National Health Investors (NYSE: NHI) continues to grow its senior housing operating portfolio, with more growth expected in the future as the company looks into move-outs within legacy assets, according to CEO Eric Mendelsohn.
In the third quarter, NHI transitioned seven properties to its SHOP segment and announced the company’s first SHOP acquisition, a $74.3 million acquisition from last month of a four-property portfolio from Compass Senior Living.
“We’re working on a strong active pipeline that should generate similar or higher external investment activity in 2026,” Mendelsohn said.
Acquisitions will be a “meaningful component” of NHI’s growth for the “next several years,” having completed $303.2 million in 2025 with $195 million under signed letters of intent to acquire and close on “in the next few months.”
These investments are “entirely focused on senior housing,” with a “significant number of SHOP deals” expected, Mendelsohn said.
Leaders addressed the same-store net operating income loss of 2.2% compared to last year of 15 legacy Holiday Retirement properties as occupancy declined by 110 basis points from the third quarter last year.
In the portion of communities, NHI experienced “higher move-outs during the quarter” combined with personnel changes with 16 units taken out of service.
While the units are offline, NHI will review pricing. For context, NHI Chief Investment Officer Kevin Pascoe said NHI has “three or four buildings” that were “the laggards that dragged our performance down.”
“I think some of the good news here is that our lead volumes are still very good,” Pascoe said. “It’s a matter of just converting and making sure we have the right incentives in place for the people on the ground.”
When asked about the status of the operators for these specific communities, NHI leaders said both current operators would remain as managers of the property, Mendelsohn said.
Pascoe noted difficulty with some of the legacy Holiday Retirement communities, now managed by Discovery Senior Living and Merrill Gardens, with a focus on pricing power and the tour process.
In September, NHI issued a formal notice of default to an affiliate of National HealthCare Corporation (NHC) for non-compliance with non-monetary provisions of the master lease between the companies. NHC represents 12.2% of NHI’s net operating income, managing 80 skilled nursing facilities with over 10,300 beds.
“The lease is pretty bare bones, as you know, but it does say that if they’re in default, they don’t have the right to renew, so all of that could be subject to arbitration or litigation or legal interpretation,” Mendelsohn said, noting that many things are “on the table” depending on the status of default.
NHI has hired Blueprint Advisors to “survey the market” and “get touch points on lease rates and cap rates in the markets where these buildings reside,” Mendelsohn said.
Mendelsohn cited certain “audit requirements, certain reporting requirements, certain insurance requirements and [capital expenditure] requirements” that prompted NHI’s letter. The company also inspected all NHC-managed buildings and found “maintenance and level of CapEx to be lacking.”
In a letter to NHI, NHC has notified leadership of intent to renew the master lease for one, five-year term commencing Jan. 2027, pending review and “the effectiveness and legality of” NHC’s notice.
The post NHI Tackles Move-Outs and Legacy Asset Pressures While Driving SHOP Growth and Future Deals appeared first on Senior Housing News.
Source: For the full article please visit Senior Housing News
Be First to Comment