National Health Investors, Inc. · NYSE:NHI
National Health Investors — Investor Presentation (December 2020)
43 slides from National Health Investors's investor presentation, Dec 17, 2020
Slide 1: December 2020 Investor Presentation
December 2020 Investor Presentation
Slide 2: Safe Harbor Statement
Safe Harbor Statement These slides and the accompanying oral presentation by representatives of National Health Investors, Inc. contain forward-looking statements that are based on current expectations, estimates, beliefs and assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “
Slide 3: Table of Contents
Table of Contents Executive Team and Summary 7- NHI Company Overview ER Key Credit Highlights ery ©COVID-19 Update | 10-23 | Financial Summary | 30-33 | } 35 - 43 | coerce §©Appendix
Slide 4: Executive Team
Executive Team Eric Mendelsohn President & CEO = Appointed President & CEO in October 2015 after joining NHI as an EVP of Corporate Finance in December 2014 = Has more than 21 years of healthcare real estate and financing experience = Previously with Emeritus Senior Living for 9 years Kristi S. Gain
Slide 5: Executive Summary
Executive Summary « National Health Investors (“NHI” or the “Company’) is a publicly traded healthcare REIT that specializes in sale- leaseback, mortgage and mezzanine financing of need-driven and discretionary senior housing communities, including independent living, assisted living and memory care
Slide 6: NHI Company Overview
NHI Company Overview
Slide 7: NHI Company Overview
NHI Company Overview NHI MAINTAINS A GROWING AND HIGH-QUALITY PREDOMINANTLY NNN PORTFOLIO Total , Gross 5 Units ~$3. Revenue 2 Properties * $3.7B Assets $300M States Operating Lease Partners Coverage ° GROWTH AND ASSET DIVERSIFICATION? (S in millions) 2009 2014 9/30/20 Other Senior Housing - Other S
Slide 8: Company Timeline
Company Timeline portfolio containing 32 ALFs froma RIDEA Holiday Retirement, securing ~$66M in Discovery Senior Living including 6 properties (IG) issuer credit ratings of ‘BBB-’ with Stable to purchase Timber Ridge, a class ACCRC, 1991: 2006: 2007: 2012: 2014: 2015: NHI and National Announced agre
Slide 9: Key Investment Highlights
Key Investment Highlights
Slide 10: Key Investment Highlights
Key Investment Highlights A Leading Healthcare Real Estate Portfolio with National Presence Relationships with Diverse Set of Healthcare Operators Diversified Portfolio of Healthcare Properties Triple-Net Focus Provides Revenue Stability Long-Term Lease Structures Disciplined Investment Strategy and
Slide 11: A Leading Healthcare Real Estate Portfolio with National Presence
A Leading Healthcare Real Estate Portfolio with National Presence GEOGRAPHIC DIVERSIFICATION WITH EMPHASIS ON ATTRACTIVE, GROWING MARKETS AS OF NOVEMBER 6, 2020 162 SENIOR HOUSING SKILLED NURSING HOSPITAL MEDICAL OFFICE OO) PROPERTIES OPERATING STATES 3 ° oo oe . > ee te ee ~ PARTNERS Qa TOP 10 STAT
Slide 12: Relationships With Diverse Set of Healthcare Operators
Relationships With Diverse Set of Healthcare Operators Properties / 1 Units % of Revenue Investment Market Focus Ownership sie t JING 11/2,316 Ce 16% $574M SHO Private PDickford 53 / 2,867 G 15% $534M SHO Private NHC | 42 15,677 & 12% $171M SNF/SHO Public wOLIDAy 26 3,073 © 11% $531M SHO Private ENS
Slide 13: Diversified Portfolio of Exceptional Healthcare Properties
Diversified Portfolio of Exceptional Healthcare Properties WE INVEST IN RELATIONSHIPS, NOTJUST PROPERTIES = $3.7 BILLION IN INVESTMENTS SINCE 2009 = 26 NEW RELATIONSHIPS FORMED SINCE 2009 2 ’ SMALL om 12% NHC 3% W 3% sno GS 8% ENSIGN 3% ~~ 4% biscover’ lima —_ oe QUORUM 8 rics: —= 1% ACADIA J 1% OTH
Slide 14: Triple Net Structure Provides Revenue Stability
Triple Net Structure Provides Revenue Stability REVENUE! ($ in millions) 4 Year we 6.6% $312 ne $295 $279 Tilia. 2016 2017 2018 2019 2020 ADJUSTED EBITDA!2 ($ in millions) 4Year ee 4.0% $305 ae $271 qT i 2016 2017 2018 2019 2020 NFFO PAYOUT RATIO? AFFO PAYOUT RATIO? 76.4% 782% 820% Balm BI% 71.9% 73
Slide 15: Triple Net Structure Provides Revenue Stability
Triple Net Structure Provides Revenue Stability PEER BENCHMARKING — TRIPLE NET % OF Q3 2020 PORTFOLIO" NHI l OHI SBRA WELL VIR PEAK BNOI% NNN @NOI% Other TOTAL PORTFOLIO EBITDARM COVERAGE? 2.70x 2-86x ‘ 2.15x | 1.86x | 1.68x 1.69x 1.20x 143K 1.42x 110x 1:27K 1.17x oO i Need Driven Discretionary Medi
Slide 16: Long-Term Lease Structures
Long-Term Lease Structures a LEASE MATURITIES! = PREDOMINANTLY NNN LEASE STRUCTURE = TYPICAL 10-15 YEAR TERMS WITH RENEWAL OPTIONS AND ANNUAL ESCALATORS $74 = MAJORITY OF PROPERTIES CROSS-DEFAULTED AND CROSS-COLLATERALIZED (Annualized Cash Rent; $ in millions) ! I I ! I | ! | I | I ! | ! | | | I | I
Slide 17: Disciplined Investment Strategy and Underwriting Approach
Disciplined Investment Strategy and Underwriting Approach INVESTMENT STRATEGY Emphasis on Triple-Net Investments with Geographic Diversification in Attractive Markets Opportunistically pursue acquisitions and diversification - Main focus will continue to be triple-net senior housing and skilled nurs
Slide 18: Disciplined Investment Strategy and Underwriting Approach
Disciplined Investment Strategy and Underwriting Approach RECENT LEASE ACTIVITY % Asset Units/ ™ 6 _ (S, in 000’s) Type Investment Type Buildings’ Location Initial Total Funded Remaining 32020 41 Management SHO Lease 43h wi 7.50% $12,300 ? $(12,300) $— 2.2020 Autumn Trace* SHO Lease 88/2 IN 7.25% 14
Slide 19: Industry Fundamentals Supported By Demographics, Slowing Supply
Industry Fundamentals Supported By Demographics, Slowing Supply NUMBER OF 75+, 85+ INDIVIDUALS SENIOR HOUSING UNITS AND CONSTRUCTION VS. INVENTORY SKILLED NURSING UNITS 50 5 75+ ee 85+ = 40 4 E | 1475 B-year CAGR_ 3.8% 2 20 4 . 10 + +85 8-year CAGR 1.8% +85 10-year CAGR 4.7% 2017A = 2019E-_—_ « 2021
Slide 20: Challenged SNF Reimbursement Environment Emphasizes Operator Importance
Challenged SNF Reimbursement Environment Emphasizes Operator Importance a SKILLED NURSING PAY RATES* =@= Vedicare RPPD ($) =@= Managed Medicare RPPD ($) =@= Medicaid RPPD ($) $600 5 8 $543 p19 9523 SEE 9621 519 $521 $519 $520 $624 $523 $524 g599 $526 g524e—me $525 | ised $ Pe $ Ss $518 $ _S $82 S18
Slide 21: Conservative Approach to Capitalization
Conservative Approach to Capitalization CAPITALIZATION STRUCTURE 9/30/2020 Capitalization Cumulative Multiple Wtd. Avg. Rate of Adj. EBITDA * Cash and Equivalents 2 $42 $550M Revolver? $331 1.35% 2years 11K Term Loans * 650 257% 3 years 3.2% Private Placement Notes 400 4.15% 4 years 45x Convertible
Slide 22: Conservative Approach to Capitalization
Conservative Approach to Capitalization TOTAL DEBT TO GROSS ASSETS 41.1% 39.1% 40.0% 40.5% 41.1% 38.2% 2015 2016 2017 2018 2019 3Q 2020 I SECURED DEBT TO GROSS ASSETS 5.1% 4.8% 2015 2016 2017 2018 2019 Source: Company filings and supplemental materials as of 9/30/2020 3Q 2020 | 1 Adjusted EBITDA inc
Slide 23: Conservative Approach to Capitalization
Conservative Approach to Capitalization SELECT FINANCIAL COVENANTS! & CREDIT RATINGS Credit Facility Requirement Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Leverage ratio <= 60% 44% 43% 43% 41% 41% Unencumbered leverage ratio <= 60% 48 % 48 % 48% 42% 42% Secured leverage ratio <= 30% 4% 4% 4% 4% 4% Fix
Slide 24: Financial Summary
Financial Summary
Slide 25: Financial Policies
Financial Policies ACQUISITIONS AND INVESTMENTS DIVIDENDS LIQUIDITY TARGET LEVERAGE Focused on expanding private pay senior housing properties with experienced tenants, long- term leases and stabilized occupancy Continue to selectively pursue skilled nursing opportunities with experienced operators
Slide 26: 3rd Quarter 2020 Financial Highlights
3rd Quarter 2020 Financial Highlights 3rd QUARTER RESULTS YEAR/YEAR CHANGE ($ in millions, except per share) 2020 2019 Revenue 1 $80.3 $80.1 Adjusted EBITDA? $77.0 $77.2 Normalized FFO/Share * $1.42 $1.42 Normalized AFFO/Share 4 $1.34 $1.32 Source: Company filings and supplemental materials as of 9/
Slide 27: 2019 Financial Highlights
2019 Financial Highlights FULL YEAR RESULTS YEAR/YEAR GROWTH ($ in millions, except per share) 2019 2018 Revenue $3121 $295 Adjusted EBITDA? $298 $280 Normalized FFO/Share * $5.50 $5.46 Normalized AFFO/Share 4 $5.10 $5.04 Source: Company filings and supplemental materials as of 9/30/2020 ‘Revenue ex
Slide 28: Liquidity
Liquidity NHI LIQUIDITY ($ in millions) In 2019, NHI drew down ~$216M on its revolver to fund investments $471 | $397 ' i] ' e 1 Hl $332 ' 1 1 $3 1 $255 $261 $466 $5 $42 $329 SEED $219 FYE 2016 FYE 2017 FYE 2018 FYE 2019 Q3 2020 m Unused Revolver m Unrestricted Cash Total Revolver $550 $550 $550 $55
Slide 29: COVID-19 Update
COVID-19 Update
Slide 30: COVID-19 Update
COVID-19 Update Industry-Leading Response and Disclosure Around COVID-19 Impact on NHI and its Operators = As of December 1, 2020, NHI had 526 confirmed active resident cases (approximately 2.1% of total capacity) of COVID-19 in its SNF and senior housing portfolio = There were 216 confirmed Senior
Slide 31: Collections Stable; Occupancy Trends Show Pressure
Collections Stable; Occupancy Trends Show Pressure Collections Under NHI’s NNN Portfolio Remain Resilient 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% JUL AUG ‘SEP ™ Collected Sy Occupancy Declines Continue at an Elevated Pace Oct NOV ™Deferred ™ Other Apr-20 May-20 DEC Jun-20 NHI agreed to defer $2.
Slide 32: COVID-19 Case Trends in the NHI Portfolio
COVID-19 Case Trends in the NHI Portfolio NHI COVID-19 Trends Have Generally Followed Patterns in the United States r 80% 700 4 600 4 + 70% 2 L Go B 500 4 60% 0 a § L 50% 8 = 400 4 = 8 | 40% B 2 300 4 = a | 30% & S z 3 200 f 20% * 100 4 p 10%: od L 0% 2 © WV @ VW @ © Rae Q LSSEPOPELSS ES FELIS SEES
Slide 33: Unprecedented Government Support for NHI Operators
Unprecedented Government Support for NHI Operators CARES Act Support for Skilled Nursing and Senior Housing The federal government has provided skilled nursing facilities with significant support via the $2 trillion CARES Act stimulus package = The Provider Relief Fund distributed $50 billion to eli
Slide 34: Appendix
Appendix
Slide 35: Balance Sheets
Balance Sheets ($ in thousands except share and per share amounts) September 30, 2020 December 31, 2019 Assets (unaudited) Real estate properties Land $ 220423 $ 213,617 Buildings and improvements 3,041,613 2,836,673 Construction in progress 2,528 24,556 3,264,564 3,074,846 Less accumulated deprecia
Slide 36: Statements of Income
Statements of Income ($ in thousands except share and per share amounts) Quarter Ended September 30, 2020 2019 Revenues (unaudited) (unaudited) Rental income $ 77,821 $ 75,247 Interest income and other 6,480 6,435 84,301 81,682 Expenses Depreciation 20,836 19,695 Interest 12,892 14,661 Legal 241 40
Slide 37: FFO, AFFO & FAD
FFO, AFFO & FAD ($ in thousands except share and per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net income attributable to common stockholders $ 42,595 $ 42,758 $ 147,986 $ 118,417 Elimination of certain non-cash items in net income: Depreciat
Slide 38: FFO, AFFO & FAD
FFO, AFFO & FAD Years ended December 31, ($ in thousands except share and per share amounts) 2019 2018 2017 2016 Net income attributable to common stockholders $ 160,456 $ 154,333 $ 159,365 $ 151,540 Elimination of certain non-cash items in net income: Depreciation 76,816 71,349 67,173 59,525 Deprec
Slide 39: Reconciliations
Reconciliations ($ in thousands) Quarter Ended September 30, Adjusted EBITDA Reconciliation 2020 2019 Net income $ 42,661 $ 42,755 Interest expense 12,892 14,661 Franchise, excise, and other taxes 164 124 Depreciation 20,836 19,695 NHI's share of EBITDA adjustments for unconsolidated entities 652 -
Slide 40: Reconciliations
Reconciliations Adjusted EBITDA Reconciliation ($ in thousands) Years ended December 31, 2019 2018 2017 2016 2015 Net income 160,449 154,333 $ 159,365 $ 152,716 $ 150,314 Interest expense 56,299 49,055 46,324 43,108 37,629 Franchise, excise, and other taxes 1,550 1,166 960 1,009 985 Depreciation 76,
Slide 41: Reconciliations
Reconciliations ($ in thousands) Properties Units / YTDGAAP YTD Straight- YTD Cash Full Year Annualized Sq. Ft.* Revenue Line Revenue Impact Cash Revenue Leases Senior Housing - Need Driven Assisted Living 94 5,131 59,343 $ 4,888 $ 54,455 $ 13,172 $ 67,627 Senior Living Campus 14 1,976 18,042 peal 1
Slide 42: Reconciliations
Reconciliations ($ in thousands) Revenue 3Q 2020 YTD 2020 2019 2018 2017 2016 2015 Rental income $ 68,728 $ 209,595 $ 266,300 $ 258,026 $ 239,079 $ 210,195 $ 189,824 Straight line rent 5,086 15,481 22,084 22,787 26,090 22,198 24,623 Escrow funds received from tenants 4,007 7,190 5,798 a = 3 2 Total
Slide 43: Portfolio Information
Portfolio Information Tenant Purchase Options ($ in thousands) tye Properties (#) Lease Expiration Year Option Type Current Cash Rent % of Total’ MOB. 1 February 2025 Open A $312 0.10 % HOSP 1 March 2025 Open B 2,016 0.67 % HOSP 1 September 2027 2021 D 2,765 0.92 % HOSP 1 June 2022 2022 A 3,544 1.18
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