National Health Investors, Inc.

Greetings and welcome to the National Health Investors' fourth quarter conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will 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. I would now like to turn the conference over to Dana Hambly.

Please go ahead. Thank you, and welcome to the National Health Investors Conference Call to review the company's results for the fourth quarter of 2021. On the call 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 the notice of the accessibility of this conference call on a listen-only basis were released after the market closed yesterday 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 risks 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 31st, 2021. Copies of these filings are available on the SEC's website at sec.gov or on NHI's website at nhiread.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 our CEO, Eric Mendelsohn. Eric Mendelsohn Hello, and thanks for joining us today.

It has been less than a year since we announced to the market that we were ready to make more lasting decisions to fundamentally transform NHI into a stronger healthcare REIT by pruning underperforming assets, transitioning properties to new tenants, restructuring leases with partners with whom we can grow, and venturing into new revenue streams, including shop structures. To that end, we have completed the sale of 23 properties through January for net proceeds of approximately $244 million, which includes 19 underperforming senior housing properties for $195 million. The NOI cap rate on the senior housing dispositions was 2.4%, with EBITDARM coverage of 0.51 times. In our November call, we identified an additional 21 senior housing properties for disposition. From that group, we completed the sale of three properties, transitioned three properties to new operators, and decided to retain three properties under triple net leases. We expect that the repositioning of the remaining 12 will be completed in the first and second quarters. Since November, the Board has approved the sale of four additional underperforming properties. We expect that these dispositions will close later this year. In total, we currently target 16 housing property dispositions with estimated net proceeds of $125 million, representing an approximate 9% cap rate on contractual rent, but a very low single-digit NOI cap rate. shifting our focus to our Bickford relationship. We are disappointed that the pace of restructuring has slowed since we last reported results. This has been driven primarily by headwinds caused by Omicron that have weighed on Bickford's enterprise cash flow and impaired progress. We're evaluating scenarios in which more short-term financial assistance may be needed. That said, we are confident that our restructuring efforts with Bickford will create a more focused portfolio that significantly improves coverage, creates excess cash flow to service deferral balances, and enhances the overall quality of our relationship. You can see the results on page six of our supplemental, which details the improving coverage ratios following dispositions. We also continue to work diligently on the transition of the legacy holiday portfolio into a shop joint venture with Merrill Gardens and Discovery. Since our November update, we disclosed that we have filed a lawsuit against Welltower, so the timing of the transition has been delayed while the legal proceedings play out. We do have good dialogue with the existing manager, Atria, and believe that we'll be able to move quickly on the transitions as soon as allowable. We believe this will expand our avenues for long-term growth. The timing also looks optimal as industry fundamentals start turning in a more favorable direction, allowing us to capture meaningful NOI upside loss due to the pandemic. Our skilled nursing and CCRC portfolios, which currently account for nearly two-thirds of cash revenue, are performing well under challenging circumstances and have provided stability as we have been working to restructure other parts of the portfolio. The balance sheet is in great shape as we reduced debt by over $250 million during 2021 and maintained leverage within our target range of four to five times net debt to adjusted EBITDA. This is despite granting over $28 million in rent concessions and $11.4 million in holiday nonpayment. Given our favorable financial position, we see little need to raise new equity to fund our growth in the near term. We understand that there are many moving pieces which cloud visibility into our NOI growth. The timing of the holiday transitions and the headwinds caused by Omicron led us to postpone giving guidance at this time. But though the timing of our strategic actions has been elongated, the overall strategy to reposition NHI has not changed. We believe that we are at an earnings trough and look forward to better days ahead as the effects of the pandemic wane and our repositioning strategies are fully implemented. I'll now turn the call over to John.