National Health Investors 2026 Q2 Earnings Call

The floor is yours. Thank you and welcome to the National Health Investors second quarter 2026 conference call.

On the call today are Eric Mendelsohn, President and CEO, Kevin Pascoe, Chief Investment Officer, Todd Siefert, Chief Financial Officer, and David Travis, Chief Accounting Officer. Yesterday, NHI released its second quarter results and conference call information in a press release after market close. Today's remarks may include forward-looking statements which are subject to risks or uncertainties and are not guarantees of future performance. Investors are urged to carefully review NHI's filings with the Securities and Exchange Commission, including its Form 10-K for the year ended December 31, 2025, and Form 10-Q for the quarter ended June 30, 2026, for a discussion of these risks. Copies of these filings are available on the SEC's website at sec.gov or on NHI's website at nhireit.com.

In addition, today's call may include certain non-GAAP financial measures, reconciliations of which are provided in NHI's earnings release, which has been furnished to the SEC on a Form 8-K. 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.

Good morning, and thank you for joining us today. The second quarter represented another important step in executing the strategy we outlined earlier this year. Our operating results were in line with our expectations. We completed the sale of the NHC portfolio on July 1st. We further expanded our SHOP platform, and we continued investing in the people and infrastructure necessary to support our long-term growth. The completion of the NHC transaction marks one of the most significant corporate actions in NHI's history. Beyond increasing our private pay senior housing focus, it substantially strengthens our balance sheet by reducing leverage to well below our long-term target range and provides strong liquidity to pursue future investments. We believe this financial flexibility creates a meaningful competitive advantage as acquisition opportunities accelerate. Our SHOP portfolio performed in line with our expectations for the quarter, and our outlook for the year is unchanged.

Same-store results improved significantly from the first quarter, while the newer acquisitions and transition properties are collectively performing within our original investment assumptions. As SHOP becomes a larger percentage of our NOI, we believe these newer investments will increasingly define the company's organic growth profile. In the past year, we've increased our SHOP investment by 137% to approximately $850 million or 24% of the company's total. As the SHOP portfolio grows from a relatively small platform into a larger contributor, we are deliberately investing ahead of that growth in people, technology, and processes to ensure we can continue expanding while maintaining disciplined execution. That includes evolving our leadership structure to support the company's next phase of growth, which is why we're excited to welcome Chris Maingot as our new Chief Operating Officer. Chris brings extensive operating and asset management experience that will further strengthen oversight of our growing SHOP portfolio.

Just as importantly, his addition allows Kevin Pascoe to dedicate even greater attention to expanding operator relationships, sourcing investment opportunities, and driving our acquisition strategy. Disciplined capital deployment remains one of our highest priorities. We believe this enhanced organizational structure positions NHI to execute more effectively through strong operating performance while increasing our capacity to source attractive investments. We also completed our planned CFO transition on July 1st with Todd Siefert assuming the role of Chief Financial Officer. Todd inherits a strong balance sheet with significant liquidity that positions us well to support our long-term growth strategy. His seamless transition ensures continuity of the financial discipline and capital allocation instincts that have long been cornerstones of NHI's success. We continue to believe that the industry backdrop provides powerful and sustained tailwinds for our company. Demand is accelerating as the aging population expands while new construction remains historically low.

Taken together, we believe NHI enters the second half of the year from a position of strength, and our focus remains unchanged. Delivering strong operating performance across our expanding SHOP portfolio, pursuing disciplined external growth through thoughtful capital allocation, maintaining a conservative balance sheet, and creating sustainable long-term value for our stockholders. While there's always more work to be done, the progress we've made this year reinforces our confidence in the company's strategic direction. We believe NHI is exceptionally well-positioned to capitalize on one of the most attractive senior housing environments, and we're excited about the opportunities ahead.

With that, I'll turn the call over to Kevin to discuss our business development and asset management activities.

Kevin? Thank you, Eric. Beginning with business development, NHI has completed $237.2 million of year-to-date investments in private pay senior housing at an average yield of 7.7%, including more than $212 million in SHOP investments.

Our external growth strategy remains focused on private pay senior housing across both SHOP and triple net structures while maintaining the flexibility to transition selected assets to SHOP when and where we see greater long-term value creation. We continue to see an active investment environment and believe that our strong reputation as a reliable capital partner, enhanced liquidity, and increased business development resources position NHI favorably to capitalize on our robust pipeline. We currently have approximately $127.3 million under signed letters of intent, primarily in SHOP, with an estimated initial yield of 6.8% and 6.5% after maintenance CapEx. Beyond the signed LOIs, we are evaluating approximately $420 million of additional deals, excluding several larger portfolio transactions.

While the pace of acquisitions can vary from quarter to quarter, our investment discipline does not. We believe the actions we've taken over the past several months have meaningfully increased our capacity to execute as opportunities arise, and we're confident we'll continue to deploy capital where the long-term risk-adjusted returns are most attractive. As a part of our ongoing asset management process, we continually evaluate every property to ensure it supports NHI's long-term strategy. While acquisitions naturally receive the most attention, dispositions are an equally important component of disciplined capital allocation. In addition to the NHC sale, we completed the disposition of seven properties with six operators for net proceeds of $117.4 million in 2026. We noted last quarter that we are evaluating a range of strategic alternatives for our same-store SHOP portfolio.

We have discussed a solution with our board on a subset of same-store properties that we believe could provide a better use of our capital. As the negotiations are ongoing, we will provide more details as plans are finalized. Now turning to our operating performance. Total SHOP NOI increased by 188.5% compared to the second quarter of 2025, driven by the transition and acquisition of 27 properties. Collectively, SHOP NOI for the second quarter at $11 million was in line with our forecast. Same-store NOI on the 15 legacy Holiday properties, which represents less than 5% of total annualized NOI, declined 6.3% year over year to $3.6 million. On a more positive note, when compared to the first quarter of 2026, same-store NOI increased by 18.9%.

For the 26 properties that have been in the portfolio since the beginning of this year, NOI increased sequentially by approximately 7.6% from the first quarter of 2026 to the second quarter. Overall, our second quarter SHOP results were consistent with the outlook we established last quarter, and our full-year expectations are unchanged. We remain encouraged by the performance of our newer SHOP investments. These communities continue to support our outlook for high single to low double-digit NOI growth and reinforce our confidence in the long-term return profile of our acquisition strategy. While much of our attention has understandably focused on SHOP, our triple net portfolio continues to provide a solid foundation for the business. Across our triple net portfolio, operating fundamentals remain stable. We continue to experience full contractual rent collections as well as healthy occupancy and rent coverage throughout the portfolio.