Good morning, and welcome to the Sabra Health Care REIT post merger Roadmap and 2018 Guidance Conference Call. This is being recorded. I would now like to turn the call over to Michael Foster, Executive Vice President of Finance. Please go ahead.

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 update to the Care Capital Properties’ portfolio, our update on the status of our pending dispositions of certain Genesis Facilities, our update to our 2017 outlook and our update to our 2018 outlook, as well as other acquisition and investment plans, our expectations regarding our financing plans and our expectations regarding our future results of operations. 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 31, 2016 and those listed in our Form 10-Q for the quarter ended March 31, 2017, as well as in our press release included as Exhibit 99.1 to the Form 8-K we furnished to the SEC yesterday. These materials can be accessed in the investor relation section of our Web site at www.sabrahealth.com. 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. And with that, let me turn the call over to Rick Matros, Chairman and CEO of Sabra Health Care REIT.

Thanks, Mike and thanks everybody for joining us today. So I'm just going to spend a couple of minutes making some comments and then kick it over to Harold to go through everything in detail then we’ll have Q&A. Brent Chappell is here with us as well as to participate in Q&A, as Brent is in middle of a lot of the restructuring that we’ve been working on and just announced. So obviously we’re pleased to put into plan, pleased that we’re going to be able to execute within a timeframe that we told everybody we would execute within, and that is all the decision, some of them we’ve already been made and they’ll all be made by the end of the year so that we walk into 2018 with pretty clean slate of possible exception the signature and I'll come back to that. And the second, the deal as it turned out and we did more work turned out to be much more accretive after restructuring. Then what we originally communicated really dealing with couple of issues; one was we did one of the a bit conservative so that we have some room there; and then secondly and we communicated this prior and that was that we never assumed any cost savings from getting investment grade in our previous numbers relative to accretion in the past. And part of that was because -- in large part, even though we anticipated getting investment grade, we certainly didn’t want to get out ahead of the rating agencies and just make that assumption, and certainly make assumption somewhat. So that really accounts for the difference. So all-in-all, we feel really good about where we are in terms of actually getting everything done. We actually started staffing up to accommodate the Company's growth…

Thanks Rick. And thanks everybody for joining today. So I'll dive into the CCP portfolio repositioning update and then I'll talk a little bit about 2017 and 2018 guidance. And then we'll open it up to Q&A. I would like to point out that Q&A we won't discuss tenant specific details, we don't want to get into tenant specific details, but we're happy to provide the added color to assist and understanding the implications to our financial performance in our rent coverage. And as Rick said, Brent Chappell, he really took the lead on formulating the details of the strategy. Brent knows many of these relationships are very well through his many years in the space, including in NHP where he had direct knowledge of any of these operators and the assets, so really happy to have him on board. He was invaluable in getting this done expeditiously and with great quality. So diving in post the evaluation included operator meetings along with detailed asset and lease reviews; the approach focus primarily but not exclusively on tenants below 1.10 times coverage; the face-to-face meetings focused on financial performance and constraints to success operational and financial strategies, market conditions and ancillary businesses of these operators; the asset reviews focused on performance trends comparative metrics, market dynamics and physical plans; the lease reviews would be available credit enhancements and opportunities to facilitate greater access to cash without compromising our security position. So it’s a very, very thorough approach to the process. And it lead to various tenant specific strategies that include lease modifications, which could include changes to escalators impounds and covenants; it included asset sales and transfers and closures; working capital financing and very select circumstances; and then obviously, some rent reductions. And where possible the strategies include mechanisms to recoup…

Yes. And before we -- just before we go to Q&A, one of the comment I was going to make and I think people have to drop off early and that is [indiscernible] with everybody in Texas and Florida, we have four facilities that had to be vacated during the storms and two tenants two facilities each. We actually had two other facilities that were taking order and the rescue work is putting their access to facilities. And the staff in those facilities were just incredibly dedicated, they put the patients and residents before their families before themselves, and while it doesn’t have a material impact on us that’s really beside the point. The point is that when people ask about while we feel as good we feel about the skilled nursing that really goes to why we feel good about it. There’s a level of passion and commitment with the people that work in this space that’s unparallel to I believe in any other industry in the country. And it goes to skilled nursing as well as senior housing. And so I know a lot of people reached out to support folks that were going through hard times down there and still are, and again our prayers are with them. And I just commend and thank all of the staff members throughout the industry, throughout both states, that have put again put the residence and patience before themselves and before their families. And with that we’ll go to Q&A.

[Operator Instructions] We first go to Juan Sanabria with Bank of America Merrill Lynch.

Just two quick questions on the dividend. Any thoughts on what you think the targeted payout ratio could be on your recent AFFO or new 2018 AFFO normalized guidance?

Sure. So we’re not in a position to say what the dividend is going to be, because the board has to declare the dividend. But that said our payout policy, our dividend policy, is not going to change. So it’s 80% give or take of AFFO. And so by putting the guidance out, we thought that would allow everybody to the math and calculate approximately what the dividend increase might be.

And then just on the dispositions for -- I guess, Genesis what you have done and what's coming, as well as the targeted dispositions to come as part of the CCP of rationalization. Can you talk about the cap rates for buyers and what target rent coverage levels there assuming in their numbers?

So the cap rates have been pretty consistent around 9% leased cap rates with coverage, call it, 14-ish, anywhere between one-three to one-five, somewhere in that range. And in terms of what is clear just to make a comment is our decisions on Genesis really has nothing to do with CCP. The 35 facilities that we’re in the process of finalizing the dispositions, that decision was made before we announced the CCP deal. It has nothing to do with it. In terms of additional dispositions that we certainly more than implied in the past, we are in the process of assessing exactly what we want to do. And so we’ll be coming out with that probably in the not too distant future in terms of the plan that we’re going to put forth to continue to reduce Genesis exposure. But that plan will go hand-in-hand with other deals that we will be announcing, so that we can manage year-over-year growth.

And then just lastly on the acquisitions of $500 million. What's the mix that we should expect? And is there a larger portfolio deal there just given your confidence on that number?

Yes, larger portfolio deal, prefer not to talk about the mix yet.

You've given that blended cap rate on the expectation, correct? That's that you're confident on that?

Yes.

Next question comes from Tayo Okusanya with Jefferies.

Just a couple of quick ones from us, I know the guidance does not include any recouping of the $33.5 million. But when you do think about over the next 12 to 18 months, could you talk about scenarios where some of that could you recoup and what -- any dollar values behind those kind of scenarios?

So, we really didn’t take dollar values behind the scenario. There’re couple of things that we look at in terms of actually expecting some of it really to claw back, if you will; 0ne is when people focus on rent coverage, one of the things that don’t necessarily get -- doesn't necessarily get focused on is the real problem when guys have rent coverage that's too tight is that they don't have the excess cash flow they need to invest and reinvest and execute on their business plans. So it isn’t just a function of analyst looking at it and say, hey this coverage looks like too tight. These guys actually can’t execute, because they're doing everywhere they can just to make the rent check every month. And so part of the analysis that was done here was an analysis of a business plan, so that we felt comfortable that by giving some of those tenants rent relief if they don’t have the excess cash flow to execute. So there could be an opportunity to get some of that back for us as their businesses improve, simply because they’re going to be able to be in a better position to execute. I think as we look out towards 2019 and we see some uptick on the demographics that helps, depending on the system payment reform that CMS is contemplating with skilled nursing, we think operators that we have are going to do really well under that system payment reform [indiscernible] and actually they must be not talking that for a while. And so there're a number of different things that contribute to us getting it back, but it's not going to be in 2018 anyway. So we'll see how it goes. The point that we’ve made earlier, we're taking $33.5 million. But remember, we're taking $33.5 million as worst case scenario. So we're not even sure at this point that we're going to have to get all the way there, because there's certain things that are happening with some of the tenants in terms of trend and some other things that we're watching before we make final decisions.

Again, just to clarify. Would actually the specific language in the modified leases around recruitment or no?

Yes, that's right, Tayo, that's what we'll do. When those leases are restructured and amended, there'll be provisions in there to recoup that. And by in large, as Rick said, it's going to take some time. So if you're thinking about modeling, I would not model recruitment next year. But as Rick said, it would put a very conservative number out in our guidance because it's going to take some time for all the reductions to occur. So that's probably the more difficult modeling question. But when we put those new leases out, those new leases will have things, they’ll probably be pretty closely tied to coverage. So if their coverage starts to improve dramatically, we'll be able to recoup that excess rent, the excess coverage beyond what they really need to reinvest in their operations they’re doing successfully up to the amount of relief that we gave.

And then just the guidance for '18 in particular. Could you talk about what’s driving really the high end and low end of that guidance, because a lot of it just timing related, more than anything else?

That’s right. A lot of it has to do with timing of the rent adjustments that we're talking about, that’s in there. So if it goes longer, it could be on the higher end. If it happens more quickly, it could be on the low end, so that’s a good way to think about it.

Next question comes from Michael Knott with Green Street Advisors.

Just a question on the rent cuts, I guess, is $33.5 million is the worst case. What's the approximate good case on the other side of that coin? And then what would be the approximate time frame where we would all be alerted that that was indeed the case?

I think over the next few months, we’ll have a better sense we’ll probably be able to provide another update on the third quarter earnings call. If I give you what we think the best case is then s everybody is going to take what the best case is and when it comes in hot, when it comes in a different number of business…

But would it be fair for us to assume that there wouldn’t be a huge amount of variance between good case and this worse case monitor for the $33.5 million?

There could be a decent variant. And I would also add this. Signature is a big part of this number. And so everything else -- there is couple of tenants that are larger tenants that need larger amounts of the majority of the adjustment. So it's not like it's going to be 25% of this number something. It's going to be toward that number. But as Rick said, it could be a fair amount different from that number. But it’s hard to bag at this point.

Because when we talk about 15 tenants, from most of that 15 it’s pretty nominal.

And then Rick, can you help me understand how you think about external growth and your ambitions there, given that your current cost of capital is just so-so on the equity side, created a slight discount or NAV, for example. And just curious how you relate that to you goals to continue to grow portfolio through acquisitions? And then also, how it relates to your guys ambition to further improve the balance sheet overtime?

So a couple of things. When we look at this stock price, which is obviously the way on the down side weighted on the weight average cost of capital currently and even though it’s been slowly recovering since all the Vegas players got out of the stock. The way we look at it and we took the same approach when we were resolving the Forest Park issue. There was what we though a real over reaction in that scenario, which turned out to be the case in the stock recovery pretty quickly thereafter. And similarly here, the complex deal, people are negative on since, we get all that stuff and we similarly think that the reaction here has been overdone. And so we think that with the things that we know are coming up relative to acquisition announcements that we’ve been working on that I mentioned earlier, capital markets activity, we’re going to have some nice catalyst with the stock that will get the stock price into a better position and thereby obviously improve our cost of capital. So we look at stock price, if the stock price is down because of things that we’re doing badly from an execution perspective, that’s one thing. But when the stock price is down for a period of time, because our view of it is -- because of what is going on in the company and that will recover, that’s always proven to be the case. So we think that we’re going to be able to execute on our growth strategy as we have done it. And even with the stock price where it is and given the improved cost of capital on the debt side, we are in a much better position from a weighted average cost of capital perspective than we’ve been throughout a lot of Sabra's history by a long shot, and that never stopped us from executing and getting deals done. And even if sometimes you get ahead of yourself a little bit, if you’re making the right decisions in terms of which are requiring because you believe that the strategic importance of that acquisition will result in an improvement in multiples and you make those decisions, that’s how you grow company.

And then one more if I may, and then I will hop off. Just curious when you take a step back now and you -- curious how you feel about the -- I think the number is 1.22 times pro forma fixed charge coverage for the corporate guarantee tenants from the CCP side of things versus the 1.13 to 1.18 for Genesis Holiday in the legacy portfolio. Just curious how you think about now that side of things versus where CCP is going to be at least in a better position than it was before?

So obviously CCP is a nice increase. And so we feel good about the CCP piece. On Genesis we’re not happy about it, and that’s why we talking about additional plans to continue to dispose Genesis solely. In terms of Holiday, it’s good. Holiday is an independent living operator. We underwrite those assets at 1.1, so 1.18 at Holiday is a good number. So we are perfectly comfortable with Holiday. So good on CCP, a nice improvement and hopefully it will get better. Good on Holiday, which is -- which actually one where we would underwrite IL. And then on Genesis, no we’re not happy about it and we’re going to continue to dispose. And as I said, we’ll come out with a fully based plan on Genesis and be discussing that with all you guys probably in the not too distant future.

Next question comes from Rich Anderson at Mizuho Securities.

So just if we could breakdown the guidance a little bit. When you first announced the deal, the 16% AFFO accretion prior to any rent cuts now the number is 15% AFFO accretion. After these adjustments that you described, but also including acquisitions preferred to redemptions, debt refinancing. So can you put the four buckets into that 15% and how much of the 15% accretion is directly related to the CCP deal post cuts, and how much is attributable to these new factors?

So a couple of things. First of all, coming up with -- when we originally put our accretion numbers out, keep in mind that what we were talking about and we were very clear with it, accretion based on our internal forecast for 2018 at that time. What we are now presenting is an accretion number that’s fully validatable by the Street, which is taking our second quarter 2017 AFFO of $0.51 per share and comparing it to the average quarterly AFFO number in our guidance for 2018, which is $0.61 per share that’s a 15.1% increase. So I just want to make sure everybody understand. It’s a little bit different calculation between the two. The 15.1% as far as putting it into bucket, I would say this. The vast majority of it is related to CCP transaction. And secondarily, when you look at the refinancing of debt and the picking up preferred, all of that is -- the ability to do that was driven by the CCP transaction, because the investment grade rating, which was predicated on getting the CCP transaction done is what's driving the lower cost of debt that allows us to do that to see that accretion. So in fact when you talk about the CCP, it actually covers both of those things. And then the acquisition volume outside of that, which is really the $550 million that we did this year that has some impact it’s probably two or three pennies of that. So you’re looking at probably 12% specifically related to CCP somewhere in that range.

And then the $33.5 million, just say that’s the number, I understand it could be lower than that. But that also includes the impact from selling assets and redeploying the full circle process there. So is there a point in time where you’ll be running at a number higher than that as you sell assets but have yet to redeploy, so the number in the interim could be run rate of, just say for arguments sake, $35 million but then come back in after you redeploy. Is that the way to think about it?

That is a possibility to be sure. So the way to think about it is the $33.5 million, as you said, is the ultimate run rate after it's all done. And as I said in my comments, there could be some temporary further adjustments. But also keep in mind that we’re staging in that $33.5 million. So I wouldn’t expect that it’s a foregone conclusion is going to be that noise above that level. I think it’s just going to come down at a time, it was hard to predict. But I think from our perspective, putting in $33.5 million for the full year '18, probably covers it. But again, there could be some noise outside of that.

And we acknowledge that it makes tough to you guys to model, because there’s probably more of a chance it’ll be lower than that at any point in time than higher. So Harold is absolutely correct. The best approach to take is just assume $33.5 million for the full year.

And then if we could get a little bit granularity on the '18 guidance. How much of it is higher NOI, how much it is lower G&A perhaps from synergies or lower interest expense from debt refi or even interest income from this working capital process you talked about. Can you break it out a little bit more for us?

I can do it in broad strokes. And if you are offline talk a little bit more about some of the details we could do that. But I think the vast majority is on the NOI line. Our G&A costs are obviously going up compared to 2017, because of the merger transaction. Obviously, it’s going to be less than the combined company all the synergies there. But on a standalone sovereign basis, our G&A costs are going up. The run rate is probably closer to $4 million a quarter versus the $2.5 million a quarter on a cash basis. But by enlarge it is from the acquisition activity and the CCP merger. And a bit of interest savings, as you said, maybe a couple of million dollars on interest savings from the revolver. And then certainly more interest savings if you took the delta between the 5.5% and the 4.75% on the refinancing of the bonds.

And Rich, the other comment I would make about G&A is that, obviously, goes up in terms of real dollars but not necessarily in terms of the cost within the entire enterprise. And we will have one of the lowest G&A lows in the space, much lower than our size. And that's really because when we did the spin, we had a clean slate to work from. And so we structured our infrastructure differently than I think most of our peers that have been in place for a longer period of time, we were able to take advantage of where technology and outsourcing was at the time that we did the spin. So one of the reasons we’ve gone from eight to -- we'll be about 25 individuals post CCP deal, we’re almost [275] now, and that's not a huge increase when you consider other companies 10 times the size since the spin. So what we did was we said look the only people that we were working for Sabra are those folks that go to our core competency; so acquisition, asset management, financing and accounting, that's it. Every other component of a corporate infrastructure is outsourced. So it's allowed us to grow and to leverage our growth by just having folks here that are more -- that go to the core competency of the company, and everything else is outsourced for those folks that we outsource to, the increase that they have to do in terms of their infrastructure to accommodate our growth is on them. So that's allowed us to be pretty slick and stay focused on the work that we need to get done.

And so the last -- just quick on just from a dynamic standpoint. How you avoid a situation having got publicized this process you're going through, those that are left out, those tenants that maybe feel disgruntled or passed over even though they may not have legal grounds to request a lease adjustment. Could you be potentially looking at more turn-over -- tenant turnover or something like that when their leases do expire just because the fact they were left out of this?

So we don't think that that's the case. Most of them get it. We have those conversations. And it's interesting in this business people want to see everybody else being healthy it's good for the business. We’ve had only two other tenants that, that hey other guys are getting, could we get it too, and it's like no, this is why. But we have good relationships with those guys. We've known these guys for a long time. So as leases expire, everything always goes to the quality of the relationship. And given the relationships that we have with our tenants and the value that we bring to those tenants that we think is a little bit different than maybe some of the others because of our operational background and resources, we have no concerns about that. And I guess the question is, it's a fair question. But we’ve had those conversations and we're just not getting that reaction.

[Operator Instructions] We'll next move to Chad Vanacore with Stifel.

So I just want to follow-up on Michael Knott’s question about the $33 million impact, that's worst case scenario. Now, without putting any numbers on it. What might be some factors leading to outperform above that number?

As far as -- hasn't not to take as big as that…

Yes.

I think as we look at we've done this on a trailing 12 basis, we've done it on a trailing three basis, we’ve used forward looking rents, we've done quite a bit of analysis. And so in some cases, as we’ve talked through with these operators, we can see a pathway to improved operations in the near term and we're seeing trends that are going in the right direction. So, on those basis, when you look at our coverage levels that we've based this on those levels of cuts may not be necessarily.

So how would you -- how would that contractually obligated to -- if operations improve, these are triple net leases. None of that cash flow should come up to use. So what are some other factors there?

Chad, ask the question again. I'm not following the question.

So say you restructured some of these leases, you get concessions, you changed the terms of the lease and operations improve for your operators. Great for you on a coverage basis, but doesn’t change your cash flow. So what other factors could lead you having outperformance above that $33 million impact.

So I think the way you describe it, we will restructure those leases and then start improving operations, the lease modification will have language something to the effect of if your lease coverage improves to X then we will reset rents again and those rents will go back up, so that your coverage -- so that the rents are back to the level they were before. So what you're doing is you’re locking in that particular lease, a maximum coverage that they are going to have. Does that answer your question so you will get some insight. And we will get some upside from that lease that reset that second reset. The first reset to get when it reduced so coverage go up as coverage is improved and their cash flows improve then the lease will allow for the rents to be reset again at a higher level.

So as coverage improves, you potentially reset those rents?

Right, and that’s what we mean by recruitments, that’s how the recruitment would occur.

Got it. Because the other option would be to have some percentage rent. Have you considered that at all?

Actually that is a possibility. We do have with our rules that we have to work within, and so part of the strategy has to be to make sure we follow the rate rules. And you typically see it’s very easy to be recompiling if you tie your percentage rent to revenues, get typically higher to operational performance. But have that said when you are making rent concessions there is some ability to recoup rent when you make those concessions to recoup those concessions that are more tied to coverage. So I was just saying and just so you know to answer first because I think may be some of the confusion is we haven’t completed all of these agreements yet, but some of the agreements are still being in process to get documented and finalized. So that’s why there is still some ambiguity, if you will, around how much they’re going to be, because all of those agreements have been finalized. But we’ve had those conversations with tenants and we're working through that.

You said you’ve had these conversations with 10 tenants. You have agreements in principal with how many of them right now?

Little more than half, this is Brent Chappell.

Little bit more than half. But there is agreement in principal more close to it on the others, otherwise we would have come out with a level of confidence that we have right there. And these guys, they really appreciate what we're doing for them. This is not something that we've experienced. So that’s one of the reasons that it’s gone so smoothly. They do really appreciate it.

So thinking about the restructuring of leases and you say that’s there could be upside from $33.5 million rent cut. What could -- someone blocks or delays working those come up?

I don’t see any stumbling blocks and delays that getting these rent lease modifications in place. We’re going to get those done. And I think it’s, as we’ve said, we’ll be able to get all those done by the end of the year. And so the question will be in some cases as we finalize, those will be a little bit less. Will it be the $33.5 million and how quickly will those recruitments occur. But keep in mind that there is -- certain of those operators and the perfect example of those that were not giving rent concessions too at all but have low coverage and that low coverage we’re fine with that. I think it’s an important point to make. Everybody focuses so strongly on rent coverage, but there’s nuance to rent coverage and when you got an operator who has an ancillary business that’s making a ton of money off of that operation through those ancillary businesses, they are not going to not pay their rents and lose debt of that facility to run those operations clearly. And there have been examples in the CCP portfolio specifically where they were talk to about moving operations -- moving facilities to other operators because rent coverage was low and those operators said no, we’re going to continue to pay rent, we’re not going to give these buildings up. And that’s an example of where those low rent coverages aren’t necessarily indicative of problems.

And this isn’t even a question on our mind as to what the way with all of this. We have our arms around those other businesses they run and produce. So we actually -- we can look at it concretely and say if there is no issue here whatsoever and that’s why we’re going to categorize -- there’s only a couple of those tenants. So it’s not that big a deal. But we’re going to characterize them separately so you guys can see that.

Next we go to Michael Knott with Green Street Advisors.

Coincidentally enough I think the dollar amount of what you highlight in the ‘17 guidance of cash portion of loss on extinguishment of debt, I think it’s in the ballpark of the rent cuts we’re talking about in terms of absolute dollars. Just wanted to have you walk us through your thought process on that decision to essentially incur that cost to refi those notes now. Is that a cover charge of being a new investment grade issuer, or how do you think about the economic merits of that decision?

I think when you look at the long-term present value of the cash flow impact it’s a positive impact for us to do that. Certainly, we could wait until the next call dates and it might be a little bit lower. But when you evaluate the potential cost of increased higher interest rates, you got to make a decision to pull the trigger at the time when you feel like the breakeven is such that a change in interest rate -- the risk of weighting for it for the next call date and the change of interest rates when you look at those two and the risk of net interest rate change becomes too great to pull the trigger sooner than later. And we look it on a present value cash basis. And then obviously, it helps our forward-looking cost of capital. But both of those are considered in that decision.

And it stretches out the maturity dates. And the other thing is to Harold’s point of the market. The debt market right now is unbelievable there have been very few points in time where it’s been as good to go out as it is right now. So as you know, it’s still unpredictable out there to not take advantage of that now when it is positive over the long haul would be the wrong thing for us to do.

And then the press release guidance mentioned incremental investment in the Signature, behavioral health -- behavioral hospitals. Can you just talk about may be the size or any commentary on that that you would like to share with everyone?

Yes, that’s what was previously discussed when Care Capital made that acquisition, it’s about $20 million incremental investment, so not a large amount. But that’s the additional amount that they had identified.

We expect it will be doing more of those guys because we’ve identified a number of such on the country that they would have build new hospitals at. So we think the growth with that platform is going to be probably the de-novo growth as opposed to them doing other acquisitions to add on to the platform, so we will see.

And then Rick this might be your favorite question in the morning. But I wanted to get you guys’ take on what your operator’s views or maybe even your views, if you look, on the recent CMS proposals so relapse some of the mandatory bundled payment initiatives in '18 and then cancel some others?

So a lot of -- because they were market specific on the mandatory bundling, it really were effective guys on the margin. I think it’s a bigger headline thing that it actually is in terms of impact on the operators. And I probably, certainly from the Street’s perspective will fall to minority of those that had no issue with the mandatory bundling because we’re going through a paradigm shift. There’s going to be some form of bundling out there and it may be different in different markets in CMS’s that we may not have one plan the entire country. But I think when -- because you’re going to be left, which is the voluntary programs. When you have mandatory program, it forces guys to start thinking about what they need to do to accolade to that. And since it’s really only affected them on the margins, the impact was actually pretty negligible when you look at all the operators versus the street’s reaction to those headlines when all that stuff was announced. So I actually think -- I actually wouldn’t have had any issue with keeping in place at all. So I think it’s just a positive headline.

Next we will go to Tayo Okusanya with Jefferies.

The synergies -- the cost synergies that are built into the '17 and '18 numbers. Could you tell us exactly how much you’re building in of the $20 million you’re expecting?

So as in the normalized number, the entire $20 million is included in those numbers. So there is going to be some transition period where we still have some staff there in Chicago helping us with the transition, making sure we get through all the process of transitioning the systems and doing all the things that need to be done. That will tail off through the course of 2018. I think it will probably by enlarge done second quarter of '18. But when you look at our normalized number, you can see exactly what it is for the full $20 million. And you can imply, if you will, looking at the per share impact of those normalizing of that transition cost, we got to back into what the numbers are from the absolute dollar basis that we’re assuming.

And then in the press release, you do mention that in some instances you may give some tenants working capital advances and things like that. Could you talk about how much of that that you are expecting that’s built into guidance? And how much interest income associated with that activity could be built into your '17 or '18 numbers?

It’s negligible. They’re going to be rounding.

And then the last one from me…

We noted it just because it's just one more factor, but it's really negligible.

The ancillary supported tenants that you discussed in the press release as well. Just how many tenants one fall into that bucket and how much of your rents today actually make up at this point?

We got two tenants that fall into that particular bucket, and the rent associated with those two tenants is about $10 million.

And those two tenants, it looks like even with the ancillary income, the rent coverage today is below one. Is that the way to think about those companies or those tenants?

Correct.

Next question comes from Rich Anderson with Mizuho Securities.

So I'm thinking back in some of the documentation premerger. And if I remember correctly, you had a pre-CCP AFFO number that might have suggested I think $million or so, or $2.49 per share, that's pre-CCP. So then you put this in and your range is slightly below that number. So explain -- give me the roadmap as to why this is accretive relative to standalone Sabra?

You say that our 2017 guidance was $2.49…

'18..

I think we’ve never -- any number done on 2018.

We never put any numbers out Rich.

Well, I was just thinking in terms of the merger documentation, I thought there was a forecast out there for '18 as well, maybe I'll take it offline with you because…

We’ve never publicly made any comments about 2018 numbers.

And ladies and gentlemen, with no further questions in queue, I'd like to turn the conference back over to management for closing remarks.

Thank you very much for your time today. I know it was a quick release, not much notice on the call, so I appreciate how many of you joined in today. And as always, we're available and accessible to all you guys and a number of you guys we'll see you in New York at the [indiscernible] Conference next week. Have a great weekend. Thanks everyone.

Ladies and gentlemen, that does conclude today's conference. We thank you for your participation, and you may now disconnect.