NHI - Earnings call transcript Q1 2022 | National Health Investors, Inc.

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Operator

Greetings and welcome to the National Health Investors First Quarter 2022 Conference Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we’ll conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, May 10, 2022. It is now my pleasure to turn the conference over to Dana Hambly. ahead. go Please

Dana Hambly

welcome to And quarter National Investors Health XXXX. Thank the to Company’s call review first results conference you. the for of the

yesterday On well Officer; call basis, the and and a Travis, that’s Chief this Mendelsohn, in Investment are conference The on John of David the were results, the been Officer. the Pascoe, of as Officer; Financial listen-only Kevin market notice release released Chief President by Chief Spaid, Accounting call today as a closed CEO; press after covered Eric media. accessibility financial

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

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

Eric Mendelsohn

where for dispositions, $XXX initial $XXX thanks of It our joint asset have year and ability past to we operators SHOP one since and to and to has Hello, great we with plans million tenant We’ve year. through confidence million communicated deal today. joining to our the their ventures. us been a recover Dana. lease restructurings optimize you, Thank including portfolio new transitions accomplished partners in existing in

completed have time, $XXX since sales of including housing in million asset in senior that million sales underperforming approximately We $XXX properties.

Holiday properties great as for legacy two to provides be SHOP Merrill a transition success buildings. value complete dispositions $XXX the we well. communicated in aren’t into Recall several April Bickford repay be their that Gardens the market contributing Bickford will November. on income. our which to used our that and exceeding expect a reached as year. excess million in capital this proceeds is is to sustainable so the after new relationship milestone NHI Xst, as the rent, and and Living other Bickford confident two coverage, These cash reinvest leases impact of minimal We we’re half rental success to can more that with deferral dispositions in reset plan our in Discovery net have consistent have properties years of restructured first valued more NOI, fair lease, underperforming We on the create much flow and improves new that balance, generates for our We effective ventures partner company our we cash NHI’s Senior we with another maintain our April. remaining will a the that properties

sheet strategy, ventures traditional look providing coupled business for housing. on report. The a and net early over senior with we’ve by to triple X forward pleased transition These While make deferrals is million debt been in detail far announced repurchase new leverage balance more times types and formidable EBITDA nonpayment the $XXX it’s adjusted our XX net in these and ventures so quarter much great debt and within X to our still NHI stages, despite shape, competitor with of second the plan. to starting rebuild pipeline share Welltower $XXX as recently to and a we from last million in our reduced maintained The eight months. is significant target months we of for

described So, activity unforeseen we We’ve introduce We for as navigate regular the new outlines the volatility understand need we’d near-term capital to to We and obstacles undertaken this is busy, updates, opportunity moving optimization. cash the without process issue intentional. business of in that difficult would knew forecasting. see in the plenty our our have our equity. to supplemental the be made to slide a deploy our many portfolio to communicate included I through but way. that there tried along that pieces would that the and flow plan slide

continue with Our operators to challenges. deal operational

in better like However, we’re these position now a we feel to forecast challenges.

reached and has now point, to are which that We visibility. largely our improved an completed we’ve happy greatly portfolio inflection optimization report

result, John review a As will his John? in our results. more in issued detail recently which discuss we quarter guidance of

John Spaid

Beginning impacted income and March first in press Thank that per There our of XXXX, are achieved we $X.XX which period XX, day, common for number and first the in sequentially share, items earnings net results, $X.XX ended quarter are XXXX good up everyone. with from our quarter compared $X.XX, the you, quarter our the in XXXX. diluted same release. Eric, to for outlined fourth a

Reconciliations of $X.XX fourth This XX, share increased quarter, sequentially increase from the decreased distribution FFO quarter in The recently XXXX. For first and forma higher metrics we our for yesterday we’ve XXXX, the $X.XX earnings million ended be Sequentially Holiday largely by pro dispositions metrics and our $X.XX the for expense. performance line common sec.gov. recognition quarter. for results $X.XX. release from to $X.X filed for previously midpoint diluted $X.XX FFO previously for our in to first XX-Q in per expense. are for modifications, the which was was interest can sequential and $X.XX legal the driven at found by offset the compared our the FFO quarter concessions, NAREIT FAD our March additional the fourth increased lower with million quarterly discussed lease This lease to issued deposit, achieved $X.X normalized rent first announced and normalized quarter guidance funds available from of

share Our on May and first XX.X%, FFO $X.XX quarter ratios dollar and payout of XX.X% dividend of X, was per and paid normalized respectively. represents FAD XXXX, total

quarter As and record payable Board $X.XX second dividend share per Xth. June August of for declared XXth announced on yesterday, of shareholders our our on

end million for XXst, XXXX. Turning March the quarter to the by since our quarter reduced of of first ended the we balance debt sheet approximately the $XXX.X

first leverage Our keep non-cash EBITDA expense. QX is net to our times. was the adjusted Please leverage for ratio debt X.X option seasonally that higher ratio in adjusted stock quarter not mind

expect equity We the and the issue available equity under program million. $XXX legacy While we still leverage our the any while to have credit had during the million in our to $XXX revolving second still and facilities. during transitioned new in recommence ratios recast stated million we quarter million the portfolio revolver we those operators, XXth, our financial during through ATM within and first quarter. We increase policies, not -- not improvement from facility to and receiving credit as immediate to cash. expect issue we see Holiday a did $XX On first quarter do $XX.X to from outstanding April NOI

in million have approximately remaining available buyback includes We program under On continue we us which $X.XX, under well to our guidance, normalized $X.XX share as stock to million. per to of $X.XX a range April as the ATM XXth, of annual $XXX million range our recent $XXX a FFO and $XXX.X range program. FAD in issued to FFO $X.XX of NAREIT in share per $XXX.X to

portfolio $X.X rent on from our based lease million Welltower repayment throughout end SHOP quarter. million the investment the Our rent XXXX second XXXX, a and first at existing the amounts commitments, upon consistent with $XX asset loan calls, deposit recognition X.XX% commencing existing $X.X dispositions the $XXX payment from loan Holiday concessions, of during beginning related NOI including an in of April in repayments guidance lawsuit, communicated and funding the to Xst, quarter, in includes prior million, assumptions settlement from the million

future Our our April portfolio. Other release. or now benefit found the press turn assumptions to acquisitions, be can guidance in from deferral the discuss outstanding Kevin? repayment I’ll on that, does not Pascoe balances. With assume unannounced any Kevin call any to over

Kevin Pascoe

XX Thank you, and efforts business asset as John. our major has properties. on has portfolio and from development with of most concentrate our of our my pandemic, I’ll Starting as operators, needs comments the group experienced are most disruption This focused. portfolio classes driven well optimization activity. senior where been housing pipeline the and

including million. X tenants $XX dispositions housing basis, On a at have higher on approximately trailing Bickford annualized the with schedule above million restructured Eric As portfolio’s Bickford. we as the large leases that senior we completed to times, set couple $XXX We and trend with portfolio been noted, expect rent a and lease leads sales three-month lease and improving. the coverage of for is have restructured in

not for of cash forecasting we lessen provide assistance. concessions flow May. enterprise said any rent Bickford We’re still improve Bickford and to did That not any for process the will future buildings, we’re April. in selling some And in the the which for concession need

operating On meeting property of senior up $X properties We’re reductions to deferral repayment joint housing, million Senior are Xst, million of a balance of dispositions. we Gardens, on generally appropriate their to April and Bickford the ventures level Living, and Merrill are nine certain disruptive. specific performance to with which Holiday completing SHOP. are targets six Discovery legacy properties targeting for and repayment Transitions determining both minimum under or model transitioned contingent $X of annually

which and the cash XX% be of of at results, upside from to NOI in period annualized great. when Ensign, at for We excluding we’re account low CCRCs NHC deferrals in which resilience tenant, solid approximately EBITDARM The times actually million. at of our $X XX% attributable our portfolio, largest represents times year-over-year, X.XX future cash had declined deferrals are revenue incremental of times. based including coverage to SLC, times, million in of primarily X.XX in performed comfortable an to to CCRCs on contribution which portfolio. times, will approximately and optimistic but increase for our nursing operators. that the portfolio, other other of have the PPP which have X.X our EBITDARM confident net continues This $X feel XX% approximately loans. annualized X.X SNF X.XX the skilled net represent prior X.XX times was revenue is and The still mid-teens, Coverage of NHC with XX annualized coverage early

leases not April. and we assistance began, operators, pandemic since other under did received Our SNF in have -- the any rent concessions five minimal provide

proposed the SNF than are but don’t materially We favorable health is rule, final CMS’ is hopeful change of reimbursement rule overall operators our case. the we not that the to that still more expect if

Senior construction $XX.X Regarding million. recent business for property Encore million announced quarter, for first development, exercised in our memory new the loan we Encore purchase $XX.X AL, in with Wisconsin Living for and option XX-unit a care just a with

properties $XX to leases the in the XX-year year under $X.X the $XX.X We also quarter, commitment. We three. were up funded transitioned net Montecito rent three see lease, million will ratchet in that to master our Encore with on during million starting NOI-based to mezzanine a million loan $X.X balance which total under bringing million Illinois under annually,

as term see triple term financing to environment the and including current still as seller’s shorter We’re net starting we’d improvement in a longer market. deals lesser an a the deals lease to extent, pipeline, characterize

seeing type Gardens RIDEA our and the joint announcement on opportunities Merrill following more ventures. We are Discovery

in our we will in growth is for looking see structures steady another contributor. senior ensure ventures as focus resources on own the avenue industry, to we that, get place make these way, that near-term expand have investments the the organization With platform. a back we housing we in joint before the another to these make to Said I’ll over SHOP Eric. hand to need sure NOI right call While

Eric Mendelsohn

Thank Kevin. you,

reignite strong the on page chapter history of as advantage financial our be growth to to our We’re rate. our look position grateful turning we take this of to

unique June Q&A, pleased Tracy Before a conducted the nationwide welcome now questions. I’d Xst. Board fit. to and the open the We to addition to for as in of like stood really as best line we’ll perspective have out Directors, on newest she over NHI’s we’re which will Tracy joining boardroom. really call the turning Colden, her the Operator, And to search be

Operator

is [Operator you. from Thank question Anderson first Please go Instructions] with the of line Our ahead. SMBC. Rich

Your line is open.

Rich Anderson

Thanks. morning. Good

deferrals. on buy So, payback the or of Bickford -- the

to installment monthly but year way Is the year, that of Just a million about $X month a it? so I on per a sort to a right $X million up understand, of a think it’s at minimum. total

Kevin Pascoe

formula think What the of we’re way timing now Kevin. kind It’s right the is looking about to That’s at Rich. right Hey, and the of it. payment.

-- as then increase for than will minimum they’ll that, to now, they performance, extent paying they’re So have there we’re the million they a be that what to payback. number. targeting continue is But annually more. better doing $X And

Rich Anderson

you is concessions? but first could Are And for is this… similar, Maybe said deferrals of just or the deferrals $X.X combination of restructure you in maybe quarter, abatements? for concessions. define this then that those And that, you can all or and just clarify million

John Spaid

Hey Rich. both. This is John. It’s

XX see -- it page on supplemental. roughly can you our So, of

Rich Anderson

it myself. Okay. If I it’s can there, then find

John Spaid

Yes.

Rich Anderson

me? average we as for first collection in to the month collection XX.X% to itself the XX.X% out. below second that XX.X% something plays in Okay. Can reconcile the expect quarter April. well quarter, Again, you

clarification Just any there?

John Spaid

is John This again. Sure.

not. the what there some are from to making adjustments you’re effects And of hopefully long-term we’re seeing the So, leases.

we obviously we as should improve, so, do unless have that, collection deferrals didn’t abatements we And that expect. or additional

the So, about think I it. way it, would characterize that’s

Rich Anderson

And everything some benefit all sort into any lease, and went -- the Bickford And restructure Okay. behind four Recognizing master consolidating is breaking into the something real the magic and ones? leases? into like them relationship that what Bickford work there master four simplifying there that, to one me. out for was separate to or is thought of last Thanks. the

John Spaid

by one of debt, properties it the structure. those over because lease have properties into is Kevin some is the for initially, it. we the rest there requirement secured And back it separate take and a different to I’ll me Let turn to reason of

Kevin Pascoe

part function that portfolios of different on HUD hit time. is some, the Fannie Sure. over and was NHI There of working on it’s of is part which debt debt to acquiring these John had already there’s different I -- a big time, on originally, mean, then Fannie on. them elements just over

there yes, down. to is it consideration So, reducing given

us. working still for them. simplification pieces priority We’re is through some But with always a

the things worked but keep for for to buckets, status would of in their So, we’re debt still But that table partly, be on we’ve quo keeping partly just the in kind them now, future. reasons, while a be table. the through we have the of market, the recasting once something the that fair we’ll and of end to we have then, issues. And would a kind get when likely do on relationship,

Rich Anderson

one the quick -- Holiday a opportunity you. one -- gotten now for at senior what write a percentage just your set your done, lease least appears housing you’ve of Expanding maybe Kevin, what’s right, to And excuse conversion potential transition’s of for portfolio net that a from SHOP me. the there? What percentage triple

Kevin Pascoe

it from the have good absolutely That’s conversations. think we tool we a it NHI at table. some in than as belt a take more tool relationship say, building I time. perspective perspective upside, I’d at this to there’s we’ve not more to in have it from acquisition business a point will a about for from Well, looked capture perspective to those But, and date. new off conversion a the If opportunity

Operator

go We a KeyBanc question Austin Wurschmidt have Capital Please from with ahead. Markets.

open is line Your

Austin Wurschmidt

the So, transitioned you guys of mentioned to NOI Holiday range, reach XX that annualized, low to assets for kind I mid-teens that believe. were

guidance in was you And in the what those year? NOI quarter? for this to by what are assets, the of ramps first that assuming run for assets end So the the rate those quarterly quarterly that

John Spaid

one. I guess, John. I’ll This take that is

number don’t haven’t was given that would the quarter. the lot be quarter. noise a a know that you we first provide that you. about So, really first meaningful to of information in I There

which just that you’ll you along roughly more that is second see rate is quarter meaningful. mentioned. run the though, What For

the clearly be little to that it’ll and be because just get staggered, that quarter. But, effects fourth bit about third there’ll of the it a in transition somewhat second in However, that we see mentioned. been talking we’ve ramping number you to quarter

hope that I So, helps.

Austin Wurschmidt

this I revenue relationships? are you know not. basing those has management or these And don’t are these then, deals, restructure fees, to operator you if provided or with NOI been as the new look on But,

Kevin Pascoe

management road. property of and sharing earn-out an market And fee the structure, time, on where a upside, participate fee. create flow But, it’s venture revenue. not This valuation fees What the these that’s is is a of typical the the more of just they it’s just plus The done but we’ve joint with a of not it’s the through a management through based management down function are over cash Kevin. as building. their co-invest, management in

Austin Wurschmidt

just little then, talking And maybe bit the investment a about backlog.

You then to with backlog on volume targeting? think Any that and down or type as match product starting sense of sort the breaks timing it’s the funding about mentioned, that sort investment by of maybe we build. how you’re dispositions,

Kevin Pascoe

that’s would the it to come we But To where continue I choppy It’s the opportunistic. see opportunities remain it’s bit past has be flow where would in been said my We up. just how Like to not and more And works. a choppy relationships think always in frankly, and match work is little of fund, still be comments how marries NHI a market. up able characterize. and amazing. I that’s still deal I a that prepared that

Encore. flow, did to as and side. starting on more are debt various equity looking couple both, We close you We the a at on opportunities say, deals some with see deal

So and to commitments year. we the some existing again, throughout making our inroads relationships. fund servicing have And still

those So, but for a And looking patient investment steady we’re opportunities, still new there. commitments. reasonably still see of existing level NHI, servicing you’ll by then being we’re

Operator

have Mizuho. from Okusanya ahead. with Omotayo question do We a Please Instructions] go [Operator

open. Your line is

Omotayo Okusanya

and will $X that with of determine to circumstances deferrals a of what $XX very coming Bickford, also the you share I that out the details they can monthly what kind any know you if there? kind high more around the of get million with just payments helps mean, are million minimum of level I determine exactly how credit of be. them, formulation still don’t that that up just

Kevin Pascoe

margin, From them enterprise see around to the portfolio organization options very things a working around we’ve incentives we some some occupancy, perspective, complete incentivizing them. It’s of on. that to it’s some getting There’s at broad an get these to, to like that been level able to that being really it’s purchase have it’s do with -- a we’d portfolio dispositions to getting strokes.

traded to and How scenario win-win it So, get buildings. shared of those some there’s some relates a -- discussion around. maybe some or as appreciation those a

a gets get and purchase NHI good they So, relief. price some

there’s would we’re that we’re about And So, a payments minimum does we’re -- of formulation of when things formula working the that the there few everybody. what on talking then, what is saying really be help really payback, is, start, that’s on now like. the the that’s those does what

all schedule how lease of what the look it is at might we we sketched anything. have want from the paid formula like, would we’re what and looks getting the in on bullets sure make out and and we’re NOI that do hard portfolio production terms to up, not thoughtfully like, forma where looking We pro up the recast where having really we’re place What when those to minimum come into over. NHI’s subset payments gets that of because a based back the

lot tell issues up moved in of in the about the that and labor first So, marketplace, stabilizes. the NOI for how operators goalposts they’re that some winter you of the through of we’re spikes some seeing back and terms quarter a a with of bit the when that leasing I thinking late COVID would

how set that to mindful trying just we we’re again, schedule. of the So thoughtful and be

it. have we revisiting keep to So, don’t

Omotayo Okusanya

operators, in three any operator of million And then, was the new $X.X to deferrals at to all? that the of a April

John Spaid

it the But, phenomenon. that no. John. of operator down XX% we’ve say do. about to operators hadn’t some is in a XX%, got been that to And, this Tayo, our of But new more the would I last recent strategy. of optimization let’s the, those more are To past, just talked sort call work we’re

Omotayo Okusanya

really puts that tenants you is of if have on your tenants, maturing, any mind, EBITDA, real a radar that for screen rising to then the coverages, the there rent because a where anything that list? And or the capital leverage, bunch given lot we they which helpful. the of don’t rising know debt last a just But again Again, me, someone I structure issue rates. are get cause your like again, just one don’t mean, we high they have that may watch on of rates be start suddenly with

Kevin Pascoe

with is have make and So, time that not all are again even the there’s mindful if customers, to people to topic we here. our knowledge, negatively happening debt being a But, quarterly of. maturities time or our that’s a them, customers, monthly, recaps the the and conversation that that aren’t portfolio credit we’re in for would our significant at but to try that sure not least affect something behind and we talking discussed we’re of it

Operator

further questions no at are There this time.

Eric Mendelsohn

Thanks couple everyone for of your in-person see we’ll interest. at weeks. in NAREIT you a And

Operator

your for that That the call please concludes you line. and you We participation disconnect your today. thank for ask

National Health Investors (NHI) 10 May 222022 Q1 Earnings call transcript