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National Health (NHI) Sells Eight Assets Amid Operator Woes

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After facing continued seniors housing operator woes, National Health Investors, Inc. NHI announced that it closed the sale of eight properties, comprising 909 units leased to Holiday Retirement, for gross proceeds of $115 million.

Gain on the sale of around $1-$2 million is expected. For the remaining 18 properties, which were leased to Holiday, the company is exploring lease recast, re-tenanting, or additional asset sales.

With the disposal, National Health’s asset sales have aggregated $203.4 million in the ongoing year.

The sale is likely to result in earnings dilution and top-line decelerations. In the first half of 2021, rental income for the eight properties sold, excluding the impact of any straight-line rents, was $4.2 million.

The company also continues to offer rent deferrals to operators affected by the pandemic-led seniors housing woes. For August, the company will defer $1 million in rent due from Bickford Senior Living. With this, the operator’s deferred rents aggregated to $12.75 million for 2021. The company will also defer $0.8 million for three other tenants in August.

Its tenant for Holiday was recently acquired and National Health has not received any payment for August from the new tenant. This accounts for 9.8% of cash collections for August. Markedly, as of July end, National Health held $8.8 million in security deposits for rent from Holiday.

The non-payments and deferrals have affected monthly and third-quarter rent collection for the company.

Adjusting for the eight-property sale, National Health has garnered 81% of contractual cash due for August (as of Aug 27). Of the remaining, 1.9% and 0.6% relate to contractual cash that the company expects to collect and lower projected revenues from transitioned properties before the start of the pandemic, respectively. Also, 3.7% and 3% deferrals are related to Bickford and three other tenants, respectively.

With this, from the start of third-quarter 2021 to date, and adjusting for the sale of eight properties, the company has received 85.6% of contractual cash due. The remaining balance consists of 1% of contractual cash, which it expects to collect, 4.6% in Bickford-related deferrals, 1.1% in Holiday-related deferrals, 4.9% related to Holiday's August rent discussed earlier, 2.3% in deferrals related to three other tenants and 0.5% related to lower estimated revenues from transitioned properties before the start of the pandemic.

Notably, while acceleration in vaccinations and the reopening of the company’s communities have aided a rebound in occupancy, any significant turnaround is less likely in the near term. The scenario is likely to continue to be a major growth hurdle.

Shares of this Zacks Rank #4 (Sell) company have declined 16.1% in the past six months as against the industry’s rally of 15.9%.

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