“It’s been a busy 2021, and the breakneck speed won’t’ be ending anytime soon,” National Health Investors CEO and President Eric Mendelsohn said in Tuesday’s second quarter earnings call.
“We have accomplished much this year, but we have so much more to do,” he said.
NHI signed a non-binding letter of intent in July to sell a portfolio of nine properties to an institutional buyer that is leased to Holiday with an aggregate net book value of $133.5 million. NHI anticipates closing this transaction in August for total cash consideration of $129.8 million and will recognize an impairment of approximately $3.7 million in the third quarter of 2021 associated with this transaction. Chief Investment Operator Kevin Pacoe said the sale will yield an $11.6 million annual revenue.
“It gives us stronger portfolio options,” he said.
Mendelsohn said the Atria and Welltower transaction impacted the REIT’s decision to sell off some Holiday properties. At the same time, he said, “We’ve had our eye on selling these buildings for a while.”
During the second quarter, NHI sold to affiliates of Bickford Senior Living a portfolio of six properties that were being leased to Bickford for a purchase price of $52.9 million. The REIT received approximately $39.9 million in cash consideration upon sale and originated a second mortgage note receivable for the remaining purchase price of $13 million. NHI recorded a $3.5 million gain on the sale. Rental income from this portfolio was $1.6 million and $3 million for the six months ended June 30, 2021 and 2020, respectively.
Normalized funds available for distribution for the second quarter of 2021 were $52.8 million, which represents a decrease of 13.3% from the same period in the prior year.
NHI collected 87.3% of contractual cash due for the most recent quarter. The remaining balance is comprised of the following: 8 % in deferrals related to Bickford Senior Living; 1.4% in deferrals related to Holiday; 2.7% in deferrals related to four other operators; and 0.6% related to lower forecasted revenue from transitioned properties prior to the start of the pandemic.
“As expected, our second quarter results were negatively impacted by higher levels of deferrals which increased to $9.9 million from $4.2 million in the first quarter. While we have been pleased with the persistent recovery in occupancy in our senior housing portfolio, we are not out of the woods yet and expect that our operating partners will need continued assistance,” Mendelsohn stated in a press release yesterday.
See more coverage of the earnings call by McKnight’s Senior Living.
