Nhi Makes Flurry Of Acquisitions In Q1 With $264m Pipeline Under Consideration

National Health Investors (NYSE: NHI) has an accelerating deal pipeline at the ready as it continues to fine-tune results with its operating partners.

Already this year the Murfreesboro, Tennessee-based company has invested $174.9 million, with a flurry of acquisitions since the start of the year. The company also is evaluating a pipeline of approximately $264 million, which includes deals to add communities to its senior housing operating portfolio (SHOP). The company is also working to convert additional triple-net communities to fit in its SHOP segment, which today numbers 15 communities.

NHI is also evaluating several large deals with “nine figure valuations” that are not counted within its active pipeline, according to NHI Chief Investment Officer Kevin Pascoe.

Normalized funds from operations (FFO) registered at $1.15 per share in the quarter. The company also increased its guidance for FFO per share to a range of $4.68 to $4.73 for 2025, up from its previous FFO guidance of $4.59 to $4.66 per share.

Looking ahead, the REIT has plans to begin removing incentives that have been used to help boost occupancy across the portfolio in order to further boost its revenue per occupied room (RevPOR), which is currently down 20 basis points year-over-year.

Net operating income (NOI) for the company’s SHOP segment grew 4.9% in 1Q25 versus the same period a year prior.

Seasonality in the first quarter kept the company’s SHOP net operating income (NOI) growth, below what BMO capital markets analysts Juan Sanabria and John Kim expected for the quarter.

“Guidance was bumped above the Street, benefiting from solid acquisition momentum and continued deferral repayments,” they wrote in a May 5 investor note.

NHI’s stock is priced at $76.36, up 0.4% from the previous close.

Acquisitions add three new operating partners

NHI spent the first quarter of 2025 increasing its senior living holdings, including with some new operating partners.

Acquisitions in the first quarter of the year included a 108-unit assisted living and memory care community in Montrose, Colorado for $21.2 million; an assisted living facility in Oviedo, Florida, a 120-unit assisted living and memory care community in Bergen County, New Jersey; and a portfolio of six memory care communities located in Nebraska for a total purchase price of $63.5 million.

The company in the first quarter of 2025 also added three new operating partners to its stable: Generations, Juniper Communities and Agemark.

“We’ve long admired all three of these companies and are already exploring additional avenues to grow these relationships,” said NHI President and CEO Eric Mendelsohn.

He added that the company is optimistic it can surpass last year’s investment total of $237.5 million this year.

“Last quarter, I said that we were pleased with the execution in 2024 and very optimistic that 2025 would be an even more productive year,” Mendelsohn said. “That is proving to be consistent with our mantra to under-promise and over-deliver.”

The company’s leaders are confident of that outcome given that “the current market seems to show no dearth of sellers, while the buyer pool is somewhat limited,” Pascoe said. Previously, senior living dealmakers had hoped cap rates and interest rates would be more amenable to M&A this year. But “cap rates have kind of flattened out” while interest rates remain stuck, Pascoe said.

“There was a glimmer of hope. I think people thought that they were going to come down, but that’s been diminished,” he said. “It’s just made us a lot more competitive, and the markets are just ripe for us.”

SHOP-ing spree continues

NHI is in the process of continuing to grow its SHOP segment in 2025. Some deals have stalled amid that process. For instance, the REIT had sought a previous $1.2 million transaction that had “significant resources” allocated for it, but ultimately ended up not following through, as it was “not the right deal for shareholders.”

“We will not pursue growth for growth’s sake,” Mendelsohn said.

Instead, NHI is converting parts of its triple-net portfolio into RIDEA structured agreements. According to Mendelsohn, the company is taking its time with the conversions in order to ensure they go smoothly. The goal is for this initial conversion to become the template for future additions of assisted living into the RIDEA structure, he said.

“Rather than commit resources to something that was going to drag out and may not completely satisfy investor expectations, we decided to continue to move off of it and really pursue the pipeline we have otherwise,” he said.

As of March 2025, SHOP registered at 88.9%, up from the 86.8% in March 2024. The segment’s performance in the first quarter of this year was hampered by move-outs related to residents moving to a higher level of care or dying.

However, he added the company believes it will increase SHOP NOI between 12% and 15% year-over-year growth with “good leading indicators” looking ahead.

“That’s something we’re expecting to see throughout the year,” Pascoe said. “We had planned on a flat first quarter, and then improving from there.”

On May 1, NHI amended its triple-net lease agreement with Discovery Senior Living to convert six properties to a RIDEA management structure. As part of that process, NHI plans to bring in a new operator to manage the communities. Pascoe noted that there will be “some noise” in the company’s results. NHI is investing additional “revenue producing CapEx” into the portfolio.

“Discovery has done a good job on the SHOP portfolio that we have. We’ve seen occupancies improve. We’re starting to see the incentives that we had put out there to get occupancy up come off,” he said. “At the end of the day, it took a little bit more time than we would have liked on the SHOP portfolio … But we’re moving, and we feel good about that, so we want to support the things that have gone well.”

Pascoe believes there is an ability for NHI to move “larger independent buildings” into its existing relationship with Discovery, and it has no intention of “casting that aside.”

NHI is seeking to transition the portfolio in the third quarter of this year, though Pascoe noted it is subject to legal review and licensure applications.

“We need to see more steady, continued growth. We think that we can get that focus out of the RIDEA relationship and continue to invest in some additional CapEx that will be ROI producing,” Pascoe said. “That’s really the focus, to make sure we’re getting the right year-over-year growth out of it.”

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