National Health Investors NYSE: NHI reported second-quarter results that management said were in line with expectations, alongside the completion of a major portfolio sale and continued expansion of its seniors housing operating portfolio, or SHOP.
President and CEO Eric Mendelsohn said the company completed the sale of its NHC portfolio on July 1, an action he described as one of the most significant in NHI’s history. The transaction increased the company’s focus on private-pay senior housing, reduced leverage below its long-term target range and added liquidity for future investments, according to management.
NHI sold the NHC portfolio for $560 million in cash and expects to record an approximately $541.6 million gain during the third quarter. Chief Financial Officer Todd Siefert said about $221 million of the proceeds was used to complete previously acquired replacement properties through reverse Section 1031 exchanges, while roughly $334 million is being held for future tax-deferred reinvestment under Section 1031.
Second-Quarter Financial Results
For the quarter ended June 30, NHI reported net income of $1.15 per share, up 45.6% from the prior-year period. The increase was driven largely by a $22 million gain on the sale of real estate related to the sale of five properties for approximately $98.5 million in net proceeds.
NAREIT funds from operations per share was flat year over year at $1.19, while normalized FFO per share declined 2.5% to $1.19. The quarter included $1.1 million of expenses associated with the company’s CFO transition and about $700,000 of non-cash deferred income tax expense, Siefert said.
Funds available for distribution increased 5.8% year over year to $61.6 million. Cash rental income rose 2.8%, while total SHOP net operating income increased 188.5% from the second quarter of 2025, primarily due to the transition and acquisition of 27 properties.
General and administrative expense increased 44% to $8.8 million as NHI added personnel to support its SHOP growth strategy and incurred one-time CFO transition costs. Interest expense rose 5.4% as a result of higher average interest rates and a higher revolver balance compared with the prior-year quarter.
SHOP Growth and Operating Performance
NHI has increased its SHOP investment by 137% over the past year to approximately $850 million, representing 24% of the company’s total investments. Mendelsohn said the company is investing in personnel, technology and processes as the platform becomes a larger contributor to net operating income.
The company hired Chris Maingot as chief operating officer, a move intended to strengthen operating and asset-management oversight of the growing SHOP portfolio. Mendelsohn said the appointment will also allow Chief Investment Officer Kevin Pascoe to focus more heavily on operator relationships, investment sourcing and acquisitions.
SHOP NOI totaled $11 million in the second quarter, in line with NHI’s forecast. Same-store NOI from 15 legacy Holiday properties declined 6.3% year over year to $3.6 million, though it increased 18.9% sequentially from the first quarter. For 26 properties owned since the beginning of 2026, NOI increased about 7.6% sequentially.
Pascoe said NHI’s full-year SHOP outlook was unchanged and that newer investments continue to support expectations for high-single-digit to low-double-digit NOI growth. Dana Hambly, senior vice president of finance and investor relations, said the company’s same-store SHOP guidance implies 8% to 9% growth in the second half of the year.
Management attributed the expected improvement to occupancy initiatives, pricing efforts and the return of certain units to service. Pascoe noted that one property with units offline has created about a percentage point of occupancy pressure, with the related project expected to be completed by year-end.
Investment Pipeline and Portfolio Strategy
Year to date, NHI completed $237.2 million in private-pay senior housing investments at an average yield of 7.7%, including more than $212 million of SHOP investments. The company has about $127.3 million of signed letters of intent, primarily in SHOP, at an estimated initial yield of 6.8% and a 6.5% yield after maintenance capital expenditures.
Pascoe said NHI is also evaluating roughly $420 million of additional potential transactions, excluding several larger portfolio opportunities. He said the company remains focused on SHOP but intends to retain flexibility to use either SHOP or triple-net lease structures depending on the operator, property and expected risk-adjusted returns.
Management said acquisition pricing has become more competitive. Pascoe said the spread between larger portfolio transactions and smaller single-property or two-property deals had narrowed to roughly 25 to 50 basis points from at least 100 basis points six months earlier. Higher-quality opportunities were being priced closer to 6.5% initial yields, he said.
NHI also disposed of seven properties with six operators for net proceeds of $117.4 million during 2026, in addition to the NHC sale. The company is evaluating strategic alternatives for a subset of its same-store SHOP properties. Mendelsohn said the goal is to finalize a plan this year and pursue a transaction that is accretive or as close to accretive as possible.
Balance Sheet and Dividend
NHI’s net debt-to-adjusted EBITDA ratio stood at 4.1 times as of June 30, within its stated leverage policy range of 3.5 to 4.5 times. During the quarter, the company retired a $125 million term loan due in June 2026. It has a $100 million private placement note due in January 2027 that it expects to retire by year-end, with no other debt maturities until 2028.
Available liquidity was approximately $792.4 million at quarter-end, including $262 million of excess revolver capacity, $500 million available under its refreshed at-the-market equity program and cash on hand.
The board increased NHI’s quarterly dividend by $0.02 per share to $0.94 per share. The dividend is payable Nov. 6 to stockholders of record as of Sept. 30.
Looking ahead, Mendelsohn said NHI aims to increase SHOP exposure to 40% to 50% of its portfolio over roughly three years, while acknowledging the company could potentially move faster. Management said it will seek to redeploy its Section 1031 proceeds to avoid a special dividend and pursue additional acquisitions that support long-term FAD growth.
About National Health Investors (NYSE:NHI)
National Health Investors, Inc NYSE: NHI is a specialized real estate investment trust (REIT) focused on owning and financing high-quality healthcare and senior housing facilities in the United States. The company's portfolio encompasses a diverse range of properties, including skilled nursing centers, assisted living and memory care communities, behavioral health facilities, dialysis clinics, and medical office buildings. NHI typically enters into long-term net-lease agreements with experienced healthcare operators, providing stable and predictable rental income streams while enabling its tenants to concentrate on delivering quality care.
Since its founding in 1991 and initial public offering later that year, National Health Investors has pursued a disciplined growth strategy centered on strategic acquisitions, joint ventures, and selective development.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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