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NHI Reports 9.0% Increase in Fourth Quarter Normalized FFO



  NHI Reports 9.0% Increase in Fourth Quarter Normalized FFO

Business Wire

MURFREESBORO, Tenn. -- February 14, 2013

National Health Investors, Inc. (NYSE:NHI) announced today its normalized
Funds From Operations (“FFO”), its normalized Funds Available for Distribution
(“FAD”) and net income attributable to common stockholders for the three
months and year ended December 31, 2012.

2012 Highlights

  * Made investments and commitments totaling $178.5 million in properties and
    loans primarily in private-pay senior housing assets
  * Closed on a new $320 million bank credit facility, expandable to $450
    million to fund new healthcare real estate investments
  * Agreed with our largest customer to a lease extension through 2026
  * Increased the regular quarterly common dividend 5.8% year-over-year
  * Declared a $.22 per common share special dividend at year-end

Financial Results

Normalized FFO for the three months ended December 31, 2012, was $23,369,000,
or $0.84 per basic and diluted common share, compared with $21,448,000, or
$0.77 per basic and diluted common share, for the same period in 2011, an
increase of 9.0%. Normalized FAD for the three months ended December 31, 2012,
was $22,771,000 or $0.82 per basic and diluted common share, compared with
$20,908,000 or $0.75 per basic and diluted common share for the same period in
2011, an increase of 8.9%. Normalized FFO and Normalized FAD for the three
months ended December 31, 2012 excludes the effect on income of loan
recoveries, investment gains and other adjustments totaling $9,513,000.

FFO, as defined by the National Association of Real Estate Investment Trusts
(“NAREIT”), for the three months ended December 31, 2012, was $32,882,000, or
$1.18 per basic and diluted common share, compared with $21,038,000, or $0.76
per basic and diluted common share, for the same period in 2011. Net income
attributable to common stockholders for the three months ended December 31,
2012, was $41,105,000, or $1.48 per basic and diluted common share, compared
with $18,114,000, or $0.65 per basic and diluted common share, for the same
period in 2011. During the three months ended December 31, 2012, we recorded a
gain of $11,966,000 on the sale of an assisted living facility in New Jersey.

Normalized FFO for the year ended December 31, 2012, was $88,487,000, or $3.18
per basic and diluted common share, compared with $80,176,000, or $2.89 and
$2.88 per basic and diluted common share, respectively, for the same period in
2011, an increase of 10.4%. Normalized FFO excludes the effects of investment
gains, loan writedowns and recoveries and other adjustments totaling
$5,601,000 in 2012, and excluded the effects of investment gains, the change
in fair value of an interest rate swap agreement and other adjustments
totaling $8,666,000 in 2011. Normalized FAD for the year ended December 31,
2012, was $87,599,000, or $3.15 per basic and diluted common share, compared
with $80,419,000, or $2.90 and $2.89 per basic and diluted common share,
respectively, for the same period in 2011, an increase of 8.9%. Normalized FAD
excludes the effects of investment gains, loan recoveries and other
adjustments totaling $6,564,000 in 2012, and excluded the effects of
investment gains, the change in fair value of an interest rate swap agreement
and other adjustments totaling $8,666,000 in 2011.

FFO, as defined by the National Association of Real Estate Investment Trusts
(“NAREIT”), for the year ended December 31, 2012, was $94,088,000, or $3.38
per basic and diluted common share, compared with $88,842,000, or $3.21 and
$3.20 per basic and diluted common share, respectively, for the same period in
2011. Net income attributable to common stockholders for the year ended
December 31, 2012, was $90,731,000, or $3.26 per basic and diluted common
share, respectively, compared with net income of $81,132,000, or $2.93 and
$2.92 per basic and diluted common share, for the same period in 2011.

The reconciliation of net income attributable to common stockholders to our
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-K and supplemental
data filed with the Securities and Exchange Commission.

2013 Guidance -

The Company currently forecasts Normalized FFO for 2013 from $3.30 to $3.38
per diluted common share. The Company’s guidance range for the full year 2013
for Normalized FFO per share, with underlying assumptions and timing of
certain transactions, is set forth and reconciled below:

                                                     Full-Year
                                                     2013 Range
                                                       Low            High    
Net income per diluted share attributable to           $ 2.76         $ 2.81
common stockholders
Plus: Real estate depreciation                         .54            .57     
Normalized FFO per diluted common share                $ 3.30         $ 3.38  
                                                                              

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 low end of our guidance range assumes a
baseline from the fourth quarter 2012, the timing for terming out debt on our
credit facility and assuming 3% growth from our Bickford joint venture. On the
top end of that range, we are adding in assumptions for investment activity
and a 6% growth from our Bickford joint venture. The Company expects to make
new investments in health care real estate during 2013 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 Friday, February 15, 2013, at 1 p.m. ET, to
discuss fourth quarter results. The number to call for this interactive
teleconference is (212) 231-2902 with the confirmation number, 21645930. 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, RIDEA transactions, and 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.

 
Reconciliation of Funds From Operations and Normalized Funds From
Operations^(1)(2)
(in thousands, except share and per share amounts)
                                                                     
                   Three Months Ended                Twelve Months Ended
                   December 31,                      December 31,
                   2012             2011             2012             2011
Net income
attributable       $  41,105        $  18,114        $  90,731        $  81,132
to common
stockholders
Elimination of
certain
non-cash items
in net income:
Real estate
depreciation       3,712            2,823            14,989           10,615
in continuing
operations
Real estate
depreciation
related to         (68        )     —                (68        )     —
noncontrolling
interest
Real estate
depreciation
in                 99               101              402              443
discontinued
operations
Net gain on
sales of real      (11,966    )     —                (11,966    )     (3,348     )
estate
Funds from         $  32,882        $  21,038        $  94,088        $  88,842
operations
Investment and     (4,730     )     —                (4,760     )     (9,899     )
other gains
Loan
write-downs        (4,495     )     —                (2,195     )     (99        )
(recoveries),
net
Non-cash
write-off of
straight-line      —                —                963              —
rent
receivable
Write-offs and
expenses due       —                —                297              —
to early lease
termination
Change in fair
value of           —                275              —                1,197
interest rate
swap agreement
Legal              —                —                365              —
settlements
Other items        (288       )     135              (271       )     135         
Normalized FFO     $  23,369        $  21,448        $  88,487        $  80,176   
                                                                       
BASIC
Weighted
average common     27,848,002       27,741,961       27,811,813       27,719,096
shares
outstanding
FFO per common     $  1.18          $  .76           $  3.38          $  3.21
share
Normalized FFO
per common         $  .84           $  .77           $  3.18          $  2.89
share
                                                                       
DILUTED
Weighted
average common     27,868,245       27,784,915       27,838,720       27,792,592
shares
outstanding
FFO per common     $  1.18          $  .76           $  3.38          $  3.20
share
Normalized FFO
per common         $  .84           $  .77           $  3.18          $  2.88
share
                                                                       
                                                                       
^(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.
 

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                Twelve Months Ended
                   December 31,                      December 31,
                   2012             2011             2012             2011
Net income
attributable       $  41,105        $  18,114        $  90,731        $  81,132
to common
stockholders
Elimination of
certain
non-cash items
in net income:
Depreciation
in continuing      4,229            3,124            16,579           11,549
operations
Depreciation
related to         (87        )     —                (87        )     —
noncontrolling
interest
Depreciation
in                 99               101              402              443
discontinued
operations
Net gain on
sales of real      (11,966    )     —                (11,966    )     (3,348     )
estate
Straight-line
lease revenue,     (1,340     )     (1,016     )     (3,664     )     (3,778     )
net
Non-cash stock
based              244              175              2,168            3,087       
compensation
Funds
available for      $  32,284        $  20,498        $  94,163        $  89,085
distribution
Investment and     (4,730     )     —                (4,760     )     (9,899     )
other gains
Loan
write-downs        (4,495     )     —                (2,195     )     (99        )
(recoveries),
net
Write-offs and
expenses due       —                —                297              —
to early lease
termination
Change in fair
value of           —                275              —                1,197
interest rate
swap agreement
Legal              —                —                365              —
settlements
Other items        (288       )     135              (271       )     135         
Normalized FAD     $  22,771        $  20,908        $  87,599        $  80,419   
                                                                       
BASIC
Weighted
average common     27,848,002       27,741,961       27,811,813       27,719,096
shares
outstanding
FAD per common     $  1.16          $  .74           $  3.39          $  3.21
share
Normalized FAD
per common         $  .82           $  .75           $  3.15          $  2.90
share
                                                                       
DILUTED
Weighted
average common     27,868,245       27,784,915       27,838,720       27,792,592
shares
outstanding
FAD per common     $  1.16          $  .74           $  3.38          $  3.21
share
Normalized FAD
per common         $  .82           $  .75           $  3.15          $  2.89
share
                                                                       
                                                                       
^(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                Twelve Months Ended
                   December 31,                      December 31,
                   2012             2011             2012             2011
                   (unaudited)                       (unaudited)
Revenues:
Rental income      $  23,783        $  19,833        $  85,115        $  76,078
Mortgage
interest           1,997            1,733            7,426            6,652
income
Investment
income and         1,039            1,052            4,412            4,483       
other
                   26,819           22,618           96,953           87,213      
Expenses:
Depreciation       4,229            3,124            16,579           11,549
Interest           1,316            1,219            3,492            3,848
expense
Legal expense      342              111              766              559
Franchise,
excise and         145              194              771              837
other taxes
General and        1,780            1,218            7,799            7,588
administrative
Loan and
realty             (4,495     )     —                (2,195     )     (99        )
recoveries
                   3,317            5,866            27,212           24,282      
Income before
unconsolidated
entity, gains
on sales of
marketable         23,502           16,752           69,741           62,931
securities,
discontinued
operations and
noncontrolling
interest
Income from
unconsolidated     45               —                45               —
entity
Gains on sales
of marketable      4,759            294              4,877            10,261      
securities
Income from
continuing         28,306           17,046           74,663           73,192
operations
Discontinued
operations
Income from
operations -       1,000            1,068            4,269            4,592
discontinued
Gain on sale       11,966           —                11,966           3,348       
of real estate
Income from
discontinued       12,966           1,068            16,235           7,940       
operations
Net income         41,272           18,114           90,898           81,132
Net income
attributable
to                 (167       )     —                (167       )     —           
noncontrolling
interest
Net income
attributable       $  41,105        $  18,114        $  90,731        $  81,132   
to common
stockholders
                                                                       
Weighted
average common
shares
outstanding:
Basic              27,848,002       27,741,961       27,811,813       27,719,096
Diluted            27,868,245       27,784,915       27,838,720       27,792,592
                                                                       
Earnings per
common share:
Basic:
Income from
continuing
operations         $  1.01          $  .61           $  2.68          $  2.64
attributable
to common
stockholders
Discontinued       .47              .04              0.58             0.29        
operations
Net income
attributable       $  1.48          $  .65           $  3.26          $  2.93     
to common
stockholders
                                                                       
Diluted:
Income from
continuing
operations         $  1.01          $  .61           $  2.68          $  2.63
attributable
to common
stockholders
Discontinued       .47              .04              0.58             0.29        
operations
Net income
attributable       $  1.48          $  .65           $  3.26          $  2.92     
to common
stockholders
                                                                       
Regular
dividends          $  0.67          $  0.65          $  2.64          $  2.50
declared per
common share
                                                                                  

 
Selected Balance Sheet Data
(in thousands)
                                       December 31, 2012     December 31, 2011
                                       (unaudited)
Real estate properties, net            $     535,390         $     394,795
Mortgages receivable, net              84,250                78,672
Investment in preferred stock, at      38,132                38,132
cost
Cash and cash equivalents              9,172                 15,886
Marketable securities                  12,884                11,364
Assets held for sale, net              1,611                 29,381
Debt                                   203,250               97,300
National Health Investors              457,182               443,485
Stockholders’ equity
                                                              

Contact:

National Health Investors, Inc.
Roger R. Hopkins, 615-890-9100
Chief Accounting Officer
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