Market Overview

NHI Announces Lease Amendment with Holiday Retirement

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National Health Investors (NHI) has entered into a lease amendment and
guaranty release the ("Agreement") with our tenant, an affiliate of
Holiday Retirement ("Holiday"). The Agreement extends the term of the
lease, increases required minimum capital expenditure per unit and
provides NHI with stronger proforma 2019 lease coverage ratio. NHI
leases 25 independent living facilities to Holiday at an original cost
to NHI of $493 million.

Under the Agreement:

  • NHI will receive consideration of approximately $65.8 million in cash
    (or property in lieu of cash at NHI's option), which includes the
    forfeiture to NHI of half of the current $21.275 million security
    deposit.
  • NHI shall have sole discretion to acquire a Holiday property in lieu
    of cash that will be leased back to NHI at a rent acceptable to NHI
    and subject to the same terms and conditions of the amended master
    lease. NHI is under no obligation to accept a property in lieu of cash
    due to us under the Agreement.
  • The lease maturity is extended by five years to December 31, 2035 and
    will be secured by the remaining half of the NHI-held security
    deposit. Additionally, NHI is requiring $5 million of equity to be
    contributed into the Holiday tenant entity (the "Credit Enhancement").
    The use of the Credit Enhancement will be limited to payment of NHI
    rent and NHI-approved capital expenditures. Future return of the
    Credit Enhancement will further be limited to performance measures,
    including liquidity and lease service coverage ratio covenants.
  • NHI requires that $6.5 million of equity be contributed to the Holiday
    management company.
  • Effective January 1, 2019, Holiday rent will be $31.5 million for the
    existing 25 assets, as opposed to the $39 million previously
    obligated, with escalators commencing annually November 1, 2020, equal
    to the greater of 2.0% or 45% of trailing 12 months year‐over‐year
    revenue growth of the NHI/ Holiday portfolio, not to exceed 3.0%.
  • NHI has committed to invest up to $5 million into the communities in
    ROI‐producing capital expenditures at a 7.0% lease rate on funds
    drawn. In addition, Holiday has dedicated a minimum of $1,500 per unit
    in annual capital expenditures.
  • NHI and Holiday are contemplating the sale of up to five properties
    within the existing Holiday lease. A subsequent sale of properties, if
    any, would reduce the rent owed NHI 7% times the net proceeds received
    by NHI. No reduction in the security deposit, or tenant Credit
    Enhancement will occur as a result of any future sale.

About NHI

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. For more information, visit www.nhireit.com.

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.

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