Sabra Health Care REIT, Inc.

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1 CREDIT OPINION Update to credit analysis Update Summary RATINGS Domicile Irvine, California, United States Long Term Rating Ba1 Type LT Corporate Family Ratings - Dom Curr Outlook Stable Please see the ratings section at the end of this report for more information. The ratings and outlook shown reflect information as of the publication date. Sabra Health Care REIT's Ba1 corporate family and senior unsecured ratings reflect the strategic benefits obtained from the acquisition of Care Capital Properties Inc. ( CCP ), which closed in August The transaction significantly expanded Sabra s size and scale in the skilled nursing facility (SNF) and senior housing sectors, and increased its operator diversification, which should lead to an improved cost of capital as it seeks to grow. Positively, the REIT has modest near term debt maturities and its revolver capacity provides it with capital to fund continued growth. These credit positives are counterbalanced by increased exposure to skilled nursing facilities and a decline in property level rent coverage. The ratings also reflect the REIT's limited track record, a credit negative that is to some extent offset by the experienced management team. Exhibit 1 Leverage expected to trend down over time Net Debt / EBITDA (x) Upgrade rating driver Downgrade rating driver 9.0x 8.5x 8.0x Analyst Contacts 7.5x Reed Valutas Analyst reed.valutas@moodys.com Philip Kibel Associate Managing Director philip.kibel@moodys.com Andrew Chen Associate Analyst andrew.chen@moodys.com 7.0x 6.5x 6.0x 5.5x 5.0x 4.5x 4.0x 3.5x 3.0x Note: analysts use upgrade/downgrade drivers for guidance; they are not automatic. CLIENT SERVICES Americas Asia Pacific Japan EMEA Credit strengths» Portfolio is diversified in terms of tenant, geography and asset size» Modest near term debt maturities» Net lease structure provides strong margins» Solid fixed charge coverage» Management team has extensive experience and relationships YTD Q2 2018

2 Credit challenges» Weaker rent coverages following the merger with CCP» Higher exposure to skilled nursing following the merger with CCP which increases government reimbursement risk Rating outlook The stable ratings outlook reflects our expectation that Sabra will continue to operate and grow with a conservative capital strategy. Factors that could lead to an upgrade An upgrade of Sabra s ratings would be predicated on continued profitable growth while reducing tenant concentration such that the top three operators represent closer to 20% of total cash NOI. In addition, an upgrade would reflect maintenance of Net Debt/EBITDA below 5.0x and fixed charge coverage approaching 4.0x, as well as an improvement in tenant operating performance closer to 1.40x EBITDAR coverage. Factors that could lead to a downgrade A rating downgrade would likely reflect a shift in capital structure resulting in Net Debt/EBITDA above 6.0x and fixed charge coverage falling below 2.5x on a consistent basis. Sustained deterioration in property level coverage ratios, particularly from major tenants would also result in a ratings downgrade. Key indicators Exhibit [1] Net Debt / Recurring EBITDA 5.9x 8.5x 5.1x 6.7x 6.6x Recurring EBITDA / Fixed Charge 3.5x 3.4x 3.1x 3.0x 2.7x Gross Assets (US$ mil) 7,405 7,373 2,549 2,707 2,232 Secured Debt / Gross Assets 3.4% 3.5% 6.3% 6.5% 5.4% 46.2% 48.0% 53.1% 56.3% 54.5% Total Debt + Pfd Equity / Gross Assets 2014 [1] For the six-month period ended June 30, 2018 Profile [Nasdaq: SBRA] owns and invests in triple-net leased senior housing facilities throughout the US and Canada. As of June 30, 2018, Sabra s portfolio included 352 skilled nursing/transitional care facilities, 89 leased senior housing communities, 24 third-party managed senior housing communities, and 22 specialty hospitals and other facilities. The company s gross asset value as of 2Q18 was $7.4 billion. Detailed credit considerations Leverage and capital structure expected to improve over the next months Sabra's effective leverage (debt + preferred as a % of gross assets) was 46% as of 2Q18, down from 53% for the same period last year and has typically run between 45% and 60% since its inception. Leverage as measured by net debt to EBITDA was 5.9x at 2Q18, up from 5.6x for the year prior and down from 6.7x at year-end 2015, due primarily to the timing of asset sales used to finance recent acquisitions. Moody s expects leverage to modestly improve closer to Sabra's target range of x over the next months as strategic benefits from the CCP and other acquisitions continue to materialize. We will closely monitor Sabra s use of leverage as the REIT continues to grow organically and through acquisitions given net debt to EBITDA has only recently fallen below 6.0x. Sabra s secured debt was modest at 3.4% of gross assets as of 2Q18, declining from 6.2% following the merger with CCP. Moody's notes This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on for the most updated credit rating action information and rating history. 2 : Update to credit analysis

3 that Sabra could also access GSE or HUD financing as a cost effective source of secured capital in the future which would modestly deteriorate this metric. Moody's views Sabra's access to capital as moderate as the REIT continues to grow and diversify further. Improved diversification in terms of tenant, geography, and asset size Sabra significantly increased its size and scale as a result of the merger with CCP and its other recent acquisitions. The company's gross asset base totaled approximately $7.4 billion as of June 30, 2018, up from $2.6 billion for the same period last year. Sabra's healthcare portfolio is comprised of skilled nursing facilities (352 assets), senior housing facilities (89 assets), third-party managed senior housing (24 assets) and specialty acute care hospitals and other facilities (22 assets). Sabra's SNF exposure remains high at 64.5% of pro forma cash NOI as of June 30, Likewise, Sabra's private pay mix was 41.2% for the same period. The company's SNF and senior housing occupancy rates have declined year over year to 81.8% and 86.2%, respectively as of June 30, 2018, primarily a result of CCP's portfolio having historically lower occupancy. Occupancy levels should rebound in 2019 however as sector trends improve. Exhibit 3 Asset class concentration % of pro forma annualized cash NOI Specialty Hospital and Other 8.5% Interest and Other Income 1.9% Senior Housing - Managed 10.0% Senior Housing - Leased 15.1% Skilled Nursing/Transitional Care 64.5% Data as of June 30, 2018 The REIT's property level rent coverage (SNF EBITDAR to rent) was weak at 1.27x as of 2Q18, however Sabra is expected to reposition its portfolio through a combination of rent adjustments, dispositions and retenanting which should improve portfolio performance over time. The top five tenant concentration represents 37.7% of pro forma annualized cash NOI, with its top tenant - Senior Care Centers, representing approximately 10%. Sabra continues to look for opportunities to eliminate its tenant concentration with Genesis, an operator that has faced operational challenges related to its rapid growth in recent years. During the six months ended June 30, 2018, the company completed the sale of 27 facilities leased to Genesis and expects to complete the sale of 19 of its remaining 27 facilities, with all but one facility expected to close in 2018, retaining the other eight facilities. Genesis represents only 5.4% of pro forma annualized cash NOI as of June 30, Sabra does not engage in on-balance sheet development, but instead originates loans and makes preferred equity investments in development projects both for senior housing as well as SNFs. Sabra retains the option to purchase the underlying real estate securing these loan investments. As of 2Q18, Sabra has invested in 15 senior housing developments and one SNF project for a total investment of $58 million. Sabra properties are located in secondary markets where the population of persons aged 65+ exceeds that of the overall US. Sabra's goal is to grow and diversify its portfolio by tenant, geography, and property sub-type. The REIT s growth strategy focuses on oneoff and small to mid-sized portfolio acquisitions of stabilized healthcare assets, typically with shorter stays and high acuity units that represent higher reimbursable rates. 3 : Update to credit analysis

4 Strong, predictable earnings profile supported by triple net lease structure Sabra's EBITDA margins are strong at 87%, reflecting its triple-net lease structure. Moody's believes the REIT's triple net leases enhance the predictability of cash flows as long as property net operating income within these leases comfortably exceeds rent payments. These leases are long term in nature (typically a year initial term plus renewal options), with annual escalators for inflation. The REIT's revenues, however, can be subject to volatility associated with its property sub-type concentrations, as well as reimbursement risk. Fixed charge coverage is strong for the rating category at 3.5x as of 2Q18 and we expect this metric to improve to the 4-5x range going forward on a pro forma basis. The company maintains one joint venture relationship with Enlivant - the joint venture collectively owns 172 senior housing properties across 20 states and includes an option for Sabra to acquire 100% ownership of these assets within three years. Finally, any future acquisitions or development opportunities are expected to be on-balance sheet investments. Liquidity analysis Sabra maintains adequate liquidity with modest near term debt maturities and sufficient capacity to fund its near-term growth objectives. Following the close of the merger with CCP, Sabra s unsecured revolving credit facility was amended to increase the borrowing capacity of the revolver to $1.0 billion, and extend the maturity date to August The credit facility has an accordion feature to increase the total availability up to $2.5 billion. As of June 30, 2018, there was $676 million outstanding under the revolver and $342 available for borrowing as well as approximately $225 million of cash and restricted cash available to fund any future acquisition activity. Recent acquisitions related to the company's portfolio repositioning were financed with a combination of equity, draws on the revolver, and asset sale proceeds. Unencumbered assets accounted for 93% of Sabra's total gross asset base as of 2Q18, improving the firm's overall credit profile. Positively, Moody's notes that Sabra's upcoming debt maturities are manageable with less than 10% of total debt coming due through The REIT's FFO payout was 71% as of 2Q18, in line with past performance. Structural considerations Sabra's Ba1 debt rating is two notches below the indicated rating in Moody's scorecard, reflecting the REIT's property type focus and risks stemming from changes in reimbursement which require it to maintain relatively stronger credit metrics versus similarly rated REIT peers. 4 : Update to credit analysis

5 Rating methodology and scorecard factors Exhibit 4 Global Rating Methodology for REITs and Other Commercial Property Firms Rating Drivers Aa A Baa Ba B Liquidity & Funding Liquidity Coverage Caa Ca Implied Score Adjusted Score Trend High Baa High Baa Low Ba Low Ba High A Mid A Moderate Debt Maturities 10.6% FFO Payout 71.1% Amount of Unencumbered Assets 92.9% Leverage & Capital Structure Debt + Preferred/Gross Assets 46.2% Net Deb/EBITDA 5.9x Secured Debt/Gross Assets 3.4% Access to Capital Moderate Market Positioning & Asset Quality Franchise/ Brand Name Limited Gross Assets $7.4 Diversity-location/tenant/industry/economic Limited Development % Gross Assets Asset Quality Limited Cash Flow & Earnings EBITDA/Revenues 86.8% EBITDA Margin Volatility Fixed Charge Coverage 2.7% 3.5x JV/Fund Business % Revenues Overall Assessment Implied Score Adjusted Score Data for the six-month period ended June 30, 2018 Ratings Exhibit 5 Category SABRA HEALTH CARE REIT, INC. Outlook Corporate Family Rating Moody's Rating Stable Ba1 SABRA HEALTH CARE LIMITED PARTNERSHIP Outlook Bkd Senior Unsecured Stable Ba1 Source: Moody's Investors Service 5 : Update to credit analysis

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7 CLIENT SERVICES 7 Americas Asia Pacific Japan EMEA : Update to credit analysis