National Health Investors(US:NHI)2023-02-22 23:40Financial Data and Key Metrics Changes - For the year ended December 31, 2022, the company's net income was $1.48 per share, NAREIT FFO was $3.55 per share, and normalized FFO was $4.30 per share [7][8] - The fourth quarter FAD was $44.7 million, while the full year FAD was $201 million [8][16] - The fourth quarter FAD payout ratio was 87.3%, and the company declared a first quarter dividend of $0.90 per share [16][34] Business Line Data and Key Metrics Changes - The SHOP segment's fourth quarter net operating income was $1.9 million, down from $2.8 million in the third quarter [10][40] - The company reported a significant decline in occupancy in the SHOP portfolio, which represents 3% of adjusted NOI, with occupancy decreasing to 75.8% [39] - The need-driven senior housing coverage ratios improved, with trailing 12-month EBITDARM coverage reaching 1.02x, the highest since Q3 2020 [54] Market Data and Key Metrics Changes - The company faced challenges in the market due to rising interest rates, which made buyer financing more difficult [50] - The overall collections of contractual cash due were strong at 98.1%, with deferrals of $1.2 million in the fourth quarter [53] - The company has 13 properties held for sale with a net book value of $43.3 million [50] Company Strategy and Development Direction - The company aims to capitalize on growth opportunities both organically and through acquisitions, with a focus on maintaining a strong financial profile [32][41] - The company has completed significant asset dispositions and tenant repositioning activities, positioning itself to take advantage of a buyer's market [41][32] - The company plans to continue making dispositions and providing limited financial assistance to certain operators while focusing on portfolio optimization [27][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to growth, with full-year guidance implying growth of 3.5% to 5% [34] - The company acknowledged the challenges posed by a difficult interest rate environment and industry challenges but noted improved visibility [34][41] - Management indicated that the fourth quarter results provide a good baseline for future growth, with expectations for significant margin improvements [40][34] Other Important Information - The company has a $160 million share repurchase program in place and ended the year with $88 million in available share buyback authorization [2][14] - The company has over $500 million in cash and revolver availability, indicating ample liquidity [15] Q&A Session Summary Question: About SHOP occupancy performance - Management acknowledged the disappointing performance and attributed it to the transition of buildings and the need for improvements [43] Question: Timeline for $6 million to $8 million NOI upside - Management indicated that the expected timeline for achieving this upside is over the next two years [44] Question: Guidance below Street consensus - Management clarified that the fourth quarter included one-time irregular events impacting FFO, and they expect improvements moving forward [83][84] Question: Deferred balances timeline - Management indicated that the timeline for recording deferred balances back into income is expected to be within 12 to 24 months [86] Question: Non-performing loans and interest income - Management confirmed that interest income was recorded for non-performing loans, but timing issues may affect recognition [79]