NYSE:NHI National Health Investors Q2 2025 Earnings Report $74.44 -0.10 (-0.13%) As of 09:56 AM Eastern This is a fair market value price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast National Health Investors EPS ResultsActual EPS$1.22Consensus EPS $1.16Beat/MissBeat by +$0.06One Year Ago EPS$1.18National Health Investors Revenue ResultsActual Revenue$70.27 millionExpected Revenue$86.46 millionBeat/MissMissed by -$16.19 millionYoY Revenue Growth+6.70%National Health Investors Announcement DetailsQuarterQ2 2025Date8/6/2025TimeAfter Market ClosesConference Call DateThursday, August 7, 2025Conference Call Time10:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by National Health Investors Q2 2025 Earnings Call TranscriptProvided by QuartrAugust 7, 2025 ShareLink copied to clipboard.Key Takeaways Positive Sentiment: We exceeded expectations in Q2 thanks to robust acquisitions, exceptional SHOP NOI growth and improved tenant collections, prompting a raise of 2025 normalized FFO guidance by $0.09 to $4.80 per share and a 2.2% dividend increase for the first time since 2021. Positive Sentiment: On August 1, we converted seven properties from leases to SHOP, boosting annualized SHOP NOI by approximately $8.8 million (57%) and bringing SHOP to nearly 10% of consolidated NOI while achieving record same‐store SHOP NOI growth of 29.4%, 3.7% RevPAR growth and a 26.9% NOI margin. Positive Sentiment: Our acquisition pipeline remains active with $175 million closed year‐to‐date, about $130 million in signed LOIs and nearly $350 million in additional senior housing opportunities, positioning acquisitions—especially SHOP deals—as a major growth driver. Positive Sentiment: The balance sheet is in excellent shape with net debt to adjusted EBITDA at 3.9×, zero secured debt, and approximately $760 million of available liquidity across cash, revolver capacity and forward equity commitments. Neutral Sentiment: Shareholder feedback led to significant board refreshment—including director retirements, new appointments and board declassification—and a special committee is now overseeing NHC lease renegotiations to secure the best value for investors. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallNational Health Investors Q2 202500:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipantsPresentationSkip to Participants Operator00:00:00Greetings. Welcome to the National Health Investors twenty twenty five Earnings Webcast and Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press 0 on your telephone keypad. Operator00:00:22Please note this conference is being recorded. I will now turn the conference over to your host, Dana Hambly. You may begin. Dana HamblyVP - Finance & IR at National Health Investors00:00:33Thank you, and welcome to the National Health Investors Conference Call to review results for the 2025. On the call today are Eric Mendelson, President and CEO Kevin Pascoe, Chief Investment Officer John Spade, Chief Financial Officer and David Travis, Chief Accounting Officer. The results as well as notice of the accessibility of this call were released after the market closed yesterday in a press release that's been covered by the financial media. Any statements in this conference call, which are not historical facts, are forward looking statements. NHI cautions investors that any forward looking statements may involve risks or uncertainties and are not guarantees of future performance. Dana HamblyVP - Finance & IR at National Health Investors00:01:11All forward looking statements represent NHI's judgment as of the date of this conference call. Investors are urged to carefully review various disclosures made by NHI and its periodic reports filed with the Securities and Exchange Commission, including the risk factors and other information disclosed in NHI's Form 10 ks for the year ended 12/31/2024, and Form 10 Q for the quarter ended 06/30/2025. Copies of these filings are available on the SEC's website at sec.gov or on NHI's web website at nhireit.com. In addition, certain terms used in this call are non GAAP financial measures, reconciliations of which are provided in NHI's earnings release and related tables and schedules, which have been furnished on Form eight ks to the SEC. Listeners are encouraged to review those reconciliations provided in the earnings release together with all other information provided in that release. Dana HamblyVP - Finance & IR at National Health Investors00:02:07I'll now turn the call over to our CEO, Eric Mendelson. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:02:11Hello, and thanks to everyone for joining us today. We followed a strong start to the year with an even stronger quarter, which exceeded our expectations. The second quarter's outperformance was multifaceted and driven by solid execution throughout the enterprise. The faster pace of acquisitions in the first half of the year, exceptional SHOP NOI growth and continued deferral collections on improving tenant fundamentals were all major contributors. Due to the outperformance and good visibility, we're raising our 2025 guidance for the second time this year. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:02:51We increased the midpoint of our normalized FFO guidance per share by $09 to $4.8 representing year over year growth of 8.1%. With our improving growth and excellent coverage, we also announced last night that we are increasing the dividend for the first time in four years. Additionally, we're excited to share a milestone event for NHI. Effective August 1, we completed the transition of seven properties from leases to SHOP, resulting in an increase to our annualized SHOP NOI of approximately $8,800,000 or 57%. Following these transitions, SHOP will represent almost 10 of our consolidated NOI. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:03:43Given the significant organic and external growth opportunities, we expect that percentage to grow exponentially both on a near term and long term basis. Since we established SHOP in April 2022, we've been methodically preparing to grow this portfolio as we believe senior housing operations provide the highest growth potential with the best risk adjusted returns in our investment universe. Through investments in personnel as well as other internal and external resources, we're confident that we now have established a strong foundation across our asset management, business development, accounting and legal functions to strategically expand the SHOP portfolio at a rapid pace. Turning to the SHOP results for the quarter. SHOP NOI increased by over 29% compared to the 2024. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:04:41While there were some nonrecurring benefits during the quarter, which Kevin will detail, we're pleased that the early strategy to focus on driving higher occupancy is now leading to improved RevPOR growth and margin expansion. RevPAR growth of 3.7% and NOI margin at 26.9% are both record results since SHOP's formation. We continue to see substantial organic upside in this portfolio. With the conversions, we expect pro form a annualized twenty twenty six NOI growth to be double digits. The pipeline activity continues to make us optimistic that acquisitions will be a meaningful component of our growth profile for the next several years. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:05:28We've announced investments of 175,000,000 so far this year and currently have approximately $130,000,000 undersigned LOIs, which we expect to close in the next few months. This includes a SHOP deal valued at approximately $74,000,000 as well as a purchase option that we've exercised on a large entrance fee community. The incremental pipeline at nearly $350,000,000 is entirely focused on senior housing, including a significant number of SHOP deals. We expect to have several signed LOIs in the next two quarters. As I just mentioned, we expect acquisitions and SHOP acquisitions in particular to be a major contributor to our growth profile. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:06:16While we view every deal based on its own merits, we also employ a portfolio approach in which we measure any new acquisitions impact on the yield and growth of the overall SHOP portfolio. Obviously, we like the deals and we see many that offer tremendous NOI growth, and we evaluate situations in which the deal may open up a new relationship or geography where we see significant future opportunity. Through this approach, we are also developing a stable of institutional class operating partners that should allow us to source more opportunities with more seamless integration into our platform. Overall, our goal still targets aggregate initial yields to be accretive immediately with expected multiyear exceptional NOI growth. The balance sheet continues to be in great shape and very supportive of funding the significant investment pipeline. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:07:14Our net debt to adjusted EBITDA at 3.9 times is below the low end of our target range, and we have available liquidity of approximately $760,000,000 We believe this low leverage and strong access to capital create real competitive advantages and give us optionality when assessing our capital needs for the future. To sum all of this up, we're very excited about the multiple growth opportunities, and our confidence in capitalizing on these opportunities has never been higher. As this is our first public conference call since the Annual Shareholders Meeting in May, I want to share a few comments. First, we want to sincerely thank our shareholders for the constructive dialogue over the years and especially leading up to this year's meeting. We believe your valuable feedback has informed and validated our strategic direction. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:08:10Also, your direct correspondence has resulted in considerable Board changes, including this year's retirement of our two longest tenured Board members, the recent appointments of Candace Todd and Rob Chaffin, and the declassification of the board. Lastly, the outcome of the vote clearly informs our board that there is more work to be done, particularly with board refreshment. The Board is committed to improved governance and understands the role it plays in delivering long term value for our shareholders. On that topic, the Special Board Committee tasked with overseeing the NHC lease renegotiation is actively engaged with management. While we're not providing details of the engagement or the ongoing discussions with NHC, we are confident that the special committee's interests are fully aligned with our shareholders to execute a deal that delivers the best possible value. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:09:08I'll now turn the call to Kevin to provide more details on our operations. Kevin? Kevin PascoeChief Investment Officer at National Health Investors00:09:14Thank you, Eric. Our focus during the quarter was on transitioning six previously leased properties, including five assisted living and one independent living community to Sinceri Senior Living under a SHOP operating structure. This was accomplished on August 1, and we're thrilled to be working with Sinceri, an accomplished operator with 76 communities in its portfolio spanning 24 states. NHI retains 100% ownership of this portfolio and has engaged Sinceri under a management agreement, which includes incentives based on growth in both NOI and real estate valuation. We also transitioned an independent living community in Tulsa, Oklahoma from a lease to the existing shop venture that we have with Discovery Senior Living, which increases that portfolio to 10 properties. Kevin PascoeChief Investment Officer at National Health Investors00:10:02Discovery was the operator under the lease, so there should be no disruption in operations. These seven properties generate approximately 8,800,000.0 in annualized SHOP NOI and we expect them to have double digit NOI growth profile in 2026. John will provide more details on the impact of the transition to this year's guidance. The pipeline is very active and we are evaluating approximately $343,000,000 in senior housing deals through potential investments in SHOP, B Simple real estate and mortgage loans that have preferably a path to future ownership. More than 50% of the pipeline are SHOP deals with initial yields that are accretive to the company. Kevin PascoeChief Investment Officer at National Health Investors00:10:46We are focused on assets where there is a clear path to significant NOI growth. As Eric noted, we're also interested in acquisitions that provide other strategic benefits such as establishing a relationship with a new operating partner where we see future opportunities to scale in a specific geography. With Sinceri, we feel we are getting the best of both worlds in double digit NOI growth and significant flexibility to grow that relationship. Turning to our SHOP performance. Our same store SHOP portfolio of 15 communities increased NOI by 29.4% year over year to $3,800,000 The quarter did benefit from non recurring items totaling approximately $200,000 Adjusting for these items, we are still quite pleased that the pro form a rate was over 21%. Kevin PascoeChief Investment Officer at National Health Investors00:11:37As we've talked about, our strategy in 2023 and 2024 was to drive occupancy higher, which we did successfully. With occupancy over 89% for the last three quarters, our focus has shifted to pricing. We are encouraged to see early results in the RevPOR growth of 3.7% compared to the 2024 and two point one percent compared to this year's first quarter. Due to the excellent growth year to date, we have moved our full year NOI growth rate slightly higher to a range of 13% to 16%. This implies some slowing in the second half of the year, which is driven by some recent softness in occupancy, but we're optimistic that this trend reverses itself in fairly short order. Kevin PascoeChief Investment Officer at National Health Investors00:12:21Our longer term view is unchanged and we actually have higher conviction in the margin potential following the strong second quarter result. Across the triple net portfolio, we are generally experiencing the continuation of solid trends with no rent concessions, continued collection of deferred rents in excess of our expectations and stable occupancy and EBITDARM coverages. Bickford continues to generate strong NOI and we are encouraged to see the recent occupancy rebound. Bickford's second quarter occupancy increased by 20 basis points from the first quarter to 85.2%. Trailing twelve month EBITDARM coverage through March 30 excluding deferral repayments was 1.66 times. Kevin PascoeChief Investment Officer at National Health Investors00:13:06Including the repayments of approximately $4,800,000 over that timeframe, Bickford's pro form a coverage was a very comfortable 1.46 times. Repaid approximately $1,200,000 of deferred rent during the second quarter and has an outstanding balance of $10,400,000 at June 30. Recall that Bickford's next rent reset is April 2026. Due to their solid performance, we expect that we will be able to capture more than their quarterly run rate of deferral repayments into the future base rent and largely eliminate the variability that these repayments can cause to our outlook. Before I turn the call over to John, I'd like to announce we have hired Grant Johnson to fill the new role of Senior Vice President of Asset Management. Kevin PascoeChief Investment Officer at National Health Investors00:13:49Grant has over two decades of asset management and healthcare finance experience across senior housing and skilled nursing industries and has extensive relationships with operating companies, private equity and capital providers. Brand is part of that strong foundation Eric mentioned earlier and we expect great contributions from him. Kevin PascoeChief Investment Officer at National Health Investors00:14:07I'll now turn the call over to John to discuss our financial results and guidance. John? John SpaidCFO at National Health Investors00:14:12Thank you, Kevin, and hello, everyone. Let me begin with our second quarter results. I'll be using average diluted common shares for all per share results. John SpaidCFO at National Health Investors00:14:22For the quarter ended 06/30/2025, our net income per share was $0.79 down 2.5% from the prior year. Our NAREIT FFO results per share for the second quarter compared to the prior year period increased 0.8% to $1.19 per share. Our normalized FFO results per share for the second quarter increased 3.4% to $1.22 per share compared to the prior year second quarter. During the second quarter, we recognized a $1,500,000 gain from our equity method investment and $1,400,000 in lower credit loss expenses, which positively impacted net income, NAREIT FFO and normalized FFO. When reviewing our performance this quarter, please recall that last year's second quarter results included a lump sum $2,500,000 deferred rent recovery from one of our cash basis tenants. John SpaidCFO at National Health Investors00:15:19FAD for the quarter ended June 30 compared to the prior year period increased 8.1% to $56,000,000 NOI from our SHOP segment for the quarter ended June 30 increased 29.4% to $3,800,000 compared to the prior year period. The year over year SHOP common shareholder FAD contribution was up 32.6% to $3,400,000 after adjusting for routine capital expenditures and non controlling interests. For the six months ended June 30, SHOP revenues increased 5.7% to $28,200,000 compared to $26,600,000 in the prior year period. SHOP expenses grew 2.4% from $20,800,000 to $21,200,000 and the margin expanded two forty one basis points as a result of improvements in occupancy and RevPAR. In the second quarter, our cash rents increased $4,600,000 year over year. John SpaidCFO at National Health Investors00:16:21Cash rents attributable to our investment volume contributed $5,900,000 And our existing lease escalators, negotiated step ups and percentage revenue rents contributed an additional $1,700,000 and represents a 2.7% increase in those rents year over year. Offsetting these increases were our cash rent changes associated with the previous year's various transition properties, which represented only a $200,000 reduction in rents on those properties. Finally, as I previously mentioned, further offsetting these changes was last year's $2,500,000 lump sum deferred rent payment associated with one of our cash basis tenants. Interest expense for the quarter was flat year over year, while weighted average common diluted shares were up 7.5% to 46,800,000 shares as a result of the company's greater use of equity in lieu of debt to fund new investments over the last year. Sequentially, compared to the first quarter, cash G and A, excluding proxy fight expenses, increased $800,000 primarily due to compensation expenses. John SpaidCFO at National Health Investors00:17:31Legal expenses were modestly down sequentially Q2 over Q1, but still at an elevated level due to the company's increased investment in SHOP activities. In the second quarter, we completed the acquisition of a senior housing portfolio for $63,500,000 We also closed on a 28,000,000 senior housing construction loan with an existing operator. Our total funded investments for the six months ended June 30 was $161,500,000 This total includes our new acquisitions, net of one property acquired in the first quarter through a deed in lieu of foreclosure, as well as our funded mortgage and loan commitments, plus our investments in our existing real estate. To meet our investment needs, we utilized proceeds from mortgage and loan payoffs totaling $35,400,000 as well as $123,500,000 in proceeds from new equity. Year to date, our paid dividends of $76,000,000 in debt retirements were well supported by our operating cash flow and other liquidity sources. John SpaidCFO at National Health Investors00:18:40During the quarter, we settled just under 800,000 common shares from our Q4 twenty twenty four and Q1 twenty twenty five forward ATM activity at an adjusted forward price of $74.71 per share after fees and forward costs, for proceeds of approximately $58,000,000 Additionally, we again activated our ATM and sold on a forward basis approximately 1,300,000.0 common shares at an average price before fees of $72.5 per share. At 06/30/2025, we had total escrowed forward equity proceeds of approximately $102,300,000 available to us in exchange for the future delivery of 1,400,000.0 common shares at an average price of $71.03 per share. We also ended the quarter with $18,600,000 in cash on our balance sheet and $322,000,000 in revolver capacity. During the second quarter, we retired $75,700,000 in secured debt, which brings our secured debt balance to zero. We also extended our $200,000,000 term loan for six months to 12/16/2025. John SpaidCFO at National Health Investors00:19:52We have a $50,000,000 senior loan maturing in November and intend to extend the term loan maturity in the third quarter for an additional six months to June 2026. Our balance sheet ended the second quarter in great shape. Our net debt to adjusted EBITDA ratio was 3.9 times for the quarter, just below our stated four to five times leverage policy. Our interest coverage ratio was stable sequentially and improved year over year to 4.7 times despite retiring $151,000,000 in lower rate fixed interest rate debt since the second quarter last year. At June 30, our liquidity was approximately $760,000,000 which includes escrowed forward equity, cash, excess revolver capacity and up to an additional $316,000,000 in available ATM capacity. John SpaidCFO at National Health Investors00:20:44We continue to monitor long term bond rates and expect to utilize public debt to further improve our liquidity. Let me now turn to our dividend and guidance. As we announced last night, our Board of Directors declared a $0.92 per share dividend for shareholders of record 09/30/2025, and payable 10/31/2025. This represents a 2.2 increase and is our first dividend increase since the 2021. We also adjusted our full year 2025 guidance, which includes increases to our normalized FFO and normalized FAD results. John SpaidCFO at National Health Investors00:21:22Our guidance includes the impacts from the recently announced SHOP conversion and our other expected results. Compared to 2024, NAREIT FFO guidance at the midpoint is $4.48 or a decline of 1.5% and normalized FFO at the midpoint is $4.8 or an increase of 8.1%. Compared to our May full year guidance, we decreased NAREIT FFO by $0.19 per share and increased normalized FFO by $09 per share. Our guidance for FAD at the midpoint is $228,900,000 up from the May guidance of 225,100,000 and represents a 12.1% increase over 2024. Included in our guidance issued last night are our just announced RIDEA shop conversion expectations, which commenced August 1. John SpaidCFO at National Health Investors00:22:17During the third quarter and subject to final post closing reconciliations, we expect to write off approximately $12,000,000 in straight line receivables associated with the termination of the Discovery leases. And we conservatively estimated between 1,000,000 and $1,400,000 in losses upon operations transfer, which will both be adjusted out of our normalized FFO and FAD results. Our guidance includes our expected five month NOI contribution from the conversion shop operations in the range of $3,600,000 to $3,700,000 as well as approximately $500,000 in routine CapEx for the remainder of the year. During the third quarter, the company also expects to recognize Discovery lease revenues totaling approximately $3,300,000 subject to final post closing reconciliations. Our guidance includes same store SHOP NOI growth in the range of 13% to 16% over 2024, which is up slightly from 12% to 15% in prior guidance. John SpaidCFO at National Health Investors00:23:21Guidance also includes the continued collection of deferred rents and the fulfillment of our existing commitments. In keeping with our past recent practice, our updated 2025 guidance includes $105,000,000 in additional new unidentified investments and an average yield of 8.1%. Our guidance includes a small amount of forward equity utilization between now and the end of the year, but our actual use will be dependent upon the volume and timing of additional new investments. Finally, guidance continues to include assumptions for additional costs and concessions related to normal asset management transitions, dispositions and loan repayments. Once again, thank you for joining our call today. John SpaidCFO at National Health Investors00:24:04That concludes our prepared remarks. So with that, operator, please open the lines for questions. Operator00:24:21Confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset Your first question for today is from Austin Wurschmidt with KeyBanc. Austin WurschmidtSenior REIT Analyst - Equity Research at KeyBanc Capital Markets00:24:48Thanks. Good morning, everybody. Eric, it sounds like you have a lot of positive momentum on the investment front, but there was a bit of a delay in closing, I believe, on some of the investments and that decrease in that unidentified investments assumed in guidance. Can you just give some additional detail what's driving the delay and just what the confidence level that everything is moving forward from here? Kevin PascoeChief Investment Officer at National Health Investors00:25:12Hey, Austin, this is Kevin. I would just characterize it as a timing issue. As we talked about during the quarter, we're very focused on the conversion. We still have a very robust pipeline. We've got a couple of deals under LOI that we expect to close in the not too distant future. Kevin PascoeChief Investment Officer at National Health Investors00:25:28So I don't view it as a disruption. It's just more timing than anything else. Austin WurschmidtSenior REIT Analyst - Equity Research at KeyBanc Capital Markets00:25:34Appreciate that. And then you guys have talked about in the past, quarter or so walked away from a larger portfolio transaction. I don't think you kind of flagged, whether or not you continue to evaluate those deals outside of what you've quoted in the pipeline. Anything you can share in terms of the opportunity set and what the desire or likelihood is that there's something out there that could fit nicely within the portfolio to continue to grow as a percentage of the overall entity? Kevin PascoeChief Investment Officer at National Health Investors00:26:08Sure. This is Kevin again. I think when we look at the pipeline, what we're quoting are things that we're actively working. There's a likelihood that we issue an LOI but there are also ones that are generally under $100,000,000 in size. So it's stuff that's a little more tangible. Kevin PascoeChief Investment Officer at National Health Investors00:26:26We absolutely have some bigger deals in pipeline that we're evaluating and we have the personnel and the bandwidth to be able to take it down. We also just don't want to send the wrong signal and make the pipeline look like it's bigger than it should be when those deals have generally have some more nuances to them. So there's a few that are still floating around. We still continue to evaluate some larger portfolios. It's really just a sense of making sure we have the right operating partner, it's the right profile and it checks a lot of boxes. Austin WurschmidtSenior REIT Analyst - Equity Research at KeyBanc Capital Markets00:27:01From a funding perspective, can you just remind us, should we think about a leverage neutral approach to funding investments or whether we could see you drive down leverage further over time? That's it for me. John SpaidCFO at National Health Investors00:27:15Yeah. Yeah. Austin, this is John. So our policy is usually maintain leverage neutral. But as you noticed, we were in the market talking to debt investors in March. John SpaidCFO at National Health Investors00:27:28That was prior to Liberation Day. Liberation Day was very disruptive. We've noted that during a period of time earlier this year, our cost of equity was pretty close to our cost of incremental long term debt. So we've pivoted to utilizing a lot more equity. That's not our desire. Our desire is to stay more leverage neutral. But that's going to be market conditions and driven by market, And we're fortunate enough to have options here to provide for liquidity from different sources. Austin WurschmidtSenior REIT Analyst - Equity Research at KeyBanc Capital Markets00:28:08Thanks for the time. Operator00:28:13Your next question is from Omotayo Agusanya with Deutsche Bank. Omotayo OkusanyaManaging Director - Head of US REIT Research at Deutsche Bank00:28:22Good morning, everyone. Good execution this quarter. Just around Discovery, again, there's still a top tenant of yours. I think the subset is 3.2% of NOI. Just curious how you were thinking about that overall relationship today because again, transition a bunch of assets away from them, then that's one independent living asset that you actually kept with them in the SHOP portfolio. Omotayo OkusanyaManaging Director - Head of US REIT Research at Deutsche Bank00:28:46Just wondering what some of the challenges are that caused some of the transition and just how you're thinking about the overall relationship today. Kevin PascoeChief Investment Officer at National Health Investors00:28:56Tayo, this is Kevin. As it relates to Discovery, there's still going to be an ongoing partner of ours. We have 10 buildings with them in SHOP. We continue to see some NOI growth within that portfolio and expect more out of them. So they're going to be a piece of our business going forward. Kevin PascoeChief Investment Officer at National Health Investors00:29:12As we talked about on the last call, it's a matter of making sure that we're promoting the things that are going well within the relationship, which is why we moved over the independent living building from triple net to shop. We wanna promote that piece of it. So, you know, you'll continue to see them be a piece of our business. They're a large operator in the space. So, you know, we like having them as a customer, and, you know, we'll see where the what the future brings for us there. Omotayo OkusanyaManaging Director - Head of US REIT Research at Deutsche Bank00:29:36On the assisted living side, is there something thematic with those assets you transitioned? Did they not have scale in those markets? Curious why that decision was made. Kevin PascoeChief Investment Officer at National Health Investors00:29:48I think this is a function of their smaller buildings and secondary markets. Discovery had done an okay job coming out of the pandemic and getting them turned around but as we've really just described, I generally think they do really well with bigger buildings and more primary markets. They've done a decent job here, but we wanted to make sure that we had the right focus, not to say they weren't giving focus to the buildings, it was time for a change and wanted to make sure we had a partner that was going to be able to succeed with smaller buildings in the secondary markets and think there's still a fair amount of growth that's left in these which is why we made this transition. Omotayo OkusanyaManaging Director - Head of US REIT Research at Deutsche Bank00:30:36Makes sense. And then one other quick one from me. I think you made a comment that shop, there was like some near term softness in occupancy you saw maybe post 2Q and you were hoping it was just a temporary thing. Could you just talk a little bit about what you're seeing out there and what may be causing that whether it's just you're starting to ramp up on pricing or maybe that's what caused the pullback? Kevin PascoeChief Investment Officer at National Health Investors00:31:00I think it was really two things. There was some change in kind of the local leadership in some of the buildings which can sometimes cause a little bit of disruption. I don't want to offer an excuse for that but I think they there was an element of just moving some people around making sure we have the right people in the right seats that's accomplished. And then the other part of it is really just some abnormal move outs higher than normal. The flows in and move ins have been fairly consistent. Kevin PascoeChief Investment Officer at National Health Investors00:31:29It was just kind of an abnormality on the move outsides. So we think that will kind of come back to the mean and we'll continue to see growth there. Omotayo OkusanyaManaging Director - Head of US REIT Research at Deutsche Bank00:31:38Thank you. Operator00:31:43Your next question for today is from Farrell with Bank of America. Farrell GranathEquity Research Associate at Bank of America00:31:50Hi. Good morning. This is Farrell Granath. I first just wanted to touch on the recent hire of Grant and how does that play into how you're thinking about either your investment or strategy when expanding into either the shop business or just expanding into housing generally. Kevin PascoeChief Investment Officer at National Health Investors00:32:11Good morning. This is Kevin again. The focus for us was to make sure that we have our asset management team in a very good spot to be able to take on where the business is going which is going to be more of a shop focus and that's going to require us to have an expansion of oversight. So we hired in a senior person in Grant. We're going to be putting people in the right seats. Kevin PascoeChief Investment Officer at National Health Investors00:32:35I used that phrase once already but using it here again to make sure that we have the right oversight. We have great people on our team and I think there's a lot of room for them to grow. We just need to make sure that we have our systems and processes down where when it comes to shop so we can expand that piece of the business. So once we get that set, we can further accelerate the pipeline and make sure that whatever we bring in the front end is going to be managed appropriately and we're going see the growth that we expect out of it. Farrell GranathEquity Research Associate at Bank of America00:33:07Great. And also on the SLM, I know you had received some of the loan payment that you had previously disclosed last quarter. Would you expect to receive any other payments going forward or has there been any other development? Kevin PascoeChief Investment Officer at National Health Investors00:33:20No further developments. We have an agreement with them where there are some scheduled payments. Frankly, they're a floundering operator right now. So we'll see what happens with them. They're not going to be I view this as largely wrapped up. Kevin PascoeChief Investment Officer at National Health Investors00:33:39We have a few payments that I think they'll make where we have a mortgage property but it will be small and it's just it's not really going to move the needle significantly. And we still do have credit on the guarantee with guarantees that we have behind it. So we have recourse, should they not perform. But at the end of the day, again, we're talking about a very small percentage here. Farrell GranathEquity Research Associate at Bank of America00:34:03Great. And one last one for me. For the discovery deferral payments with the termination of the lease, I saw there was a comment about that you would expect to collect the remaining deferral balance. I was just wondering if you could touch on how much that was in total, what you could expect to come in. John SpaidCFO at National Health Investors00:34:23This is John. So everything was approximately $3,300,000. So it's not quite the entire deferral balance. Farrell GranathEquity Research Associate at Bank of America00:34:34Okay. Alright. Thank you very much. Operator00:34:41Your next question is from John Kilachowski with Wells Fargo. John KilichowskiVP - Equity Research at Wells Fargo00:34:48Good morning. Thank you. Maybe the first one for me, just gonna be on NHC. Could you give us maybe a progress report on how those discussions are going? And then maybe also on the performance of that portfolio to date from a coverage perspective? Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:35:04Easy questions. This is Eric. So the discussions are ongoing. Can't really give you the details, but, you know, the the special committee of the board that was formed of non conflicted directors has met. We discussed our strategy, and that is in progress. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:35:34NHC has received some communication about that strategy. So, things are moving, and that's about all I can give you there on that update. And then in terms of coverage, as I'm sure you probably know, you know, we report their corporate coverage, but it it has improved to over four times. If you look at page seven in our supplemental, you'll see the number 4.16 times for NHC on their first quarter twenty twenty five coverage. So as an enterprise, they're doing really well. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:36:17And, you know, their ability to pay whatever the negotiated new rent is should not be an issue. John KilichowskiVP - Equity Research at Wells Fargo00:36:29Got it. Very helpful. And then, you know, an extension of that is, you know, in the past, you've mentioned the potential to do some dispositions out of that portfolio, you know, come the the turn of the new lease. Are you able to maybe size some of that for us? I don't know if you can talk about is that a 5% or 20% of the portfolio you're looking at? John KilichowskiVP - Equity Research at Wells Fargo00:36:49Or are there certain states maybe that you could speak to? Just something that could help us think about what that portfolio is going to look like going forward. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:36:57The way I think about it is from a pure asset management perspective, which means that, you can cull some of the underperforming buildings or more difficult states and come up with a better, portfolio that possibly could pay more rent. So as I've said in the past, a lease renewal could look like a combination of buildings that are sold and remaining buildings that are paying higher rent. John KilichowskiVP - Equity Research at Wells Fargo00:37:35Got it. Thank you. Operator00:37:41Once again, if you would like to ask a question, please press star one. We have reached the end of the question and answer session. And I will now turn the call over to Eric Mendelson for closing remarks. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:38:12Thank you, operator. Thanks, everyone, for your attention, and we'll look forward to seeing you at NAREIT or at some other investor conference. Operator00:38:22This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.Read moreParticipantsExecutivesDana HamblyVP - Finance & IREric MendelsohnPresident, CEO & Board MemberKevin PascoeChief Investment OfficerJohn SpaidCFOAnalystsAustin WurschmidtSenior REIT Analyst - Equity Research at KeyBanc Capital MarketsOmotayo OkusanyaManaging Director - Head of US REIT Research at Deutsche BankFarrell GranathEquity Research Associate at Bank of AmericaJohn KilichowskiVP - Equity Research at Wells FargoPowered by Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) National Health Investors Earnings HeadlinesNational Health Investors, Inc. 2025 Q2 - Results - Earnings Call PresentationAugust 7 at 1:25 PM | seekingalpha.comBrokerages Set National Health Investors, Inc. (NYSE:NHI) Target Price at $84.60August 7 at 2:13 AM | americanbankingnews.comTrump’s national nightmare is herePorter Stansberry and Jeff Brown say a new U.S. national emergency is already underway — and it could trigger the biggest forced rotation of capital since World War II. They reveal why Trump is mobilizing America’s tech giants… and name the two stocks most likely to soar as trillions shift behind the scenes.August 8 at 2:00 AM | Porter & Company (Ad)Decoding National Health Investors Inc (NHI): A Strategic SWOT InsightAugust 6 at 12:15 AM | gurufocus.comNational Health Investors earnings beat by $0.04, revenue topped estimatesAugust 6 at 11:02 PM | investing.comNHI Announces Second Quarter 2025 ResultsAugust 6 at 8:13 PM | gurufocus.comSee More National Health Investors Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like National Health Investors? Sign up for Earnings360's daily newsletter to receive timely earnings updates on National Health Investors and other key companies, straight to your email. Email Address About National Health InvestorsIncorporated in 1991, National Health Investors (NYSE:NHI) (NYSE:NHI) is a real estate investment trust specializing in sale, leasebacks, joint-ventures, senior housing operating partnerships, and mortgage and mezzanine financing of need-driven and discretionary senior housing and medical investments. NHI's portfolio consists of independent living, assisted living and memory care communities, entrance-fee retirement communities, skilled nursing facilities, and specialty hospitals.View National Health Investors ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Constellation Energy’s Earnings Beat Signals a New EraRealty Income Rallies Post-Earnings Miss—Here’s What Drove ItDon't Mix the Signal for Noise in Super Micro Computer's EarningsWhy Monolithic Power's Earnings and Guidance Ignited a RallyRivian Takes Earnings Hit—R2 Could Be the Stock's 2026 LifelinePalantir Stock Soars After Blowout Earnings ReportVertical Aerospace's New Deal and Earnings De-Risk Production Upcoming Earnings SEA (8/12/2025)Cisco Systems (8/13/2025)Alibaba Group (8/13/2025)NetEase (8/14/2025)Applied Materials (8/14/2025)NU (8/14/2025)Petroleo Brasileiro S.A.- Petrobras (8/14/2025)Deere & Company (8/14/2025)Palo Alto Networks (8/18/2025)Medtronic (8/19/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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PresentationSkip to Participants Operator00:00:00Greetings. Welcome to the National Health Investors twenty twenty five Earnings Webcast and Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press 0 on your telephone keypad. Operator00:00:22Please note this conference is being recorded. I will now turn the conference over to your host, Dana Hambly. You may begin. Dana HamblyVP - Finance & IR at National Health Investors00:00:33Thank you, and welcome to the National Health Investors Conference Call to review results for the 2025. On the call today are Eric Mendelson, President and CEO Kevin Pascoe, Chief Investment Officer John Spade, Chief Financial Officer and David Travis, Chief Accounting Officer. The results as well as notice of the accessibility of this call were released after the market closed yesterday in a press release that's been covered by the financial media. Any statements in this conference call, which are not historical facts, are forward looking statements. NHI cautions investors that any forward looking statements may involve risks or uncertainties and are not guarantees of future performance. Dana HamblyVP - Finance & IR at National Health Investors00:01:11All forward looking statements represent NHI's judgment as of the date of this conference call. Investors are urged to carefully review various disclosures made by NHI and its periodic reports filed with the Securities and Exchange Commission, including the risk factors and other information disclosed in NHI's Form 10 ks for the year ended 12/31/2024, and Form 10 Q for the quarter ended 06/30/2025. Copies of these filings are available on the SEC's website at sec.gov or on NHI's web website at nhireit.com. In addition, certain terms used in this call are non GAAP financial measures, reconciliations of which are provided in NHI's earnings release and related tables and schedules, which have been furnished on Form eight ks to the SEC. Listeners are encouraged to review those reconciliations provided in the earnings release together with all other information provided in that release. Dana HamblyVP - Finance & IR at National Health Investors00:02:07I'll now turn the call over to our CEO, Eric Mendelson. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:02:11Hello, and thanks to everyone for joining us today. We followed a strong start to the year with an even stronger quarter, which exceeded our expectations. The second quarter's outperformance was multifaceted and driven by solid execution throughout the enterprise. The faster pace of acquisitions in the first half of the year, exceptional SHOP NOI growth and continued deferral collections on improving tenant fundamentals were all major contributors. Due to the outperformance and good visibility, we're raising our 2025 guidance for the second time this year. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:02:51We increased the midpoint of our normalized FFO guidance per share by $09 to $4.8 representing year over year growth of 8.1%. With our improving growth and excellent coverage, we also announced last night that we are increasing the dividend for the first time in four years. Additionally, we're excited to share a milestone event for NHI. Effective August 1, we completed the transition of seven properties from leases to SHOP, resulting in an increase to our annualized SHOP NOI of approximately $8,800,000 or 57%. Following these transitions, SHOP will represent almost 10 of our consolidated NOI. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:03:43Given the significant organic and external growth opportunities, we expect that percentage to grow exponentially both on a near term and long term basis. Since we established SHOP in April 2022, we've been methodically preparing to grow this portfolio as we believe senior housing operations provide the highest growth potential with the best risk adjusted returns in our investment universe. Through investments in personnel as well as other internal and external resources, we're confident that we now have established a strong foundation across our asset management, business development, accounting and legal functions to strategically expand the SHOP portfolio at a rapid pace. Turning to the SHOP results for the quarter. SHOP NOI increased by over 29% compared to the 2024. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:04:41While there were some nonrecurring benefits during the quarter, which Kevin will detail, we're pleased that the early strategy to focus on driving higher occupancy is now leading to improved RevPOR growth and margin expansion. RevPAR growth of 3.7% and NOI margin at 26.9% are both record results since SHOP's formation. We continue to see substantial organic upside in this portfolio. With the conversions, we expect pro form a annualized twenty twenty six NOI growth to be double digits. The pipeline activity continues to make us optimistic that acquisitions will be a meaningful component of our growth profile for the next several years. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:05:28We've announced investments of 175,000,000 so far this year and currently have approximately $130,000,000 undersigned LOIs, which we expect to close in the next few months. This includes a SHOP deal valued at approximately $74,000,000 as well as a purchase option that we've exercised on a large entrance fee community. The incremental pipeline at nearly $350,000,000 is entirely focused on senior housing, including a significant number of SHOP deals. We expect to have several signed LOIs in the next two quarters. As I just mentioned, we expect acquisitions and SHOP acquisitions in particular to be a major contributor to our growth profile. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:06:16While we view every deal based on its own merits, we also employ a portfolio approach in which we measure any new acquisitions impact on the yield and growth of the overall SHOP portfolio. Obviously, we like the deals and we see many that offer tremendous NOI growth, and we evaluate situations in which the deal may open up a new relationship or geography where we see significant future opportunity. Through this approach, we are also developing a stable of institutional class operating partners that should allow us to source more opportunities with more seamless integration into our platform. Overall, our goal still targets aggregate initial yields to be accretive immediately with expected multiyear exceptional NOI growth. The balance sheet continues to be in great shape and very supportive of funding the significant investment pipeline. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:07:14Our net debt to adjusted EBITDA at 3.9 times is below the low end of our target range, and we have available liquidity of approximately $760,000,000 We believe this low leverage and strong access to capital create real competitive advantages and give us optionality when assessing our capital needs for the future. To sum all of this up, we're very excited about the multiple growth opportunities, and our confidence in capitalizing on these opportunities has never been higher. As this is our first public conference call since the Annual Shareholders Meeting in May, I want to share a few comments. First, we want to sincerely thank our shareholders for the constructive dialogue over the years and especially leading up to this year's meeting. We believe your valuable feedback has informed and validated our strategic direction. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:08:10Also, your direct correspondence has resulted in considerable Board changes, including this year's retirement of our two longest tenured Board members, the recent appointments of Candace Todd and Rob Chaffin, and the declassification of the board. Lastly, the outcome of the vote clearly informs our board that there is more work to be done, particularly with board refreshment. The Board is committed to improved governance and understands the role it plays in delivering long term value for our shareholders. On that topic, the Special Board Committee tasked with overseeing the NHC lease renegotiation is actively engaged with management. While we're not providing details of the engagement or the ongoing discussions with NHC, we are confident that the special committee's interests are fully aligned with our shareholders to execute a deal that delivers the best possible value. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:09:08I'll now turn the call to Kevin to provide more details on our operations. Kevin? Kevin PascoeChief Investment Officer at National Health Investors00:09:14Thank you, Eric. Our focus during the quarter was on transitioning six previously leased properties, including five assisted living and one independent living community to Sinceri Senior Living under a SHOP operating structure. This was accomplished on August 1, and we're thrilled to be working with Sinceri, an accomplished operator with 76 communities in its portfolio spanning 24 states. NHI retains 100% ownership of this portfolio and has engaged Sinceri under a management agreement, which includes incentives based on growth in both NOI and real estate valuation. We also transitioned an independent living community in Tulsa, Oklahoma from a lease to the existing shop venture that we have with Discovery Senior Living, which increases that portfolio to 10 properties. Kevin PascoeChief Investment Officer at National Health Investors00:10:02Discovery was the operator under the lease, so there should be no disruption in operations. These seven properties generate approximately 8,800,000.0 in annualized SHOP NOI and we expect them to have double digit NOI growth profile in 2026. John will provide more details on the impact of the transition to this year's guidance. The pipeline is very active and we are evaluating approximately $343,000,000 in senior housing deals through potential investments in SHOP, B Simple real estate and mortgage loans that have preferably a path to future ownership. More than 50% of the pipeline are SHOP deals with initial yields that are accretive to the company. Kevin PascoeChief Investment Officer at National Health Investors00:10:46We are focused on assets where there is a clear path to significant NOI growth. As Eric noted, we're also interested in acquisitions that provide other strategic benefits such as establishing a relationship with a new operating partner where we see future opportunities to scale in a specific geography. With Sinceri, we feel we are getting the best of both worlds in double digit NOI growth and significant flexibility to grow that relationship. Turning to our SHOP performance. Our same store SHOP portfolio of 15 communities increased NOI by 29.4% year over year to $3,800,000 The quarter did benefit from non recurring items totaling approximately $200,000 Adjusting for these items, we are still quite pleased that the pro form a rate was over 21%. Kevin PascoeChief Investment Officer at National Health Investors00:11:37As we've talked about, our strategy in 2023 and 2024 was to drive occupancy higher, which we did successfully. With occupancy over 89% for the last three quarters, our focus has shifted to pricing. We are encouraged to see early results in the RevPOR growth of 3.7% compared to the 2024 and two point one percent compared to this year's first quarter. Due to the excellent growth year to date, we have moved our full year NOI growth rate slightly higher to a range of 13% to 16%. This implies some slowing in the second half of the year, which is driven by some recent softness in occupancy, but we're optimistic that this trend reverses itself in fairly short order. Kevin PascoeChief Investment Officer at National Health Investors00:12:21Our longer term view is unchanged and we actually have higher conviction in the margin potential following the strong second quarter result. Across the triple net portfolio, we are generally experiencing the continuation of solid trends with no rent concessions, continued collection of deferred rents in excess of our expectations and stable occupancy and EBITDARM coverages. Bickford continues to generate strong NOI and we are encouraged to see the recent occupancy rebound. Bickford's second quarter occupancy increased by 20 basis points from the first quarter to 85.2%. Trailing twelve month EBITDARM coverage through March 30 excluding deferral repayments was 1.66 times. Kevin PascoeChief Investment Officer at National Health Investors00:13:06Including the repayments of approximately $4,800,000 over that timeframe, Bickford's pro form a coverage was a very comfortable 1.46 times. Repaid approximately $1,200,000 of deferred rent during the second quarter and has an outstanding balance of $10,400,000 at June 30. Recall that Bickford's next rent reset is April 2026. Due to their solid performance, we expect that we will be able to capture more than their quarterly run rate of deferral repayments into the future base rent and largely eliminate the variability that these repayments can cause to our outlook. Before I turn the call over to John, I'd like to announce we have hired Grant Johnson to fill the new role of Senior Vice President of Asset Management. Kevin PascoeChief Investment Officer at National Health Investors00:13:49Grant has over two decades of asset management and healthcare finance experience across senior housing and skilled nursing industries and has extensive relationships with operating companies, private equity and capital providers. Brand is part of that strong foundation Eric mentioned earlier and we expect great contributions from him. Kevin PascoeChief Investment Officer at National Health Investors00:14:07I'll now turn the call over to John to discuss our financial results and guidance. John? John SpaidCFO at National Health Investors00:14:12Thank you, Kevin, and hello, everyone. Let me begin with our second quarter results. I'll be using average diluted common shares for all per share results. John SpaidCFO at National Health Investors00:14:22For the quarter ended 06/30/2025, our net income per share was $0.79 down 2.5% from the prior year. Our NAREIT FFO results per share for the second quarter compared to the prior year period increased 0.8% to $1.19 per share. Our normalized FFO results per share for the second quarter increased 3.4% to $1.22 per share compared to the prior year second quarter. During the second quarter, we recognized a $1,500,000 gain from our equity method investment and $1,400,000 in lower credit loss expenses, which positively impacted net income, NAREIT FFO and normalized FFO. When reviewing our performance this quarter, please recall that last year's second quarter results included a lump sum $2,500,000 deferred rent recovery from one of our cash basis tenants. John SpaidCFO at National Health Investors00:15:19FAD for the quarter ended June 30 compared to the prior year period increased 8.1% to $56,000,000 NOI from our SHOP segment for the quarter ended June 30 increased 29.4% to $3,800,000 compared to the prior year period. The year over year SHOP common shareholder FAD contribution was up 32.6% to $3,400,000 after adjusting for routine capital expenditures and non controlling interests. For the six months ended June 30, SHOP revenues increased 5.7% to $28,200,000 compared to $26,600,000 in the prior year period. SHOP expenses grew 2.4% from $20,800,000 to $21,200,000 and the margin expanded two forty one basis points as a result of improvements in occupancy and RevPAR. In the second quarter, our cash rents increased $4,600,000 year over year. John SpaidCFO at National Health Investors00:16:21Cash rents attributable to our investment volume contributed $5,900,000 And our existing lease escalators, negotiated step ups and percentage revenue rents contributed an additional $1,700,000 and represents a 2.7% increase in those rents year over year. Offsetting these increases were our cash rent changes associated with the previous year's various transition properties, which represented only a $200,000 reduction in rents on those properties. Finally, as I previously mentioned, further offsetting these changes was last year's $2,500,000 lump sum deferred rent payment associated with one of our cash basis tenants. Interest expense for the quarter was flat year over year, while weighted average common diluted shares were up 7.5% to 46,800,000 shares as a result of the company's greater use of equity in lieu of debt to fund new investments over the last year. Sequentially, compared to the first quarter, cash G and A, excluding proxy fight expenses, increased $800,000 primarily due to compensation expenses. John SpaidCFO at National Health Investors00:17:31Legal expenses were modestly down sequentially Q2 over Q1, but still at an elevated level due to the company's increased investment in SHOP activities. In the second quarter, we completed the acquisition of a senior housing portfolio for $63,500,000 We also closed on a 28,000,000 senior housing construction loan with an existing operator. Our total funded investments for the six months ended June 30 was $161,500,000 This total includes our new acquisitions, net of one property acquired in the first quarter through a deed in lieu of foreclosure, as well as our funded mortgage and loan commitments, plus our investments in our existing real estate. To meet our investment needs, we utilized proceeds from mortgage and loan payoffs totaling $35,400,000 as well as $123,500,000 in proceeds from new equity. Year to date, our paid dividends of $76,000,000 in debt retirements were well supported by our operating cash flow and other liquidity sources. John SpaidCFO at National Health Investors00:18:40During the quarter, we settled just under 800,000 common shares from our Q4 twenty twenty four and Q1 twenty twenty five forward ATM activity at an adjusted forward price of $74.71 per share after fees and forward costs, for proceeds of approximately $58,000,000 Additionally, we again activated our ATM and sold on a forward basis approximately 1,300,000.0 common shares at an average price before fees of $72.5 per share. At 06/30/2025, we had total escrowed forward equity proceeds of approximately $102,300,000 available to us in exchange for the future delivery of 1,400,000.0 common shares at an average price of $71.03 per share. We also ended the quarter with $18,600,000 in cash on our balance sheet and $322,000,000 in revolver capacity. During the second quarter, we retired $75,700,000 in secured debt, which brings our secured debt balance to zero. We also extended our $200,000,000 term loan for six months to 12/16/2025. John SpaidCFO at National Health Investors00:19:52We have a $50,000,000 senior loan maturing in November and intend to extend the term loan maturity in the third quarter for an additional six months to June 2026. Our balance sheet ended the second quarter in great shape. Our net debt to adjusted EBITDA ratio was 3.9 times for the quarter, just below our stated four to five times leverage policy. Our interest coverage ratio was stable sequentially and improved year over year to 4.7 times despite retiring $151,000,000 in lower rate fixed interest rate debt since the second quarter last year. At June 30, our liquidity was approximately $760,000,000 which includes escrowed forward equity, cash, excess revolver capacity and up to an additional $316,000,000 in available ATM capacity. John SpaidCFO at National Health Investors00:20:44We continue to monitor long term bond rates and expect to utilize public debt to further improve our liquidity. Let me now turn to our dividend and guidance. As we announced last night, our Board of Directors declared a $0.92 per share dividend for shareholders of record 09/30/2025, and payable 10/31/2025. This represents a 2.2 increase and is our first dividend increase since the 2021. We also adjusted our full year 2025 guidance, which includes increases to our normalized FFO and normalized FAD results. John SpaidCFO at National Health Investors00:21:22Our guidance includes the impacts from the recently announced SHOP conversion and our other expected results. Compared to 2024, NAREIT FFO guidance at the midpoint is $4.48 or a decline of 1.5% and normalized FFO at the midpoint is $4.8 or an increase of 8.1%. Compared to our May full year guidance, we decreased NAREIT FFO by $0.19 per share and increased normalized FFO by $09 per share. Our guidance for FAD at the midpoint is $228,900,000 up from the May guidance of 225,100,000 and represents a 12.1% increase over 2024. Included in our guidance issued last night are our just announced RIDEA shop conversion expectations, which commenced August 1. John SpaidCFO at National Health Investors00:22:17During the third quarter and subject to final post closing reconciliations, we expect to write off approximately $12,000,000 in straight line receivables associated with the termination of the Discovery leases. And we conservatively estimated between 1,000,000 and $1,400,000 in losses upon operations transfer, which will both be adjusted out of our normalized FFO and FAD results. Our guidance includes our expected five month NOI contribution from the conversion shop operations in the range of $3,600,000 to $3,700,000 as well as approximately $500,000 in routine CapEx for the remainder of the year. During the third quarter, the company also expects to recognize Discovery lease revenues totaling approximately $3,300,000 subject to final post closing reconciliations. Our guidance includes same store SHOP NOI growth in the range of 13% to 16% over 2024, which is up slightly from 12% to 15% in prior guidance. John SpaidCFO at National Health Investors00:23:21Guidance also includes the continued collection of deferred rents and the fulfillment of our existing commitments. In keeping with our past recent practice, our updated 2025 guidance includes $105,000,000 in additional new unidentified investments and an average yield of 8.1%. Our guidance includes a small amount of forward equity utilization between now and the end of the year, but our actual use will be dependent upon the volume and timing of additional new investments. Finally, guidance continues to include assumptions for additional costs and concessions related to normal asset management transitions, dispositions and loan repayments. Once again, thank you for joining our call today. John SpaidCFO at National Health Investors00:24:04That concludes our prepared remarks. So with that, operator, please open the lines for questions. Operator00:24:21Confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset Your first question for today is from Austin Wurschmidt with KeyBanc. Austin WurschmidtSenior REIT Analyst - Equity Research at KeyBanc Capital Markets00:24:48Thanks. Good morning, everybody. Eric, it sounds like you have a lot of positive momentum on the investment front, but there was a bit of a delay in closing, I believe, on some of the investments and that decrease in that unidentified investments assumed in guidance. Can you just give some additional detail what's driving the delay and just what the confidence level that everything is moving forward from here? Kevin PascoeChief Investment Officer at National Health Investors00:25:12Hey, Austin, this is Kevin. I would just characterize it as a timing issue. As we talked about during the quarter, we're very focused on the conversion. We still have a very robust pipeline. We've got a couple of deals under LOI that we expect to close in the not too distant future. Kevin PascoeChief Investment Officer at National Health Investors00:25:28So I don't view it as a disruption. It's just more timing than anything else. Austin WurschmidtSenior REIT Analyst - Equity Research at KeyBanc Capital Markets00:25:34Appreciate that. And then you guys have talked about in the past, quarter or so walked away from a larger portfolio transaction. I don't think you kind of flagged, whether or not you continue to evaluate those deals outside of what you've quoted in the pipeline. Anything you can share in terms of the opportunity set and what the desire or likelihood is that there's something out there that could fit nicely within the portfolio to continue to grow as a percentage of the overall entity? Kevin PascoeChief Investment Officer at National Health Investors00:26:08Sure. This is Kevin again. I think when we look at the pipeline, what we're quoting are things that we're actively working. There's a likelihood that we issue an LOI but there are also ones that are generally under $100,000,000 in size. So it's stuff that's a little more tangible. Kevin PascoeChief Investment Officer at National Health Investors00:26:26We absolutely have some bigger deals in pipeline that we're evaluating and we have the personnel and the bandwidth to be able to take it down. We also just don't want to send the wrong signal and make the pipeline look like it's bigger than it should be when those deals have generally have some more nuances to them. So there's a few that are still floating around. We still continue to evaluate some larger portfolios. It's really just a sense of making sure we have the right operating partner, it's the right profile and it checks a lot of boxes. Austin WurschmidtSenior REIT Analyst - Equity Research at KeyBanc Capital Markets00:27:01From a funding perspective, can you just remind us, should we think about a leverage neutral approach to funding investments or whether we could see you drive down leverage further over time? That's it for me. John SpaidCFO at National Health Investors00:27:15Yeah. Yeah. Austin, this is John. So our policy is usually maintain leverage neutral. But as you noticed, we were in the market talking to debt investors in March. John SpaidCFO at National Health Investors00:27:28That was prior to Liberation Day. Liberation Day was very disruptive. We've noted that during a period of time earlier this year, our cost of equity was pretty close to our cost of incremental long term debt. So we've pivoted to utilizing a lot more equity. That's not our desire. Our desire is to stay more leverage neutral. But that's going to be market conditions and driven by market, And we're fortunate enough to have options here to provide for liquidity from different sources. Austin WurschmidtSenior REIT Analyst - Equity Research at KeyBanc Capital Markets00:28:08Thanks for the time. Operator00:28:13Your next question is from Omotayo Agusanya with Deutsche Bank. Omotayo OkusanyaManaging Director - Head of US REIT Research at Deutsche Bank00:28:22Good morning, everyone. Good execution this quarter. Just around Discovery, again, there's still a top tenant of yours. I think the subset is 3.2% of NOI. Just curious how you were thinking about that overall relationship today because again, transition a bunch of assets away from them, then that's one independent living asset that you actually kept with them in the SHOP portfolio. Omotayo OkusanyaManaging Director - Head of US REIT Research at Deutsche Bank00:28:46Just wondering what some of the challenges are that caused some of the transition and just how you're thinking about the overall relationship today. Kevin PascoeChief Investment Officer at National Health Investors00:28:56Tayo, this is Kevin. As it relates to Discovery, there's still going to be an ongoing partner of ours. We have 10 buildings with them in SHOP. We continue to see some NOI growth within that portfolio and expect more out of them. So they're going to be a piece of our business going forward. Kevin PascoeChief Investment Officer at National Health Investors00:29:12As we talked about on the last call, it's a matter of making sure that we're promoting the things that are going well within the relationship, which is why we moved over the independent living building from triple net to shop. We wanna promote that piece of it. So, you know, you'll continue to see them be a piece of our business. They're a large operator in the space. So, you know, we like having them as a customer, and, you know, we'll see where the what the future brings for us there. Omotayo OkusanyaManaging Director - Head of US REIT Research at Deutsche Bank00:29:36On the assisted living side, is there something thematic with those assets you transitioned? Did they not have scale in those markets? Curious why that decision was made. Kevin PascoeChief Investment Officer at National Health Investors00:29:48I think this is a function of their smaller buildings and secondary markets. Discovery had done an okay job coming out of the pandemic and getting them turned around but as we've really just described, I generally think they do really well with bigger buildings and more primary markets. They've done a decent job here, but we wanted to make sure that we had the right focus, not to say they weren't giving focus to the buildings, it was time for a change and wanted to make sure we had a partner that was going to be able to succeed with smaller buildings in the secondary markets and think there's still a fair amount of growth that's left in these which is why we made this transition. Omotayo OkusanyaManaging Director - Head of US REIT Research at Deutsche Bank00:30:36Makes sense. And then one other quick one from me. I think you made a comment that shop, there was like some near term softness in occupancy you saw maybe post 2Q and you were hoping it was just a temporary thing. Could you just talk a little bit about what you're seeing out there and what may be causing that whether it's just you're starting to ramp up on pricing or maybe that's what caused the pullback? Kevin PascoeChief Investment Officer at National Health Investors00:31:00I think it was really two things. There was some change in kind of the local leadership in some of the buildings which can sometimes cause a little bit of disruption. I don't want to offer an excuse for that but I think they there was an element of just moving some people around making sure we have the right people in the right seats that's accomplished. And then the other part of it is really just some abnormal move outs higher than normal. The flows in and move ins have been fairly consistent. Kevin PascoeChief Investment Officer at National Health Investors00:31:29It was just kind of an abnormality on the move outsides. So we think that will kind of come back to the mean and we'll continue to see growth there. Omotayo OkusanyaManaging Director - Head of US REIT Research at Deutsche Bank00:31:38Thank you. Operator00:31:43Your next question for today is from Farrell with Bank of America. Farrell GranathEquity Research Associate at Bank of America00:31:50Hi. Good morning. This is Farrell Granath. I first just wanted to touch on the recent hire of Grant and how does that play into how you're thinking about either your investment or strategy when expanding into either the shop business or just expanding into housing generally. Kevin PascoeChief Investment Officer at National Health Investors00:32:11Good morning. This is Kevin again. The focus for us was to make sure that we have our asset management team in a very good spot to be able to take on where the business is going which is going to be more of a shop focus and that's going to require us to have an expansion of oversight. So we hired in a senior person in Grant. We're going to be putting people in the right seats. Kevin PascoeChief Investment Officer at National Health Investors00:32:35I used that phrase once already but using it here again to make sure that we have the right oversight. We have great people on our team and I think there's a lot of room for them to grow. We just need to make sure that we have our systems and processes down where when it comes to shop so we can expand that piece of the business. So once we get that set, we can further accelerate the pipeline and make sure that whatever we bring in the front end is going to be managed appropriately and we're going see the growth that we expect out of it. Farrell GranathEquity Research Associate at Bank of America00:33:07Great. And also on the SLM, I know you had received some of the loan payment that you had previously disclosed last quarter. Would you expect to receive any other payments going forward or has there been any other development? Kevin PascoeChief Investment Officer at National Health Investors00:33:20No further developments. We have an agreement with them where there are some scheduled payments. Frankly, they're a floundering operator right now. So we'll see what happens with them. They're not going to be I view this as largely wrapped up. Kevin PascoeChief Investment Officer at National Health Investors00:33:39We have a few payments that I think they'll make where we have a mortgage property but it will be small and it's just it's not really going to move the needle significantly. And we still do have credit on the guarantee with guarantees that we have behind it. So we have recourse, should they not perform. But at the end of the day, again, we're talking about a very small percentage here. Farrell GranathEquity Research Associate at Bank of America00:34:03Great. And one last one for me. For the discovery deferral payments with the termination of the lease, I saw there was a comment about that you would expect to collect the remaining deferral balance. I was just wondering if you could touch on how much that was in total, what you could expect to come in. John SpaidCFO at National Health Investors00:34:23This is John. So everything was approximately $3,300,000. So it's not quite the entire deferral balance. Farrell GranathEquity Research Associate at Bank of America00:34:34Okay. Alright. Thank you very much. Operator00:34:41Your next question is from John Kilachowski with Wells Fargo. John KilichowskiVP - Equity Research at Wells Fargo00:34:48Good morning. Thank you. Maybe the first one for me, just gonna be on NHC. Could you give us maybe a progress report on how those discussions are going? And then maybe also on the performance of that portfolio to date from a coverage perspective? Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:35:04Easy questions. This is Eric. So the discussions are ongoing. Can't really give you the details, but, you know, the the special committee of the board that was formed of non conflicted directors has met. We discussed our strategy, and that is in progress. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:35:34NHC has received some communication about that strategy. So, things are moving, and that's about all I can give you there on that update. And then in terms of coverage, as I'm sure you probably know, you know, we report their corporate coverage, but it it has improved to over four times. If you look at page seven in our supplemental, you'll see the number 4.16 times for NHC on their first quarter twenty twenty five coverage. So as an enterprise, they're doing really well. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:36:17And, you know, their ability to pay whatever the negotiated new rent is should not be an issue. John KilichowskiVP - Equity Research at Wells Fargo00:36:29Got it. Very helpful. And then, you know, an extension of that is, you know, in the past, you've mentioned the potential to do some dispositions out of that portfolio, you know, come the the turn of the new lease. Are you able to maybe size some of that for us? I don't know if you can talk about is that a 5% or 20% of the portfolio you're looking at? John KilichowskiVP - Equity Research at Wells Fargo00:36:49Or are there certain states maybe that you could speak to? Just something that could help us think about what that portfolio is going to look like going forward. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:36:57The way I think about it is from a pure asset management perspective, which means that, you can cull some of the underperforming buildings or more difficult states and come up with a better, portfolio that possibly could pay more rent. So as I've said in the past, a lease renewal could look like a combination of buildings that are sold and remaining buildings that are paying higher rent. John KilichowskiVP - Equity Research at Wells Fargo00:37:35Got it. Thank you. Operator00:37:41Once again, if you would like to ask a question, please press star one. We have reached the end of the question and answer session. And I will now turn the call over to Eric Mendelson for closing remarks. Eric MendelsohnPresident, CEO & Board Member at National Health Investors00:38:12Thank you, operator. Thanks, everyone, for your attention, and we'll look forward to seeing you at NAREIT or at some other investor conference. Operator00:38:22This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.Read moreParticipantsExecutivesDana HamblyVP - Finance & IREric MendelsohnPresident, CEO & Board MemberKevin PascoeChief Investment OfficerJohn SpaidCFOAnalystsAustin WurschmidtSenior REIT Analyst - Equity Research at KeyBanc Capital MarketsOmotayo OkusanyaManaging Director - Head of US REIT Research at Deutsche BankFarrell GranathEquity Research Associate at Bank of AmericaJohn KilichowskiVP - Equity Research at Wells FargoPowered by