National Health Investors (NHI) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.I ...

Core Insights - David A. Johnson is the founder and principal of Endurance Capital Management, specializing in various investment vehicles including stocks, bonds, options, ETFs, REITs, real estate, closed-end funds, hedge funds, and private credit [1] Group 1 - David A. Johnson has over 30 years of experience in investing and holds a Master of Science (MS) Degree in Finance with a concentration in Investment Analysis from Boston University [1] - He also possesses a Certificate in Financial Planning and an MBA from Fordham University [1]

Core Insights - Current market conditions suggest it is a favorable time to invest in Real Estate Investment Trusts (REITs) due to stable core and headline inflation rates at 3.0% [1] - A significant majority, 75% of investors, anticipate a decrease in the Fed Funds rate, which could further enhance the attractiveness of REIT investments [1] Investment Focus - The article emphasizes the importance of investing in income-producing asset classes, particularly REITs, which provide reliable income, diversification, and act as a hedge against inflation [1]

Core Insights - Sunstone Hotel Investors (SHO) and National Health Investors (NHI) are being compared for their value to investors, with a focus on which stock offers better value currently [1] Valuation Metrics - Both SHO and NHI have a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions for both companies [3] - SHO has a forward P/E ratio of 11.28, while NHI has a forward P/E of 15.82, suggesting that SHO may be undervalued compared to NHI [5] - The PEG ratio for SHO is 2.82, while NHI's PEG ratio is 3.43, indicating that SHO has a more favorable valuation when considering expected earnings growth [5] - SHO's P/B ratio is 1.08, compared to NHI's P/B of 2.43, further supporting the argument that SHO is the more attractive value option [6] - Based on these valuation metrics, SHO holds a Value grade of B, while NHI has a Value grade of D, reinforcing the conclusion that SHO is the superior value option at this time [6]

Financial Data and Key Metrics Changes - The company reported a net income per share of $0.69, up 6.2% from the prior year [16] - NAREIT FFO per share increased 5.8% to $1.09, while normalized FFO per share rose 28% to $1.32 [16] - FAD for the third quarter increased 26% to $62.2 million compared to the prior year [16] Business Line Data and Key Metrics Changes - The transition of seven properties to the SHOP portfolio resulted in a consolidated SHOP NOI growth of approximately 63% compared to the prior year's quarter [4] - Total SHOP NOI increased by 62.6% to $4.9 million compared to the prior year period [18] - Same store NOI for the 15 legacy Holiday properties declined by 2.2% year over year [11] Market Data and Key Metrics Changes - The company has a large incremental pipeline of active opportunities focused on senior housing, with approximately $195 million under signed LOIs [6] - Cash lease revenue increased approximately 12% year over year to $70.1 million during the quarter [13] Company Strategy and Development Direction - The company is focused on expanding its presence in private pay senior housing, which is expected to yield the greatest risk-adjusted returns [5] - The company is raising its guidance for the third time this year, projecting over 10% NFFO per share growth at the midpoint, the strongest annual growth since 2014 [4] - The company aims to double its SHOP NOI from approximately 10% to at least 20% of total adjusted NOI by 2026 [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the financial health of the company, stating that the industry tailwinds are strong and the company is well-positioned for future growth [8] - The company is taking corrective measures in its same store portfolio and expects it to return to double-digit growth levels in 2026 [12] Other Important Information - The company has available liquidity of over $1 billion and a net debt to adjusted EBITDA ratio of 3.6 times, indicating strong financial health [7] - The board of directors declared a $0.92 per share dividend for shareholders of record on December 31, 2025, payable January 30, 2026 [21] Q&A Session Summary Question: Can you elaborate on the remediation efforts in the SHOP portfolio? - Management indicated that they are focusing on pricing, occupancy, and ensuring the right personnel are in place to improve performance [26][27] Question: What is the current status of the NHC lease renewal? - Management clarified that there are questions regarding whether NHC is in default, which could affect their ability to renew the lease [32] Question: How is the competitive landscape affecting pricing in the SHOP market? - Management acknowledged increased competition but emphasized their strong relationships with operating partners, which provide access to off-market opportunities [47] Question: Can you quantify the one-time items that contributed to the guidance raise? - Management detailed several one-time items, including $4.6 million in cash revenues from converted properties and a $12.1 million straight-line receivable write-off [62] Question: What are the key factors for selecting operators for the SHOP portfolio? - Management highlighted the importance of operational expertise and the need for operators to demonstrate consistent performance [70]

Financial Performance & Guidance - Q3 2025 Normalized FFO per share was $132, compared to $103 in Q3 2024[8] - Funds Available for Distribution (FAD) increased to $62248 thousand in Q3 2025, a 26% increase from $49383 thousand in Q3 2024[8] - The company updated its 2025 NAREIT FFO guidance midpoint to $2179 million and NFFO guidance midpoint to $2303 million[14] - The company expects Same-Store SHOP NOI annual growth in a range of 7%-9%[14] Portfolio & Investment Activities - Lease revenue excluding certain items increased 166% compared to Q3 2024, reaching $701 million[13] - New properties acquired since 3Q 2024 contributed approximately $53 million in cash rental income during the quarter[13] - The company announced 2025 year-to-date investments totaling $3032 million at an average initial yield of approximately 80%[13] - The company has signed LOIs totaling $1953 million at an average initial yield of 84%[13] Senior Housing Operating Portfolio (SHOP) - Q3 2025 SHOP revenue increased 538% compared to the prior year period[13] - Q3 2025 SHOP NOI increased 626% compared to the prior year period, reaching $49 million[13] - Total SHOP contribution to adjusted NOI is expected to increase to approximately 100% from approximately 50% prior to recent transitions and acquisitions[25]

Core Viewpoint - National Health Investors (NHI) reported strong quarterly funds from operations (FFO) of $1.32 per share, exceeding the Zacks Consensus Estimate of $1.24 per share, and showing a year-over-year increase from $1.03 per share [1][2] Financial Performance - NHI's quarterly revenues reached $89.85 million, surpassing the Zacks Consensus Estimate by 8.07%, compared to $82.94 million in the same quarter last year [2] - The company has consistently outperformed consensus FFO estimates over the last four quarters, achieving this four times [2] Stock Performance - NHI shares have increased approximately 9.9% year-to-date, while the S&P 500 has gained 15.6% during the same period [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations of outperforming the market in the near future [6] Future Outlook - The current consensus FFO estimate for the upcoming quarter is $1.19, with projected revenues of $93.04 million, and for the current fiscal year, the estimate is $4.81 on revenues of $356.14 million [7] - The outlook for the REIT and Equity Trust - Other industry is favorable, ranking in the top 30% of over 250 Zacks industries, suggesting potential for strong performance [8]

Financial Performance - NHI reported a net income attributable to common stockholders of $0.69 per diluted share for Q3 2025, up from $0.65 in Q3 2024, and $2.22 per diluted share for the nine months ended September 30, 2025, compared to $2.17 in the prior year[6]. - Net income attributable to common stockholders for Q3 2025 was $32,812,000, up 15.9% from $28,511,000 in Q3 2024[23]. - NAREIT FFO attributable to common stockholders for Q3 2025 was $51,961,000, representing a 14.0% increase from $45,491,000 in Q3 2024[23]. - Normalized FFO attributable to common stockholders for Q3 2025 was $62,727,000, a 37.9% increase compared to $45,491,000 in Q3 2024[23]. - NOI for Q3 2025 was $70,984,000, a 2.3% increase from $69,414,000 in Q3 2024[24]. - Total revenues for the three months ended September 30, 2025, increased to $89.847 million, up from $82.944 million in the same period of 2024, representing a growth of 8.8%[35]. - Total NOI for the nine months ended September 30, 2025, was $223,892,000, a 6.8% increase from $209,611,000 in the same period of 2024[24]. Operational Highlights - The company achieved a consolidated SHOP NOI year-over-year growth of approximately 63% following the transition of seven properties to its SHOP portfolio[3]. - NHI announced a $74.3 million SHOP acquisition, which is expected to more than double its SHOP NOI, with significant organic growth anticipated in 2026[4]. - Rental income decreased by $1.1 million, or 1.8%, primarily due to the transfer of seven properties to the SHOP segment, resulting in a $6.9 million reduction in rental income[8]. - Resident fees and services increased by $1.9 million, or 62.6%, due to operations from the seven properties transitioned into the SHOP segment[8]. - Same Store NOI for the SHOP segment in Q3 2025 was $2,962,000, slightly down from $3,027,000 in Q3 2024[24]. Guidance and Projections - NHI updated its 2025 full-year guidance, projecting NAREIT FFO per diluted share in the range of $4.62 to $4.65, and Normalized FFO per diluted share in the range of $4.88 to $4.91[18]. - The company anticipates continued performance improvements and growth opportunities, while acknowledging various risks including economic conditions and regulatory changes[38]. Debt and Investment - As of September 30, 2025, NHI had $1.1 billion in net debt and a net debt to adjusted EBITDA ratio of 3.6x, below the target range of 4.0x to 5.0x[11][14]. - The company has approximately $195.3 million in investment opportunities under signed Letters of Intent with an average initial yield of approximately 8.4%[17]. - The company’s debt, net, decreased to $1.109 billion as of September 30, 2025, down from $1.146 billion at the end of 2024, a reduction of 3.2%[37]. Shareholder Information - Weighted average common shares outstanding increased to 47,433,336 in Q3 2025 from 43,476,067 in Q3 2024[23]. - The weighted average diluted shares outstanding increased to 47,623,623 for the three months ended September 30, 2025, compared to 43,987,072 in the same period of 2024[35]. Cash and Assets - Cash and cash equivalents increased significantly to $81.625 million as of September 30, 2025, compared to $24.289 million at the end of 2024[37]. - Real estate properties, net, rose to $2.302 billion as of September 30, 2025, up from $2.211 billion at the end of 2024, indicating a growth of 4.1%[37]. Expenses - The company reported a total expense of $57.555 million for the three months ended September 30, 2025, an increase from $54.804 million in the same period of 2024, which is an increase of 4.3%[35].

Company Overview - National Health Investors, Inc. (NHI) is a self-managed real estate investment trust established in 1991 [1] - The company specializes in sale-leaseback, joint venture, mortgage, and mezzanine financing of need-driven and discretionary senior housing and medical facility investments [1] Dividend Announcement - NHI announced a fourth quarter dividend of $0.92 per common share [1] - The dividend will be paid on January 30, 2026, to stockholders of record as of December 31, 2025 [1]

Real Estate Investments - As of September 30, 2025, National Health Investors, Inc. had a gross carrying value of $2.5 billion in real estate properties leased to 30 tenants, including 118 senior housing properties and 68 skilled nursing facilities[181]. - The Real Estate Investments segment includes 188 properties across 32 states, with an additional $224.6 million in mortgage and other notes receivable[181]. - Revenues in the Real Estate Investments segment primarily come from triple-net leases and interest income from financing arrangements for construction and acquisition projects[180]. - As of September 30, 2025, the total net operating income (NOI) for the real estate investments portfolio was $192,903,000, representing 86.2% of total NOI[188]. - The total number of properties in the real estate investments portfolio was 174, with a carrying amount of $2,549,823,000[188]. - The occupancy rate for the Real Estate Investments Portfolio in Q2 2025 was 85.2%, an increase from 83.9% in Q2 2024[224]. - NOI from Real Estate Investments segment for Q3 2025 was $66,022, nearly flat compared to $66,275 in Q3 2024[285]. SHOP Segment - The SHOP segment consists of 17 independent living facilities, four senior living campuses, and one assisted living facility, totaling 2,670 residential units with a gross carrying value of $551.8 million[186]. - The SHOP segment had a total of 22 properties, contributing $11,831,000 to the total NOI, which is 5.3% of the overall NOI[188]. - The average effective annualized NOI for the SHOP segment was $8,846 per unit as of September 30, 2025[190]. - The company experienced a transition of six senior housing properties into the SHOP segment, with a net carrying value of $125.3 million as of September 30, 2025[198]. - NOI from SHOP segment for Q3 2025 increased to $4,924, up 62.9% from $3,027 in Q3 2024[285]. Financial Performance - The company’s total NOI for the nine months ended September 30, 2025, was $223,777,000, an increase from $209,294,000 in the same period of 2024[189]. - Total revenues for Q3 2025 were $89.847 million, an increase of 8.3% from $82.944 million in Q3 2024[231]. - Net income attributable to common stockholders rose by 15.1% to $32.812 million in Q3 2025 compared to $28.511 million in Q3 2024[231]. - Total cash rental income increased by 18.5% to $71.237 million in Q3 2025 from $60.094 million in Q3 2024[231]. - Net income attributable to common stockholders increased by $9.2 million, or 9.7%, to $103.9 million for the nine months ended September 30, 2025[234]. - Funds From Operations (FFO) per diluted share increased by $0.11, or 3.2%, for the nine months ended September 30, 2025, compared to the same period in 2024[276]. - Normalized FFO per diluted share increased by $0.36, or 10.7%, for the nine months ended September 30, 2025, over the same period in 2024[277]. - Adjusted EBITDA for Q3 2025 was $75,378,000, compared to $64,364,000 in Q3 2024, indicating a 17.56% increase[283]. Debt and Liquidity - The company relies on external capital sources for funding future investments, which may impact growth if capital is not readily available[178]. - The company is exposed to interest rate risk as a portion of its debt bears interest at variable rates, while revenues are derived mainly from fixed-rate investments[178]. - Outstanding indebtedness as of September 30, 2025, was $1.1 billion[243]. - The company has a $700.0 million unsecured revolving credit facility maturing in October 2028, with an effective interest rate decrease of 0.10% following an amendment on October 31, 2025[244]. - The company repaid $75.0 million on its unsecured bank term loan in September 2025, extending its maturity to June 2026[246]. - The company has identified potential areas of concern regarding operators' liquidity to meet obligations, emphasizing the importance of balance sheet analysis[223]. - The company expects to meet short-term liquidity needs primarily through cash generated from operations and borrowings under its Credit Facility[270]. Regulatory and Operational Risks - The company’s investments are concentrated in healthcare properties, which may increase exposure to regulatory and operational risks[173]. - The company faces risks related to governmental regulations, particularly concerning Medicare and Medicaid reimbursement rates, which could impact tenant operations[173]. - The company’s financial condition may be adversely affected by the operating success of its tenants, managers, and borrowers, particularly in the context of potential bankruptcies[173]. Shareholder Returns - The company declared a quarterly dividend of $0.92 per common share on November 5, 2025, payable on January 30, 2026[261]. - The company maintains an ATM equity program allowing for the sale of up to $500.0 million of common stock directly into the market[264]. - In June 2025, the company entered into ATM forward sales agreements, selling 1.3 million shares at a weighted average price of $71.41, totaling $91.8 million[267]. - The company intends to comply with REIT dividend requirements, distributing at least 90% of annual taxable income for the year ended December 31, 2025[260].