National Health Investors (NYSE: NHI) reported a favorable first quarter, with executives saying Wednesday that the company is well positioned to return on historical investment trends as market conditions improve.
“We are content to be patient and believe we are in the enviable position of having significant capital to deploy at a time when capital seems increasingly scarce,” Eric Mendelsohn, NHI President and CEO, said during the call.
Analysts at Stifel noted that they saw 1Q as a win for NHI with no new problem tenants and improving rent coverage.
“We believe the current valuations fairly reflect our expected earnings trajectory,” they said. “But given all the moving parts, we expect the pathway over the next year or so to be volatile. The reason is due to deferrals, abatements and repayments, all of which are impossible to predict.”
NHI reported Q1 FFO of $1.11, beating analyst estimates by $0.12. The company posted a revenue of $82.39 million, beating consensus estimates by $4.9 million.
NHI stock rose 8.2% to close at $53.3 on Wednesday.
Mendelsohn noted that NHI’s concentration of properties with publicly traded operators National HealthCare Corporation (NYSE: NHC) and the Ensign Group (Nasdaq: ENSG) continue to anchor the portfolio with the highest reported coverage since the first quarter of 2020.
“As we’ve talked about throughout the pandemic, the entrance fee and skilled nursing portfolios, which account for 60% of our NOI, continue to anchor the portfolio with industry leaders including NHC, SLC, Ensign, Watermark, and LCS,” Mendelsohn said.
Mendelsohn said that one area of disappointment for the quarter was the performance of its SHOP portfolio, which accounts for 3% of NHI’s NOI, and remains a “clear strategic focus” for the company.
“Our longer term view on the upside potential of that portfolio has not changed, though the timeline is taking longer,” he said.
Beyond the skilled nursing portfolio, in 2023, NHI acquired two memory care communities operated by Silverado Senior Living for $37.5 million. The newly developed properties opened in 2022 and include a 60-unit community in Summerlin, Nevada, and a 60-unit community in Frederick, Maryland, and a 64-unit assisted living and memory care community in Chesapeake, Virginia from Bickford for $17.3 million.
“We are pleased with our first quarter results as the core real estate investments operations were above our expectations driven by strong collections, no unscheduled rent concessions, deferral repayments, and new investments,” Mendelsohn said.
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