National Health Investors, Inc.

What they do

NHI operates through two reportable segments: Real Estate Investments and SHOP. The Real Estate Investments segment holds 189 properties in 32 states (110 senior housing, 65 skilled nursing, one hospital) leased under triple-net leases to 31 tenants, plus $218.7 million of mortgage and other notes receivable before reserves. The SHOP segment owns and operates 17 ILFs, six SLCs and three ALFs (3,009 units) in 13 states, using third-party managers under RIDEA and its TRS, and earns resident fees rather than rents.

Revenue drivers

• Real Estate Investments rental income — Triple-net leases to 31 tenants across 189 properties; rental income was $71.4 million in Q2 2026, or 59% of total revenues, up 1.6% year-over-year.
• SHOP resident fees and services — Resident fees at 26 operated senior housing communities were $44.8 million in Q2 2026, up from $14.2 million a year earlier, and the segment had $33.8 million of senior housing operating expenses.
• Interest and other income — Interest income from financing arrangements with tenants, operators and third parties was $5.2 million in Q2 2026, down from $6.2 million a year earlier.
• Disposition gains — Gains on dispositions of real estate properties were $22.0 million in Q2 2026 and $24.6 million for the first half, with five properties sold for $98.5 million of net proceeds.

Recent performance

Q2 2026 total revenues were $121.3 million versus $90.7 million a year earlier, with net income attributable to common stockholders of $55.6 million, or $1.15 per diluted share, up 45.6%. Rental income rose 1.6% to $71.4 million while resident fees and services more than tripled to $44.8 million, driving SHOP growth. NAREIT FFO per diluted share was $1.19, flat with the prior-year quarter, and Normalized FFO per diluted share fell 2.5% to $1.19. Normalized FAD rose $5.7 million to $61.6 million, and results included $1.1 million of CFO transition compensation costs and $0.7 million of deferred income tax expense. The company completed the sale of the NHC portfolio, one of its largest transactions.

Strategy

Management is expanding the SHOP segment, citing Q2 invested capital of $854.8 million, a 137% increase year-over-year, and total SHOP NOI up about 188%. The NHC portfolio sale reduced balance sheet leverage to well below the target range and provided financial flexibility to pursue additional private-pay senior housing investments. The company recently appointed a Chief Operating Officer to strengthen asset management and business development. NHI funds investments primarily through operating cash flows, debt offerings and equity sales, and continues to dispose of non-core real estate.

Risks

• Tenant, manager and borrower credit — NHI depends on tenants, managers and borrowers performing under leases, management agreements and loans, and deterioration in their financial condition could reduce revenues and trigger impairments.
• Reimbursement and regulation — Skilled nursing operations are exposed to Medicare and Medicaid rate changes, including the 2% Medicare payment reduction extending through the first seven months of 2032, and NHI holds licenses and enrolls in government programs for RIDEA SHOP properties.
• Operating cost inflation — Labor and other operating costs have continued to rise, with historically low unemployment contributing to wage pressure on NHI's operators and SHOP managers.
• Occupancy and oversupply — Weak economic growth affecting housing sales, investment returns and personal incomes, along with an oversupply of senior housing real estate, may reduce occupancy rates at NHI's communities.

Outlook

Management says the sale of the NHC portfolio leaves leverage below its target range and provides substantial liquidity to pursue additional private-pay senior housing investments. It points to a growing SHOP portfolio, same-store SHOP results ahead of expectations, and long-term demographic tailwinds supporting the industry. The new Chief Operating Officer is expected to strengthen asset management and business development.