's Investors Service said it placed all ratings of Sabra Health Care REIT, Inc. on review up and all ratings of Care Capital Properties, LP on review down following the announcement that the REITs reached a definitive agreement to merge.

The all-stock transaction is valued at $7.4 billion, including the assumption of debt, and Sabra will be the surviving entity.

Moody’s said the review for upgrade of Sabra's ratings reflects reduced tenant concentration, stronger cash flow metrics and increased size and scale at the combined company. Sabra's exposure to its largest tenant, Genesis Healthcare, Inc., will decline to 11% of total cash NOI post-merger from 32% at year-end 16.

The review for downgrade of Care Capital's ratings reflects the expectation of modest deterioration in credit metrics, including higher leverage and lower fixed charge coverage, the agency explained. Sabra has historically operated with net debt/EBITDA above 6 times and has only recently reduced leverage within the past year.

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