Eric Mendelsohn hedshot
NHI President and CEO Eric Mendelsohn

National Health Investors is making progress on its return to growth through portfolio optimization plans announced in 2021, improvements in senior housing operating portfolio operations, and strategic positioning of the balance sheet, President and CEO Eric Mendelsohn said Wednesday during a second-quarter earnings call. 

“Our long-term outlook has not changed as fundamentals improve in the need-driven senior housing and SHOP portfolios,” he said, adding that NHI’s continuing care retirement community and skilled nursing facility platforms “remain pillars of stability.”

During the second quarter, NHI sold six properties with a net book value of approximately $28 million, for net proceeds of approximately $39.1 million. Three of the communities were operated by Chancellor Senior Living, and three were operated by Milestone Retirement.

Since the end of the first quarter, the Murfreesboro, TN-based real estate investment trust completed the sale of seven properties for net proceeds of $42 million, according to Chief Investment Officer Kevin Pascoe. This includes one assisted living community in Oregon sold after the second quarter ended for approximately $2.9 million in cash consideration, net of transaction costs, according to a press release issued in conjunction with the earnings call.

The REIT currently has four properties held for sale, which Mendelsohn said allows the company to shift more attention and energy to growth initiatives.

“With this process effectively complete, we are in a great position to deploy capital, given our low leverage and acquisition environment that seems to be moving towards a buyers market,” Pascoe said. “The pipeline is starting to reflect the changes in our cost of capital. We have multiple [letters of intent] in process, so we are confident we’ll announce new investment activity before the end of the year.”  

Net operating income from the SHOP segment, comprised of revenues from resident fees and related services less operating expenses, totaled $2.1 million, which is $0.8 million lower than it was for the same period in 2022

The quarter was affected by one-time concessions specific to Bickford Senior Living and an unnamed skilled nursing facility, totaling approximately $1.9 million, or $0.04 per share, when compared with the first quarter of this year, Menelsohn noted.

Interest expense in the second quarter compared with the first quarter was flat, largely due to lower total debt offset by higher average interest rates, according to Chief Financial Officer John Spaid.

“We adjusted our [funds available for distribution] guidance to a range of $185 [million] to $186.8 million. This slight reduction is driven primarily by higher-than-expected second-quarter concessions, which includes lower-than-expected cash basis customer collections and incremental assets sold in Q2 not previously in our guidance, and higher interest expense, all offset by better than guided deferral collections,” Spaid said. 

The REIT also adjusted the range for normalized funds from operations to $107.1 to $188.8 million, he noted.

“On a per-share basis, this equates to a midpoint of $4.33, down 1.4% from $4.39. The updated normalized FFO guidance reflects the changes to the FAD as well as changes to our non-cash rental revenue, which includes straight line rent and amortization of leased incentives,” Spaid said. 

NHI announced Tuesday that it will pay its third-quarter dividend of $0.90 per common share on Nov. 3 to stockholders of record as of Sept. 29.