NHI Announces First Quarter 2019 Results

MURFREESBORO, Tenn.–(BUSINESS WIRE)–National Health Investors, Inc. (NYSE:NHI) announced today its net
income, its Funds From Operations (“FFO”), its Normalized Funds From
Operations and its Normalized Adjusted Funds From Operations (“AFFO”)
for the three months ended March 31, 2019.

2019 Highlights

• GAAP net income of $.83 per diluted common share; AFFO of $1.22 per
  diluted common share
• Announced or completed $101 million in real estate investments
• Maintained low leverage balance sheet at 4.6x net debt-to-annualized
  adjusted EBITDA
• Ample liquidity with $461 million available to draw on revolving
  credit facility
• Fixed charge coverage remains conservative at 5.1x
• Portfolio lease coverage remains strong at 1.63x
• Transitioned three non-compliant leases to high-quality operating
  partners

2019 Guidance

The Company currently expects net income to be in the range of $3.61 to
$3.69 per diluted common share, Normalized FFO for 2019 to be in the
range of $5.43 to $5.53 per diluted common share and Normalized AFFO to
be in the range of $5.04 to $5.10 per diluted common share. The
Company’s guidance range for the full year 2019, with underlying
assumptions and timing of certain transactions, is set forth and
reconciled below:

The Company’s guidance range reflects the existence of volatile economic
conditions as well as the impact of three non-performing leases which
account for 1% of our first quarter 2019 revenues. The Company has
transitioned these properties to new third-party operators with the
intention to stabilize the operations. We cannot currently estimate the
amount of rent income that may be lost compared to the original forecast
for 2019 as a result of these transitions. The Company has announced
$101 million of acquisitions to its lease portfolio since January 1,
2019. More definitive guidance on 2019 new investments can be expected
during the second quarter earnings conference call in August 2019. 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.

Financial Results

• Net income per diluted common share for the three months ended March
  31, 2019 was $.83, a decrease of 9.8% from the same period in the
  prior year. Net income for the three months ended March 31, 2019
  included a write-down of $2,500,000 on two assisted living properties
  which we have classified as held for sale.
• Normalized FFO per diluted common share for the three months ended
  March 31, 2019 was $1.31, a decrease of 3.0% from the same period in
  the prior year.
• Normalized AFFO per diluted common share for the three months ended
  March 31, 2019 was $1.22, unchanged over the same period in the prior
  year.
• NAREIT FFO per diluted common share for the three months ended March
  31, 2019 was $1.31, a decrease of 2.2% from the same period in the
  prior year.

FFO, as defined by the National Association of Real Estate Investment
Trusts (“NAREIT”) and applied by us, is net income (computed in
accordance with GAAP), excluding gains (or losses) from sales of real
estate property, plus real estate depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures, if
any. The Company defines Normalized FFO as FFO adjusted for certain
items which may create some difficulty in comparing FFO for the current
period to similar prior periods. 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. These supplemental
non-GAAP performance measures may not be comparable to similarly titled
measures used by other REITs.

The reconciliation of net income to our FFO, Normalized FFO, Normalized
AFFO and Normalized Funds Available for Distribution (“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.

Investor Conference Call and Webcast

NHI will host a conference call on Tuesday, May 7, 2019, at 12 p.m. ET,
to discuss fourth quarter results. The number to call for this
interactive teleconference is (800) 926-6349, with the confirmation
number 21920910. The live broadcast of NHI’s fourth 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.

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

These supplemental operating performance measures may not be comparable
to similarly titled measures used by other REITs. Consequently, our
Funds From Operations (“FFO”), Normalized FFO, Normalized Adjusted Funds
From Operations (“AFFO”) and Normalized Funds Available for Distribution
(“FAD”) 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 these operating performance measures, caution should be
exercised when comparing our Company’s FFO, Normalized FFO, Normalized
AFFO and Normalized FAD to that of other REITs. These financial
performance measures do not represent cash generated from operating
activities in accordance with generally accepted accounting principles
(“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 are not necessarily indicative of cash available to fund
cash needs.

Funds From Operations – FFO

FFO, as defined by the National Association of Real Estate Investment
Trusts (“NAREIT”) and applied by us, is net income (computed in
accordance with GAAP), excluding gains (or losses) from sales of real
estate property, plus real estate depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures, if
any. The Company’s computation of FFO may not be comparable to FFO
reported by other REITs that do not define the term in accordance with
the current NAREIT definition or have a different interpretation of the
current NAREIT definition from that of the Company; therefore, caution
should be exercised when comparing our Company’s FFO to that of other
REITs. Diluted FFO assumes the exercise of stock options and other
potentially dilutive securities. 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

In addition to the adjustments included in the calculation of normalized
FFO, normalized AFFO excludes the impact of any straight-line lease
revenue, amortization of the original issue discount on our convertible
senior notes and amortization of debt issuance costs.

We believe that normalized AFFO is an important supplemental measure of
operating performance for a REIT. GAAP requires 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. GAAP also requires the original issue discount of our
convertible senior notes and debt issuance costs to be amortized as
non-cash adjustments to earnings. Normalized AFFO is useful to our
investors as it reflects the growth inherent in the contractual lease
payments of our real estate portfolio.

Funds Available for Distribution – FAD

In addition to the adjustments included in the calculation of normalized
AFFO, normalized FAD excludes the impact of non-cash stock based
compensation.

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. Additionally, normalized FAD
improves the understanding of our operating results among investors and
makes comparisons with: (i) expected results, (ii) results of previous
periods and (iii) results among REITs, more meaningful. Because FAD may
function as a liquidity measure, we do not present FAD on a per-share
basis.

This press release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All
statements regarding the Company’s, tenants’, operators’, borrowers’ or
managers’ expected future financial position, results of operations,
cash flows, funds from operations, dividend and dividend plans,
financing opportunities and plans, capital market transactions, business
strategy, budgets, projected costs, operating metrics, capital
expenditures, competitive positions, acquisitions, investment
opportunities, dispositions, acquisition integration, growth
opportunities, expected lease income, continued qualification as a real
estate investment trust (“REIT”), plans and objectives of management for
future operations, continued performance improvements, ability to
service and refinance our debt obligations, ability to finance growth
opportunities, and similar statements including, without limitation,
those containing words such as “may”, “will”, “believes”, “anticipates”,
“expects”, “intends”, “estimates”, “plans”, and other similar
expressions are forward-looking statements. Forward-looking
statements involve known and unknown risks and uncertainties that may
cause our actual results in future periods to differ materially from
those projected or contemplated in the forward-looking statements. Such
risks and uncertainties include, among other things; the operating
success of our tenants and borrowers for collection of our lease and
interest income; the success of property development and construction
activities, which may fail to achieve the operating results we expect;
the risk that our tenants and borrowers may become subject to bankruptcy
or insolvency proceedings; risks related to governmental regulations and
payors, principally Medicare and Medicaid, and the effect that lower
reimbursement rates would have on our tenants’ and borrowers’ business;
the risk that the cash flows of our tenants and borrowers would be
adversely affected by increased liability claims and liability insurance
costs; risks related to environmental laws and the costs associated with
liabilities related to hazardous substances; the risk that we may not be
fully indemnified by our lessees and borrowers against future
litigation; the success of our future acquisitions and investments; our
ability to reinvest cash in real estate investments in a timely manner
and on acceptable terms; the potential need to incur more debt in the
future, which may not be available on terms acceptable to us; our
ability to meet covenants related to our indebtedness which impose
certain operational; the risk that the illiquidity of real estate
investments could impede our ability to respond to adverse changes in
the performance of our properties; risks associated with our investments
in unconsolidated entities, including our lack of sole decision-making
authority and our reliance on the financial condition of other
interests; our dependence on revenues derived mainly from fixed rate
investments in real estate assets, while a portion of our debt bears
interest at variable rates; the risk that our assets may be subject to
impairment charges; and our dependence on the ability to continue to
qualify for taxation as a real estate investment trust. Many of these
factors are beyond the control of the Company and its management. The
Company assumes no obligation to update any of the foregoing or any
other forward looking statements, except as required by law, and these
statements speak only as of the date on which they are made. 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 http://www.sec.gov
or on NHI’s web site at http://www.nhireit.com.

Contacts

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