National Healthcare Properties, Inc.

Welcome to the fourth quarter and full year 2025 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 being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These 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 statement. The company refers you to its SEC filings, including its most recent form 10-K, for a 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 the 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 fourth quarter 2025 earnings supplemental on its website at www.nhpreit.com. You may submit questions during today's webcast by typing them in the box on the screen and a member of the company's investor relations team will follow up upon the conclusion of this presentation. Please note that a copy of this presentation and replay of the webcast will be available on the company's website later today. I would now like to turn the call over to Michael Anderson, Chief Executive Officer and President, and Drew Babin, Chief Financial Officer and Treasurer. Please go ahead, Michael.

Good afternoon, and thank you for joining us today. 2025 has been a transformational year for NHP. In our first full year as a self-managed REIT, we delivered strong performance across our portfolio, significantly reduced our corporate leverage, and successfully executed on a number of critical business initiatives. Continuing the momentum from the first three quarters of 2025, during the fourth quarter, NHP's portfolio delivered year-over-year same-store cash NOI growth of 9.8%, headlined by same-store growth of 26.5% in our senior housing operating properties, or SHOP, portfolio. As Drew will detail, this exceptional growth is driven by continued expansion of both occupancy and rate across our communities, which all include elements of need-based care. Year-over-year same-store cash and OI growth within our outpatient medical facilities or OMF portfolio was also steady at 1.9%, benefiting from strong leasing activities and optimization of expense recovery. During the fourth quarter, we successfully closed our $400 million seniors unsecured revolving facility and $150 million senior unsecured term loan with Wells Fargo and other lenders, marking a major milestone in our continued efforts to strengthen our balance sheet and optimize our capital structure. In the final months of the year, we also completed the transition of CFO role to Drew Bavin, a REIT veteran with 20 years' experience with the banking, investor, and research communities. and Chief Accounting Officer role to Eileen Park, who built a successful career as an accounting leader, most recently at Ventos, and previously in audit as a senior manager at E&Y. With these and other additions during 2025, NHP built out an integrated management platform set up to drive benefits of scale as we grow our shop portfolio and expand our portfolio of operators. As announced recently, we confidentially submitted a draft registration statement on Form S-11 to the Securities and Exchange Commission in connection with our proposed initial public offering of common stock. we will keep shareholders informed and provide updates as appropriate. In closing, we believe the underlying fundamentals of healthcare real estate industry, particularly within senior housing, remain robust. Demographic tailwinds supportive of sustained demand growth as well as constrained new supply across a diverse array of U.S. markets continue to reinforce our confidence as we plan to increasingly gear our business towards shop. Along these lines, we've also begun to market additional OMF assets for sale. Proceeds from any disposition will serve to further deleverage the company or to fund shop acquisitions harvested from a growing investment pipeline. We are excited about the year ahead and committed to delivering strong operational and financial performance across our business in 2026. Drew, could you please take us through our quarterly financial performance?

Thanks, Michael. During the fourth quarter of 2025, the company generated normalized funds from operations of approximately $6 million or 20 cents per share, which represented a 12.8% decrease year over year. The decrease was primarily related to dilution from the sale of OMF properties and higher G&A related to stock-based compensation expense, partially offset by positive same-store cash NOI growth across both the shop and OMF portfolios and interest savings resulting from debt paydowns. Notably, fourth quarter normalized results exclude $2.9 million in severance and other related costs resulting from the CFO transition. For the full year of 2025, the company generated normalized funds from operations of approximately $24 million, or 83 cents per share, which represented a 163% increase versus 2024. This was primarily driven by strong same-store cash general high growth, a reduction in operating fees to related parties from 19 million in 2024 to zero in 2025, proactive expense management initiatives, and interest savings resulting from debt paydowns, partially offset by dilution from OMF dispositions. We refer investors to page seven of our quarterly earnings supplemental. We have reconciled net loss attributable to common stockholders to NAREIT-defined FFO, as well as an added normalized FFO metric intended to adjust for volatility sometimes caused by one-time items. We've continued to also include information on this page, allowing investors and analysts to further adjust to NFFO for non-cash items such as straight-line rent, equity-based compensation, and non-cash interest expense, as well as recurring capital expenditures. For ease of reference, we've included this information for the five most recent quarters, as well as for the full years 2024 and 2025. The shop portfolio continues to produce tremendous organic growth. Year-over-year same-store revenue growth of 10.5% in the fourth quarter was comprised of a roughly 350 basis point year-over-year increase in occupancy to 84.6%, as well as 5.3% growth in rev pour. A 260 basis point increase in same-store cash NOI margin amplified this top-line growth in the same-store cash NOI growth of 26.5% year-over-year for the quarter, rounding out a 2025 in which same-store cash NOI for the segment increased by 21.8%. Rental rate increases on renewals for 2026 were in the mid-single digits, and January spot occupancy of just under 85% is in line with expectations ahead of what we expect to be an active spring leasing season. The OMF portfolio delivered fourth quarter same-store cash NLI growth of 1.9% year-over-year and full-year same-store cash NLI growth of 2.9%. Same-store ending occupancy was 94% versus 92.7% in the fourth quarter of 2024, as 21,000 square feet of new leasing activity and a 92% retention rate on expiring leases equated to net absorption of 11,000 square feet. Renewal rent increases averaged 3.6% during the fourth quarter, and were 2.2% for the full year. We generally expect strong tenant retention to continue through 2026, low to mid 2% lease escalators, and improvements in segment cash NOI margin due to our ongoing internalization of property management activities. As previously mentioned, we expect that this segment will serve as a potential source of capital for the company as we seek the benefit from an active private market for OMF assets. Recurring CapEx for the quarter totaled 8.9 million, including 2.4 million for the shop portfolio, and $6.5 million primarily tenant improvements for the OMF portfolio. We expect recurring CapEx to moderate in 2026 as we proactively address capital needs at our facilities, as well as extensions of several key OMF tenants in 2024 and 2025. Moving to the balance sheet, net debt to annualized adjusted EBITDA was 9.2 times for the fourth quarter, representing an improvement of more than one full term year over year. On a further adjusted basis, assuming properties with negative NOI that were sold during the period had been disposed of at the beginning of the quarter, the ratio was nine times. The improvement was driven by organic NOI growth, disciplined management of cash G&A, and debt reduction funded through non-core asset dispositions. Looking ahead, we expect continued organic growth and additional dispositions, along with any potential IPO transaction in the future, to further and meaningfully reduce our leverage. As Michael mentioned, we closed a $550 million senior unsecured credit facility in December that consists of a $150 million term loan and a $400 million revolver. To reduce interest rate uncertainty, we swapped the term loan to a fixed rate of approximately 5.5%. This facility funded the full repayment of a $330 million secure term loan during the fourth quarter and meaningfully strengthened their capital structure while providing additional liquidity and financial flexibility that positions us to pursue growth opportunities. We expect to continue to reduce our secured debt and to pursue a primarily unsecured balance sheet long term. Our debt maturities through 2027 include only $335 million of Fannie Mae loans coming due later this year, which encumber parts of our shop portfolio at a blended rate of 6.65%. We are optimistic about our ability to refinance this debt at attractive rates. However, the amount we ultimately refinance may be reduced based on the outcome of the potential liquidity event, as well as the timing and magnitude of any disposition activity. During 2025, we repurchased preferred stock with an aggregate liquidation preference of $8.6 million at a weighted average yield of 11.5%. We will continue to evaluate repurchases of our preferred stock relative to the long-term returns available on revenue-enhancing CapEx projects and shop acquisition opportunities. I would now like to turn the call back to Michael for his closing remarks.

Thank you, Drew, and thanks to all of our investors for joining us today. Please keep an eye on our website for any further updates as available.