National Health Investors, Inc.

Greetings, and thank you for standing by. Welcome to the National Health Investors' fourth quarter 2022 conference call. During your presentation, all participants will be in a listen-only mode, and 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. And now I'd 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 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. 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, 2022. 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 Mendelson. Eric Mendelson Thank you, Dana.

Hello and thanks for joining us today. We're pleased to report that our fourth quarter funds available for distribution, or FAD, was in line with our expectations. As expected, fourth quarter FAD declined from the third quarter, primarily from lower collections from two need-driven tenants, which have now been placed on cash basis accounting, and a third tenant whose lease we restructured during the quarter. We're also pleased to report that we achieved our full year 2022 FAD guidance despite all the moving parts involved in our portfolio optimization in addition to industry headwinds and capital market disruptions. While we will continue to make dispositions and provide limited financial assistance to certain operators, the execution of our portfolio optimization is largely complete We decided in early 2021 to divest a significant portion of underperforming properties. We were fortunate that the market was so accommodating at the time as we sold 32 senior housing properties for 296 million with low single digit implied cash yields and average coverage below 0.5 times. We also strategically sold seven non-core former NHC buildings for 44 million with minimal rent impact this year. The benefits of our considerable efforts are evident through steady improvements in the need driven senior housing coverage ratios, stronger collection rates, and declining rent concessions. The entrance fee and skilled nursing businesses from which we generate over 60% of our NOI have been steady performers throughout the pandemic, and we expect that to continue in 2023. As we transition back to growth, we see several internal and external drivers. We have total deferral balances and notes payable of approximately $53 million, which we expect to collect or creatively use to generate shareholder value. For example, fourth quarter repayments from four tenants totaled approximately $420,000, including $183,000 from Bickford. We also used $3 million of the Bickford deferral balance in lieu of cash as part of the acquisition of a newly developed property in Virginia Beach in the fourth quarter. And we just announced a similar transaction using $2.5 million of the deferral balance in lieu of cash for a property in Chesapeake, Virginia. Both properties are over 90% occupied. Fair market value rent resets on restructured leases and transition properties are also expected to incrementally enhance organic growth over the next few years as operations stabilize and tenant margins improve. The largest internal growth opportunity is in our shop portfolio, which was just formed in the second quarter of 2022 and transitioned to new operators after several years of neglect. We're not satisfied with the fourth quarter results, but continue to see a path towards significant margin improvements as we get the right personnel in place and invest more substantially in the properties. Our expectation has not changed on SHOP's upside potential as we continue to target incremental annual NOI from that portfolio of six to eight million in the next couple of years. The greatest growth opportunity continues to be externally through acquisitions and new loan originations. Throughout the portfolio optimization process, we've been laser focused on maintaining a strong financial profile, understanding that disjointed markets typically revert to the mean and that discipline and patience are eventually rewarded. We believe that we've reached that point and we're well positioned to take advantage of what is increasingly becoming a buyer's market. We've succeeded in keeping our leverage within our stated financial policies. We also repurchased 152 million of our stock, which added approximately five cents per share to our 2022 NFFO and should have a greater per share impact this year. We made 101.5 million in 2022 investments and have already announced investments of 54.8 million in the first quarter of 2023. We still have approximately 135 million in available capacity to deploy without new equity while maintaining our target leverage goals. Of course, we also have additional capacity on the revolver and ATM should the right opportunity present itself. Despite the headwinds we faced in 2022, we still felt it was important to signal that we have command of our business, which is why we issued full year guidance early in the second quarter. We are once again issuing full guidance this year with the view that there is less noise versus last year. Obviously, we face a more difficult interest rate environment and industry challenges are likely to persist, but overall our visibility is improved. We believe our fourth quarter 2022 FAD results provide a good baseline from which we can start growing again. Based on an annualized fourth quarter FAD, our full year guidance implies growth of 3.5% to 5%, and this excludes any unannounced investments. I'll now turn the call over to John to discuss our financial results and guidance in more detail. John.