National Health Investors, Inc. (NYSE:NHI) announced today its net income attributable to common stockholders, its Funds From Operations (“FFO”), its Normalized Funds From Operations, its Normalized Adjusted Funds From Operations (“AFFO”), and its Normalized Funds Available for Distribution (“FAD”) for the three and nine months ended September 30, 2016.
Highlights
| • | Announced $447.7 million in acquisitions and loans year-to-date |
| • | Issued $54 million of common equity on ATM during quarter; $104.2 million year-to-date |
| • | Net income attributable to common stockholders down 6.7% compared to third quarter 2015; up 13.1% year-to-date |
| • | Normalized AFFO up 2.8% over third quarter 2015; up 5.5% year-to-date |
| • | Maintained low leverage balance sheet at 4.4x net debt-to-annualized EBITDA |
| • | Portfolio lease coverage remains strong at 1.90x |
| • | Signed definitive agreement with Bickford Senior Living converting RIDEA portfolio to triple-net tenancy |
Financial Results
| • | Net income attributable to common stockholders per diluted common share for the three months ended September 30, 2016, was $.83, a decrease of 6.7% over the same period in the prior year. Net income attributable to common stockholders per diluted common share for the nine months ended September 30, 2016, was $2.84, an increase of 13.1% over the same period in the prior year. |
| • | Normalized FFO per diluted common share for the three months ended September 30, 2016, was $1.23, an increase of 1.7% over the same period in the prior year. Normalized FFO per diluted common share for the nine months ended September 30, 2016, was $3.60, an increase of 3.2% over the same period in the prior year. |
| • | Normalized AFFO per diluted common share for the three months ended September 30, 2016 was $1.10, an increase of 2.8% over the same period in the prior year. Normalized AFFO per diluted common share for the nine months ended September 30, 2016 was $3.24, an increase of 5.5% over the same period in the prior year. |
| • | Normalized FAD per diluted common share for the three months ended September 30, 2016, was $1.10, an increase of 1.9% over the same period in the prior year. Normalized FAD per diluted common share for the nine months ended September 30, 2016, was $3.28, an increase of 5.1% over the same period in the prior year. |
| • | FFO per diluted common share for the three months ended September 30, 2016, was $1.21, a decrease of .8% over the same period in the prior year. FFO per diluted common share for the nine months ended September 30, 2016, was $3.82, an increase of 8.8% over the same period in the prior year. |
| • | FFO and net income attributable to common stockholders for the three months ended September 30, 2016 include a $1.7 million gain on the sale of our non-controlling interest in an equity method investee, a $1.2 million write-off of a deferred tax asset, the result of the same transaction, and a $1.1 million write-off of straight-line rent receivable due to the planned transition of a 126-unit senior housing portfolio. FFO and net income attributable to common stockholders for the nine months ended September 30, 2016 additionally includes gains on sales of marketable securities of $23.5 million and $14.7 million in write-offs of a lease intangible and straight-line rent receivable, both due to the transition of a lease on a portfolio of 15 skilled nursing facilities to The Ensign Group. Net income for the nine months ended September 30, 2016 includes additional gains on sales of real estate of $1.7 million. |
The Company defines Normalized FFO as FFO adjusted for infrequent or unpredictable items detailed in the accompanying reconciliations. We define Normalized AFFO as Normalized FFO excluding the effects of straight-line lease revenue, amortization of debt issuance costs and the non-cash amortization of the original issue discount of our unsecured convertible notes. The Company defines Normalized FAD as Normalized AFFO excluding the effect of non-cash compensation expense. These supplemental non-GAAP performance measures may not be comparable to similarly titled measures used by other REITs.
Net income attributable to common stockholders is a calculation of our net income, defined as the results of our operations in conformity with generally accepted accounting principles (GAAP) in the United States of America, less net income attributable to noncontrolling interests in our consolidated joint ventures, if any.
The reconciliation of net income attributable to common stockholders to our FFO, Normalized FFO, Normalized AFFO and Normalized FAD is included as a table to this press release and filed in the Company’s Form 10-Q with the Securities and Exchange Commission.
2016 Guidance
The Company currently expects Normalized FFO for 2016 to be in the range of $4.84 to $4.88 per diluted common share and Normalized AFFO to be in the range of $4.36 to $4.38 per diluted common share. The Company’s guidance range for the full year 2016, with underlying assumptions and timing of certain transactions, is set forth and reconciled below:
| Full-Year 2016 Range | |||||||
| Low | High | ||||||
| Net income per diluted share attributable to common stockholders | $ | 3.70 | $ | 3.72 | |||
| Plus: Depreciation | 1.48 | 1.50 | |||||
| Less: Gains on sales of marketable securities | (.60 | ) | (.60 | ) | |||
| Less: Gains on sales of real estate | (.12 | ) | (.12 | ) | |||
| Plus: Normalizing items related to GAAP accounting for lease transitions | .36 | .36 | |||||
| Plus: Other normalizing items | .02 | .02 | |||||
| Normalized FFO per diluted common share | $ | 4.84 | $ | 4.88 | |||
| Less: Straight-line rental income | (0.57 | ) | (0.59 | ) | |||
| Plus: Amortization of debt issuance costs | 0.06 | 0.06 | |||||
| Plus: Amortization of original issue discount | 0.03 | 0.03 | |||||
| Normalized AFFO per diluted common share | $ | 4.36 | $ | 4.38 | |||
The Company’s guidance range reflects the existence of volatile economic conditions, but does not assume any material deterioration in tenant credit quality and/or performance of its portfolio. The Company does not include an estimate of investment volume in its guidance range, however, it includes future investments with existing and new tenants for which management estimates are reasonably likely at the present date. The guidance is based on a number of assumptions, many of which are outside the Company’s control and all of which are subject to change. The Company’s guidance range allows for the uncertainty inherent in the structure and timing of the financing required to fund previously announced investments and any pending new investments. The Company’s guidance may change if actual results vary from these assumptions.
Investor Conference Call and Webcast
NHI will host a conference call on Monday, November 7, 2016, at 12 p.m. ET, to discuss third quarter results. The number to call for this interactive teleconference is (800) 699-3428 with the confirmation number, 21820961. The live broadcast of NHI’s third quarter conference call will be available online at www.nhireit.com. The online replay will follow shortly after the call and continue for approximately 90 days.
About National Health Investors
Incorporated in 1991, National Health Investors, Inc. (NYSE: NHI) is a real estate investment trust specializing in sale-leaseback, joint-venture, mortgage and mezzanine financing of need-driven and discretionary senior housing and medical investments. NHI’s portfolio consists of independent, assisted and memory care communities, entrance-fee retirement communities, skilled nursing facilities, medical office buildings and specialty hospitals. Visit www.nhireit.com for more information.
