National Health Investors, Inc.

Health Investors First Quarter 2024 Earnings Webcast and Conference Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Dana Hamley. Sir, the floor is yours.

Thank you and welcome to the National Health Investors Conference Call to review the results for the first quarter of 2024. 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 were released after the market closed yesterday in a press release that's been covered by the financial media. 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 March 31, 2024. Copies of these filings are available on 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 furnished 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.

Hello, and thank you to everyone for joining us today. We're off to a great start in 2024 as the first quarter results exceeded our expectations and represents the third straight quarter of outperformance. The general theme remains the same and is characterized by stable cash collections, steady deferral repayments, improving operator fundamentals, shop occupancy and revenue growth, and no unexpected rent concessions. Our excellent start coupled with good visibility for the rest of the year prompted us to raise our full year guidance, which implies over 5% FAD growth at the midpoint. The increased FAD guidance is broad-based with several factors contributing to the improved outlook. John will provide more details in a few minutes. As a reminder, our guidance does not include any new investment activity. We believe our portfolio is in great shape and positions NHI for strong organic growth through multiple channels, including deferral repayments, rent step-ups with select large tenants, significant NOI growth potential and shop, and capital investment projects concentrated on the existing real estate portfolio. Our senior housing EPIDARM coverage moved higher for the eighth consecutive period to 1.45 times with particular strength at Bickford and our other need-driven operators. We reached a favorable outcome with Bickford on April 1st, rent reset, which increased the base rent by approximately 10% annually, while preserving our ability to receive rent deferral repayments based on growing revenue in the Bickford leased portfolio. Strong revenue growth within our NHC portfolio during 2023 drove an increase in the percentage rent, which more than offset the scheduled reduction in base rent related to the sale of seven properties in 2022. As most of you on today's call are well aware, the NHC lease matures at the end of 2026, so we're actively working on creating a favorable outcome for our shareholders. For the record, I need to state that the negotiations related to the NHC lease are sensitive. We understand the importance of this lease to shareholders and our unique relationship to NHC, so we do plan to provide relevant information on the process where and when appropriate. Back to our results. The Senior Housing Operating Portfolio, or SHOP, increased NOI by 54.8% year-over-year to 2.9 million on over 13% revenue growth and 600 basis points of margin expansion. Sequentially, NOI increased by approximately 2%, which is encouraging as we typically expect seasonal weakness in the first quarter. Our guidance for 2024 NOI growth remains at 25 to 30% though continued occupancy improvement coupled with lower move-in incentives have us optimistic that we'll be at the high end or above the current guidance range as the year progresses. Also supplementing our organic growth is a $25 million NOI-producing CapEx program targeted at our leased real estate portfolio. To date, we have committed $19 million at a weighted average yield of over 8%. We view this program as a low-risk investment into properties with good coverage and returns well above our cost of capital. The balance sheet at just 4.4 times net debt to adjusted EBITDA continues to be one of the lowest levered among all REITs and positions us for significant external growth. We have plenty of dry powder to execute our growth initiatives with over $970 million in capacity right now on the revolver and ATM. We've been advising sellers and borrowers for several quarters that the higher for longer rate environment could be a reality. It seems to be a certainty at this point, which has created a more active pipeline for us. Our pipeline is currently over 300 million, and we have submitted LOIs on deals valued at over 100 million, with initial yields of more than 8% on average. The improvement in our cost of capital is allowing us to become more competitive to other providers of capital. With seller expectations on cap rates adjusting higher and our cost of capital moving lower, we expect external growth to remain robust for the foreseeable future. Kevin will provide more details on the makeup of the pipeline. We clearly see the momentum for NHI across several paths including our multi-pronged organic growth strategy, significant external growth opportunities, and a favorable macro environment driven by slowing supply and growing demand. In sum, NHI is in a great position to capitalize on several initiatives and create a pathway for several years of exceptional growth. I'll now turn the call to Kevin to provide more details on our operations. Kevin.