NHI’s Adjusted Funds From Operations Fall to $1.12 per Share in Third Quarter
Key Facts
By contrast, diluted NAREIT FFO per share rose 2.8% to $1.12, compared with $1.09. Net income attributable to common shareholders was $562.680 million, compared with $32.812 million a year earlier. Net income reflects the sale of the NHC portfolio, from which the company recorded a gain of $541.6 million. The two operating metrics present different pictures of the quarter, with adjusted funds from operations declining and NAREIT FFO rising slightly.
The company completed the sale of the NHC portfolio on July 1, 2026. It comprised 35 properties. Cash consideration for the transaction was $560 million, with closing costs of $5.3 million, and the company recorded a gain of $541.6 million. In the first nine months, rental revenue from the NHC portfolio fell to $22.2 million from $30.4 million in the same period of 2025. The portfolio’s share of total company revenue declined to 6.3% from 11.3%. The period figures show the effect of the portfolio’s removal from the leased asset base, while the sale gain lifted accounting net income in the quarter.
The quarterly result followed mixed performance in the first half of the year. Normalized FFO per share rose 2.1% in the first six months to $2.42, from $2.37 in the same period of 2025, despite falling 2.5% in the second quarter to $1.19 from $1.22. The chief executive said in a second-quarter earnings statement that total SHOP portfolio net operating income rose about 188% year over year, driven by recent acquisitions, and that same-property results exceeded expectations. The decline in adjusted funds from operations in the third quarter follows those results, while growth in the SHOP portfolio reflects the contribution of recently added assets. Comparing overall portfolio performance with same-property results remains important in tracking the path of the company’s operating income.
The company continued to invest in its healthcare portfolio after selling NHC. It disclosed the completion in October of a purchase of a portfolio of six senior living communities across Kentucky, Michigan and Tennessee, at a total price of $107.7 million, including $1.2 million in closing costs. It also said that $336.3 million of NHC sale proceeds was available on September 30 to fund qualifying real estate acquisitions under Section 1031. The deadline to deploy those proceeds for eligibility is December 28, 2026. Chief Executive Eric Mendelsohn said the company had completed more than $395 million in investments since the start of the year and expected to complete significant additional investments before year-end. He added that management’s plan aims to address underperformance and deliver sustainable growth in net operating income.
The ratio of consolidated net debt to annualized adjusted earnings before interest, taxes, depreciation and amortization was 3.6 times on September 30, within the company’s target range of 3.5–4.5 times. On the same date, the company disclosed $1.0 billion in outstanding debt and $700 million in credit facility capacity. The board declared a cash dividend of $0.94 per share on November 6, payable on January 29, 2027, to shareholders of record on December 31, 2026. The company is scheduled to hold a conference call to discuss its third-quarter results on November 10 at 10:00 a.m. Eastern time. EL7 data showed the stock closed at $71.24 on November 6, the last trading session before the results announcement.