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EX-99.2 - EXHIBIT 99.2 TRANSCRIPT OF 4Q 2013 EARNINGS CALL OF FEBRUARY 18, 2014. - NATIONAL HEALTH INVESTORS INCexhibit992.htm
Exhibit 99.1



Contact: Roger R. Hopkins, Chief Accounting Officer
Phone: (615) 890-9100

NHI Reports Fourth Quarter and Year End 2013 Results


MURFREESBORO, Tenn. – (February 18, 2014) National Health Investors, Inc. (NYSE:NHI) announced today its normalized Funds From Operations (“FFO”), its normalized Adjusted Funds From Operations ("AFFO"), its normalized Funds Available for Distribution ("FAD") and net income attributable to common stockholders for the three months and year ended December 31, 2013.

Year-To-Date Highlights
Increased fourth quarter Normalized FFO by 7.1% over the same quarter in 2012 and by 11.6% year over year.
Closed or announced $751.6 million of new investments contributing to portfolio growth and diversification
Increased 2013 regular dividend per share 9.8% over 2012

Financial Results
Normalized FFO for the three months ended December 31, 2013, was $26,749,000, or $0.90 per diluted common share, compared with $23,369,000, or $0.84 per diluted common share, for the same period in 2012, an increase of 7.1%. Normalized AFFO for the three months ended December 31, 2013, was $24,624,000 or $0.82 per diluted common share, compared with $22,029,000 or $0.79 per diluted common share for the same period in 2012, an increase of 3.8%. Normalized FAD for the three months ended December 31, 2013, was $25,542,000 or $0.86 per diluted common share, compared with $22,771,000 or $0.82 per diluted common share for the same period in 2012, an increase of 4.9%. Normalized FFO, Normalized AFFO and Normalized FAD for the three months ended December 31, 2013 exclude a $3,256,000 gain recognized on the favorable settlement of a contingent purchase liability.

FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), for the three months ended December 31, 2013, was $29,942,000, or $1.00 per diluted common share, compared with $32,882,000, or $1.18 per diluted common share, for the same period in 2012. Net income attributable to common stockholders for the three months ended December 31, 2013, was $27,776,000, or $0.93 per diluted common share, compared with $41,105,000, or $1.48 per diluted common share, for the same period in 2012. Net income for the three months ended December 31, 2013 and 2012 included gains on sales of real estate of $2,888,000 and $11,966,000, respectively.

Normalized FFO for the year ended December 31, 2013, was $100,935,000, or $3.55 per diluted common share, compared with $88,487,000, or $3.18 per diluted common share, for the same period in 2012, an increase of 11.6%. Normalized AFFO for the year ended December 31, 2013, was $94,430,000 or $3.33 per diluted common share, compared with $83,860,000 or $3.01 per diluted common share for the same period in 2012, an increase of 10.6%. Normalized FAD for the year ended December 31, 2013, was $99,127,000 or $3.49 per diluted common share, compared with $87,599,000 or $3.15 per diluted common share for the same period in 2012, an increase of 10.8%. Normalized FFO, Normalized AFFO and Normalized FAD for the year ended December 31, 2013 exclude a $3,256,000 gain recognized on the favorable settlement of a contingent purchase liability, net loan impairments of $1,976,000 and other adjustments of $624,000.





NHI Reports Fourth Quarter and Year End 2013 Results
Page 2
February 18, 2014



FFO, as defined by NAREIT, for the year ended December 31, 2013, was $101,591,000, or $3.58 per diluted common share, compared with $94,088,000, or $3.38 per diluted common share, for the same period in 2012. Net income attributable to common stockholders for the year ended December 31, 2013, was $106,183,000, or $3.74 per diluted common share, compared with $90,731,000, or $3.26 per diluted common share, for the same period in 2012. Net income for the year ended December 31, 2013 and 2012 includes gains of $22,258,000 and $11,966,000 on sales of real estate.

The reconciliation of net income attributable to common stockholders to our FFO, Normalized FFO, Normalized AFFO and Normalized FAD are included as a table to this press release and in supplemental data furnished on Form 8-K and are filed in our Form 10-K with the Securities and Exchange Commission.

2014 Guidance
The Company currently forecasts Normalized FFO for 2014 from $3.92 to $4.00 per diluted common share and Normalized AFFO from $3.44 to $3.50 per diluted common share. The Company's guidance range for the full year 2014 for Normalized FFO and Normalized AFFO per diluted common share, with underlying assumptions and timing of certain transactions, is set forth and reconciled below:
 
Full-Year 2014 Range
 
Low
 
High
Net income per diluted share attributable to common stockholders
$
3.00

 
$
3.05

Plus: Real estate depreciation
.92

 
.95

Normalized FFO per diluted common share
$
3.92

 
$
4.00

Less: Straight-line rental income
(.48
)
 
(.50
)
Normalized AFFO per diluted common share
$
3.44

 
$
3.50


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 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 low end of our guidance range assumes a baseline from the fourth quarter of 2013, the acquisitions and dispositions of real estate announced during the fourth quarter of 2013, the timing for terming out debt on our credit facility and assuming 3% growth from our Bickford joint venture. On the top end of that range, we are adding in assumptions for 6% growth from our Bickford joint venture. We are not including assumptions for additional investment activity. The Company expects to make new investments in health care real estate during 2014 that meet its underwriting criteria and where the spreads over its cost of capital generates sufficient returns to its shareholders. These new investments are expected to be funded by the Company’s liquid investments and by short-term and long-term debt financing. 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 Tuesday, February 18, 2014, at 9 a.m. ET, to discuss fourth quarter results. The number to call for this interactive teleconference is (212) 231-2929 with the confirmation number, 21706155. The live broadcast of NHI's quarterly 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
National Health Investors, Inc. (NYSE: NHI), a Maryland corporation incorporated and publicly listed in 1991, is a healthcare real estate investment trust (REIT) specializing in financing healthcare real estate by purchase and leaseback transactions, RIDEA transactions and by mortgage loans. NHI’s investments include senior housing (assisted living, memory care, independent living and senior living campuses), skilled nursing, medical office buildings and specialty hospitals. www.nhireit.com





NHI Reports Fourth Quarter and Year End 2013 Results
Page 3
February 18, 2014



Statements in this press release that are not historical facts are forward-looking statements. NHI cautions investors that any forward-looking statements may involve risks and uncertainties and are not guarantees of future performance. All forward-looking statements represent NHI's judgment as of the date of this release. Investors are urged to carefully review and consider the various disclosures made by NHI in its periodic reports filed with the Securities and Exchange Commission, including the risk factors and other information disclosed in NHI's Annual Report on Form 10-K for the most recently ended fiscal year. Copies of these filings are available at no cost on the SEC's web site at www.sec.gov or on NHI's web site at www.nhireit.com.




NHI Reports Fourth Quarter and Year End 2013 Results
Page 4
February 18, 2014


Reconciliation of FFO, Normalized FFO, Normalized AFFO and Normalized FAD
(in thousands, except share and per share amounts)
 
 
 
 
 
 
 
 
Three Months Ended
 
Years Ended
 
December 31,
 
December 31,
 
2013
 
2012
 
2013
 
2012
Net income attributable to common stockholders
$
27,776

 
$
41,105

 
$
106,183

 
$
90,731

Elimination of certain non-cash items in net income:
 
 
 
 
 
 
 
Real estate depreciation in continuing operations
5,201

 
3,545

 
17,646

 
13,182

Real estate depreciation related to noncontrolling interest
(203
)
 
(68
)
 
(537
)
 
(68
)
Real estate depreciation in discontinued operations
56

 
266

 
557

 
2,209

Net gain on sales of real estate
(2,888
)
 
(11,966
)
 
(22,258
)
 
(11,966
)
Funds from operations
$
29,942

 
$
32,882

 
$
101,591

 
$
94,088

Investment gains
(3,256
)
 
(4,730
)
 
(3,256
)
 
(4,760
)
Loan costs expensed due to credit facility amendments
63

 

 
416

 

Non-cash write-off of straight-line rent receivable

 

 

 
963

Legal settlement

 

 

 
365

Loan impairments and (recoveries), net

 
(4,495
)
 
1,976

 
(2,195
)
Other items, net

 
(288
)
 
208

 
26

Normalized FFO
$
26,749

 
$
23,369

 
$
100,935

 
$
88,487

Straight-line lease revenue, net
(2,152
)
 
(1,340
)
 
(6,560
)
 
(3,664
)
Straight-line lease revenue, net related to noncontrolling interest
27

 

 
55

 

Non-cash write-off of straight-line rent receivable

 

 

 
(963
)
Normalized AFFO
24,624

 
22,029

 
94,430

 
83,860

Non-real estate depreciation in continuing operations
696

 
516

 
2,455

 
1,590

Non-real estate depreciation related to noncontrolling interest
(31
)
 
(18
)
 
(97
)
 
(19
)
Non-cash stock based compensation
253

 
244

 
2,339

 
2,168

Normalized FAD
25,542

 
22,771

 
99,127

 
87,599

 
 
 
 
 
 
 
 
BASIC
 
 
 
 
 
 
 
Weighted average common shares outstanding
29,831,176

 
27,848,002

 
28,362,398

 
27,811,813

FFO per common share
$
1.00

 
$
1.18

 
$
3.58

 
$
3.38

Normalized FFO per common share
$
.90

 
$
.84

 
$
3.56

 
$
3.18

Normalized AFFO per common share
$
.83

 
$
.79

 
$
3.33

 
$
3.02

Normalized FAD per common share
$
.86

 
$
.82

 
$
3.50

 
$
3.15

 
 
 
 
 
 
 
 
DILUTED
 
 
 
 
 
 
 
Weighted average common shares outstanding
29,860,614

 
27,868,245

 
28,397,702

 
27,838,720

FFO per common share
$
1.00

 
$
1.18

 
$
3.58

 
$
3.38

Normalized FFO per common share
$
.90

 
$
.84

 
$
3.55

 
$
3.18

Normalized AFFO per common share
$
.82

 
$
.79

 
$
3.33

 
$
3.01

Normalized FAD per common share
$
.86

 
$
.82

 
$
3.49

 
$
3.15


See Notes to Reconciliation of FFO, Normalized FFO, Normalized AFFO and Normalized FAD.




NHI Reports Fourth Quarter and Year End 2013 Results
Page 5
February 18, 2014


Notes to Reconciliation of FFO, Normalized FFO, Normalized AFFO and Normalized FAD

Funds From Operations - FFO

FFO represents net earnings available to common stockholders, excluding real estate asset impairments and gains on dispositions, plus depreciation associated with real estate investments. Normalized FFO excludes from FFO certain items which, due to their infrequent or unpredictable nature, may create some difficulty in comparing FFO for the current period to similar prior periods, and may include, but are not limited to, impairment of non-real estate assets, gains and losses attributable to the acquisition and disposition of assets and liabilities, and recoveries of previous write-downs.

We believe that FFO and normalized FFO are important supplemental measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets requires depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a REIT that uses historical cost accounting for depreciation could be less informative, and should be supplemented with a measure such as FFO. The term FFO was designed by the REIT industry to address this issue.

Adjusted Funds From Operations - AFFO

We believe that normalized AFFO is an important supplemental measure of operating performance for a REIT. Generally accepted accounting principles (“GAAP”) require a lessor to recognize contractual lease payments into income on a straight-line basis over the expected term of the lease. This straight-line adjustment has the effect of reporting lease income that is significantly more or less than the contractual cash flows received pursuant to the terms of the lease agreement. Normalized AFFO is useful to our investors as it reflects the rate escalators inherent in the contractual lease payments received from our lessees.

Funds Available for Distribution - FAD

We believe that normalized FAD is an important supplemental measure of operating performance for a REIT as a useful indicator of the ability to distribute dividends to shareholders.

These operating performance measures may not be comparable to similarly titled measures used by other REITs. Consequently, our FFO may not provide a meaningful measure of our performance as compared to that of other REITs. Since other REITs may not use our definition of FFO, normalized FFO, normalized AFFO & normalized FAD, caution should be exercised when comparing our Company's normalized FAD to that of other REITs. These financial performance measures do not represent cash generated from operating activities in accordance with GAAP (these measures do not include changes in operating assets and liabilities) and therefore should not be considered an alternative to net earnings as an indication of operating performance, or to net cash flow from operating activities as determined by GAAP as a measure of liquidity, and is not necessarily indicative of cash available to fund cash needs.




NHI Reports Fourth Quarter and Year End 2013 Results
Page 6
February 18, 2014


Condensed Statements of Income
 
 
 
 
 
 
 
(in thousands, except share and per share amounts)
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
2013
 
2012
 
2013
 
2012
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
Rental income
$
29,984

 
$
22,837

 
$
106,029

 
$
81,482

Interest income from mortgage and other notes
1,756

 
1,997

 
7,633

 
7,426

Investment income and other
1,051

 
1,039

 
4,166

 
4,409

 
32,791

 
25,873

 
117,828

 
93,317

Expenses:
 
 
 
 
 
 
 
Depreciation
5,897

 
4,062

 
20,101

 
14,772

Interest
3,218

 
1,316

 
9,229

 
3,492

Legal
162

 
341

 
784

 
766

Franchise, excise and other taxes
299

 
145

 
616

 
771

General and administrative
2,084

 
1,780

 
9,254

 
7,799

Loan and realty (recoveries) losses, net

 
(4,495
)
 
1,976

 
(2,195
)
 
11,660

 
3,149

 
41,960

 
25,405

Income before equity-method investee, discontinued operations
 
 
 
 
 
 
 
and noncontrolling interest
21,131

 
22,724

 
75,868

 
67,912

Income from equity-method investee
55

 
45

 
324

 
45

Investment and other gains
3,266

 
4,759

 
3,306

 
4,877

Income from continuing operations
24,452

 
27,528

 
79,498

 
72,834

Discontinued operations
 
 
 
 
 
 
 
Income from operations - discontinued
771

 
1,778

 
5,426

 
6,098

Gain on sale of real estate
2,888

 
11,966

 
22,258

 
11,966

Income from discontinued operations
3,659

 
13,744

 
27,684

 
18,064

Net income
28,111

 
41,272

 
107,182

 
90,898

Net income attributable to noncontrolling interest
(335
)
 
(167
)
 
(999
)
 
(167
)
Net income attributable to common stockholders
$
27,776

 
$
41,105

 
$
106,183

 
$
90,731

 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
29,831,176

 
27,848,002

 
28,362,398

 
27,811,813

Diluted
29,860,614

 
27,868,245

 
28,397,702

 
27,838,720

 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders
$
.81

 
$
.98

 
$
2.77

 
$
2.61

Discontinued operations
.12

 
.50

 
.97

 
.65

Net income attributable to common stockholders
$
.93

 
$
1.48

 
$
3.74

 
$
3.26

 
 
 
 
 
 
 
 
Diluted:
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders
$
.81

 
$
.98

 
$
2.77

 
$
2.61

Discontinued operations
.12

 
.50

 
.97

 
.65

Net income attributable to common stockholders
$
.93

 
$
1.48

 
$
3.74

 
$
3.26

 
 
 
 
 
 
 
 
Regular dividends declared per common share
$
.735

 
$
.67

 
$
2.90

 
$
2.64





NHI Reports Fourth Quarter and Year End 2013 Results
Page 7
February 18, 2014


Selected Balance Sheet Data
 
 
 
(in thousands)
 
 
 
 
December 31, 2013
 
December 31, 2012
 
 
 
 
Real estate properties, net
$
1,247,740

 
$
535,390

Mortgage and other notes receivable, net
60,639

 
84,250

Investment in preferred stock, at cost
38,132

 
38,132

Cash and cash equivalents
11,312

 
9,172

Marketable securities
12,650

 
12,884

Straight-line rent receivable
18,691

 
12,370

Equity-method investment and other assets
66,656

 
12,172

Assets held for sale, net

 
1,611

Debt
617,080

 
203,250

National Health Investors Stockholders' equity
766,546

 
457,182