National Health Investors(US:NHI)2025-05-05 20:06Part I. Financial Information Financial Statements Total assets increased to $2.78 billion, with Q1 2025 revenues at $89.3 million and net income at $33.8 million Condensed Consolidated Balance Sheets Total assets increased to $2.78 billion from $2.61 billion, driven by real estate and cash, with liabilities rising to $1.34 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Real estate properties, net | $2,270,257 | $2,211,253 | | Cash and cash equivalents | $135,004 | $24,289 | | Total Assets | $2,782,885 | $2,614,371 | | Liabilities & Equity | | | | Debt | $1,262,985 | $1,146,041 | | Total Liabilities | $1,338,300 | $1,229,194 | | Total Equity | $1,435,045 | $1,375,387 | | Total Liabilities and Equity | $2,782,885 | $2,614,371 | Condensed Consolidated Statements of Income Total revenues grew to $89.3 million in Q1 2025, resulting in net income of $33.8 million and diluted EPS of $0.74 Statement of Income Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Rental income | $68,866 | $62,187 | | Total Revenues | $89,296 | $81,513 | | Total Expenses | $56,008 | $51,122 | | Net income | $33,817 | $30,657 | | Net income attributable to common stockholders | $34,113 | $30,915 | | Earnings per common share - diluted | $0.74 | $0.71 | Condensed Consolidated Statements of Cash Flows Net cash from operations was $46.5 million, with a $110.8 million net increase in cash driven by financing activities and real estate acquisitions Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $46,478 | $40,827 | | Net cash used in investing activities | ($75,469) | ($16,193) | | Net cash provided by (used in) financing activities | $139,766 | ($35,922) | | Increase (decrease) in cash and cash equivalents | $110,775 | ($11,288) | - A significant non-cash investing activity in Q1 2025 was the acquisition of $8.6 million in real estate through a deed in lieu of foreclosure of a mortgage note receivable16 Notes to Condensed Consolidated Financial Statements Notes detail NHI's business, $76.1 million in Q1 2025 real estate acquisitions, $1.26 billion total debt, and a $0.90 quarterly dividend - NHI is a self-managed REIT operating through two segments: Real Estate Investments (leases, mortgages for senior housing/medical facilities) and Senior Housing Operating Portfolio (SHOP), which consists of 15 company-owned independent living facilities212223 Q1 2025 Real Estate Acquisitions (in thousands) | Operator | Asset Class | Total Cost | | :--- | :--- | :--- | | Generations, LLC | SLC | $21,200 | | Mainstay Healthcare | ALF | $8,600 | | Juniper Communities, LLC | ALF | $46,284 | | Total | | $76,084 | - As of March 31, 2025, mortgage and other notes receivable totaled $278.7 million before a credit loss reserve of $18.9 million. Two mezzanine loans totaling $15.8 million were designated as non-performing757690 Debt Composition as of March 31, 2025 (in thousands) | Debt Type | Amount | | :--- | :--- | | Revolving credit facility - unsecured | $447,200 | | Bank term loans - unsecured | $200,000 | | 2031 Senior Notes - unsecured, net | $398,124 | | Private placement notes - unsecured | $150,000 | | Fannie Mae term loans - secured | $75,704 | | Total Debt (net of unamortized costs) | $1,262,985 | - In Q1 2025, the company settled a forward equity sale agreement for approximately $65.5 million in proceeds. It also entered into new ATM forward sale agreements to sell ~0.2 million shares for potential proceeds of ~$15.5 million125127 - The Board of Directors declared a quarterly dividend of $0.90 per common share, consistent with the prior year132 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses 9.5% Q1 2025 revenue growth, a $3.3 billion portfolio, improved tenant performance, strong liquidity, and $1.15 Normalized FFO per share Executive Overview and Portfolio Summary NHI, a REIT, manages a $3.3 billion portfolio of 205 senior housing and medical facilities, diversified by asset type and with limited geographic concentration Portfolio Summary as of March 31, 2025 | Segment | Properties | Gross Investment | % of Total NOI | | :--- | :--- | :--- | :--- | | Real Estate Properties | 175 | $2,669.3 M | 87.4% | | Mortgage and Other Notes | 15 | $278.7 M | 8.5% | | SHOP | 15 | $359.8 M | 4.1% | | Total Portfolio | 205 | $3,307.8 M | 100.0% | - The company's largest tenant concentrations by revenue for Q1 2025 are Senior Living Communities (15%), National HealthCare Corporation (NHC) (12%), and Bickford Senior Living (12%)59194 - The only geographic concentration of 10% or more of investment is in South Carolina, at 11.3% as of March 31, 202560 Investment Activity and Tenant Performance Q1 2025 saw $76.1 million in new investments, with tenant EBITDARM coverage improving to 2.09x and occupancy rising to 84.6% - Total real estate acquisitions in Q1 2025 amounted to $76.1 million. A subsequent acquisition in April 2025 added a $63.5 million portfolio of six memory care communities181184 Real Estate Investments Portfolio Coverage (TTM) | Metric | 4Q23 | 4Q24 | | :--- | :--- | :--- | | Total Portfolio Coverage | 1.94x | 2.09x | | Total Portfolio Occupancy | 82.6% | 84.6% | - As of March 31, 2025, two tenants were on a cash basis of accounting for revenue recognition, with total cash rents received from them in Q1 2025 being $11.5 million, slightly down from $11.8 million in Q1 2024199 - The company established a credit loss reserve of $18.9 million for receivables and a liability of $0.1 million for unfunded loan commitments as of March 31, 2025212 Results of Operations Total revenues increased by 9.5% to $89.3 million in Q1 2025, driven by new investments, leading to $33.8 million net income Year-over-Year Change in Key Financial Items (in thousands) | Item | Q1 2025 | Q1 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Total Rental Income | $68,866 | $62,187 | $6,679 | 10.7% | | Total Revenues | $89,296 | $81,513 | $7,783 | 9.5% | | Total Expenses | $56,008 | $51,122 | $4,886 | 9.6% | | Net income | $33,817 | $30,657 | $3,160 | 10.3% | - Key drivers of revenue growth included new investments funded since March 2024. Interest expense decreased by 3.6% due to lower interest rates and borrowings on the Credit Facility216 Liquidity and Capital Resources NHI maintains strong liquidity with $135.0 million cash and $252.8 million credit facility availability, a conservative 4.1x net debt to EBITDA ratio, and investment-grade credit ratings - At March 31, 2025, liquidity sources included $135.0 million in cash, $252.8 million available on the credit facility, and potential access to $409.0 million via the ATM equity program217 - The company's consolidated net debt to Annualized Adjusted EBITDA ratio was 4.1x for the three months ended March 31, 2025235 - In Q1 2025, the company settled a forward equity sale for $65.5 million in proceeds. As of March 31, 2025, it had approximately $68.9 million of undrawn net proceeds available through ATM forward sale agreements217243247 - On April 1, 2025, the company repaid $60.3 million of maturing Fannie Mae term-debt using proceeds from its Credit Facility112229 FFO & FAD (Non-GAAP Measures) Normalized FFO per diluted share increased to $1.15 in Q1 2025, with Normalized FAD rising 9.9% to $56.0 million, driven by new investments and improved performance Non-GAAP Performance Measures (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | NAREIT FFO attributable to common stockholders | $52,350 | $47,713 | | Normalized FFO attributable to common stockholders | $52,614 | $48,499 | | Normalized FAD attributable to common stockholders | $56,001 | $50,975 | | Normalized FFO per diluted share | $1.15 | $1.12 | - The increase in Normalized FFO per diluted share was primarily due to new investments completed since March 31, 2024258259 - The company's Fixed Charge Coverage ratio improved to 5.1x in Q1 2025 from 4.5x in Q1 2024266 Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate exposure on $647.2 million variable-rate debt, with a 50 basis-point change impacting annual net interest expense by $3.2 million - The company is exposed to interest rate risk on approximately $647.2 million of variable-rate debt as of March 31, 2025270 - A 50 basis-point (0.50%) increase or decrease in interest rates would change annual net interest expense by approximately $3.2 million271 - Inflation risk is mitigated through leases that generally provide for annual rent increases (fixed or CPI-based) and require tenants to pay all property operating expenses275 Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during Q1 2025 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period, March 31, 2025276 - No changes in internal control over financial reporting occurred during the first quarter of 2025 that have materially affected, or are reasonably likely to materially affect, the company's internal controls277 Part II. Other Information Legal Proceedings The company faces ordinary course legal claims, but management expects no material adverse effect on its financial condition or operations due to indemnification - The company faces claims and suits in the ordinary course of business, but management does not expect them to have a material adverse effect on its financials279 Risk Factors No material changes to risk factors, except for a new one addressing potential costs and distractions from stockholder activism - A new risk factor was added concerning stockholder activism, which could lead to substantial costs, management distraction, and potential damage to the company's reputation and business opportunities281 Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading plan during the first quarter of 2025282 Exhibits This section lists exhibits filed with Form 10-Q, including corporate governance documents, CEO/CFO certifications, and XBRL data files - The report includes standard corporate governance documents and required CEO/CFO certifications (Sections 302 and 906 of Sarbanes-Oxley) as exhibits283