NHI Sees ‘Tale of Two Cities’ as Nursing Homes Benefit from Federal Aid — and Senior Living Lags Behind

The real estate investment trust (REIT) National Health Investors, Inc. (NYSE: NHI), offered a concise take on the varied impacts of the COVID-19 pandemic for the senior housing and skilled nursing sectors while reporting its third quarter results Tuesday.

“The difference between skilled nursing and senior housing is like a tale of two cities,” Eric Mendelsohn, president and CEO at NHI, said in response to analyst questions on the company’s earnings call. “You’ve got skilled nursing being showered with government subsidies if they want them, and you also have a conscious effort to treat COVID-19 patients at skilled nursing — which seems counterintuitive, based on what we’ve seen at some other skilled nursing operators, but we know that Ensign is admitting COVID patients and treating them and making money at that. So I feel like skilled nursing is doing just fine.”

NHI’s skilled nursing portfolio accounts for 27% of annualized cash revenue for the Murfreesboro, Tenn.-based REIT, and is “anchored by” the tenants National HealthCare Corporation (NYSE American: NHC) and The Ensign Group (Nasdaq: ENSG) — which contribute 12% and 8% of annualized cash revenue respectively, Kevin Pascoe, NHI’s chief investment officer, said on the call.


For the third quarter of 2020, NHI reported net income attributable to common shareholders of $42.6 million, or 95 cents per share, compared with $42.76 million, or 97 cents per share, in the year-ago period. The company reported revenue of $84.3 million for the quarter, compared with revenue of $81.68 million in the year-ago period.

The REIT collected 96.6% of its contractual rent for the third quarter, and 97.8% of contractual rent for the month of October, Pascoe said.

“Cases have started to climb again,” he noted in providing an update on COVID-19 numbers for the REIT’s operators. “And we’re at 367 active resident cases across 81 communities. The active cases represent about 1.5% of our unit capacity. Nearly three-quarters of the cases are in our SNFs, some of which are actively admitting COVID patients.”


Like its fellow REIT Omega Healthcare Investors (NYSE: OHI), NHI stressed the importance of the ongoing government support of the SNF sector and senior housing through distributions from the Provider Relief Fund. Pascoe pointed to EBITDARM [earnings before interest, taxes, depreciation, amortization, rent, and management fees] coverage for the trailing 12-month period ending June 30 of 2.89x for the SNF portion of NHI’s portfolio, up from 2.81x in the prior quarter.

“This coverage is inclusive of funds received from the CARES Act, which seems to be working as designed, as it is helping SNF operators bridge the gap to a more stable operating environment,” Pascoe said.

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