National Health Investors Delivers Strong Fourth Quarter Results and Looks Ahead to 2025 Growth Opportunities
The National Health Investors (NHI) team recently concluded their fourth quarter of 2024 earnings webcast and conference call, revealing a strong performance that exceeded expectations. NHI's President and CEO, Eric Mendelsohn, highlighted the company's solid organic growth from ramp-ups and deferral repayments, as well as increased investment activity.
Notably, NHI's cash rent increased by nearly 9% year-over-year, driven in part by SHOP occupancy acceleration. This contributed to a 12.5% NOI (Net Operating Income) growth, with the company announcing investments of over $150 million during the quarter at an initial yield of 8.5%. Additionally, NHI's balance sheet leverage ticked down to 4.1x from 4.4x in the third quarter.
The full year's results showed similar trends, with NHI benefiting from portfolio optimization efforts that contributed meaningfully to 2024 growth. This included over $11 million in total deferral repayments and approximately 17% growth in Bickford's cash rental income. SHOP NOI increased by approximately 32%, mainly driven by improved occupancy and 350 basis points of margin improvement.
From a capital allocation perspective, NHI announced over $235 million at an average yield of approximately 8.6%. This was the company's most active year since 2019, with momentum clearly building. As a result, NHI delivered growth in annual NAREIT FFO ( Funds From Operations), normalized FFO and FAD (Funds Available for Distribution) for the first time since 2020.
Looking ahead to 2025, Mendelsohn emphasized the expectation of continued growth. He noted that while some benefit from rent step-ups and deferral repayments may accrue from the 2024 restructuring, NHI is seeking other avenues to support internal growth. Specifically, the company is considering opportunities to transition triple-net senior housing assets to SHOP structures where they see excellent long-term potential with existing or new operators.
This strategy is seen as a capital-efficient way to improve shareholder value by increasing overall exposure to senior housing operations and working with strong partners to generate greater cash flow and higher real estate valuations. Additionally, NHI continues to see significant organic upside in its existing SHOP platform, planning to strategically increase RevPOR (Revenue Per Occupied Room) to further drive margin expansion.
The company's balance sheet is in great shape, supporting funding for significant investment opportunities. In fact, NHI was able to raise net proceeds of approximately $262 million on a forward basis last year, with around $119 million remaining available to settle. As CFO John Spaid detailed in his comments, this has led the company to include $225 million of incremental investments in their 2025 guidance.
