National Health Investors came out with its first quarter earnings and reported modest improvements in several financial metrics from the year-ago quarter. The REIT also increased its 2025 annual guidance range, which investors must have liked, pushing up the share price by nearly 3% in the trading hours following the announcement and earnings call to hit year-to-date highs.
Net income attributable to common stockholders per diluted common share for the Q1:25 was $0.74 compared to $0.71 during the same period in the prior year. It also included approximately $300,000 in proxy contest and related expenses for a proxy campaign launched by activist investor Jonathan Litt’s Land & Buildings in February 2025. National Association of Real Estate Investment Trusts (NAREIT) FFO per diluted common share also rose to $1.14 for Q1:25 from $1.10 in Q1:24, as did Normalized FFO per diluted common share, which jumped to $1.15 from $1.12 during the same period.
In addition, NHI increased its 2025 annual guidance range, which includes the following:
- NAREIT FFO per diluted common share to a range of $4.64 – $4.70 from $4.59 – $4.66;
- Normalized FFO per diluted common share to a range of $4.68 – $4.73 from $4.59 – $4.66; and
- Normalized FAD to a range of $223.8 million – $226.4 million from $219.8 million – $223.6 million.
Seasonality factors did result in slower NOI growth than expected, leading NHI to maintain the 12% to 15% growth rate guidance for the year. SHOP NOI totaled $3.1 million, or 4.9% higher than the year-ago quarter, driven by higher revenues and higher occupancy in the portfolio (although margin declined 10 basis points to 22.1% in the same period). But NHI expensed approximately $1.2 million in costs incurred related to a large SHOP transaction that is no longer probable of occurring. Rental income recognized from the company’s tenants increased $6.7 million, or 10.7%, primarily as a result of new investments funded since March 2024 and partially offset by properties divested since March 2024.
Occupancy actually decreased throughout the quarter in several of its portfolios, dropping from 89.6% in its SHOP in January 2025 to 88.9% in March 2025. The 37-property, same-store Bickford Senior Living portfolio saw census fall from 85.5% to 83.9% in the same period, as did Senior Living Communities’ nine-property, same-store portfolio from 85.7% to 85.1%. The Bickford portfolio is still below August 2024’s occupancy level, and the SHOP only beats it by 40 basis points. At least NHI’s preliminary occupancy in April was up approximately 40 basis points from March, according to CFO Kevin Pascoe on the call.
The REIT had an active quarter in terms of investments and acquisitions, which helped drive the growth in guidance. CEO Eric Mendelsohn stated on the Tuesday earnings call that NHI has “announced investments of $174.9 million so far this year and we’re far from done as the number of sellers seems to be growing.” The largest deal was its purchase of six memory care communities in Nebraska for a total purchase price of $63.5 million. The 15-year master lease, which includes two five-year extension options, has an initial lease rate of 8.0% with fixed annual escalators of 2%. Agemark Senior Living is the tenant/operator, which is a new partner for NHI.
NHI also announced three single-site acquisitions. In January 2025, it acquired a 108-unit assisted living/memory care community in Montrose, Colorado, for $21.0 million, or $194,000 per unit, excluding $200,000 in closing costs. The 10-year lease, which includes two five-year extension options, has an initial lease rate of 8% with fixed annual escalators of 2%. Then, in February 2025, NHI acquired an assisted living community in Oviedo, Florida, through the completion of a deed in lieu of foreclosure to settle a $10.0 million non-performing mortgage note receivable. The company recorded the real estate assets acquired at their estimated fair values of $8.6 million, which is equivalent to the net carrying value of the mortgage note receivable prior to completing the deed in lieu of foreclosure.
In March 2025, NHI acquired a 120-unit assisted living/memory care community in Bergen County, New Jersey, for $46.0 million, or $383,000 per unit, excluding $300,000 in closing costs. The 15-year lease, which includes two five-year extension options, has an initial lease rate of 7.95% with fixed annual escalators of 2%. The lease includes an $800,000 capital improvement fund, which will be added to the respective lease base, if funded.
There were a couple of changes to leases, as well. First, the remaining two properties leased to Senior Living Management were transitioned to a new operator that had been serving as the interim manager of the properties. NHI executed a new 15-year triple-net master lease, which includes two five-year extension options, with the new operator. The master lease generates approximately $1.1 million in annual rent with fixed annual escalators of 2%.
Next, effective May 1, 2025, NHI amended its triple-net master lease with Discovery Senior Living for a portfolio of six senior housing properties held in a consolidated real estate partnership with an aggregate net book value of $126.8 million as of March 31, 2025, that is owned by both parties to reset the contractual rent that took effect May 1, 2025, to $500,000 per month. As part of the amendment, NHI obtained the right, but not the obligation, to pursue, negotiate, engage and otherwise enter into a new agreement with a new manager with respect to these leased properties. The straight-line rent receivable associated with the in-place lease is $9.3 million as of March 31, 2025, which will be reduced to its realizable value when management determines the transition is probable of occurring and the existing lease will be terminated. Rental income recognized associated with this lease was $1.5 million for the three months ended March 31, 2025 and 2024.
In loan activity, NHI amended a mezzanine loan agreement with affiliates of Vizion Health and funded an additional $5.3 million in the first quarter of 2025. The balance of the loan as of March 31, 2025, was $18.0 million. The amendment to the loan agreement provides for an interest rate of 9.15% and a maturity date in May 2028. Also, the REIT entered into an agreement to fund up to $28.0 million on a construction loan for the development of an 84-unit assisted living/memory care community in Wyoming, Michigan, and operated by Encore Senior Living. The loan agreement provides for an annual interest rate of 9.0%.
Looking forward, the company is currently evaluating a pipeline of approximately $264.0 million of investments which include SHOP, sale-leaseback, and loans with purchase options primarily for seniors housing assets, excluding portfolio deals (the REIT is currently evaluating some nine-figure deals). Liquidity also stands at $1.3 billion in net debt including $447.2 million outstanding on its $700 million revolving credit facility, so there is plenty of room for more acquisitions.
Continuing with balance sheet activity, in April 2025, NHI repaid Fannie Mae outstanding principal and accrued interest of $60.3 million from proceeds drawn on its credit facility on March 31, 2025. The REIT also exercised one of the two six-month options on the $200 million term loan to extend the maturity date from June 2025 to December 2025. And NHI currently has $409 million available under its at-the-market (ATM) program, excluding proceeds raised under forward sale agreements.
