National Health Investors(US:NHI)2022-02-23 20:19Financial Data and Key Metrics Changes - For Q4 2021, net income per diluted common share was $0.14, down from $0.83 in Q4 2020. For the full year, it was $2.44 compared to $4.14 in 2020, primarily due to $51.8 million in impairment charges and $28 million in rent concessions [16][19] - Funds from Operations (FFO) per diluted common share decreased to $1.07 from $1.28 year-over-year, while normalized FFO decreased to $1.06 from $1.37 [17] - Normalized Funds Available for Distribution (FAD) declined by $13.1 million year-over-year to $45.9 million [18] Business Line Data and Key Metrics Changes - The skilled nursing and Continuing Care Retirement Communities (CCRC) portfolios, which account for nearly two-thirds of cash revenue, are performing well despite challenges [13] - The needs-driven senior housing portfolio, accounting for approximately 29% of annualized cash revenue, experienced occupancy gains but slowed towards the end of the quarter due to seasonality and COVID-19 [25] - Independent living communities, representing only 2% of annualized cash revenue, did not pay rent during the quarter, with significant declines in NOI margins [29] Market Data and Key Metrics Changes - The average occupancy for senior living communities was 81.7%, up 130 basis points from the previous quarter, remaining above pre-pandemic levels [24] - EBITDARM coverage for non-SLC properties improved to 1.75 times from 1.66 times year-over-year [24] - The skilled nursing portfolio's same-store EBITDARM coverage was 2.85 times, with NHC and Ensign Group contributing significantly to cash revenue [30] Company Strategy and Development Direction - The company is focused on transforming into a stronger healthcare REIT by selling underperforming assets and venturing into new revenue streams [7] - The board has approved the sale of additional underperforming properties, targeting 16 housing property dispositions with estimated net proceeds of $125 million [9] - The company aims to complete its portfolio optimization efforts in the next couple of quarters, expecting steady progress towards growth [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the restructuring efforts with Bickford, despite the slow pace due to Omicron-related challenges [10] - The company believes it is at an earnings trough and anticipates better days ahead as the pandemic's effects wane [14] - Management did not provide guidance due to uncertainties surrounding the Welltower litigation and holiday portfolio [19] Other Important Information - The company reduced debt by over $250 million during 2021 and maintained leverage within its target range [13] - The fourth quarter dividend of $0.90 per share was declared, representing a payout ratio of 84.8% for normalized FFO [20] - The company has unfunded commitments totaling approximately $109 million with an average yield of 8.5% expected to be funded during 2022 [20] Q&A Session Summary Question: Lack of guidance and its implications - Management indicated that the uncertainty surrounding the holiday portfolio makes it difficult to provide guidance [39][40] Question: Investment activity outlook - Management expects to fulfill over $100 million in commitments and aims to return to growth, viewing last year's $121 million as a lower watermark [48][49] Question: Bickford's performance and future - Management considers Bickford a partner and is working to lessen exposure while helping them stabilize [51][52] Question: Transition timeline for legacy holiday assets - Management hopes to transition assets within 30 days of a favorable hearing outcome [78] Question: Potential outcomes of the hearing - A positive outcome would allow control over the transition of buildings, while a negative outcome would prolong the process [60][67]