National Health Investors, Inc.

Greetings and welcome to the National Health Investors Third Quarter 2022 Conference Call. At the start of the presentation, all lines will be in a listen-only mode. Afterwards, we will conduct the 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. As a reminder, this call is being recorded Wednesday, November 9, 2022. 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 third quarter of 2022. On the call today are Eric Mendelson, President and CEO, Kevin Pascoe, Chief Investment Officer, John Spade, 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 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-Q for the quarter ended September 30, 2022. 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 items 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 Mendelson.

Eric Mendelson Hello, and thanks for joining us today. We continue to make progress on our portfolio optimization, and it showed in our strong third quarter results, which were ahead of our internal expectations. Our collection rate improved as tenant deferrals declined to 1.4 million versus 3.9 million in the second quarter. Since we announced our optimization plans in the second quarter of 2021, we have completed the sale of 32 senior housing properties for net proceeds of 296 million and had a cash NOI yield of just 2.7%, and EBITDARM coverage of only 0.47 times. We're seeing the positive impact of the dispositions on our senior housing coverage ratios. Trailing 12 EBITDARM coverage for the senior housing portfolio again showed improvement and has increased from 0.98 times to 1.14 times over the last two reported periods. Over the same timeframe, Bickford's coverage increased from 0.82 times to 1.0 times, and our other needs-driven tenants improved from 0.79 times to 0.91 times. Adjusting for Bickford's April 1st rent reset, their coverage was 1.32 times. Please reference our business update published yesterday afternoon for more details. While the third quarter results exceeded our expectations, the operating environment for our tenants and the shop portfolio remains challenging with labor and other inflationary pressures weighing on margins. As announced yesterday, we're maintaining our annual guidance for the year, which implies a sequential decrease in FAD. We feel that this is prudent given the increasing interest rates as well as industry stress which may lead to further dispositions, deferrals, rent restructurings, or tenant transitions in the fourth quarter. As noted in our business update, we're targeting additional asset sales with proceeds in a range of $50 to $60 million. This includes 10 properties currently held for sale and certain other properties that are expected to be sold or moved into held for sale. Fortunately, Our conservative financial policies and early and decisive actions to dispose of underperforming assets in a seller's market benefited us and has kept our balance sheet in excellent health. We ended the quarter with leverage in the middle of our targeted range at 4.5 times, and we've completed share repurchases totaling $152 million. The acquisition market still strikes us as dislocated though our pipeline discussions have been more actionable lately, so we expect that we will be able to announce some investment activity before the end of the year. We remain optimistic that outstanding deferral balances, rent restructuring, and tenant transitions should all contribute to better internal growth over the next few years as deferral balances are repaid and the restructured and transitioned leases move back towards market rates later next year and into 2024. We also continue to see significant NOI upside in the shop portfolio as margins start to rebound from historically low levels. We are focused on concluding our optimization efforts and returning to growth. We continue to be bullish on the long-term industry fundamentals for senior housing and skilled nursing and are fortunate to be in a position of considerable financial strength to navigate through the near-term macro headwinds and capitalize as these industries recover. As always, we'll continue to provide transparency to the market on our progress along the way. I'll now turn the call over to John to discuss our financial results and guidance in more detail. John.