EX-99.1 2 item991earningspressreleas.htm SECOND QUARTER EARNINGS PRESS RELEASE, DATED JUNE 30, 2012 Item 99.1 Earnings Press Release Q2 2012
Exhibit 99



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

NHI Reports Increase in Second Quarter Normalized FFO

MURFREESBORO, Tenn. – (August 6, 2012) National Health Investors, Inc. (NYSE:NHI) announced today its normalized Funds From Operations (“FFO”), its normalized Funds Available for Distribution ("FAD") and net income for the three months and six months ended June 30, 2012.

Second Quarter Highlights
•
Committed up to $15,000,000 to Capital Funding Group for mezzanine financing for its bridge-to-HUD lending program
•
Entered into $320,000,000 unsecured credit facility to pay down revolving borrowings and fund new healthcare real estate investments
•
Acquired a new, stabilized 125-bed skilled nursing facility in Texas for $13,470,000
•
Increased third quarter dividend to $.67 per common share

Financial Results
Normalized FFO for the three months ended June 30, 2012, was $21,386,000, or $0.77 per basic and diluted common share, compared with $20,179,000, or $0.73 per basic and diluted common share, for the same period in 2011, an increase of 6.0%. Normalized FAD for the three months ended June 30, 2012, was $21,010,000 or $0.76 per basic and diluted common share, compared with $19,724,000 or $0.71 per basic and diluted common share for the same period in 2011, an increase of 6.5%. Normalized FFO for the three months ended June 30, 2012 excludes $297,000 in write-offs and expenses resulting from an unplanned lease termination and $155,000 of other adjustments. Normalized FAD for the three months ended June 30, 2012 excludes $297,000 in write-offs and expenses resulting from the unplanned lease termination and $155,000 of other adjustments. Normalized FFO and Normalized FAD for the three months ended June 30, 2011 excluded $8,655,000 in gains on sales of marketable securities and a $988,000 decline in the fair value of an interest rate swap agreement which did not qualify for hedge accounting.

FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), for the three months ended June 30, 2012, was $19,971,000, or $0.72 per basic and diluted common share, compared with $27,846,000, or $1.00 per basic and diluted common share, for the same period in 2011. Net income for the three months ended June 30, 2012, was $16,928,000, or $0.61 per basic and diluted common share, compared with net income of $25,117,000, or $0.90 per basic and diluted common share, for the same period in 2011. FFO and net income for the three months ended June 30, 2011 included gains on sales of marketable securities of $8,655,000.

Normalized FFO for the six months ended June 30, 2012, was $42,761,000, or $1.54 per basic and diluted common share, compared with $38,256,000, or $1.38 per basic and diluted common share, for the same period in 2011, an increase of 11.8%. Normalized FAD for the six months ended June 30, 2012, was $43,093,000, or $1.55 per basic and diluted common share, compared with $39,458,000, or $1.42 per basic and diluted common share, for the same period in 2011, and increase of 9.2%.


NHI Reports 3.2% Increase in Second Quarter Normalized FFO
Page 2
August 6, 2012

FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), for the six months ended June 30, 2012, was $41,346,000, or $1.49 per basic and diluted common share, compared with $47,331,000, or $1.71 and $1.70 per basic and diluted common share, respectively, for the same period in 2011. Net income for the six months ended June 30, 2012, was $35,278,000, or $1.27 per basic and diluted common share, compared with net income of $44,210,000, or $1.59 per basic and diluted common share, for the same period in 2011. FFO and net income for the six months ended June 30, 2011 included gains on sales of marketable securities of $8,809,000 and gains on the sale of real estate of $2,299,000.

The reconciliation of net income to FFO, Normalized FFO, FAD and Normalized FAD is included as tables to this press release and is filed on Form 8-K and in our Form 10-Q and supplemental data filed with the Securities and Exchange Commission.

2012 Guidance
The Company currently forecasts Normalized FFO for 2012 from $3.08 to $3.13 per diluted common share. The Company's guidance range for the full year 2012 for net income per share and Normalized FFO per share, with underlying assumptions and timing of certain transactions, is set forth and reconciled below:
 
Full-Year 2012 Range
 
Low
-
High
Net income per diluted common share
$
2.55

-
$
2.58

Plus: Real estate depreciation
0.48

-
0.50

Plus: Expenses due to early lease termination and other adjustments
0.05

 
0.05

Normalized FFO per diluted common share
$
3.08

-
$
3.13


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 Company expects to make new investments in health care real estate during the remainder of 2012 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 Monday, August 6, 2012, at 9 a.m. ET, to discuss second quarter results. The number to call for this interactive teleconference is (212) 231-2917 with the confirmation number, 21599644. 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.

National Health Investors, Inc. is a healthcare real estate investment trust that specializes in the financing of healthcare real estate by purchase and leaseback transactions and by mortgage loans. NHI's investments involve skilled nursing facilities, assisted living facilities, independent living facilities, medical office buildings, and hospitals. The common stock of the company trades on the New York Stock Exchange with the symbol NHI. Additional information about NHI, including its most recent press releases, may be obtained on NHI's web site at www.nhireit.com.

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 3.2% Increase in Second Quarter Normalized FFO
Page 3
August 6, 2012

Reconciliation of Funds From Operations and Normalized Funds From Operations(1)(2)
 
 
 
 
(in thousands, except share and per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2012
 
2011
 
2012
 
2011
Net income
$
16,928

 
$
25,117

 
$
35,278

 
$
44,210

Elimination of certain non-cash items in net income:
 
 
 
 
 
 
 
Real estate depreciation in continuing operations
3,043

 
2,712

 
6,068

 
5,386

Real estate depreciation in discontinued operations
—

 
17

 
—

 
34

Net gain on sale of real estate
—

 
—

 
—

 
(2,299
)
Funds from operations
$
19,971

 
$
27,846

 
$
41,346

 
$
47,331

Gains on sales of marketable securities
(30
)
 
(8,655
)
 
(30
)
 
(8,809
)
Change in fair value of interest rate swap agreement
—

 
988

 
—

 
(266
)
Non-cash write-off of straight-line rent receivable
963

 
—

 
963

 
—

Write-offs and expenses due to early lease termination
297

 
—

 
297

 
—

Acquisition costs under business combination accounting
95

 
—

 
95

 
—

Legal settlement
90

 
—

 
90

 
—

Normalized FFO
$
21,386

 
$
20,179

 
$
42,761

 
$
38,256

 
 
 
 
 
 
 
 
BASIC
 
 
 
 
 
 
 
Weighted average common shares outstanding
27,792,834

 
27,708,136

 
27,784,469

 
27,702,432

FFO per common share
$
0.72

 
$
1.00

 
$
1.49

 
$
1.71

Normalized FFO per common share
$
0.77

 
$
0.73

 
$
1.54

 
$
1.38

 
 
 
 
 
 
 
 
DILUTED
 
 
 
 
 
 
 
Weighted average common shares outstanding
27,820,831

 
27,799,616

 
27,812,027

 
27,797,863

FFO per common share
$
0.72

 
$
1.00

 
$
1.49

 
$
1.70

Normalized FFO per common share
$
0.77

 
$
0.73

 
$
1.54

 
$
1.38

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Management believes that funds from operations (FFO) is an important supplemental measure of operating performance for a real estate investment trust. Because the historical cost accounting convention used for real estate assets requires straight-line 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 real estate investment trust 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 real estate investment trust industry to address this issue. Our measure may not be comparable to similarly titled measures used by other REITs. Consequently, our funds from operations 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, caution should be exercised when comparing our Company’s FFO to that of other REITs. FFO does not represent cash generated from operating activities in accordance with GAAP (funds from operations does 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 in the United States, as a measure of liquidity and is not necessarily indicative of cash available to fund cash needs.
 
 
 
 
 
 
 
 
(2) 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 assets, gains and losses attributable to the acquisition and disposition of assets and liabilities, recoveries of previous write-downs, and changes in the fair value of interest rate swap agreements.


NHI Reports 3.2% Increase in Second Quarter Normalized FFO
Page 4
August 6, 2012

Reconciliation of Funds Available for Distribution and Normalized Funds Available for Distribution(1)(2)
(in thousands, except share and per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2012
 
2011
 
2012
 
2011
Net income
$
16,928

 
$
25,117

 
$
35,278

 
$
44,210

Elimination of certain non-cash items in net income:
 
 
 
 
 
 
 
Depreciation in continuing operations
3,396

 
2,930

 
6,761

 
5,798

Depreciation in discontinued operations
—

 
17

 
—

 
34

Net gain on sale of real estate
—

 
—

 
—

 
(2,299
)
Straight-line lease revenue, net
(14
)
 
(946
)
 
(1,077
)
 
(1,855
)
Non-cash stock based compensation
248

 
273

 
1,679

 
2,645

Funds available for distribution
$
20,558

 
$
27,391

 
$
42,641

 
$
48,533

Gains on sales of marketable securities
(30
)
 
(8,655
)
 
(30
)
 
(8,809
)
Change in fair value of interest rate swap agreement
—

 
988

 
—

 
(266
)
Write-offs and expenses due to early lease termination
297

 
—

 
297

 
—

Acquisition costs under business combination accounting
95

 
—

 
95

 
—

Legal settlement
90

 
—

 
90

 
—

Normalized FAD
$
21,010

 
$
19,724

 
$
43,093

 
$
39,458

 
 
 
 
 
 
 
 
BASIC
 
 
 
 
 
 
 
Weighted average common shares outstanding
27,792,834

 
27,708,136

 
27,784,469

 
27,702,432

FAD per common share
$
0.74

 
$
0.99

 
$
1.53

 
$
1.75

Normalized FAD per common share
$
0.76

 
$
0.71

 
$
1.55

 
$
1.42

 
 
 
 
 
 
 
 
DILUTED
 
 
 
 
 
 
 
Weighted average common shares outstanding
27,820,831

 
27,799,616

 
27,812,027

 
27,797,863

FAD per common share
$
0.74

 
$
0.99

 
$
1.53

 
$
1.75

Normalized FAD per common share
$
0.76

 
$
0.71

 
$
1.55

 
$
1.42

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Management believes that FAD and normalized FAD are important supplemental measures of a REIT’s net earnings available to common stockholders. Since other REITs may not use our definition of FAD; caution should be exercised when comparing our Company’s FAD to that of other REITs. FAD in and of itself does not represent cash generated from operating activities in accordance with GAAP (FAD does 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.
 
 
 
 
 
 
 
 
(2) Normalized FAD excludes from FAD certain items which, due to their infrequent or unpredictable nature, may create some difficulty in comparing FAD for the current period to similar prior periods, and may include, but are not limited to, impairment of assets, gains and losses attributable to the acquisition and disposition of assets and liabilities, recoveries of previous write-downs, and changes in the fair value of interest rate swap agreements.
Condensed Statements of Income
 
 
 
 
 
 
 
(in thousands, except share and per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2012
 
2011
 
2012
 
2011
 
(unaudited)
 
(unaudited)
Revenues:
 
 
 
 
 
 
 
Rental income
$
18,843

 
$
18,565

 
$
40,150

 
$
37,494

Mortgage interest income
1,847

 
1,634

 
3,549

 
3,230

Investment income and other
1,084

 
9,790

 
2,144

 
11,202

 
21,774

 
29,989

 
45,843

 
51,926

Expenses:
 
 
 
 
 
 
 
Depreciation
3,396

 
2,930

 
6,761

 
5,798

Interest expense
747

 
1,589

 
1,321

 
848

Legal expense
128

 
141

 
220

 
329

Franchise, excise and other taxes
229

 
194

 
354

 
482

General and administrative
1,593

 
1,293

 
4,379

 
5,137

 
6,093

 
6,147

 
13,035

 
12,594

Income from continuing operations
15,681

 
23,842

 
32,808

 
39,332

Discontinued operations
 
 
 
 
 
 
 
Income from operations - discontinued
1,247

 
1,275

 
2,470

 
2,579

Gain on sale of real estate
—

 
—

 
—

 
2,299

Income from discontinued operations
1,247

 
1,275

 
2,470

 
4,878

Net income
$
16,928

 
$
25,117

 
$
35,278

 
$
44,210

 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
27,792,834

 
27,708,136

 
27,784,469

 
27,702,432

Diluted
27,820,831

 
27,799,616

 
27,812,027

 
27,797,863

 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
Income from continuing operations
$
0.56

 
$
0.86

 
$
1.18

 
$
1.42

Discontinued operations
0.05

 
0.04

 
0.09

 
0.17

Net income per common share
$
0.61

 
$
0.90

 
$
1.27

 
$
1.59

 
 
 
 
 
 
 
 
Diluted:
 
 
 
 
 
 
 
Income from continuing operations
$
0.56

 
$
0.86

 
$
1.18

 
$
1.42

Discontinued operations
0.05

 
0.04

 
0.09

 
0.17

Net income per common share
$
0.61

 
$
0.90

 
$
1.27

 
$
1.59

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.65

 
$
0.615

 
$
1.30

 
$
1.23

Selected Balance Sheet Data

 
 
 
(in thousands)
 
 
 
 
June 30, 2012
 
December 31, 2011
Real estate properties, net
$
412,332

 
$
394,795

Mortgages receivable, net
82,199

 
78,672

Investment in preferred stock, at cost
38,132

 
38,132

Cash and cash equivalents
9,800

 
15,886

Marketable securities
13,142

 
11,364

Assets held for sale, net
29,381

 
29,381

Debt
120,000

 
97,300

Stockholders' equity
445,272

 
443,485