{ "docId": "019dd923-622b-71dc-a6dd-bbff5fdcb53a", "docSlug": "b22ed52c7fa2", "documentTitle": "National Health Investors, Inc. (NHI)", "authorId": "26_Land_and_Buildings", "authorName": "Jonathan Litt", "documentKindSlug": "shareholder-letter", "documentKindLabel": "Shareholder letter", "sourceTypeSlug": "activist_investor", "sourceTypeLabel": "Activist investor", "presentationDate": "2024-04-18 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 2, "pageCount": 8, "prevPage": 1, "nextPage": 3, "slideType": "executive_summary", "function": "summarize", "density": "overcrowded", "nDataPoints": 4, "notes": "The slide serves as an activist investor's summary of their position on National Health Investors (NHI).", "elementsJson": [ "paragraph" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622b-71dc-a6dd-bbff5fdcb53a/2", "deckHref": "/decks/019dd923-622b-71dc-a6dd-bbff5fdcb53a", "deckJsonHref": "/decks/019dd923-622b-71dc-a6dd-bbff5fdcb53a.json", "deckAnchorHref": "/decks/019dd923-622b-71dc-a6dd-bbff5fdcb53a#slide-2", "components": [ { "bbox": null, "kind": "callout", "text": "We believe it is impossible for shareholders to trust that key decisions are being evaluated with full independence and objectivity.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-25b5-768c-bb3a-b8432de0cb00", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "2024e AFFO: 13x", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-25b5-768c-bb3a-bd4dba39beb0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.9, "x": 0.05, "y": 0.75 }, "kind": "paragraph", "text": "With the litany of concerning issues with the structure and makeup of the Board, namely, the conflicts of interest caused by some members of the Board possessing significant investments in and relationships with NHC, as well as the longstanding interlocking relationships among members of the Board, we believe it is impossible for shareholders to trust that key decisions are being evaluated with full independence and objectivity.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "002e7230-01b7-4c64-8f9c-80af52dbd382", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.9, "x": 0.05, "y": 0.56 }, "kind": "paragraph", "text": "However, investors should be on high alert as negotiations begin in earnest for NHI’s upcoming lease renewal with skilled nursing operator NHC, which represents 15% of current Company NOI at rents materially below market. At market rents, given the 3.5x disclosed corporate coverage and rising, we believe the upside to NHI earnings could be 15% from this lease alone. This outcome would be in stark contrast to the most recent lease renegotiation that resulted in rents declining over the life of the five-year lease extension, even after normalizing for some asset sales, and without sufficient property-level income disclosure.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0ad6f515-9534-459a-90dd-fbef04a822df", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.9, "x": 0.05, "y": 0.37 }, "kind": "paragraph", "text": "We believe NHI is an overlooked diamond in the rough among publicly traded REITs. Unlike nearly all of its healthcare REIT peers, most of its income is derived from senior housing assets, a sector with tremendous fundamental tailwinds as the 80+ demographic is expected to be the fastest-growing age cohort for many years to come and there is little new supply. Additionally, distinct from most peers, its skilled nursing net lease portfolio is under-rented, which should provide significant future earnings growth. The long-term earnings power of the Company is substantially above today’s depressed levels, in our view.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "49f3dcbf-c1bf-4343-a696-f35a43c59ce9", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.9, "x": 0.05, "y": 0.26 }, "kind": "paragraph", "text": "We view NHI as an attractive investment given its 1) undervaluation at just 13x 2024e AFFO, 2) well-covered 6.1% dividend yield, 3) substantial senior housing operating portfolio (“SHOP”) growth potential, 4) accretive external growth opportunities, and 5) material rental upside in its net lease portfolios.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "6ba9481c-e7f7-4f9b-b9ff-a91496c3b047", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.1 }, "kind": "paragraph", "text": "The Annual Meeting presents a critical opportunity for shareholders to demand accountability, improved governance, and importantly, a Board that is comprised of truly independent directors that has the objectivity necessary to properly oversee and negotiate the NHC lease renewal.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b4b91667-ee9d-4e34-a7c4-07ab433aba7f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.9, "x": 0.05, "y": 0.21 }, "kind": "title", "text": "NHI is undervalued with opportunities to drive shareholder value creation", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "27a9021b-7159-40bd-b436-f5e21c8d4c4b", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [ { "name": "Executive summary", "slug": "executive-summary", "agent": null, "layer": "slide", "matchId": "e061c999-ee47-4b82-96ba-cd533c19c8a1", "evidence": "This slide presents a summary of NHI's undervaluation and opportunities.", "confidence": 0.9 } ], "frameworks": [], "arcBeats": [ { "to": 2, "from": 2, "beatId": "6f49627a-2c3b-4940-a7b4-6a90ef867720", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Problem", "beatSlug": "problem-agitate-solution-problem-identify-pain", "evidence": "NHI is undervalued", "position": 0, "confidence": 0.8, "parentBeatName": "Complication", "parentBeatSlug": "complication" } ], "loops": [ { "to": 7, "from": 2, "name": "Cost Of Inaction", "slug": "27-cost-of-inaction", "bestFor": "Urgent budget requests, compliance, risk mitigation", "matchId": "d153eb8f-3856-43ad-b3c4-a7eb5f2eeced", "evidence": "Emphasizes the need for shareholder action to address undervaluation and poor governance", "position": 0, "objective": "Highlight the cost of not taking action", "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point", "confidence": 0.6, "description": "Quantify what happens if the audience does nothing" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }