National HealthCare Corporation

Hello everyone, thank you for joining us and welcome to National Healthcare Properties' third quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Mike Ozuna, Director of Investor Relations. Mike, please go ahead.

Welcome to the third quarter 2026 webcast for National Healthcare Properties, Inc. All participants will be in listen-only mode. Please note this event is being recorded. Also note that certain statements and assumptions in this webcast presentation, which are not historical facts, will be forward-looking and are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are subject to certain assumptions and risk factors which could cause the company's actual results to differ materially from the forward-looking statements. The company refers you to its SEC filings, including its most recent form 10-K, for detailed discussion of the risk factors that could cause these differences and impacts in its business. During today's call, the company will also discuss certain non-GAAP financial measures These measures should not be considered in isolation or as a substitution for financial results prepared in accordance with GAAP. The company will provide a reconciliation of these measures to the most directly comparable GAAP measure as part of its third quarter 2026 earnings supplemental on its website at www.nhpre.com. A question and answer session will follow the prepared remarks. Also, please note that a replay of the webcast will be available on the company's website later today. I would now like to turn the call over to the company's executive management team. Please go ahead, Michael.

Thank you, Mike. Good morning and welcome to National Healthcare Property's third quarter 2026 earnings call. I'm Michael Anderson, Chief Executive Officer of NHP, and I'm joined today by Drew Babin, our Chief Financial Officer, who will speak to our financial results and outlook in greater detail following my remarks. On our first two earnings calls as a public company, we outlined three strategic priorities. First, grow the shop portfolio both organically and through disciplined acquisitions with best-in-class operators. Second, concentrate our capital in senior housing. And third, build a balance sheet consistent with an investment grade on secured issuer. The third quarter meaningfully advanced each of those objectives. Beginning with the portfolio, when we announced our first outpatient medical sale in May, we expected shop to represent approximately 60% of our cash NOI. Six months later, we have sold, placed under definitive agreement, or signed a letter of intent for every outpatient medical facility we own. In September, we closed the sale of the first 30 properties in our previously announced portfolio for approximately $198 million. The remaining 56 properties in that portfolio are under agreement for approximately $331 million, with the buyer assuming approximately $219 million of secured debt. Also in September, we announced the definitive agreement to sell an additional 40 properties for approximately $531 million, and we signed a non-binding letter of intent to sell the final four properties. We expect both to close in the fourth quarter, subject to customary closing conditions. Together, the 126 properties sold or under definitive agreement represent approximately $1.1 billion of gross proceeds at a trailing 12-month nominal cap rate of 7.5% and an economic cap rate of 6.8%. Upon closing of these transactions, NHP will become a pure place senior housing operating REIT, one of only two in the public markets. All of our net operating income will come from senior housing operating properties in which approximately 97% of revenue is derived from private payers serving an aging population by the time of severely constrained new supply. Turning to operations, on our second quarter call, we explained that we and our operators had chosen to use short-term concessions at certain lower occupancy communities. We believe that this approach could weigh on third quarter same store NOI growth and that we believed it was the right long-term decision to accelerate occupancy at those communities. Our third quarter results showed that our strategies worked. Same-store cash NOI grew 13.6% year-over-year and same-store cash NOI margin expanded 150 basis points to 24.3%. These results have included the cost of concessions as well as the impact of a one-time insurance reimbursement in last year's third quarter, which Drew will further detail. We view a short-term concession that secures a longer-term stay as beneficial to overall revenue and margin, and we are now positioned to enter 2027 with greater pricing elasticity and a more efficient flow-through of incremental revenue to NOI across a broader portion of our portfolio. Our four operating partners, Senior Lifestyle, Discovery Senior Living, AgeWell Senior Living, and Priority Life Care now collectively manage our 60 shop communities. Each continues to demonstrate the quality of resident care and operational discipline that underpin these results. and we're grateful for their partnership as we continue to scale alongside them. We also expect to add a fifth operating partner, Sincerely Senior Living, through an expected near-term acquisition. Turning to external growth, during the third quarter, we acquired 22 shop communities totaling 1,381 units for approximately $300 million. And subsequent to quarter end, we acquired one additional community with 79 units for approximately $26 million. Our 2026 year-to-date acquisitions now total 25 properties and 1,671 units for approximately $424 million at a forecasted blended year one yield of approximately 7.9% and a year three yield of approximately 9.4%. Our acquisition pipeline continues to grow. We currently have purchase and sale agreements for approximately $240 million of shop acquisitions and estimated weighted average year one and year three underwritten cap rates of approximately 7.4% and 8.7% respectively. That total includes the five communities we discussed last quarter for which we were the winning bidder in a bankruptcy proceeding, and at least half of that consideration is expected to be funded with NHP OP units or REIT shares. We have an additional $148 million under non-binding letters of intent. Together, that is approximately $388 million in 1,385 units, primarily assisted living and memory care, expected to close in the fourth quarter or in early 2027. Pipeline deals are subject to due diligence We believe the overall quality of this pipeline is higher than that of our same-store portfolio, and occupancy across these communities is, on average, higher as well. This volume reflects our disciplined, selective approach. We have evaluated and underwritten nearly $12 billion of potential opportunities and submitted approximately $3 billion of non-binding letters of intent. We continue to focus on need-based private pay communities where our operating partners and asset management team can drive measurable improvement. Finally, an update on governance. Last quarter, I noted that we had begun another board process to identify a new independent director. We expect that process to conclude shortly with a meaningful enhancement to our board, and we look forward to sharing further details at the appropriate time. I'll now hand the call over to Drew Babin, our Chief Financial Officer.