National Health Investors, Inc.

Greetings and welcome to the fourth quarter 2020 conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we'll conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. This conference is being recorded Tuesday, February 23, 2021. And now I'd like to turn the conference over to Dana Hambly. Please go ahead.

Thank you and welcome everyone to National Health Investors Conference Call to review the company's results for the fourth quarter of 2020. On the call with me today are Eric Mendelson, President and CEO, Kevin Pascoe, Chief Investment Officer, John Spade, Executive Vice President and Chief Financial Officer, and David Travis, Chief Accounting Officer. The results as well as notice of the accessibility of this conference call on a listen-only basis were released yesterday after market close in a press release that's been covered by the financial media. As a reminder, any statements in this conference call which are not historical facts are forward-looking statements. NHI cautions investors that any forward-looking statements may involve risk or uncertainties and are not guarantees of future performance. All forward-looking statements represent NHI's judgment as of the date of this conference call. Investors are urged to carefully review various disclosures made by NHI and its periodic reports filed with the Securities and Exchange Commission including the risk factors and other information disclosed in NHI's Form 10-K for the year ended December 31, 2020. Copies of these filings are available on the SEC's website at sec.gov or on NHI's website at nhireet.com. In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in NHI's earnings release and related tables and schedules which have been filed on form 8K with the SEC. Listeners are encouraged to review those reconciliations provided in the earnings release together with all other information provided in that release. I'll now turn the call over to Eric Mendelson.

Hello, and thanks for joining us today. We hope that everyone is staying healthy and hopeful that 2021 will be better for our industry than 2020. Despite the unprecedented challenges created by the COVID-19 pandemic, NHI performed well in 2020. We increased AFFO per share by 3.7%, increased the dividend per share by 5%, and maintained our fiscal discipline with leverage below five times net debt to EBITDA and an AFFO payout ratio below 85%. We're also pleased to note that we deployed $226.9 million in real estate and note investments during 2020, and our pipeline for 2021 looks promising. We were also able to access the capital markets to bolster our balance sheet using our ATM, and more recently, through the issuance of our first public bond offering in January at a very favorable rate. As we discussed last quarter, the impact of the pandemic has been uneven across our portfolio, as the entrance fee and skilled nursing communities, which generate more than 50% of our cash revenue, have been more resilient than our freestanding assisted living, memory care, and independent living tenants. Government assistance through the CARES Act has been effective in bridging the gap to a more stable operating environment. We are hopeful that more assistance is on the way from the Provider Relief Fund as well as the $1.9 trillion American Rescue Plan, as most in the senior housing and skilled nursing industries continue to struggle with declining occupancy and increased staffing, testing, and PPE costs. Despite the hardship, our monthly collections remain strong throughout 2020, and thus far into 2021, which is a testament to the tireless efforts of our operators in their mission to keep our seniors safe. But the pandemic has obviously placed a considerable burden on our tenants, which clouds visibility in the weeks and months ahead and will make 2021 a more challenging year. Fortunately, the rollout of the vaccine to over 94% of our communities is having a positive impact with the number of active resident cases down by approximately 65% since peaking in mid-December. However, this is not yet translated into occupancy gains, so the road to recovery looks too uncertain for us to forecast with a high degree of confidence. Therefore, we're not providing guidance at this time. That may change if clarity improves. As we have previously discussed, we've been working diligently with Bickford and prospective lenders on the sale of nine properties, which would improve their cash flow by approximately $3 million annually. We're still moving forward with a closing currently targeted in March. However, the rapidly changing underwriting process for these buildings makes valuation for the lenders more difficult, so we're working along multiple paths with our Bickford partners to create a long-term solution that makes them a stronger company while improving our coverage metrics. We are not disclosing specifics as the discussions are ongoing, but we hope our track record of transparency tells you that we will share more details as soon as possible. As the pandemic unfolded, we expected that there would be more deferrals heading into 2021. We said last quarter that we believe the challenges presented by the pandemic are temporary and that we would be hesitant to make long-term decisions in the heat of a crisis. That is still very much the case. So we're willing on a tenant by tenant basis to address their individual needs. Fortunately, with the early success of the vaccine clinics, we see some light at the end of the tunnel and expect to see occupancy gains this year, which puts us in a better position to make decisions that have a more lasting impact on the company. While 2021 will be a difficult year, NHI is well positioned to weather the storm with multiple levers at our disposal to preserve our conservative capital structure and set the company up for longer-term growth. While this pandemic has had a disproportionately negative impact on operators caring for the senior population, We do not believe the damage is permanent and remain steadfast in our positive outlook for the great growth opportunities in healthcare real estate. With that, I'll turn the call over to John.