NHI - Earnings call transcript Q4 2018 | National Health Investors, Inc.

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Colleen Schaller

Hello, everyone. This is Colleen Schaller, Director of Investor Relations. Welcome to the National Health Investors conference call to review the company's results for the fourth quarter of 2018.

On the call with me today is Eric Mendelsohn, President and CEO; Roger Hopkins, Chief Accounting Officer; Kevin Pascoe, Chief Investment Officer; and John Spaid, Executive Vice President of Finance. The results as well as notice of the accessibility of this conference call on a listen-only basis over the Internet were released this morning before market opened in a press release that's been covered by the financial media.

me which that are are let this statements forward-looking start, call, conference not we remind any you in statements. As historical facts, risks not investors uncertainties cautions that forward-looking may NHI any and of guarantees involve are future performance. statements or as NHI's conference statements date the judgment forward-looking of of All represent this call. XX-K various in to factors the Exchange NHI Commission, for the made risk and NHI's the its XX, are urged disclosures with and Investors periodic other Securities disclosed information and Form carefully review December ended by reports filed year including XXXX. www.sec.gov on Copies website on filings are of www.nhireit.com. these the available SEC's at website at or NHI's

have terms certain to the Listeners in filed X-K Eric information in addition, over other review reconciliations measures, earnings SEC. in reconciliations call which used with release turn In provided which are NHI's provided non-GAAP tables Mendelsohn. financial earnings been in the this related are release now in Form call provided together I'll are and those the with of all to schedules, that and release. encouraged

Eric Mendelsohn

you, and including the about Beach a and of execute building. investments NHI will we've holiday the Since the through of earnings number talk Colleen. XXXX. Today, challenges on closed our new opportunities the QX Thank acquisition restructure, completed I'll release, Vero

I've Our distressed pipeline as a is as with ever some it as seen active product as stabilized. well

low capital significant are our of and cost Our focus operator our relationships on contributors to activity.

of the operators the me from challenges you've X% about troubled past. this come year Our in speak that heard

we the delighted growing looking progress the agreement to me are with into great, in we is a ended entered say forward them forbearance forbearance operator and with the We're XXXX and with in that them. Let agreement future. doing with their first that recently

into we has interim possession took entered on with to been have Lake and the litigation third. X of and affiliates continue QX, that an management Manager During communities, the the Capital. on of of the We've East transition agreements part the communities of were X we placed

we and we and quickly properties to trauma show year on much to momentum to We to better the have the deposits these costs previous on inflicted flow, return expect to in the will firm ongoing a transition this the cash the how by continue place was you positive operator time, assessment as security have progresses. At former cannot offset our expect with during share the picture severe, call. QX give but a you to community

operators having also with. We previously other there X are difficulties that we're mentioned,

that expect one transitioned. QX. has The the first Wisconsin we property impacts as during supported the to with This mitigating in property transition is operator is property operator financially the and a single guarantee, the deposits

care uncertain us of second for The run Leaves. memory to time is It this operator buildings at situation give and X outcome. definitive Autumn consists by difficult a you more more

talks to during move which or operate are not to continued defaults, is time, their they perform We forebear some B. their certain. on ability to we includes this Plan giving them in failure We're either to but will pay will which, rent, community

enter to new their substantially very into new is continues product paying to on Ridge phase entrance project Issaquah, presold. similar Moving a a experience very in opportunities. demand. excited and Timber development Sage LCS our with to project extremely robust Washington. to investment X The Woods on We're LCS our LCS

nursing, and X moment. a will both Wingate, about around more We interesting Kevin also announced Ignite which skilled have talk new strategies relationships with in

the NHI that exception. us. opportunities on challenges opportunities to to to for is guidance the strong is by quickly our executing gave The addressing mentioned. team under It's happen year front and this committed and and continue desire we my challenges of on making promise in reflected As and over I we no XXXX, previously entire the by deliver,

on quarters coming the turn over informed well call doing. to how you With Roger? that, the Roger. I'll we're keep over will We

Roger Hopkins

leased fourth with We these a escrow expenses, which counsel has Lake the delinquent Capital. payment everyone. rent late an million faced portion associated Eric. of defaults occurred, our in Regency of affiliate challenges engaged of December Eric for unpaid lease taxes accounts just tenants, shareholders. Thanks, assert XXXX. of revenues agreements we the the of to and on collectively at property X $XXX,XXX described our payment to our and accounted outside with With total of repossession we total Leasing, protect X tenants quarter the in charged for year-end the of a legal our $X.X Hello, of East facilities SH for X.X% interest including

to We will recovery million scheduled process collection incurred the ensuring we compliance our in originally with of expenses all XXXX rents the pursue $XX.X plus agreements. the maximize lease of measures cash in all of of

will and We expenses rent cover also under agreements personal our unpaid our us. exercise with who guarantors rights to

million total XXXX it Finally, new In and situations million. Last $XXX.X is to advisable. with financial material investments announced have managers The when on X believe quarter we not construction we month, operations announced did described we for packs. will impact financing in in year. $XX.X our third-party lease operators, planned transition leased in have $XXX.X full results we a fourth tenants to the we and purchase announced or December, mortgage million bringing the

off a is great to XXXX start. So

which loan NHI's caused in disruptions $XXX tenants and also in on in by the be development our focused will investments priority executing resolving described in is nearly management our XX-K, the default and million primarily X commitments new in pipeline. funded accretive on We XXXX. have

compared the to X from the share million line the rents ago of because straight in Normalized to fourth the $X.X compared $X.X fourth declined of the $X.XX $X.XX year. FFO which share for of year to same was the GAAP purposes, per For recognition increased in ago. diluted quarter quarter XXXX fourth last per million XXXX, $X.XX quarter period in year X% AFFO $X.XX X diluted in same period normalized to

normalized X.X% diluted full normalized $X.XX FFO the AFFO while per year, X.X% For share. to to $X.XX increased increased

NHI, rents, renovating funding make Furthermore, John for make and access to quarterly our leverage NHI's finishes portfolio renovation previous and Whether existing for our to at which We more because we of our of This projects the million, on provide exclude best the indicator described and we our we our growth periods comparability by calls, maintain public our at both sizable increases, explain will approach believe seniors for a and acquisitions fourth sources. increase operators year total the and renovations from facilities, construction to revenues facilities today's AFFO and $XXX.X on which new which automatically new deploying ones, million of the capital to from good volume maintain tends in demonstrates has investment focused purchasing equity profile, annual X.X% straight mix low tenants that expect. convention quarter accomplish debt portfolio equity for new X.X% is boost new with are our shareholders. in less utilization AFFO buildings of and same private lease in we in growth which useful. careful allowed appearances period-to-period and deals we to accounting to and shortly. encourage of increases the capital as XXXX. $XX dividends and and are our debt revenues. the up-to-date quarterly are or and ability reflect I respectively, to both NHI over and full As were These were the line

increases in reflective Our of expense depreciation XXXX portfolio. interest and expense are our growing

the compared X.X% fourth declined and and were X.X% X.X% quarter to the prior $X.X for year $X.X full million. Our in only to to X.X% $XX.X administrative revenues the year. the prior for These year of only total for compared million and to general million in expenses XXXX increases increased

the share-based vesting $XXX,XXX $X.X and first XX% compensation full for quarter expense our noncash noncash the occurs was Our compensation quarter of to due for annual million schedules. year. fourth Approximately the in

to dividends. ratio This low be quarterly in normalized payout XXXX announced currently our estimate our increase X% dividend on our per share. FFO morning, for we $X.XX Moving We outstanding to will a in ratios transition. mid-XX% AFFO range, manage as in the may and normalized year throughout These range. fluctuate the to in we properties our through will payout the range our mid-XX% be

and share have of described XXXX, earlier the very commitments business as shown makes capital us $X.XX of range XXXX, funding our for composition the ongoing and default include a XXXX per AFFO morning. These expected We estimate in properly we our estimates new will debt cautious tenants robust leverage. commitments align guidance investments, to our be to over we in maintaining share. X for and normalized for new diluted for $X.XX in of funding estimate to the mentioned the range in more $X.XX schedule diluted our our As equity our while press of for new XXXX, expected to per will uncertainty the metrics $X.XX financial growth in be a non-GAAP and in earnings this capital normalized estimate significant release of earlier FFO growth currently a resources while

estimate our our those John described certainty the to We will will debt to equity able defaults uses who as Spaid, and with call turn of tenants we now of John? more are I'll discuss among adjust resolution guidance earlier. the capital. over

John Spaid

Thank you, Roger.

ratio debt maturity For weighted net EBITDA at years and ended at annualized metrics debt our the capital X.X December to were coverage average charge X.Xx, at quarter XX, debt X.Xx. fixed

the weighted average fourth debt in was with cost revolver $XX on ended revolver, million capacity. NHI year our For available our quarter with the leaving X.X%. ended December outstanding of $XXX million us XX,

ATM program. to Turning our

an well net fourth ATM of debt. proceeds reduce we in our stock. XXX,XXX common to Proceeds future NHI were were leverage the turn revolver to Pascoe sold used at million. portfolio. to capacity resulting to our of price the continues our the net after of During share, have quarter our now at of million X discuss fourth After sold per The the investments. $XX.XX shares Xx call commissions currently facility. approximately in for quarter, shelf to activity, $XX $XXX.X we shares average under Kevin positioned our With be I'll over midpoint debt-to-EBITDA accretive Kevin? remaining our ratio,

Kevin Pascoe

John. Thank you,

quarter, X XX% into Looking smaller development will development from X.Xx and XX. rolling nicely of coverage now Bickford for coverage at to revenue the had look Living Bickford our to nearly It our the skilled ratio in same-store ending once as properties and adds be our was quarter. into two an at same-store of or the The portfolio of of operating the represents mid-XXXX leases. continue of ahead in improvements coverage transition continues coverage housing selling Each of property EBITDARM X.XXx, months additional portfolio and a cash complete, lease The X.XXx. next third into the schedule This overall the Taking was held XX September end will XXXX. portfolio, remaining sale, properties have a to for compete up at third cash EBITDARM calculation excludes positive anticipated for Ohio be Bickford was the spring X The EBITDARM T net the ratio well on and Senior Pennsylvania flow positioned quarter EBITDARM the be sold. Bickford we which X.XXx. developments the and Senior excluded will ended X portfolio. trailing X.Xx XX purchased are calculation portfolio. these the is a of months. with properties going its capital larger

fee basis represents trailing XX% was of third with end. Including revenue. their XX-month ratio our net Our EBITDARM Communities as quarter a coverage entry of Living on relationship cash X.XXx Senior income,

property to we East nonoperational. reposition SLC working with which back SLC currently to over with take agreed the And Charlotte be Lake. is the have took we'll asset, We from

We second our as to reopen similar SLC in asset A high-end to quarter a late in expect the the assets building we portfolio. have Class

HealthCare the Looking National at Corporation.

had with coverage XX% partnership of had cash cash fixed for ratio Our our of accounts an X.XXx. coverage Retirement, NHC X.XXx. corporate of which of revenue, revenue EBITDARM charge and Holiday our XX% a represents

consists in living Beach, The positive announced saw senior occupancy assisted Isles affiliate month, community for living by the XXX move this of of ins, XX.X%. net third the units. of owned Holiday Florida and XX living community quarter a quarter units The independent we Vero Earlier Retirement. an purchase averaged and the of

for This annual in annually be part leased of restructuring back of to acquired based mass November last year. $XX as the $X.X added announced an the purchase growth have and We XXXX, million million our X% on extension average to portfolio. accomplished November and release. our X% and part between on lease amended began vary of an The escalators current as master Holiday affiliate revenue the and restructure rent X, of lease and Holiday of of amended was will for in lease Holiday

XX purchase mass to deposit. million release, cash a in NHI this of payment February would the third million X, made as of rent Beginning end, XXXX, the result relinquished portfolio EBITDARM and $XX.X cash and be of the coverage a on for was has lease the amended a of consideration As of X.XXx $XX.X amendment. adjusting Trailing recent $XX.X annual impact million. cash quarter terms for portfolio of Holiday a the Holiday the security

other Moving investments. on to

memory Scottsdale, The in units, per be The the interest X-year independent funded We presold. Class a Serving Phoenix, construction The Milwaukee Capital occupancy under Care after a had of totaled Wisconsin, in basis have from earned living NHI's includes in million. skilled expansion currently to XXX-bed term Construction funding second XX-year X.XX% million to $XX.X senior XX-year The XX% the fund expansion the Creek, and $XX.X venture to nursing a year announced construction of XXXX. of in project with into CCRC capitalized investment. Arizona. the a near XXXX XX-year December, initial $XXX had committed of annual and began senior XX will expansion community units, million joint rate. between commitment is NHI third new Oak skilled Services. development entrance underway the we LCS. fees that the post is XXX-unit commitment. with Wood, are units a Life and assisted living the loan delighted existing up expand relationship The living consists December, borrower and loan to independent finance to $XXX.X and closing, construction million quarter X% and loan loan expected the X.X% be And area, XXX% this an beds. a Scottsdale At is finance a and maturity the initial A XX XX the interest X X.X% XXX a to of to and million independent escalates construction and balance. our The with the care expansion. of XX construction in during care completed a be $XX.X for proceeds Westminster a million maturity a units financing XXX-unit continuing retirement NHI commitment renewals Also yield. completion greater recapitalize points Sage The rate $X.X with loans The yield applied of the the of escalator. commitment approached nursing will loan. In a year of a facility lease

by $X addition, In facility, Ignite is and Resorts. tenant XXXX by The be XXXX. based earnout Oak operated of Medical meeting Creek, there on affiliates Resorts owned and Health the operator Villa Medical in a Ignite a Care entity will metrics million certain

Healthcare, maturity living a patients. Wingate strategy campus, new back owning also, and In complex taking And about nursing focus will hospitality excited January, a are Lake in X.X% operation lease senior We up lease housing. Wingate's XX been beds. announced Massachusetts, Kingston, of living in of communities escalators. agreed on the X currently of in the medically fixed buildings purchase to living has operates an XX campus XXX a total of to investment Silver and annual committed The $XX.X in we units, the space. We for added located XX plus has for rate skilled lease that product. campus, options next years, over affiliate lease operator, with operating X-year The years Ignite family-owned for campus with initial consists we to business $X.X Boston be capital at approach like of to skilled located south X assisted is separate and upon improvements senior nursing X the over annual XX-year renewal The units the which independent million. an northeast. million a Wingate NHI of predominantly and XX has

of during turn operating and we second senior are the able nursing into to with the which Turning in activity increase We opportunities, our quality saw half in both transactions accretive year an partners. skilled high pipeline. to housing

we is to very hand about call mentioned, that, and As current Eric. active With very pipeline feel accretive the to I'll to our over positive ability Eric investments. make continue the back

Eric Mendelsohn

And with line Kevin. questions. that, open you, Thank we'll the for

Operator

[Operator Instructions].

coming the with question Vanacore first Chad of line from Our Stifel.

Chad Vanacore

Or of in REITs much the you changes or guidance? any on a So modeling? how with recovery XXXX nonperforming have assumed us rough could additional is timeline details rent assumptions in help

Eric Mendelsohn

Sure, This Eric. is Chad.

is guidance range As you our noticed, wide. very

guidance on based rent of assumes guidance rents low amount -- and So the rent previous of the little end assumes amount. the the high very of end medium we've the

Chad Vanacore

already mentioned more be transitioning, That property put any from you that that had property I is Can getting one while you're you another those? while, Eric, so off-line rent to you you're the around that. right. details going give in CapEx. All assume some for

Kevin Pascoe

have Charlotte to [indiscernible] to community being This is the We're Yes, the Sure. then community CapEx Kevin. what leased we provide them. is lease dollars community repositioned. where and to going currently will be

be for will off that repositioned a a minimal over. period through be where up coming lease improved community reopen plant there those rent time physical of of back we're a will the took up. from as But very there lease So what asset we going is that to much and that

Chad Vanacore

out and of have Kevin. so that, now? going you was give then the that you're right off-line say to All is SLC -- up? Did it right, and lease And to dark there building go kind

Kevin Pascoe

Yes, that's right.

Chad Vanacore

you. did Okay. Any quarter? hear And say, comments? you I additional to then reopen, it's second couldn't going

Kevin Pascoe

we're what at later this Yes. in the It be time. should is quarter expecting second we

Chad Vanacore

dip a quarter through just throughout is 'XX the in the to later then recovering fair the it the expect year, should of that before earnings thinking And of we year? progression Okay. assume about first

Roger Hopkins

Roger. is this Chad,

know, time that dip probably first our period you a quarter and, annual we also stock where a foresee is the of option awards. should issue as in You

So we to quarter. a be a through good problems then dip continuing a of X to first portion natural tenant will those that there work described. there's the of due we vesting And in the

Chad Vanacore

All right.

you're quarter, was guess, So that front? dealt of Once what's Lake, that on I on. resolved X this East to those properties one issues with moving be left with

Kevin Pascoe

got of we've new the arrangements operators. X new with under So X

third interim back. took community an on the operator we have We that

we We on a be towards to that we're now give will on working next we'll able have that update an so -- call. finalizing -- can the

Operator

Capital of line KeyBanc the from Markets. coming question next Jordan Sadler with Our

Jordan Sadler

I wanted the I that to activity clarify year-to-date in. got activity. maybe what here. us bit. a guidance to you've some to -- just additional investment come baked guiding back little there, seems It the But just and you're towards the in release want

Roger Hopkins

commitments investment January. is Roger. first good on about We spillover this which a last in We sight year of still volume we will loans which do announced of be half so We've million and million already year, this of This far in of a majority have will effect to and fund line the $XX leases, year. $XXX pay year. this had

our mentioned, vest our options year have awarded stock good tenant first a the and of each employees to first will quarter tempered that quarter, in As outlined. that the we problems X the number that by fact is working the are through we're

have on And conference so direction take And first May the going to the those little quarter. clarity our in think call. while we'll to by a resolve those are portfolios of much X more we

Jordan Sadler

guide? into $XXX incremental Or saying an the or... baked include you've the of But million million funding specifically, you're already $XX that there's

Roger Hopkins

$XXX investment over the million in incremental commitments include of the does. It year. It does

Jordan Sadler

In addition million? to $XX the

Roger Hopkins

we to conservative portfolios on and And we working to described. May. expect more a have diligently with unknowns been in we're those of very clarity And have there's we've very lot respect that the Yes. we three portfolios -- because

Jordan Sadler

be amounts XXXX? or investments from portion of what funded million the $XXX -- in $XXX comes made to million under that million That $XXX remaining? the your were remaining the Roger, that's

Roger Hopkins

of on Wood example, occur yet approximately the Kevin we've described property. that, majority Sage got Well, -- LCS would with new which investment for XXXX. our in $XX to on that's the million fund And

construction of tenant, of Senior We We We'll Living, monthly. will funded the this mentioned about to year, Resorts. $XX several new Ignite projects. million. Bickford there also have Medical got commitments remaining We've renovation construction which funding be be

Jordan Sadler

Okay.

them. like bulk it comprised of So having $XXX the the sounds commitments million to just of is existing your fund funding

Roger Hopkins

majority believe That's in we exactly will which XXXX. and the calendar right, of occur

Jordan Sadler

tenants that line the from terms tenants? And -- of a Can on walk of maybe in have are those XQ to three Okay. maybe book XQ how there. tenants? of us bit Roger, just a on describe in you questioning much booking you while So different you from roughly XQ? then combined taking of you little three I revenue troubled you, -- a be $X.X XQ? And much from angle how basis, income annualized that Chad's So to them? those did an Is as total million few $XX then will rental if million number in those amount

Roger Hopkins

of from a me the Well, let tenants. XX-K, would case Lake We I describe different it we and in so did context. that take the little X the when able year. and just that December our occur to bit we me X Eric took possession XX. facilities. let respect over X. December then in possession because unpredictable of occur, for putting We revenue take new would with as approach our operators completely possession. East examined those of what portfolio, the In we on lost was in just Kevin little give we expect you building as with to be those described It we to on strategy had litigation been third then a took And had And couldn't buildings

revenue December regard Lake. had East a operator, not... did loss we one we to in property So small a With of to related

Jordan Sadler

Did quantify you you you that? just December? say collect rent didn't Can for

Roger Hopkins

was not that could which straight-line foresee. The approximately would Yes. collected, rent cash not together be and rent we $XXX,XXX

Okay.

portfolio. The property one a was second one

Jordan Sadler

Sorry.

got would and collected from that Because X October tenant November? And you the quarter? XX so say you you in

Roger Hopkins

the me. exact front of numbers in don't have I

Jordan Sadler

it But would -- obviously, this I It's you fine. of and be I like, can Eric, I with is helpful you -- the follow off-line. think for know up community, because the to sake as that it have a you of But this tenants disruption. amount the earnings, to you and small exposure model this. causing X% to to is obviously trying or we're your them disruptive described

to is throughout this helpful be the it known be of rest activity I to to project of there's not but detail the of decay, would guys. Some color you sort able there's of know earnings level relates that and your if year. do What's little a there can might there? granularity, other Is East one get left my question status CCRC? with have we And bit more And this then it that you still is the the help. property only as Lake?

Kevin Pascoe

Sure. This is Kevin.

two an is CCRCs high-quality leased were that East have an are buildings to Lake Communities, We were Watermark subleased to job. a then affiliate operator doing fine. that doing of is operator, a good who Those that

So buildings. not operator they those of are the

Jordan Sadler

Okay. to place? Those in are going stay

Kevin Pascoe

Yes. still performing. in They place and are

Jordan Sadler

Okay. X, rent as in beginning rent? my straight-line Holiday's cash it that cut what's you $XX in And being I guidance last -- rent think, the the January there to you was question to for then a talked is rent But 'XX. relates million about rent? for the what's you

Roger Hopkins

is may We I have have extensive Roger. Jordan, think don't because off-line I that. for to do a an readily have this We available disclosure. number discuss that

cash However, of year expect be plus on acquired Vero That which were rent $X,XXX,XXX. this has property which in X Beach, will the rent from first-year XX. a January that's a we XX Holiday,

Jordan Sadler

it. get I No, Yes.

to the And we amendment. provide, impact and XXXX straight-line how between will XX sorry, big materially recast that that number, $XXX,XXX tenant lease moves Just in get to which a is 'XX X the did very FFO delta is 'XX large XX and rent every rent from which that and that coming needle. you guidance the that that you --

you embedded I'd that be that $XX million, can't tenant. the offered And so It in what's guide I'm just from curious just imagine. just

Roger Hopkins

straight-line be to Yes, an rent impact definitely. would there

Operator

Our coming from with Bernstein next question One. of Daniel Capital line the

Daniel Bernstein

properties? impacting Actually, been talk Is start What's I if a wanted there. can we to of systemic? let's to bit down some, bit maybe switch coverage coming maybe the a couple coverage, so gears little it it operations? Bickford. of is just about has Or their a And little Their that?

Kevin Pascoe

This guess, with start Kevin. Sure. of I is couple would is I what a things.

bit happening incremental coverage that and is transition been you're seeing up portfolio continue is we there. of middle you're the some we have to as with are we the cost what few that bit in still that building and and buildings continue First, wages last in well, in into and we've to markets been There's year see There quarters. seeing talking staff pressure wage the then try that there little had the year the keeping Minnesota about a has in. the as last keep Pennsylvania their transitioning Ohio the the transitioned added the which a little also, portfolio also from last that that of of come and

transition previous Things the employment over still they're CapEx in on the maybe mentioned to the their I the [indiscernible] operator the like were those to feel to going was but out, what's and we that soliciting guarded some happening. a to As situation be call, we employees. buildings get -- specific from and of figured prior in it put wage dollars buildings was in going good position compete. starting They're against,

that put a did of back with time bit Again, speed. a spent lot organization good Bickford. We on pressure feel we the coverage. about where So the up they're But to little of is. getting

being We other time. and of with revenue continue those building's over do look Bickford is add drive to if to revenue in, at line better in knick able job we increase invest in the have, markets. and that they markets the But I'd then occupancy the the thing a company knack is And you buildings.

good other have the in compete of that is portfolio provide of there I'll their have cash remind So I really still organization. they thing that outside that are feel you investments other the to and buildings to ability that about do the well. flow And ours they and

we again, spent... So

Daniel Bernstein

[Technical guys, off. Hey, cut just you Difficulty]

Colleen Schaller

[Indiscernible].

Kevin Pascoe

you Dan, hear can us?

Daniel Bernstein

I you can now, hear yes.

Kevin Pascoe

good feel time of them, do with the about We they're to organization. compete like I and that. the about to and lot feel be a spent well. sorry all I'm Okay. things We able doing right

Daniel Bernstein

the those mentioned feel cite that getting in cite control. transition Anything anything the on labor, Or else there of occupancy? make can terms you assets assets you can comfortable? you think that for you transition under Is that I

Kevin Pascoe

CapEx in that XX just been dollars years. the haven't put touched Mainly we probably those XX buildings to and

out to the bring for to a good selling those them market. season they see Bickford got that the is needed the here to and with up sell be back So and and them increase. really market them go to where be to buildings line good well they to quality coming be able spring able we've present more And occupancy up be the what usually to in be to would for

about excited have. opportunity the they we're So

Daniel Bernstein

Okay. XXXX. little there another. further And but then are purchase is in a options This some out, bit

you you purchase Any up worked tenants $X do So options? to And million the they those notify exercise would rent. on it insight you whether might how or when exercise those have the to if indicate options they those react assets? meeting

Kevin Pascoe

This is different. Kevin bit little again. Each one is a

the recapitalize them. terms that them. the to out extent to or be the keep table trying would going period those way we to relationship. okay bought to, say going is, to there's some notice That see to we go of that's the we're they or the option be and buy able to those is a manage are works that that anything and again, little going a get they're the in buildings it if way that said, if way active bit to option So on want is would We we're the reposition expecting different different. of into in There I being

that's expecting would little we the them each to it. that generally different. it in about the approach I option, is -- way I their one's But because is exercise it bit think So and way it

Daniel Bernstein

switching Okay. gears. One,

a six opportunity Where see sellers terms cap heading? are Just I the coverage? of get what why the terms sense acquisition kind of than ask seeing was want? doing trying want what there's of today underwriting there spread of ask more to bid you're pipeline. mean, months in you What about is lease ago. Just do different and you in to the rates

Kevin Pascoe

widely that feel I Again, like market. varies by

that seen now. into change markets, haven't lot I would a have cap core place core for If you're stayed what going a some those time lot. or compressed really And consider rates

talked areas those rate There that we I prior lot has that we type the of cap of service been is expansion. think that much. of in bit the pool that know little changed I secondary has have about a don't more markets. a opportunity of calls

there to what a amount now. while accretive we activity transactions that that fair a trying is we which able I and we're is communicate demonstrated for think, of still still were to get done,

feel there Hopefully, make So I accretive to I about ability pipeline. answers good your good and investments. again, out what's question. about that our feel the

Daniel Bernstein

one what sounds Almost. under add over of doing? Places better construction maybe That's how you've turn where looking assets in, CapEx at and kind your been that's you're it you But like operators around? can been say to the XX something would value years of more you tend managed, X, those loans put and me. last underfunded and to

Kevin Pascoe

I that's Yes, think fair.

We're different. sure story to stream. price value to are is we add the an can the -- they cash trying fee look extent each the and at assessment But we is little bit assets stability of opportunities. make value a flow the be one those through these. that appropriate to it We there provide and buying flow a and That in looking like opportunities, some with CapEx of the going is get said, management cash we the go to When always in on flow portfolio. cash stable and

a willing has little have create portfolio to definitely that asset repositioned all value So down really coverage extent the be that's we And a that, that's the entertain. of the interesting. bit road, can to something that of can and and we're

Operator

coming Wells Fargo. question from Stender line with of next the Todd Our

Todd Stender

you. probably just with stick Kevin,

about money The I You the more higher little some to Care like around for? this Care underwriting using coupon just you of them. the is details Life just some maybe is credit time, described the last guess, QX. and what a to loan you talk your extended of those? Can looks in Life Can senior than

Kevin Pascoe

Sure.

large we over had purchase small net true mainly really, just as is again, CCRC a that, area investment. different investment different were bit large do it's because option. it's with a one, a a have of this premium a not is we're a and before. bit A So a this we Scottsdale, little Arizona. pricing Class making them little was Phoenix the terms the what The in The In greater

the definitely have that it's to will ability value it We having sell, at option. in but if look time there's to

warranted had like felt Ridge. we like is getting a weren't that we option So Timber we premium if defined on

pricing of kind that aspect. So

pay are funds for to independent XXX-unit living. going is the Just the expansion, next which

did So from as and perspective what place deal the that It's basically we with same the pay full Timber was for exact dollars were Ridge. expansion. to recap in the loan the that then

expansion, will at fund fee the $XXX with as that day. commitment. then -- And the that about we'll senior think the million to in be end $XXX loan. that the from comes XXX-unit is expansion, the of down the that will So in pay entry loan million I number And full wrapped

Todd Stender

how long? the like that? for something What's duration of And

Kevin Pascoe

be prepayment is for there's similar. X years, of a We fees term it XX-year for term. do And out out The a then a least It's lock so there at have will the couple years. thereafter.

it's at we to way loan So or our the going built, the then and that going point, filled that we'll to And -- way get loan look well and we least we to looked at the they're additional that they're see positioned have would understand expect events. the they're have an the recapitalization to to make. want be at investment get if is looking at to they'll expectation

Todd Stender

accumulate? Do cash does coupon? just Or they see this a Is loan? this

Kevin Pascoe

they cash This is have. is interest that loan. cash This

Todd Stender

it. Got

coverage the individual any The one. to that quick that on a lease? existing is you asset just Just acquired, Beach master Vero going And property?

Kevin Pascoe

to you've be go sized portfolio. does coverage resized it similar seen into the to what similar we lease, portfolio. in the to Holiday how the then It We it master be and would the

Todd Stender

one. Last right. All

remarks, of tucked just you shows Ignite as so issue up with guess, yield a It Resorts, in prepared in loan like in yield, your that described it Medical X.X% it there. your standard would lease. I you've the a So disclosure, I got, imagine development has a as just some sounds development.

yield look like a of would property. on that distinguish what Just market kind

Kevin Pascoe

to Well, the yield lease to where skilled of the think we space. NHI is is X.X%. speak. That to is done proven X.X% through that to range, X.X% about kind is construction our other that so X% nursing in -- goes way The we've into

that why is this is the So in which role has. there's that rate development, a it premium

Todd Stender

Okay.

the yield fully -- want on what so yield it that And they market the What property? will stabilized. be you do think

Kevin Pascoe

talking yield? about NHI's are rate? Or cap we

Todd Stender

I would say NHI's yield That's -- no, rate. cap fair. market

Kevin Pascoe

has rate a XX% -- this be and would nursing stabilized low be look on we're kind XX%, high least in number. looking be it cap at Call double would the at time of my in digit would quality yes, way NHI at will gone point at up it It skilled guess if assets.

Operator

Markets. Kim Our of John BMO next with from coming Capital line question the

John Kim

you have So troubled operators currently. three

past XXXX. I'm you Holiday, of X to if other your with quarters. the couple just had any anticipates deal guidance put issues kind If you've that's in wondering of for

Roger Hopkins

fourth total No, the Certainly, including our not. to $X.XX in X is Lake to was the the and events. us. does This East Roger. impact other impacts relating impactful about from aside it of nonpayment the were quarter FFO to The those

end able top commitments And we in were even invest in ongoing we we had have higher money. than new side, $X.XX result On to the to with able our projected. on business, AFFO plus were the a actually

and to came how we quarter while finish difficulties. in year deal think are the up had certainly with we late three that with So considering were successful, we tenants the fourth well those

John Kim

scenario your keeping any there not other be wondering this will a it's your for in So watch just list issues? or on guidance, tenant if reasonable year not that but I'm

Eric Mendelsohn

is Eric. John, this

XX-month generally be Holiday reduced know it applied roughly includes rent is And conservative. coverage, remind I'll very trailing this coverage our that X ratios. You rents. everyone new this year the their the Obviously, if XX on lease guidance would that you

year. last substantial improvement over feel a So like that's we where we were

they until dealt year. have next another and So lease don't we Holiday with consider escalator

the dealt a rent that. a in them took Bickford, are done their of that's marketing with hard with and about lease issue We've we about in that deep lot we've first We and concerned portfolio. got their amendment strategy, in people Bickford. look a a at a dive We've terms in operations, their questions So cut. of know

properties are of be properties online two will That of. once coverage sale in And You'll later are an sale. those accretive see two for year. held disposed got their that their then coming and help help also developments new coverage. their the will we've That

we are that thin planned on coverage and the mindful So consider Bickford our when guidance. we of

John Kim

the X X coverage excludes already the of correct? assets, the on Eric, Bickford, X transition

Eric Mendelsohn

it Yes, does.

John Kim

have be will coming coverage year-end online? those once think developments you you do you by you where fill then the if So -- and

Eric Mendelsohn

start of costs. in moving upside the rid agency, an Pennsylvania, and positions get properties improving a they target, did and labor It's lot acquisition have occupancy gains see improvement the because hiring terms we And in a Ohio agency John. then there getting permanent some as of immediate those of Once and -- well. you'll of

predict to will for hesitant I'm long that take reasons. So how those

John Kim

anticipate? guidance, we kind a underwriting over that, X downtime? to expect months guess, coverage Okay. in guidance And what XX a historically, far lease -- as reason what do your I the as like like restructured transition the then, a part X you Chad's X you the what you on as follow-up level to answer And what's what get Should do XX% in seen to but to with operators. of is gave your question if you've I range know your care to rent to that? expect of of the coverage cut you with

Eric Mendelsohn

three Lake we that's that's being the have completely X Well, properties, dark thinking of East renovated.

lease X take So will you months will the XX or could that, optimistic. take after And that X being XX which then to months. have up

lack is CapEx dealing with property trauma to back of funds. that So property NOI probably that and took Charlotte we until lack XXXX, and open is producing national still transition is start The of of not the going good mid-XXXX.

got to that not going you occupancy end then probably the this making start in money, the very one a We've it's a I the year. low. of temporary manager good not that's losing And So is it's recovery mark. is showing tell but question in can by probably a money. And Indiana there.

in of all to see start these lift buildings, So mid-XXXX. probably you'll a

Operator

[Operator Instructions].

coming next question Fleming line Robinson SunTrust with Our from of the Humphrey. Eric

Eric Fleming

I So guidance. to a question from of ask other wanted the side

AFFO great line. of X% at growth your the than on You guys really more incentive have hitting targets been

way -- there would need do get X% to is now, a right guidance to in what to XXXX 'XX? is there year? the left you Or growth to get AFFO this you've there where a Given

Eric Mendelsohn

would There on acquisitions, and through Eric. be don't a to that that constantly over. on and accelerated it wind constantly but right way have The don't something are control working up acquisitions We're is way, that's now. is visibility we This trying we that have accretive.

that's you So can't moment. at give an that the something clarity have We'll on update. I probably

it's this something everyone we'll year, be guidance every Given our updating quarter.

Operator

line Jordan the Our Markets. is coming question with from question Sadler a coming Capital of follow-up next KeyBanc

Jordan Sadler

Did it this wanted month. exercising not Ridge. mention you in that or I to option? on believe expires you're I follow-up whether Timber

Kevin Pascoe

expire. doesn't It actively evaluating. opens We're it month. this Yes,

Jordan Sadler

sort max the agreed-upon can indicates you I $XXX what if look of a K us like market And or remind price it's million, think rate us? Can of Okay. exercised? that an of you remind would kind $XXX million fair cap value.

Kevin Pascoe

So clarify, minimum the $XXX a million just is market. to with fair

So it's fair market It's a a minimum million. of $XXX option.

researching A something over That's finally, this. asset cap And month rate on been So your the for a hone so it's appropriate we're in negotiating. question the that something what we've like really again, last cap actively should the on rate. Class to here where or

to the that something that get that to very further portfolio [indiscernible] hard look having the taking at. interested we're and been path. fantastic on So be It you'll a is down a in. really once proud It's asset, we're something something have we've we that very

Jordan Sadler

ahead, Is that -- John. go

John Spaid

I to Holiday to ready -- should on I wanted rent to back back get for have we actually, get on So been that. you -- to because straight-line wanted your on question

It let's million that which million million. $X.XX Beach, added be million and into will looks with like so in million. for looks of So say, $XX.XX the for GAAP line our come the first $X.X Holiday line, original that assets. transaction equation, to Cash, million, XX months start it $XX.X of $X.XX like just will straight cash needs be XX another, straight for rent. $X Vero

but doing they're on settling little So Beach work be on that, bit to it. should and a more that close pretty Vero

should you your determine impacts. FFO that to what So need you give

Jordan Sadler

John? $X.XX -- million, you what the did What was

John Spaid

That's straight-line a rent...

Jordan Sadler

That's number? That $XX.XX a million? monthly

John Spaid

No.

Kevin Pascoe

That's... monthly. Not

John Spaid

That's annual Yes. straight-line number. the

Jordan Sadler

it. XX plus Got X.

John Spaid

Yes.

Jordan Sadler

do to XQ rent really -- that XQ just bridging booked was? the How will make... That's helpful. from do in GAAP the XQ, you From [indiscernible] I know what

John Spaid

was as it recall. think $XX.X million, I I Yes,

Jordan Sadler

Okay.

quarter in would it So a of been have XQ. that

John Spaid

Yes.

Jordan Sadler

offer Okay. And maybe That's very Eric, terms opportunity of little easy. make that insight much. in appreciate then, Can you bit potentially. mentioned pipeline? to a you distressed I of things going the really the

Eric Mendelsohn

X/X seeing half forma more broken We're pro buildings occupancy. couple destabilized on and And developments, they're of a sell sure. they more Sure, developers full. beautiful or deals, sales based a built to who've them want

to took starting more deals nobody calls Kevin that them so So that be were that was up are marketed deals widely are serviced. are stabilized, of those then outrageous which it. And also what but we're retreads, seeing pricing on the

go new XX or new can and regroup if they forma and X back broker and they interested. come months So pro anyone see get and and new a back later with pictures a

Jordan Sadler

Okay. That then? sounds senior housing-esque,

Eric Mendelsohn

this lot It does. a happening remember sounds like of XXXX me. to it I in stuff XXXX. Yes,

Jordan Sadler

helpful. That's missed like. in in the driver the this may quarter, looks the -- was. Can lastly FFO And included just is what I X legal well, others. of quarter? just have that it the And for recovery normalized One, you -- then that

Roger Hopkins

tenant escrow charged of that those the is the accounts for our This expenses it. of associated collection portion We we That legal Roger. disclose rents. a with did was

that taxes, was that other accounts we was which to their And a have property The they amount. escrow portion their charged not paid. substantial

million. $X.X accounts escrow tenants these charged we together, all So

Jordan Sadler

Okay.

you line, that? legal million XXX so must had that your expense in category just quarter of you I'm So Roger, says have in legal the minus the expenses P&L. offsetting under -- the looking in and $X.X

Eric Mendelsohn

Right.

Eric. and taxes, then say. is That we elsewhere. which was The property as some show up is would legal you reimbursed, this had So expense

Jordan Sadler

Okay.

charging recovery I prior quarter just back. expenses, that's them imagine? So of that's a would But expenses? Prior actually

Eric Mendelsohn

Yes.

Jordan Sadler

Okay. in FFO? backed out. if was know that don't Was normalized I it

Just curious.

Roger Hopkins

our reduce those escrow expenses. Well, of tenant our charge accounts would

you So That it's in a if reconciliation. the will. start net you reimbursement those income of expenses, when

Jordan Sadler

in Eric, have had last you was you, the a gain on quarter. the I one follow-up. but And just That's general. Holiday fine. for Yes, I'll in

hasn't that, of one this with. like get your curious. You as least. them creditor consider got that comment you that that I made think from Do should I yet point? with of perspective, a I'm Holiday they've dealt the stabilized And entity other just out at dealt we credit, they, but know at seems there kind are necessarily And it and corporate

Eric Mendelsohn

would we settlement That's they that business to fair negotiating question, tenant them, their And what viable look would would were modeled without away. the determined Solver and of still a without if make and were with the buildings When we sure like a Ventas control we with be. Jordan. buildings go and and they buildings that span manager and our those with

and So to how that is I still the we're Ventas that waiting see resolves settlement there, know out itself.

Jordan Sadler

if to know corporate to you entity? Do recourse Okay. had entity, the the they

Eric Mendelsohn

to recourse entity, as all the guarantor have did. They we

Operator

time. I there you. the Mendelsohn, will back Mr. at no turn to call this are further questions

Eric Mendelsohn

All time right, attention, and at your and everyone. NIC we'll of in you Diego. San Thanks see for some

Operator

for you Ladies We and you lines. call for your gentlemen, today. that does disconnect the conference conclude ask thank and your participation that please

National Health Investors (NHI) 19 Feb 192018 Q4 Earnings call transcript