NHI - Earnings call transcript Q2 2019 | National Health Investors, Inc.

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Operator

Greetings, and welcome to the National Health Investors Second Quarter 2019 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, Thursday, August 8, 2019.

I would now like to turn the conference over to Dana Hambly. Please go ahead.

Dana Hambly

Thank you, operator. everyone. Hello Hambly, Relations. Dana of Director is Investor This Welcome review second the National Health quarter call to Investors conference company's XXXX. to the of results for the

On Finance. Chief Investment Mendelsohn, and John is Hopkins, me Vice Accounting Officer; the President Executive CEO; of Chief Pascoe, and Roger Eric Kevin Officer; Spaid, call with President today

release released call listen-only basis press over The results, of been notice in a as that's before the accessibility opened Internet, the on were this by as well of morning market this financial conference covered the a media.

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

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

over to turn the now I'll Mendelsohn. Eric call

Eric Mendelsohn

everyone. Hello, you, join Thank I'm glad today. could us you Dana.

welcome Director to our to Welcome, Hambly Before team. Investor joining is as of like Dana our new us He started, Relations. I'd we get Dana.

accretive acquisitions portfolio flow. to with and our spending on cash are performance. improve year-to-date at buildings a also operational portfolio time of future been NHI to $XXX We've working and transition organization. their been positioning the together of lot financial a with and second million quarter. of Bickford It's We've friends their for adding our X working busy our been Bickford improve to

see in performance are can we our You with recent of which seeing improved occupancy what details in terms Bickford. XX-Q, trends

Kevin bearing on efforts Our will that you fruit. details are shortly. the give

three The new acquisition transactions, fast and $XXX seven activity customers. furious: has of million with been representing them different

commitments is the includes working even to sight to get $XX back In existing the new in to line nine year-end. All Holiday before were addition, basis, and quarter. and that portfolio we our restructured of these we've say to share a per guidance transition operators back before and first we been on properties to new million where to hard

about to sets up revenue, happy aren't for XXXX. lost well having having backfill the us we we believe While done so

We've transition which made significant for growth. well progress with nine organic buildings, bodes our

details have Here his Kevin with in on what's and remarks. happening few been are more will them, a details

fantastic. is Communities On quarter. extensive see with and will renovations next traditional SLC, our in rent has up line you Senior result straight the signed We Charlotte completed Living show building, a the and lease the

The a larger just is part a new with with new Discovery lease of lease incentives. signed NOI-based In we as transaction. an Indianapolis, lease

has updates The XX-Q. cash Chancellor each these NOI our in XX-Q properties as scheduled paying they LaSalle property. transition Group the rent to formerly far see by our are rebranded and the five we've us received the thus buildings flow buildings. operated disclosures from Turning Autumn Leaves, Please regarding out

to over now I'll that, Roger. With call turn the

Roger Hopkins

Thanks, Eric. Hello, everyone.

spoke lease from investment revenue our restructuring revenue Holiday the negative effects disclosed. about loss the master great Eric terms ago. of temporary of the a XXXX has volume, now moment in revenue it's our new of on that also the a effect with offset the offset previously and We that fully of have retirement of this are transition And properties having we

far investments, accretive leasebacks in almost $XXX and purchase senior So mortgage housing. note in year, million all announced this we've

$XXX million in announced approximately new expect our priority making fund management pipeline as we will this months to later. next that to XX focused Kevin the have accretive the listed SEC. We previously that our NHI's in investments commitments remains in XX-Q describe filed Form XX on with over morning

XX, share purposes XXXX, year FFO GAAP $X.XX period the of same rent to diluted ended line rent X Normalized compared X,XXX,XXX income straight For to in FFO line normalized income additional $X.XX the X months fully-diluted common the due an and of shares. to of $X.XX year average period lower same the was for weighted for due June $XXX,XXX. second lower $X,XXX,XXX quarter straight versus for ago, per X XXXX $X.XX was primarily ago

to NHI dividends to our XX, exactly and has in For matching metrics prior new shareholders. ability been focused investments the generate as revenue our quarterly was best described always diluted make months in to increase we XXXX, transition second lost particular, June quarter, been earlier. and both the the normalized annually $X.XX it to AFFO and our the of annual consistent X our $X.XX; for ended was share, Holiday year properties from the has despite it the on with and growth, challenges per free cash indicator AFFO faced flow results

NHI's total same increase was period were million, second ago. the a over which revenues for the $XX.X X% year X quarter

and a boosts and and of our months tenants, a and revenues. which few new new our X explain funding to $XXX.X mortgage how increased deploying accomplish in expansion ended XX, fund mix will X.X% for deals by projects and revenue million. XXXX, good to careful sizable reflect in renovation of utilization our our capital capital. the For the increases both John the lease projects debt These automatically equity of minutes construction volume we acquisitions in June lease investment

investment and of $X,XXX,XXX second of the expense for same X interest June compared of quarter and quarter rate during of fix in $XXX X ago our on the million agreements is variable the same XXXX to recent XXXX interest XX, period a rates into volume when X $X,XXX,XXX year increase the most debt. rate to the increased expense interest entered months the ended to corresponding interest compared year reflective in Our ago our and period swap

in of expense Our second increase same $X,XXX,XXX quarter are in in of increase XXXX compared the the an depreciation of first portfolio. of $X,XXX,XXX our real to X XXXX the growing periods and reflective for estate XXXX of months

months described months same XXXX pay been expenses have to X assets tax troubled year doubled as X Our ended and when we X on have that to XX, for property both taxes ago the new to X the earlier. the required June more transitioned operators period than the we compared

be Our and expense pricing the and due to during for is $XXX,XXX second expected the investors. is model. administrative noncash next for quarters share-based general information by each quarter, to primarily increased computed of This the our X compensation research Black-Scholes expenses analysts $XXX,XXX higher expense helpful and

a escrow terms month on paid Property standard our first that lease to accounting was our insurance $X,XXX,XXX to us its income taxes expenses requires the made of companies show was X each the and amount XXXX and for properties and separately on to is quarter new of deposits from statement. the $X,XXX,XXX months leases. tenant out There according our second for that

to bottom our in revenue, amount lease there our so no same the is is line. However, included effect

XX. included June and the X paid our the we properties, related However, for X taxes for which property franchise, by $XXX,XXX our in to ended months $XXX,XXX excise taxes and the transition us were other months

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

As range binding diluted are for is commitments end more. and in $XX will commitments for new guidance that we currently We will $X.XX per XXXX, a of currently $X.XX be even updated there actionable XXXX, estimate though before normalized in share diligently for million working to close for of existing FFO the to obtain XXXX. our we estimate

the equity month new the normalized and of commitments are funding the by investments, AFFO to the capital range capital to leverage. ongoing resources earlier by and $X.XX include our $X.XX of $X.XX estimate mentioned for our our and expected increasing debt range bottom low each to of maintaining per revising align new estimates These for end of a growth properly composition our We share. diluted

fund to timing of and the are volume guidance adjust our with new remainder our the will certainty We XXXX as of able more mix to the and with completed capital investments which for estimate of we them.

of the turn capital. John over our Spaid, debt to equity will now John? discuss I'll and who call use

John Spaid

Thank you, Roger.

rise our leverage us X coming as As over It's X we our in this in return to that discussed leases. the transition will a expectation the earnings to our year the we EBITDA transition reposition have we continue the from continuing properties last quarters. calls, anticipated

a interest of LIBOR cash in or new term off with XXXX, to discretion both, year June will bond a $XXX instrument. at sheet rate debt purchase from million either our options, balance manage NHI's XXXX combination and convertible mature our redeem risk into Additionally, in debt manage our transformative of be or for million swaps $XXX we proceeds longer-dated using our a tenant as stock expected revolver

It our our of debt-to-adjusted financial is to stated to range net Xx. alter EBITDA within not and policies, intend our to intention ratio stay we Xx

our equity we will to manage We fund to conservatively use judiciously balance growth. our as continue sheet proceeds

June and metrics of maturity ending capital the charge XX weighted X.Xx. ratio coverage of for EBITDA debt Our average years X.X were: debt-to-annualized X.Xx, quarter debt net fixed at

lenders. $XXX was LIBOR-based the of further end yield at weighted existing variable at X.XX% charges while was interest with into fixed-rate seeing first entered swap quarter. in quarter At $XXX The the rate interest our the of XXXX. $XXX million is XX, million of swaps. curve our swaps favorably our through average to of inverted, December recent XX, X.X%, the fixed QX into to rate of entered credit cost end transactions NHI June the NHI the debt ended swaps before swaps are in These the in debt For which new benefits X second million from addition our quarter,

an remaining second before second used average were per reduce approximately $XX in activity, quarter, After of at shares under our common $XXX.X price million. revolver resulting $XX.XX of shelf facility. the we proceeds after we to our share capacity commissions debt. During The our in ATM million Proceeds fees, sold XXX,XXX our net quarter of shares stock. were sold have

liquidity. capacity. in revolver on second leaving with us $XXX available NHI our with million to revolver, quarter ended million our outstanding the Turning $XXX

over call Kevin the Pascoe discuss to turn Kevin? now portfolio. I'll to the

Kevin Pascoe

you, Thank John.

them put and we been a mentioned, have on reposition to Eric our communities hard As better working path. transition

of the improvements continue to much portfolio. also for portfolio find is While completed and ways to try and make to communities working larger the partners not the buildings operators the every improve in are but on the NHI, we heavy lifting transition the diligently to only day, to

portfolio the started the at coverage would note and year EBITDARM indicators X.XXx. seeing SNF the of in is quarter, like I X.XXx, first during in the housing we in X.XXx certainly senior level would improvement higher at see portfolio, skilled the at to leading a was second we our Looking the coverage end the of while quarter senior to portfolio total housing, the positive a portfolio. overall coverage, was steady for and ratio like this

XX% Bickford revenue. ratio of EBITDARM ended by operator Living, for XX Senior largest represents the our months cash trailing X.XXx our an coverage revenue, XX. which March to of had Turning

this reminder, the started to for a quarter. down turn EBITDARM was occupancy sequentially coverage the As properties X the sale. later positive for especially smaller held in from calculation fourth quarter excludes quarter, but This second

XX.X% quarter to and XX month. positive versus the occupancy year, The through right of but recent chart take to first the direction. for flow the We've will step momentum Same-store up progress. occupancy the improved X-quarter effect performance, added averaged second which quarter ended for XX.X% the a for XX.X% this a good was of the XX-Q this the June couple in quarters to shows in a is June

vast mid-XXXX total The purchased Bickford and to QX agency to the we on continue flow expense of X add footing Ohio in of Bickford or of results, the some have These overtime leadership developments and have and cash majority EBITDARM additional but of up the of both XX trailing the in seems excluding portfolio. out portfolio and to coverage buildings. and ahead finally schedule XXXX. developments, position nicely from better with X portfolio lease X.XXx same-store Bickford as labor the all Furthermore, Pennsylvania filled a

with work to Bickford the continue relationship. to find We ways optimize to

a cash for may explore buildings avenues and new improve include addition we flow time. held to In to assets and continue opportunistically to the selling operators. other to sale over assets some This developments, transitioning few

financial is progress Bickford refinancing meaningful in balance improving their In addition, performance third assets making quarter. the sheet by non-NHI and

in Our rolling we will as invest like due SLC fee X.XXx is income, XX% to are units renovated solid entry fee the reporting, and best net position fee additional during Living winter the is The well to buildings as renovating Communities this months their once of unit likely to I'd to there. fees on a respective sold. to operations Due months spring the its improvement these CapEx line calculation in are represent the relationship shows investment are lag portfolio pleased entry on the by the in trailing quarter. in the very our back and income. quarter due of purchasing inventory with available before off the entry their quarters more entry last as some with coverage discussed This few will Including units Senior levels. XX-month the basis. fee with their and fruit revenue. continued to This ratio bear quarter-over-quarter entry in focus cash down it note lower communities EBITDARM call variability in has a quarters summer some and markets, X historical we and be in team ratio

will has rent is lease as will of and leadership. and master move feel a is X of the to for supervision balance then benefit $XX,XXX under buildout for positioned increase years and XXXX; residents. job $X.XX in transition this for it to the the Charlotte, SLC The for launched did the the building, remaining. is and SLC headquarters properties, July escalators which rental in a SLC formerly is $XXX,XXX is which great of is $X.X million with lease in beginning by lease, community, XXXX; an miles future. XX.X direct from XXXX, X% one the SLC with SLC the with community from which less million aside the Rent XXXX. thereafter. well coterminous The than has

senior million added This at acquire community into X.XX%, opportunity also loan relationship South and We XXX-unit CCRC $XX.X the rate carries to a fits has add well NHI an for value good community providing senior a loan geographic purchase to Columbia, their interest to Carolina. the company. on a by is a and The footprint SLC of option stabilizes. the once it in

Looking at HealthCare National Corporation.

with Our of a partnership corporate and NHC XX% revenue our of has charge X.XXx. fixed accounts coverage cash for

capital operator aligned. first be represents when coverage of improvement XX which partners's of EBITDARM recent demonstrates Trailing This is an interests adjusting lease cash on possible our coverage of what as X.XXx and had retirement, amendment. Holiday in EBITDARM X.Xx. an impact Holiday of revenue, the portfolio would XX% the coverage quarter for end, ratio the are

to on investments. new Moving

number Comfort starting announced escalator $XX.X their XX-unit to acquisition Senior pleased once May, Living. the lease and Senior buildings that Comfort high to a of of Care living operators affiliate is for we NHI's the rate of respective quality, located to million. property the X XX-year Care demonstrates Living. opened leased brings the of markets. The Manor, acquisition to in has annual total lease community, again a is care X.XX% This with X. local commitment say an to and plus commitment in Comfort In Brighton we understand and of leased year total memory Michigan relationship town Care are Brighton, This of our expanded We a recently assisted

managed community funding a by loan announced manages has owned interest a in loan care $XX.X more X-year we which will by XX operator for be The LLC, a with of to XX-bed the Midwest Tom be Ostrom, living construction Wisconsin. of X.X% The located community annual is assisted new million renewals. begun in Oshkosh, development. June, one-year completed has and of and quarter XXXX. an X buildings has second memory X XX property growing the Construction currently Management, rate in and the expected In on

venture and in June, will consists is with incentive announced joint Senior mortgage properties escalators. them managing located XXX Discovery per a at an extended units. assisted living Discovery senior tenant purchased initial option Discovery will will units of XX for annual the million to for a earnout of have to had of unit. affiliates entered XX-year after to about the purchase to equity, based units affiliates which care a joint of $XXX,XXX units, venture, later available Living. X% Maryland Pennsylvania, closing and will and make joint expenses, memory $X conjunction closed memory which and XX venture in of property assisted NHI, consists leased with month. independent XX of affiliates the living joint million to X performance annual into XX.X% $XXX.XX with NHI yield the be annual was of loan the this of we costs million Furthermore, in scheduled to member, X.X%. loan owns the X.X% stabilization. and of be $X venture The an care venture consist The additional In additional NHI This a for Indiana portfolio. lease Also have property interest properties community as and joint on with company in Discovery million $X.X cash including Indiana XXX a in units, translates owns The

feet. Discovery Indianapolis in at Discovery until on properties will is the we've will be with the the increasing a of with transitioned provided July. there the The the and back fits be $XXX,XXX property time leased former for on of CapEx overall years. property the the term an allowance acquired to to has Regency which the will $XXX,XXX has lease a of community. capital NHI last its cash recently floor based fair to loan and based of X buildings a $X.X also to flow of working value value million, incentive lease into of them. located nicely reset of affiliates be tenant XXXX, NHI and This market in portfolio eligible payment Discovery get

community a Cappella memory with community and living in NHI addition rate X.XX%. July our Capella profile. Pueblo, Colorado. in the partner operator million mission Solutions. operating is of to XX-unit fits will lease care latest this local a for $X.X initial an NHI Lastly, a assisted with was in portfolio at new good target located of growth our a funded Living that profile driven

our an customers. new half both existing to the with new Turning and first of busy incredibly pipeline. investments had We've year, making

We portfolio we opportunity high-quality additional continue to see continue operators purchase survey the the the to to evaluate. like Timber communities and are and as adding to option we Ridge market committed

have We closings. will update as commitments this transactions additional on an or we and have any firm

hand to over that, back I'll the Eric. call With

Eric Mendelsohn

you, Thank Kevin.

in we beyond. over year portfolio, million with will they have how am from difficult and saying Before And Holiday nicely further our I'd which been XXXX. XXXX hard now transition say it with last in progress we $XXX the pleased feat organic of been add in No add had year-to-date feel announced and made will position that a properties XXXX. and have question, small setup the on I restructuring of call expect has those already late we're no like we in headwinds the growth to to that investments, contribute that made most turning that decisions growth by the but to to we a Q&A, the lease the to like the NHI in has

that puts a to several hope investments more We adding next while balance us growth. the which to in And to months. disciplined a have over on share accomplished continue you these sheet position to maintaining we have with front

the over turn we for questions. With that, operator, line now will

Operator

is with question Vanacore Chad from first Our Instructions] Stifel. [Operator

Chad Vanacore

transition last So due situation we team, factors And the that to then assets the Holiday lease? and clearer you've tightened since become much of how guidance. What have is then spoke? stabilization

Roger Hopkins

our able provided, the we been going to that had the We guidance been a bit this our that We we've able to quarter. acquisition our to estimates very Roger. and have low raise good is tighten this guidance. end is of bear Chad, pace feel out

So very that the at investments the we we've are stage feel of made. we about where this good and timing

Chad Vanacore

All right.

could Just any end we high other that from swing factors would on that, end? to guidance the the think low

Roger Hopkins

past obviously Eric to Well, his we we're feel we've for but There's high do that adding been contingencies we things going described we've be happen, that provided that adequately target the obviously able to number and end, remarks. and the as of in fortunate any that. can to keep investments in

Chad Vanacore

right. All

for occupancy to the trend What's You after first occupancy giving a on quarter. dip now? fit us started be improvement out in which driving right appears a positive that

Kevin Pascoe

This team in is new -- programs driving on new which Kevin. the is it's been not adding and the there, a communities. the a leads focus Largely, focus focus, by really sales to

focus went project it a get else they time Some where they individual it are next they Elevate, they that was them Project selected went to and track. out X getting different they've once were the in. have of -- And on to to able somebody that and the person in able organization, And be, X they focus high-caliber that the they they they branches. X somebody to internally, call they back move want and really buildings on at have a them on dubbed

have CRM. they're example to really help upgraded on working the of done types Internet then They've to that generation some X searches also certain job their that's and lead able and So of improve. being their being of programs to a that like things optimize install again able and of nice

they've of to and lot sales into make kind the and them company in invest converting capturing the then infrastructure to things, sales. of the leads they're So a done sure

Operator

is from Our Markets. question with Sadler Capital next KeyBanc Jordan

Jordan Sadler

questioning. follow line just to wanted I guidance a little of up the bit on

the high news expecting high I range, rather of to into the on coming upward of call more sort guidance came down. the good the end probably post in sort of the was and targeting you tweak front, have also but the end range than been that Roger, think given of NAREIT mentioned downward. the some would of investment I the

so weren't in at got to that fact accelerated And activity investment already nearly the year-to-date headwinds you curious sort you reduction of rate, rates you but XQ, interest or end the given of in year, of sure underwriting the that -- interest year, beginning that's X this been, the just sort of may are have X I'm guys of I'm kind or sort what it a of offsetting XXX these sort and the benefits?

Roger Hopkins

year, think expected, we things we've third direction. transitioning quarter a we out bit as a Obviously, right that say things and than would although Jordan, guidance properties. Eric is got particularly described the parts, earlier these Roger. pieces different and go took this all little there of is in to I heading that longer the transition with lot into in in now that lined compared the the and the definitely

for remarks, to transition expense prepared had taxes in some that just also We incur in mentioned those I property properties. to my respect

So $XXX,XXX X like the in FFO. we caused spent that tweak the us things have line little months. that just It's first top normalized to

did at in the X we than the AFFO, normalized August very But now of $X.XX. end top the feel on of more have months ago. we clearly, Our year solid we clarity that for remainder

Jordan Sadler

Can from particularly you Regency now the XQ from to lines, what and contribution the guys the think hard look we forecast I Okay. like, a perspective look might those? properties. really LaSalle Along you ramp offer spoke contribution what those quarter, of X for like perspective might it and for XQ margin overall for or properties any insight better Roger, last was

Eric Mendelsohn

what in the next from And to been LaSalle up Kevin month. in get be it's will who year, XXXX Eric. and line really the shows say in has you should quarter. signed just and $XXX,XXX of to straight on XXXX. that I been straight that then some result gave rent property. you XX-Q a also this line And specifics finally, the That's time. schedule $XX,XXX And rent with Indianapolis, properties. going want rent, starts a like it's you We Charlotte those There lease for ramping the Jordan, that the then Discovery. take we've a

we don't yet. -- So sadly, don't you any have have numbers for concrete we

month rent. the We And a so that cash building. we've lease, then at NOI our Nashville schedule. are building, on That's probably that's And all around to to NOI out. we'll I going a an to should one X flowing Like more renovate mark said, of It's sort Indianapolis. get that in be question still. going got $XX,XXX that of take information quarters

John Spaid

this is Spaid. Jordan, John

to in view in XX-Q. just months of all you've properties X that, highlight the got So the

expenses You'll also see associated of those think We'd with most properties. the these over. are we XX-Q signal a lot to expenses the in like as transition part, for well that

the you very XX-Q SLC numbers numbers Kevin in his XX the from So gave the forward. clear be Page you'll Discovery earnings get carry those on the we'll then exact details guidance. you a in sense of there how might remarks give And transaction, QX event. you able all to subsequent about and of kind our And talks

difficult should materialize year. this there's It's just year guidance next on cash that that's building some that us I very that give as well as that. for better you in So occupancy flow think to

Jordan Sadler

helpful. The that That's and were taxes quarter? will gone you franchise that the property basically be guys incurring, next those

John Spaid

Yes. correct. That's

Jordan Sadler

know sounds some half of maybe commentary, is this sales? think, sort a I mean expect don't should optimizing second additional helpful. -- like offer? relationship relationship. a I sort -- Anything And can and/or lastly, guess you the That's couple it of your bit I we but event and maybe if of asset Bickford transitions a Kevin, I talked with Okay. little about else in you then the did

Kevin Pascoe

the on discuss something table is that's to options we with Definitely as Bickford. continue

but building about, assets, if makes combination stable some to a of the it so And flow that it them about the where build able trim get proceeds for helpful progress. on at in to better speak, may really, woods, sale that we'll feeling like sense. make with even really we we're so where and cash and build making they're to things, They can closely. or to to does that we're been add want trajectory them the relationship things sense sense foremost, it's able we'll the some back first an to at. see do to whether it that watch making be long-term occupancy. there. to more sell still evaluating continue for As not overall communicate we've selling continue And balance maybe out There's have but are for definitely making they're of We'll They've are to progress. we continue occupancy, the where to of make them, outright that company portfolio, be We to where sheet them the look the some that's talked sale. way something could the things but a and loan different

Jordan Sadler

quick of anybody know last talking improvements: here My else Anybody But watchlist. else sort made just I Okay. margin? about. some you're concerned up onto you've popped Bickford just one and about is this quarter? sequentially the the the watchlist on for example, nice Holiday,

Eric Mendelsohn

Jordan, it's Eric.

are smaller watching that's of of attention before, paying we're worry list. operators time, think need everybody's of nothing X% are about At portfolio of fringes given sort some you've our on fixing. I There and you're rents. worried that the and to any referring is that a my couple in but material heard and this

type we're where So action. any we're at not taking surgical the of point

Operator

Fargo. Todd next with question Wells our from And Stender is

Todd Stender

build to away some of just that degree. kind I diversifying to just off Bickford with, from guess, And

services? Capella. that The on new to have couple relationships, expand these like is a new Maybe XX a Christian looks please. and got be nonprofit, up Capella -- it popped You've of X names Living just Management

Kevin Pascoe

a is is -- by company entity. is The owned the manager a not-for-profit. for-profit owned management themselves Capella Sure.

So to them Christian allow able for-profit arm a continue of that mentality management with it's more different and to would them, they just, be Living things still effect, in properties. do their get a we operate of but as mission contracts like did have

about about the the we -- mission something of appreciate them. So them. each that really that's about right they about they caring mentality the and I bed definitely one have It's do have mentioned. that energized out day. But seniors margin get They

a have, They we would how off that's A good try and development, are XX a in we XX-plus an those definitely typically that's Management to a building is to It them. some we can get as new that time. well. that's more to relationships. get opportunities grow add a some operator we as base, that doing them and acquisition, over foster memory group of. like relationship buildings well Midwest Wisconsin care and I in, to got able buildings, some geography as for So we into some They continue fit fits looking other on Those groups assisted operator. the really us. will build and -- like see that to that some our have and definitely build participate with building relationships mentioned, doing expand

Todd Stender

a get tenant how is you mean maybe them loan, in options, this that of it's the door, with as maybe probably a outcome. stuff? construction you that And right? start provided I how kind and to get your That's start good purchase foot can you

Kevin Pascoe

of Yes, to to great but end business. even right. can done, we a And at want they eye a that's we as take we a some additional We're deal kind at group day, do start do of of get to kind have think always investment. that's these new that exactly smaller It's of flyer the initial more. we where we the if look the a $XX happy relationships good million for do

Todd Stender

because current. granular over XX-year a so to the you just of rising, us underwrite sense been time costs new drill labor express grow the triple-net what light think maybe And Maybe operating to just Colorado of you underwrite how and environment current at? have get labor Okay. and and kind a long confidence do do you at costs going top is supply, to to the such and that line it's lease? give have grow just costs light can then to if into just period? What a In you in assume of Pueblo, of it property rising

Kevin Pascoe

Sure.

we foremost, from is it's make where most going. they building historical then First understand at where operator the and the coming the to think recent looking to operations sure and work we're and see with

of growing you those issue late much a expense escalator? that an mentioned, a that faster. question speak or question what's kind mark, at right things big of to been you there's has the so as or revenue, the big ever about growing part, don't if been I Because grow to least expenses, want think a

is to so instance, bought we building in not income -- is reinvest this foreign instance, just be going where increase that a stable cap, very it and kind looking expense so coverage This we're it a also of anyway, off fee, So, time. a grow over with a where have over property they revenue is the earn kind have the This management growth. of a the escalator property at and moderate be growth fee-based expecting outsized to [indiscernible] with able In of more of market-type their it we're helps kind to steady time. community, we that this earn business. ability some modest to in expense

wanted, sure the with On got what some XX; given to long the XX-year they access been property. But is XX. that to they lease, of term operators have And been that long this we it's make wanted term that in one each right years, their to we it's term. our we've mission, some have work instances, to want relationship. where the In

Todd Stender

you, just maybe last And Okay. stick one to my with Kevin.

side-by-side equivalent underwrite kind to so property? LTV, you'd how For the going lease look it you look at looks with call to of is that, yield, so an to you that loan if how be it the Senior Communities, What's do grow? X.XX%, initial a made and coupon it's -- to about the Living at

Kevin Pascoe

we They the lease they relationship a of do building, getting make property of into option. such at rather I'm of looked we to to then a as them. mentioned, value bit little on sort basis, that but of one, this loan-to-value question, joint and not the co-invest structure for it, stabilized than of some add long-term put the kind to company a want I your opportunity this, purchase money in we trying sure Well, if for venture to I'm it where have in opportunity a and ability. structure, over make have our ultimately Essentially, money. standpoint coverage to it go a loan co-invest bit when lease give that point we'll for that little to to that's at from does, down ability on there, them a a purchase LTV so give a then them is the time, it have going essentially property where an want and more already get come under up set

Operator

next Rich SMBC. question is with And from Anderson our

RichAnderson

from perspective? through Can when transitions -- transitions the you point go combine loss restructure? what's the X the revenue and what's total starting Holiday a revenue you the the Like

Eric Mendelsohn

plus I'll The Well, of $XX transaction, rent brought the XXXX from cash tell we year Holiday rent approximately of about addition in Beach that million. property of Vero the for up this had restructured to scheduled million. rent $XX you, the January

So was a On about statement straight line financial year. for current million a lease, it's there now over the projected level, with new gap rent there. just $X.X the

got remember, of way it Beach in And So cash assets good was like Vero around. worth transaction. million all we $XX the really that outcome a and

RichAnderson

Right.

quarter, the down you an versus million. the Okay. like, if second do quarter on it's that X basis? of looking sort for looks restructured, that at That's like second recapture And you're on math $XX then annualized least

Eric Mendelsohn

a be renovation after with quarter. starting have transitioned. rent absolutely property we $XX from and around Charlotte. year, For properties, a We'll One basically those now major we're really fill properties them. in new transition worth brand last million started in of Those building up-type mode each

to So back were. describe I, taking new we are where to take a new as Kevin These it's take buildings. We going years. few it's can to years operators. like several than going And much better had to get

RichAnderson

Okay.

way, of in XXXX, to this it In top count. a is looking of is in $X.XX, the if not FFO terms lot end whole the and at me look denominator tell your this difference produced material $X.XX of of you basic I'm So share but too kind back. of guidance the

the that it? where end this you're to range? gotten you were So about wouldn't able suggest that the by meet your of end year you've think sort why way guidance if that kind of you've top of of -- to reasonable Is not a to back

Eric Mendelsohn

that You're correct? just is about talking FFO,

RichAnderson

Yes, that's right. Yes, yes.

Eric Mendelsohn

prepared AFFO. we think we're said FFO ago, remarks. Compared we certainly a back importantly are on Well, back and, very we're for to us, year in as I my back on

this we're said, and year. to is of year year adding as our point. the to really in of the And going next volume investment this kick begin So for Eric so just from this far remainder

RichAnderson

yourself overall, a that like already into? the multiyear company feel So trough as beyond but these got a with you that's you process transitions, you're position

Eric Mendelsohn

Yes.

RichAnderson

Okay.

day X housed required of the Okay. in them whereby everything that of the to maintaining statement. that of them way curious that way, taking able management have XX-Q the mention All but TRS operations and There up. the in I'd consolidate everything? of of anyone or Is operators aren't important a replace you'd including keep none to the are you kind be -- call of of what might just parts to on take all and was in helpful. out to by of saying Eric, the all right. this them might the you like them, queue, to maybe that that every meant if the these - have or not by going business you assets, of to was like restructure another or is I'm some

Eric Mendelsohn

in trying the accidental leases signed state. and operators. an a we be would a everything we That harbor think We that good end language, goes right, we're you it as I that is good and Leaves TRS deposited think call haven't idea. the have what would trajectory. what do buildings, are business they're the let insofar And know if unstable they could fragile, the buildings a on it Indianapolis, X we But to you're still poorly. Autumn I to vehicle right? up operations have think means that Street into in safe give would we some with, We Wisconsin, be traditional

RichAnderson

you because a would Even more Okay. be payment, wouldn't though have really in. all so right? It management

Eric Mendelsohn

that a We Well, come you you housekeeping. up come with would actually Roger wouldn't and manager Kevin know... -- cooking up and Eric and have we meals, John would doing

RichAnderson

Okay, draws guidance more beyond I Are done? into you. any dialed you've got ATM there what

John Spaid

have might of So on tried I as this as no capital leverage to intention our to letting comment beyond markets. we we do I lay can't on I policies. is John, Rich. our that afford what clearly the stated could out get

to TRS. income? lease Yes, I But technical do it lease Eric there. then can there. intent to we and them. transition operating assets The I TRS right kind which is said They're for you question, hard the now. improve being, So through we structure management fee get a the to that years, They're just Kevin on think build in will though road, a Can that includes X now, utilize in more can leases a these to transition And for to down a our of operators. these rise paid our do the a -- do that X that's or in so because give we asked flow I is that them little bit NOI-based year net one being thing time that intent you have triple-net best the just lease. losses

Rich Anderson

construction my are you. loan information. commitments, getting on just those you this is for you own actually When quickly how investments? Last do got interests question, the cash Yes,

Kevin Pascoe

This Usually, out something we'll get door is closing. at the Kevin.

to go, we I ground, if some sooner, ready and it's that's there. that shovel that interest from So say or would sort within we'll ready not after a course, next or to and if on XX put closing days, made over whenever it's they're the the development start like deal happen we've accrued on of then entitled the we've so been outlay, XX get deal outlay ones and so of will months announced, fully usually the a getting

RichAnderson

Right.

the turn cash -- it you So when then when XX months perhaps that's call into cash, flowing and and property is you accrual interest so? whatnot, the make you or accrue

Kevin Pascoe

we budget draw. they as month that have very each accruing an are into That's reserve usual. We'll interest built the

Operator

with question last from the And Daniel comes One. Bernstein Capital

Daniel Bernstein

I Bickford. providing trends wanted back Appreciate you go occupancy to your to there.

else coverage concessions? Given indicators comfort us to -- is indicate and on reducing a expense eventually us for the sign trajectory? are but -- indicators might other any you up, Bickford there might side? right able It's they go Are doing on good give something rent going that that might provide what will that where Are again margin they leading the up? be back is that occupancy lease winning

Kevin Pascoe

manageable. call, is nice and What and done Kevin. mentioned what portfolio echo a I'll that overtime for agency limiting really really pressure There's job is talked the the throughout not just about. those but I Ohio They've say reducing would of labor, Pennsylvania getting kind they've of kind or only on is done pressure. the this Daniel, aspects. enhanced, of so I good that organization. still going wage that job to aspect away. a speak, we've That's wage not But

that they Bickford place. discounting as lot then a the this I is but So before, look And on don't we call is really the is really first good the do a we've indicator about in of at portfolio. something -- think talked

markets they the to the services rates haven't so occupancy, look value that they been rents speak, a competition. are these move-ins. to able bought provide. than and their to the Their sell at bunch to the what get of and the reduced higher So really They stuck are of in knitting we versus They've competition.

looking regular you of hopefully on you them. at help going. lot different of that'll least, data see points couple a we're At for We're with a are kind So of things they're contact. where those

Daniel Bernstein

as well? supply for within there any the Okay. outlook Is change in their markets

Kevin Pascoe

mean You deliveries? new

Daniel Bernstein

correct. deliveries, New

Kevin Pascoe

Yes. competition been the They've again, coming had new they've in. immune to -- not

we've They're kind lot not been. of have are markets of competition. the that deliveries wave just seeing new seen through a managing of that the other We a

to in that seeing again, big any. there increase new say that's coming, not isn't but not deliveries a So

Daniel Bernstein

that or -- you to might of pressure But reduce supply put kind on could put forward or you worse? could That the not been them, has is X. pressure pressure going the relative where it would last context. characterize If it stable year in as it's get

Kevin Pascoe

been them. they've that biggest issue we some of radar. better not and, definitely able There's with. to that any, been more pressure. has the say The has more to it's I markets add as occupancy the lot a there be they new put would has guess They've category. been matter competition in is to, where much back remarks stable been not like We not some always some. Again, has than a the the where to There that the really of that level it competition value increased feel is in to -- pointed going going I fact is been sell for under dealt the but to were.

to big So, I to deliveries, going guess, kind be of that a coming. that wave not speak. there's we some so characterize again, see but On I as flat, would

Daniel Bernstein

pipeline nursing. but kind you're then from refer me to of And could and housing question in investments last X the skilled the doing, Okay. it regarding particularly senior

or seemed said, have bit a peers pace what to Your risk. of, value have add in you up little picked terms the of

risk. for a the How available anybody versus You're value as that add with there characterize or would standpoint? well, you characterize one else, the little be doing -- such taking know, out could Discovery. opportunity from an you a would bit as assets new or bit You you what's this more how stabilized little but

trying You're standpoint? how a of may a to seeing I'm value where where just pricing about add-risk your stabilized move pipeline you're lot the versus understand thinking from is right. opportunities

Kevin Pascoe

trying make at? and try make those starts just are with We're operators. We're to of with, see and to the geographies what the figure everything the some are air, going with doing at is that end sense. what good the what set, we do say in and to lease-type these we people be of on new would is be investments. everything buildings the of work want end day, a coupon-clipper to good add. to looking to to continue to the order going balancing stable our in to the we the stable I are opportunities are we're or able a see At to at add to development of have we're -- matchmake where value I do looking sure some But prefer That's going then investments. think of to interesting are they see makes I'd the have take at to operators, Sure. continue their with job we're look and to them who that with At partner investments. the also so avenues. going type we we're that other going and at value what sense operator. look can in speak. say day, things What at those market, the go to good opportunities preference where with we're the out we still we or our operators opportunity the look But

Daniel Bernstein

the stabilized attractive pricing now? assets Is right on not

Kevin Pascoe

kind market. the Again, depends on just it of

go makes top is like which really the of below go you try invest cost kind going If to XXX or markets, coastal there mid-markets our be more to to for really capital high-end of to to it us to difficult even fire there.

interesting to trying values seeing, some of company. what operators, think and at and you'll good good find to I grow quality looking markets, see more secondary that's you're ways getting the

Operator

And questions any gentlemen, those I'll the to for we back all are call remarks. over you the closing have. turn

Eric Mendelsohn

everyone and you attention, to Thanks for soon. time NAREIT or at and NIC your to hope see we

Operator

our may rest and great concludes line. participation. conference for Have gentlemen, And your your ladies you today. and your a We that of you thank day, disconnect

National Health Investors (NHI) 9 Aug 192019 Q2 Earnings call transcript