National Health Investors(US:NHI)2021-11-09 03:10Financial Data and Key Metrics Changes - Net Income per diluted common share for Q3 2021 was $0.67, down from $0.95 in Q3 2020 [17] - NAREIT FFO decreased to $1.16 from $1.42 year-over-year, and normalized FFO decreased to $1.15 from $1.42 [18] - Normalized FAD declined to $51.2 million, down $9.1 million year-over-year and $1.7 million sequentially [19] - The net debt annualized EBITDA leverage ratio improved to 4.8 times from 5.1 times sequentially [20] Business Line Data and Key Metrics Changes - Bickford's occupancy increased by 280 basis points from Q2 to Q3, and 520 basis points from Q1, outperforming the industry growth rate of 210 basis points [8] - The Legacy Holiday portfolio saw the disposal of 9 underperforming properties, with margins on these properties being over 1,500 basis points below the remaining portfolio [9] - The entrance fee communities, accounting for 27% of annualized cash revenue, continued to outperform other senior housing asset classes [27] Market Data and Key Metrics Changes - The skilled nursing portfolio, representing 32% of annualized cash revenue, had EBITDARM coverage of 2.8 times for the trailing 12 months [28] - Average occupancy for senior living communities was 80.4%, up 190 basis points from Q2 and higher than pre-pandemic levels [27] Company Strategy and Development Direction - The company is transitioning to a stronger position by optimizing its portfolio through dispositions and tenant transitions, expecting to conclude these efforts by Q1 2022 [7] - New joint ventures with Merrill Gardens and Discovery Senior Living are expected to enhance growth in the senior housing business [10][11] - The company aims to transform into a high-coverage, high-quality portfolio, referred to as a "jewel box" [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of senior housing fundamentals, driven by easing labor pressures and improving occupancy rates [30] - The company anticipates strong long-term organic growth, with deferral balances expected to start repaying in 2022 [31] - Management highlighted the importance of maintaining solid lease coverage and the potential for future dividend growth [69] Other Important Information - The company completed the disposition of 16 underperforming senior housing assets for approximately $173 million, with a cap rate of 3.1% [12] - The company has $74 million in cash and no amounts outstanding under its $550 million revolver as of October 31 [21] Q&A Session Summary Question: Inquiry about Bickford rent cuts - Management explained that the rent cut for Bickford was based on current cash flow and projected occupancy improvements, with a new rent structure set to begin next year [33][34] Question: Clarification on Holiday structure and deferred rents - Management clarified that the Holiday joint ventures will not have a lease structure like Bickford, and they are focused on recovering deferred rents [55][60] Question: Confidence in achieving deferred rent payments - Management expressed confidence in Bickford's ability to service the new rent rates and deferred amounts based on current performance and expected improvements [94]