NHI Sees Skilled Nursing Opportunity Despite Industry Woes

Though some sizable skilled nursing operators are struggling with occupancy, the ones working with National Health Investors (NYSE: NHI) aren’t. In fact, the real estate investment trust (REIT) sees some opportunity to grow its skilled nursing investments if the assets and operators are a good fit, executives said in an earnings call Friday.

The Murfreesboro, Tennessee-based real estate investment trust (REIT) reported its normalized funds from operations (FFO) per diluted common share as $1.35 for the fourth quarter, which represented a 6.3% increase over the prior year’s total and beat analysts’ expectations by 2 cents. For the year, NHI reported an 8.6% and an 8.2% increase per share in normalized FFO and normalized AFFO, respectively.

NHI also saw a fourth-quarter net income of roughly $37.8 million, a decrease of 12.6% over its fourth-quarter 2016 total of about $41.1 million. For 2017 as a whole, NHI logged a net income of $159.3 million, a 5.16% increase over 2016’s net income of $151.5 million.

NHI is one of the largest private-pay senior housing owners in the nation with a portfolio of 142 senior housing properties throughout the U.S. The company also has 73 skilled nursing properties, three hospitals, and two medical office buildings. In 2017, the company invested $214 million into its 32-operator portfolio.

‘Top-notch’ SNF operators

Occupancy for both NHI’s senior housing and skilled nursing portfolios held steady despite a vicious flu season and ramped-up construction in some markets, according to Kevin Pascoe, the REIT’s chief investment officer.

“The customers we have on the skilled side are top-notch and we feel very comfortable with them,” Pascoe said during Friday’s earnings call. “So, if we can expand those relationships like that, to the extent we can build some new ones, we’d love to.”

Though NHI’s investment pipeline could include some skilled nursing assets going forward, the REIT is taking a wait-and-see approach.

“It’s something we’re still evaluating and we want to make sure we keep a balance of how we do our investments,” Pascoe noted. “It has to be a good quality operator, good market — nothing from our underlying criteria would have changed there.”

Earlier this year, NHI announced a $14.4 million acquisition of a 121-bed skilled nursing facility (SNF) in Waxahachie, Texas, which was leased to an affiliate of The Ensign Group. That facility opened in November 2016 and joins NHI’s current Ensign assets of 16 SNFs in Texas.

NHI’s share price gained about 2.29%, to $65.73, by the time the markets closed Friday.

Written by Tim Regan

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Tim Regan
Tim is a lover of bad jokes and good beer. When he's not hunched over his work computer, Tim can usually be found hunched over his personal computer.



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