National Health Investors (NHI) Q4 FY25 earnings call: guidance and Q&A

Is the 7-8% same-store SHOP guidance conservative, given prior commentary about potential double-digit growth and corrective measures?

Kevin Pascoe stated the guidance is conservative, aiming to 'under-promise, over-deliver.' He noted that 16 units in one 100% occupied building will come online in May, contributing to growth, and the second half of the year is expected to be stronger after a softer Q1.

“we want to deliver something that we feel very confident that we can achieve. And there is -- there should be opportunity within the portfolio from there. So it's a bit of an under-promise, over-deliver.”

asked by Farrell Granath · answered by Kevin Pascoe

Are lease negotiations with NHC moving constructively, and what is the probability of a resolution in the next 3-9 months?

Eric Mendelson stated the company is in a 'quiet period' regarding NHC negotiations, indicating they are ongoing but cannot be discussed further.

“We're in the thick of it right now. So I would describe our posture as we're in a quiet period regarding NHC.”

asked by Austin Wurschmidt · answered by D. Mendelsohn

Have past SHOP challenges changed the approach to underwriting new deals or structuring management agreements for added flexibility?

Kevin Pascoe confirmed that past experiences influence underwriting, focusing on campus-style products with assisted living and memory care, not just independent living. Management agreements are structured to provide flexibility for operator changes if needed, though it's not desired.

“I would say it definitely impacts the way we think about deals, but we're also focused on more senior housing campus style products, ones that have assisted memory care.”

asked by Austin Wurschmidt · answered by Kevin Pascoe

How is the non-same-store SHOP portfolio performing, especially considering transitional impacts, and what are the expectations for RevPOR?

Kevin Pascoe explained that the non-same-store portfolio includes properties transitioned from triple-net or to new operators, experiencing transitional impacts. He noted that the Sinceri transition performed better than expected, with solid growth expectations for the current year, and these properties will roll into same-store in Q4.

“Overall, though, the transitions have gone pretty well. I would say just pulling one out on the Sinceri transition we did last year that performed better than expectations through the second half of the year.”

asked by Juan Sanabria · answered by Kevin Pascoe

What is the target for SHOP as a percentage of the total portfolio, and how does NHI's growth strategy (margin story vs. occupancy lift) compare to peers seeing 20% growth?

Eric Mendelson stated the goal is to double SHOP NOI contribution to 20% this year, with an eye towards 30% or beyond. He acknowledged peers' occupancy lift but emphasized NHI's focus on margin opportunity in the Holiday portfolio and rate opportunity with new, experienced operators taking over from mom-and-pop operations.

“in terms of growth of NOI for the company, we've told people that last year we doubled from 5% to roughly 10%. And this year, we could usually double that again to 20% and with an eye towards getting it up to 30 or beyond in terms of percentage of SHOP.”

asked by Richard Anderson · answered by D. Mendelsohn

Could the remaining Bickford deferred rent be repaid through mechanisms other than cash, such as lowering acquisition valuations, as done in the past?

Kevin Pascoe confirmed that various options are being considered to gain value for the remaining deferred rent, including potential future developments or portfolio adjustments, but did not specify a particular method. He noted the rent reset is in April and the goal is to maintain aggregate rent.

“you're on the right track. In terms of what values out there, we've built several buildings with Bickford. There's still another one remaining that could have some value like that.”

asked by Omotayo Okusanya · answered by Kevin Pascoe