Nhi Seeks To Grow Shop Segment At Rapid Pace With $343m Pipeline Under Consideration

National Health Investors (NYSE: NHI) is gearing up to grow its senior housing operating portfolio (SHOP) at a fast pace.

NHI recently transitioned seven communities into its SHOP segment, which now stands at 15 properties and 1,732 units. The company’s newest operating partners include Vancouver, Washington-based Sinceri Senior Living, which recently inked a RIDEA agreement with NHI covering six communities.

Beyond that, the Murfreesboro, Tennessee-based real estate investment trust (REIT) is evaluating a pipeline of about $343 million in investments, primarily senior housing communities, that include SHOP, sale-leaseback and loans with purchase options. So far, the company has signed letters of intent for almost $130 million, mostly senior housing sale-leaseback investments and one loan with a purchase option.

The company has closed $175 million worth of deals so far this year, overall.

More than half of the deals the company is evaluating are focused on growing its SHOP segment and the company is focused on “acquisitions that provide other strategic benefits, such as establishing a relationship with a new operating partner, where we see future opportunities to scale in a specific geography,” said Kevin Pascoe, NHI’s chief investment officer.

The deals in the REIT’s pipeline are valued at $100 million or less, though there are “bigger deals” that NHI is considering.

“It’s really just a sense of making sure we have the right operating partner, it’s the right profile, and checks a lot of boxes,” Pascoe added.

NHI has run into some turbulence with regard to funding its new investments. Tariffs enacted by President Donald Trump in April have been “very disruptive” to the company’s leverage profile, said CFO John Spaid.

“Earlier this year, our cost of equity was pretty close to our cost of incremental, long-term debt,” he said. “We’ve pivoted to utilizing a lot more equity. That’s not our desire. Our desire is to stay more leverage neutral.”

He added NHI is “fortunate enough to have options here to provide for liquidity from different sources.”

Analysts with BMO Capital Markets noted the REIT’s “solid” investment pipeline and SHOP NOI margins that “shine” as positives.

NHI’s senior housing portfolio includes 115 senior housing triple lease properties.

NHI stock rose to $74.54, up 2.5% from the previous close.

SHOP segment performance and growth

In 2023 and 2024, NHI targeted higher occupancy for its SHOP operating partners. Now that average occupancy for the segment has registered at or above 89% for the last three quarters, the company is turning its focus to pricing, Pascoe said.

That effort has paid off in the form of revenue per occupied room (RevPOR) of $3,071 in the second quarter of 2025, representing growth of 3.7% over the prior quarter. Revenue for the segment was $3.8 million in the second quarter of this year, a gain of 29.4% increase versus the same period in 2024, when SHOP revenue was a little higher than $900,000.

That progress prompted NHI’s leaders to up the REIT’s SHOP net operating income (NOI) guidance for 2025, which is now slightly higher at a range of 13% to 16% growth.

That guidance bakes in “slowing in the second half of the year, which is driven by some recent softness in occupancy,” Pascoe said. He linked the occupancy softness to changes in local leadership at the communities and abnormally high move-outs, two headwinds he believes will ease with time.

“We’re optimistic that this trend reverses itself in fairly short order,” Pascoe said. “Our longer-term view is unchanged, and we actually have higher conviction in the margin potential following the strong second quarter result.”

As NHI has shuffled its SHOP operating team, it has brought on some new operating partners. The company’s latest addition is Sinceri Senior Living, which shares with the REIT “a long history of trust, transparency and a shared vision.”

‘This new partnership structure reflects that continued alignment,” Micah Gerber, president of finance and investments at Sinceri, said in a press release. “We are proud to steward these communities and to invest in their ongoing success.”

NHI also in the quarter moved an independent living community from a triple-net lease to its SHOP segment under the management of Discovery Senior Living.

“[Discovery] is going to be a piece of our business moving forward,” said Pascoe. “It’s a matter of making sure that we’re promoting the things that are going well within the relationship, which is why we moved over the independent living building from triple net to SHOP.

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