National Health Investors, Inc. Q2 FY2025 earnings call

• The second quarter exceeded expectations with strong execution, including faster acquisitions, SHOP NOI growth, and deferred collections. - Raised 2025 normalized FFO guidance per share by $0.09 to $4.80, and increased dividend for the first time in 4 years. - Completed transition of 7 properties to SHOP on August 1, increasing annualized SHOP NOI by ~$8.8 million. - SHOP NOI increased over 29% Y/Y, with RevPOR growth and margin expansion. - Pipeline activity is active with $175 million invested so far, ~$130 million under signed LOIs, and incremental pipeline near $350 million. - Hired Grant Johnston as Senior Vice President of Asset Management.

The SHOP segment saw significant performance. SHOP NOI increased by over 29% compared to the second quarter of 2024. The 7 properties transitioned to SHOP on August 1 resulted in an increase to annualized SHOP NOI of approximately $8.8 million or 57%, and SHOP now represents almost 10% of consolidated NOI. For the quarter, SHOP NOI was $3.8 million. Same-store SHOP portfolio of 15 communities increased NOI by 29.4% year-over-year to $3.8 million, with RevPOR growth of 3.7% and NOI margin at 26.9% being record results since SHOP's formation.

• Increased midpoint of normalized FFO guidance per share by $0.09 to $4.80, representing 8.1% Y/Y growth. - Adjusted FAD midpoint to $228.9 million, up from $225.1 million. - SHOP same-store NOI growth expected in range of 13% to 16% over 2024, up from prior guidance. - Expect to write off ~$12 million in straight-line receivables and estimate $1 million to $1.4 million in losses upon operations transfer related to Discovery leases. - Includes $105 million in additional new unidentified investments at 8.1% average yield.

• Timing issues with some investment closings. - SLM is a foundering operator with small scheduled payments that won't move the needle significantly. - Potential disruptions from abnormal move-outs in SHOP occupancy temporarily.

Q: Austin Wurschmidt with KeyBanc asked about delay in closing investments and confidence in forward momentum.

A: Kevin Pascoe said it's a timing issue, pipeline is robust with deals under LOI expected to close soon.

Q: Omotayo Okusanya with Deutsche Bank asked about Discovery relationship and transition of assets.

A: Kevin Pascoe said Discovery is still a partner with 10 buildings in SHOP, and transition was due to smaller buildings in secondary markets.

Q: Farrell Granath with Bank of America asked about hire of Grant and SLM payments.

A: Kevin Pascoe said Grant's hire is to ensure proper oversight for SHOP expansion, and no further significant payments expected from SLM.

Q: William John Kilichowski with Wells Fargo asked about NHC progress and portfolio performance.

A: Eric Mendelsohn said NHC discussions are ongoing, special committee is working, and NHC coverage is over 4x.