FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 of 15(d)
of the Securities Exchange Act of 1934
For quarter ended June 30, 1996 Commission file number 33-41863
NATIONAL HEALTH INVESTORS, INC.
(Exact name of registrant as specified in its Charter)
Maryland 62-1470956
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
100 Vine Street
Murfreesboro, TN 37130
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (615) 890-9100
Indicate by check mark whether the registrant
(1) Has filed all reports required to be filed by Section 13 or
15(d), of the Securities Exchange Act of 1934 during the
preceding 12 months.
Yes x No
(2) Has been subject to such filing requirements for the past 90
days.
Yes x No
21,891,926 shares of common stock were outstanding as of June 30,1996.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
NATIONAL HEALTH INVESTORS, INC.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
June 30 Dec. 31
1996 1995
(unaudited)
ASSETS
Real estate properties:
Land $ 8,238 $ 8,238
Buildings and improvements 136,847 136,891
Construction in progress 540 129
145,625 145,258
Less accumulated depreciation (25,131) (22,063)
Real estate properties, net 120,494 123,195
Mortgage and other notes receivable 475,375 469,628
Investment in real estate mortgage
investment conduits 37,886 38,140
Cash and cash equivalents 23,555 2,122
Interest and rent receivable 5,697 6,061
Deferred costs and other assets 3,429 2,770
Total Assets $666,436 $641,916
LIABILITIES AND DEFERRED INCOME
Long-term debt $135,475 $141,103
Credit facilities --- 31,750
Convertible subordinated debentures 118,909 82,316
Accounts payable and other accrued expenses 3,942 3,656
Accrued interest 2,547 1,468
Dividends payable 16,208 15,602
Deferred income 11,678 9,040
Commitments, contingencies and guarantees --- ---
Total Liabilities and Deferred Income 288,759 284,935
STOCKHOLDERS' EQUITY
Cumulative convertible preferred stock,
$.01 par value; 10,000,000 shares
authorized; 1,652,948 and 2,311,533
shares, respectively, issued and
outstanding; stated at liquidation
preference of $25 per share 41,323 57,788
Common stock, $.01 par value:
40,000,000 shares authorized;
21,891,926 and 20,535,014 shares,
respectively, issued and outstanding 220 205
Capital in excess of par value of
common stock 348,948 311,908
Cumulative net income 160,389 128,350
Cumulative dividends (173,203) (141,270)
Total Stockholders' Equity 377,677 356,981
Total Liabilities and Stockholders' Equity $666,436 $641,916
The accompanying notes to interim condensed consolidated financial statements
are an integral part of these financial statements.
The interim condensed balance sheet at December 31, 1995 is taken from the
audited financial statements at that date.
<PAGE>
<TABLE>
NATIONAL HEALTH INVESTORS, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
(in thousands,
except share amounts)
<S> <C> <C> <C> <C>
REVENUES:
Mortgage interest income $ 15,465 $ 13,040 $ 30,453 $ 27,046
Rental income 8,068 7,508 16,135 14,965
Investment interest and
other income 354 328 643 699
23,887 20,876 47,231 42,710
EXPENSES:
Interest 4,804 6,691 9,843 14,878
Depreciation and
amortization 1,790 1,691 3,599 3,362
General & administrative 892 833 1,750 1,688
7,486 9,215 15,192 19,928
NET INCOME $ 16,401 $ 11,661 $ 32,039 $ 22,782
DIVIDENDS TO PREFERRED
STOCKHOLDERS 883 1,926 1,863 3,931
NET INCOME APPLICABLE TO
COMMON STOCK $ 15,518 $ 9,735 $ 30,176 $ 18,851
NET INCOME PER COMMON SHARE:
Primary $ .72 $ .66 $ 1.42 $ 1.30
Fully diluted $ .69 $ .62 $ 1.36 $ 1.23
FUNDS FROM OPERATIONS PER COMMON SHARE:
Primary $ .78 $ .75 $ 1.56 $ 1.50
Fully diluted $ .75 $ .68 $ 1.48 $ 1.36
WEIGHED AVERAGE COMMON SHARES OUTSTANDING:
Primary 21,643,875 14,851,165 21,245,119 14,470,919
Fully diluted 27,269,393 22,010,010 27,087,510 21,683,957
Common dividends per share
declared $ .70 $ .62 $ 1.40 $ 1.24
The accompanying notes to interim condensed consolidated financial
statements are an integral part of these financial statements.
</TABLE>
<PAGE>
NATIONAL HEALTH INVESTORS, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
June 30
1996 1995
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 32,039 $ 22,782
Depreciation of real estate 3,068 2,827
Amortization of loan and organization costs 531 535
Interest on debenture conversion 161 58
Deferred income 3,213 486
Amortization of deferred income (575) (514)
Decrease in interest & rent receivable 364 688
(Increase) decrease in other assets 21 (89)
Increase (decrease) in accounts payable
and accrued liabilities 1,365 (1,425)
NET CASH PROVIDED BY OPERATING ACTIVITIES 40,187 25,348
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in mortgage & other notes receivable (44,867) (23,317)
Collection of mortgage notes receivable 39,374 51,863
Acquisition of property and equipment, net (367) (381)
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (5,860) 28,165
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of short-term loans payable --- (84,792)
Repayment of credit facilities (31,750) ---
Proceeds from long-term debt --- 57,000
Principal payments on long-term debt (5,628) (48,808)
Proceeds from sale of subordinated
convertible debentures 56,190 ---
Financing costs paid (1,470) (99)
Dividends paid to shareholders (31,327) (21,378)
Sale of stock and exercise of options 1,091 48,070
NET CASH USED IN FINANCING ACTIVITIES (12,894) (50,007)
INCREASE IN CASH AND CASH EQUIVALENTS 21,433 3,506
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,122 16
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 23,555 $ 3,522
<PAGE>
NATIONAL HEALTH INVESTORS, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
June 30
1996 1995
(in thousands)
Supplemental Information:
Cash payments for interest expense $ 6,891 $ 16,084
During the six months ended June 30, 1996
and June 30, 1995, $19,597,000 and $1,696,000
respectively, of Senior Subordinated Convertible
Debentures were converted into 721,200 shares
and 84,800 shares, respectively, of NHI's
common stock:
Senior subordinated convertible debentures $(19,597) $ (1,696)
Financing costs $ 259 $ 48
Accrued interest $ (161) $ (58)
Common stock $ 9 $ 1
Capital in excess of par $ 19,490 $ 1,705
The accompanying notes to interim condensed consolidated financial statements
are an integral part of these financial statements.
<PAGE>
<TABLE>
NATIONAL HEALTH INVESTORS, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(dollars in thousands)
<CAPTION>
Cumulative Convertible Capital in Total
Preferred Stock Common Stock Excess of Cumulative Cumulative Stockholders
Shares Amount Shares Amount Par Value Net Income Dividends Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT 12/31/95 2,311,533 $ 57,788 20,535,014 $205 $311,908 $128,350 $(141,270) $356,981
Net income -- -- -- -- -- 32,039 -- 32,039
Shares sold -- -- 39,733 -- 1,091 -- -- 1,091
Shares issued in con-
version of con-
vertible debentures
to common stock -- -- 721,200 9 19,490 -- -- 19,499
Shares issued in
conversion of pre-
ferred stock to
common stock (658,585) (16,465) 595,979 6 16,459 -- -- --
Dividends to common
shareholders ($1.40
per share) -- -- -- -- -- -- (30,070) (30,070)
Dividends to preferred
shareholders ($1.6025
per share) -- -- -- -- -- -- (1,863) (1,863)
BALANCE AT 6/30/96 1,652,948 $ 41,323 21,891,926 $220 $348,948 $160,389 $(173,203) $377,677
BALANCE AT 12/31/94 3,802,960 $ 95,074 14,047,563 $140 $140,281 $ 78,658 $ (90,274) $223,879
Net income -- -- -- -- -- 22,782 -- 22,782
Shares sold -- -- 1,902,500 19 48,051 -- -- 48,070
Shares issued in con-
version of con-
vertible debentures
to common stock -- -- 84,800 1 1,705 -- -- 1,706
Shares issued in
conversion of pre-
ferred stock to
common stock (179,442) (4,486) 162,389 2 4,484 -- -- --
Common shares sold -- -- -- -- -- -- -- --
Dividends to common
shareholders ($1.24
per share) -- -- -- -- -- -- (18,113) (18,113)
Dividends to preferred
shareholders ($1.6025
per share) -- -- -- -- -- -- (3,931) (3,931)
BALANCE AT 6/30/95 3,623,518 $ 90,588 16,197,252 $162 $194,521 $101,440 $(112,318) $274,393
</TABLE>
<PAGE>
NATIONAL HEALTH INVESTORS, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(Unaudited)
Note 1. SIGNIFICANT ACCOUNTING POLICIES:
The unaudited financial statements furnished herein in the
opinion of the management include all adjustments which are
necessary to fairly present the financial position, results of
operations and cash flows of National Health Investors, Inc.
("NHI" or "Company"). NHI assumes that users of the interim
financial statements herein have read or have access to the
audited financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations for the
preceding fiscal years ended December 31, 1995, 1994 and 1993 and
that the adequacy of additional disclosure needed for a fair
presentation, except in regard to material contingencies, may be
determined in that context. Accordingly, footnotes and other
disclosures which would substantially duplicate the disclosure
contained in the Company's most recent annual report to
stockholders have been omitted. The interim financial
information contained herein is not necessarily indicative of the
results that may be expected for a full year because of various
reasons including changes in interest rates, rents and the timing
of debt and equity financings.
Note 2. EARNINGS PER SHARE
Primary earnings per share is based on the weighted average
number of common and common equivalent shares outstanding.
Common equivalent shares result from the dilutive effect of stock
options computed using the treasury stock method. Net income is
reduced by dividends to holders of cumulative convertible
preferred stock.
Fully diluted earnings per share assumes, in addition to the
above, the conversion of convertible subordinated debentures, the
conversion of cumulative convertible preferred stock and the
exercise of all stock options using the treasury stock method.
Net income is increased for interest expense on the convertible
subordinated debentures.
The following table summarizes the earnings and the average
number of common shares and common equivalent shares used in the
calculation of primary and fully diluted earnings per share.
<PAGE>
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
PRIMARY:
Weighted average
common shares 21,615,670 14,844,667 21,216,384 14,466,515
Stock options 28,205 6,498 28,735 4,404
Average common shares
outstanding 21,643,875 14,851,165 21,245,119 14,470,919
Net income $16,401,000 11,661,000 $32,039,000 $22,782,000
Dividends paid to preferred
shareholders ( 883,000) (1,926,000) (1,863,000) (3,931,000)
Net income available to
common stockholders $15,518,000 $9,735,000 $30,176,000 $18,851,000
Net income per
common share $ .72 $ .66 $ 1.42 $ 1.30
FULLY DILUTED:
Weighted average common
shares 21,615,670 14,844,667 21,216,384 14,466,515
Stock options 28,045 9,023 28,045 9,023
Convertible subordinated
debentures 4,060,894 3,822,345 4,142,871 3,830,954
Cumulative convertible pre-
ferred stock 1,564,784 3,333,975 1,700,210 3,377,465
Average common shares
outstanding 27,269,393 22,010,010 27,087,510 21,683,957
Net income $16,401,000 $11,661,000 $32,039,000 $22,782,000
Interest expense on con-
vertible subordinated
debentures 2,418,000 1,921,000 4,883,000 3,853,000
Net income assuming con-
version of subordinated
convertible debentures
to common stock $18,819,000 $13,582,000 $36,922,000 $26,635,000
Net income per
common share $ .69 $ .62 $ 1.36 $ 1.23
<PAGE>
Note 3. FUNDS FROM OPERATIONS
The following table summarizes the calculation of primary
and fully diluted funds from operations (FFO) per share.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
PRIMARY:
Net income 16,401,000 11,661,000 32,039,000 22,782,000
Depreciation of
real estate 1,535,000 1,417,000 3,068,000 2,827,000
Dividends paid to preferred
shareholders (883,000) (1,926,000) (1,863,000) (3,931,000)
Funds from operations $17,053,000 $11,152,000 $33,244,000 $21,678,000
Average common shares
outstanding 21,643,875 14,851,165 21,245,119 14,470,919
Funds from operations per
common share $ .78 $ .75 $ 1.56 $ 1.50
FULLY DILUTED:
Net income $16,401,000 $11,661,000 $32,039,000 $22,782,000
Depreciation of real
estate 1,535,000 1,417,000 3,068,000 2,827,000
Interest expense on con-
vertible subordinated
debentures 2,418,000 1,921,000 4,883,000 3,853,000
Funds from operations assuming
conversion of subordinated
convertible debentures to
common stock 20,354,000 14,999,000 39,990,000 29,462,000
Average common shares
outstanding 27,269,383 22,010,010 27,087,510 21,683,957
Funds from operations per
common share $ .75 $ .68 $ 1.48 $ 1.36
</TABLE>
FFO is net income plus depreciation and amortization. Net
income for these purposes excludes the following items, if any:
1) gains or losses from debt restructurings, 2) gains or losses
from the sale of property which has been previously depreciated,
3) items classified under generally accepted accounting
principles as extraordinary or unusual, and 4) significant
nonrecurring events that materially distort the comparative
measurement of company performance over time. Depreciation and
amortization for these purposes includes only depreciation or
amortization of real estate assets and specifically excludes, if
any, the depreciation of operating equipment and the amortization
of deferred financing costs.
<PAGE>
For primary FFO, net income is further reduced by dividends
paid to preferred shareholders. For fully diluted FFO, net
income is increased for interest expense on the convertible
subordinated debentures.
The reconciliation of FFO to net income which is presented
above includes a line-item breakdown of each of the adjustments
being used in the calculation of FFO.
Weighted average shares are calculated in the same way as
they are for the computation of primary and fully diluted
earnings per share.
Beginning in 1996 and restated for prior years, FFO is being
calculated by NHI without adding back to net income the
amortization of loan costs, as suggested in the clarified FFO
definition provided by the National Association of Real Estate
Investment Trusts. Use of the clarified definition of FFO when
compared to the calculation used in prior periods results in a
one cent and two cent decrease, respectively in fully diluted FFO
per share for the three months and six months ended June 30, 1996
and in a one cent and two cent decrease, respectively in fully
diluted FFO per share for the three months and six months ended
June 30, 1995.
Note 4. COMMITMENTS AND GUARANTEES:
At June 30, 1996, NHI was committed, subject to due
diligence and financial performance goals, to fund approximately
$57,508,000 in health care real estate projects of which
approximately $31,508,000 is expected to be funded within the
next 12 months. The commitments include mortgage loans or
purchase leaseback agreements for eight long-term care centers,
one retirement center and one medical office building all at
rates ranging from 10.0% to 11.5%. Also included in the
$57,508,000 of commitments is a $26,000,000 commitment secured by
first mortgages on 43 long-term care centers. Draws on the
$26,000,000 commitment are limited to $3,700,000 annually. NHI
has recorded deferred income for commitment fees related to these
loans where applicable.
In order to obtain the consent of appropriate lenders to
NHC's transfer of assets to NHI, NHI guaranteed certain debt
($26,077,000 at June 30, 1996) of NHC. The debt is at fixed and
variable interest rates with a weighted average interest rate of
8.3% at June 30, 1996. NHI receives from NHC compensation of
approximately $130,000 per annum for the guarantees which is
credited against NHC's base rent requirements.
In management's opinion, these guarantee fees approximate
the guarantee fees that NHI would currently charge to enter into
similar guarantees.
<PAGE>
All of the guaranteed indebtedness discussed above is
secured by first mortgages and rights which may be enforced if
either party is required to pay under their respective
guarantees. NHC has agreed to indemnify and hold harmless NHI
against any and all loss, liability or harm incurred by NHI as a
result of having to perform under its guarantee of any or all of
the guaranteed debt.
Additionally, NHI has outstanding letters of credit totaling
$11,656,000.
Also additionally, NHI has also guaranteed bank loans in the
amount of $2,226,000 to key employees and directors which amount
was utilized for the exercise of NHI stock options. Shares of
NHI stock are held as security by NHI and the loans are limited
to $100,000 per individual per year.
Note 5. REVOLVING LINE OF CREDIT
In June, 1996, NHI renegotiated its $100,000,000 revolving
line of credit with seven banks. The agreement was previously
comprised of a $40,000,000 tranch which matured after one year
and a $60,000,000 tranch which matured after three years. Under
the revised terms, all of the $100,000,000 revolving line of
credit has a three year term which matures in June, 1999.
Additionally, the revised line of credit is at a lower spread
over LIBOR ("London Interbank Offered Rate") compared to what was
available under the previous agreement. The full $100,000,000
amount of the credit line was available to be drawn at June 30,
1996.
Note 6. CONVERTIBLE SUBORDINATED DEBENTURES:
On December 12, 1995 and on January 15, 1996, NHI sold
$45,000,000 and $55,000,000, respectively (for a total of
$100,000,000) of 7.75% convertible subordinated debentures (the
"1995 debentures") due on January 1, 2001. The 1995 debentures
are convertible at the option of the holder into the common stock
of NHI at a conversion price of $31.625, subject to adjustment.
At June 30, 1996, none of the 1995 debentures have been
converted. NHI has reserved 3,162,055 shares of common stock for
1995 debenture conversions.
On February 9, 1996 and April 12, 1996, NHI issued
$1,050,000 and $140,000, respectively of 7% subordinated
convertible debentures due on January 1, 2006 (the "1995 debt
service debentures"). The debentures may be issued to current
and future mortgagees and lessees of NHI to satisfy existing debt
service reserve escrow requirements under applicable mortgages or
leases. At June 30, 1996, debentures in the amount of $4,861,000
have been issued to mortgagees or lessees to satisfy debt service
escrow requirements. The debentures are convertible at the
option of the holder into common stock of the Company at a
conversion price of 110% of the market price on the date of
issuance of the debentures, subject to adjustment. At June 30,
1996, none of the debentures have been converted.
<PAGE>
At June 30, 1996, $12,393,000 of 7.375% convertible
subordinated debentures (the "1993 debentures") remain
outstanding. The 1993 debentures are convertible at the option
of the holder into the common stock of the Company at a
conversion price of $27.25 per share, subject to adjustment.
During the six months ended June 30, 1996, 19,442,000 of the 1993
debentures were converted into 713,450 shares of common stock.
The Company has reserved 454,789 shares of common stock for
conversion of the 1993 debentures.
In addition to the 1993 debentures, $1,655,000 of the 10%
senior convertible subordinated debentures (the "senior
debentures") remain outstanding at June 30, 1996. The senior
debentures are convertible into the common stock of the Company
at $20 per share. During the six months ended June 30, 1996,
$155,000 of the senior debentures were converted into 7,750
shares of common stock. The Company has reserved 82,750 shares
of common stock for conversion of the senior debentures.
Note 7. CUMULATIVE CONVERTIBLE PREFERRED STOCK
In February and March, 1994, NHI issued $109,558,000 of 8.5%
Cumulative Convertible Preferred Stock ("Preferred Stock") with a
liquidation preference of $25 per share. Dividends at an annual
rate of $2.125 are cumulative from the date of issuance and are
paid quarterly.
The Preferred Stock is convertible into NHI common stock at
the option of the holder at any time at a conversion price of
$27.625 per share of common stock, which is equivalent to a
conversion rate of 0.905 per share of common stock for each share
of Preferred Stock (subject to adjustment in certain
circumstances).
The Preferred Stock is not redeemable by NHI prior to
February 15, 1999 and is not redeemable for cash. On or after
February 15, 1999, the Preferred Stock will be redeemable for
common stock. NHI may redeem the Preferred Stock only if the
trading price of the Common Stock on the New York Stock Exchange
(NYSE) exceeds $27.625 per share for 20 trading days within a
period of 30 trading days prior to the exercise.
The Preferred Stock is listed on the NYSE under the symbol
"NHIPr."
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations
Overview
National Health Investors, Inc. ("NHI" or the "Company") is
a real estate investment trust which invests primarily in income
producing health care properties with emphasis on the long-term
<PAGE>
care sector. As of June 30, 1996, NHI had interests in net real
estate owned by it and mortgage investments totaling $633.8
million. NHI's strategy is to invest in health care real estate
which generates current income which will be distributed to
stockholders. NHI intends to implement this strategy by making
mortgage loans and acquiring properties to lease nationwide.
As of June 30, 1996, the Company has investments in 233
health care facilities located in 24 states consisting of 192
long-term care facilities, three acute care hospitals, eight
medical office buildings,
three assisted living facilities, eight retirement centers, and
19 residential projects for the developmentally disabled. These
investments consist of approximately $475.4 million aggregate
principal amount of loans to 43 borrowers, $120.5 million of
purchase leaseback transactions with seven lessees and $37.9
million invested in REMIC pass through certificates backed by
first mortgage loans to seven operators. Of these 233
facilities, 43 are leased to NHC and nine additional facilities
are managed by NHC. (NHC is the Company's investment advisor.)
Consistent with its strategy of diversification, the Company has
reduced the portion of its portfolio operated by NHC from 100.0%
of total real estate assets on October 17, 1991 to approximately
22.6% of total real estate assets on June 30, 1996.
Capital Resources and Liquidity
NHI has generated net cash from operating activities for the
first six months of 1996 in the amount of $40.2 million. The
funds were used along with $54.7 million proceeds from the sale
of subordinated convertible debentures, $39.4 million from the
collection of mortgage notes receivable and $1.1 million from the
sale of common stock to make additional investments in income
producing assets and real estate properties totaling
approximately $45.2 million, to repay debt and credit facilities
of $37.4 million and to pay dividends to stockholders of $31.3
million.
In June 1997, NHI renegotiated its $100 million revolving
line of credit for a lower spread over LIBOR compared to what was
previously available and also to extend the maturity date for the
entire $100 million credit agreement to June, 1999. The full
$100 million amount of the line of credit was available to be
drawn at June 30, 1996.
In January of 1996, NHI collected $54.7 million in proceeds
from the sale of 7.75% convertible subordinated debentures. The
Company's balance sheet was further strengthened by the
conversion of $16.5 million of NHI's outstanding convertible
preferred stock and $19.5 million of convertible debentures to
common equity during the first six months of 1996. NHI's
nonconvertible debt as a percentage of total capitalization has
been lowered from 45% at the end of 1994 to 28% at December 31,
1995 and to 21% at June 30, 1996. NHI's financial position is
the strongest since operations started in 1991, and the Company
continues into 1996 well positioned to take advantage of new
investment opportunities.
<PAGE>
At June 30, 1996, the Company was committed, subject to due
diligence and financial performance goals, to fund approximately
$57.5 million in health care real estate projects, of which
approximately $31.5 million is expected to be funded within the
next 12 months. The commitments include mortgage loans or
purchase leaseback agreements for eight long-term health care
centers, one retirement center and one medical office building,
generally at rates ranging from 10.0% to 11.5%. Included in the
$57.5 million of commitments is a $26.0 million commitment which
amount is secured by first mortgages on 43 long-term care
centers. Draws on the $26.0 million commitment are limited to
$3.7 million annually. Furthermore, the Company anticipates that
it will in the future continue to make additional investments in
health care properties.
Financing for NHI's current commitments and future
commitments to others may be provided by borrowings under NHI's
bank credit facilities, new lines of credit, private placements
or public offerings of debt or equity, and the assumption of
secured or unsecured indebtedness or by the sale of all or a
portion of certain currently held investments.
Results of Operations
Three Months ended June 30, 1996 Compared to Three Months Ended
June 30, 1995.
Net income for the three months ended June 30, 1996 is $16.4
million versus $11.7 million for the same period of 1995, an
increase of 40.6%. Fully diluted earnings per common share
increased seven cents or 11.3% to 69 cents in the 1996 period
from 62 cents in the 1995 period. Fully diluted funds from
operations (FFO) applicable to common stock for the 1996 three
month period was 75 cents per share versus 68 cents per share for
the 1995 period, a per share increase of 10.3%.
Total revenues for the three months ended June 30, 1996
increased $4.5 million or 14.4% to $23.9 million from $20.9
million for the three months ended June 30, 1995. Revenues from
mortgage interest income increased $2.4 million or 18.6% in the
1996 period as compared to the 1995 period. Revenues from rental
income increased $0.6 million or 7.5% when compared to the same
period in 1995. These increases resulted primarily from
investments in additional facilities during the last 12 months
and increased "revenue participations" and "additional rent"
earned under NHI's existing mortgages and leases.
Total expenses for the 1996 three month period decreased
$1.7 million or 18.8% to $7.5 million from $9.2 million for the
1995 three month period. Interest expenses decreased $1.9 million
or 28.2% in the 1996 three month period as compared to the 1995
<PAGE>
three month period. Depreciation and amortization increased $0.1
million or 5.9% when compared to the same period in 1995.
General and administrative expenses in 1996 increased $0.1
million or 7.1% when compared to the 1995 period. Depreciation
increased as a result of the Company's placing of newly
constructed assets in service in 1995. General and
administrative expenses increased due to increased administrative
expenses and advisory fees to NHC.
The decrease in interest expense was due to decreased debt
levels resulting from the paydown of credit facility debt
(average outstanding balance, $76.7 million in the three months
ended June 30, 1995, -0- in 1996) and from the conversion of
7.375% and 10% convertible debentures to common stock (average
outstanding balance $101.6 million in 1995, $18.0 million during
the three months ended June 30, 1996). The decrease in interest
expense was offset in part by interest on $100.0 million of 7.75%
convertible debt which was not outstanding in the 1995 three
month period but which was outstanding for the 1996 three month
period. Depreciation increased as a result of the Company's
placing of newly constructed assets in service in 1994 and 1995.
Six Months ended June 30, 1996 Compared to Six Months Ended June
30, 1995.
Net income for the six months ended June 30, 1996 is $32.0
million versus $22.8 million for the same period of 1995, an
increase of 40.6%. Fully diluted earnings per common share
increased 13 cents or 10.6% to $1.36 per share in the 1996 period
from $1.23 per share in the 1995 period.
Fully diluted funds from operations (FFO) per common share
for the 1996 six months period were $1.48 per share versus $1.36
per share for the 1995 period, a per share increase of 8.8%. FFO
is calculated using the National Association of Real Estate
Investment Trusts clarified definition of funds from operations
which NHI has adopted in 1996. Use of the clarified definition
when compared to the calculation used in prior periods results in
a one cent and two cent decrease, respectively in fully diluted
FFO per share for the three months and six months ended June 30,
1996 and in a one cent and two cent decrease, respectively in
fully diluted FFO for the three months and six months ended June
30, 1995.
Total revenues for the six months ended June 30, 1996
increased $4.5 million or 10.6% to $47.2 million from $42.7
million for the six months ended June 30, 1995. Revenues from
mortgage interest income increased $3.4 million or 12.6% in the
1996 period as compared to the 1995 period. Revenues from rental
income increased $1.2 million or 7.8% when compared to the same
period in 1995. These increases resulted primarily from the net
increase in investments in real estate properties during the last
12 months and increased "additional rent" and "revenue
participations" earned under the Company's existing leases and
mortgage agreements.
<PAGE>
Total expenses for the 1996 six month period decreased $4.7
million or 23.8% to $15.2 million from $19.9 million for the 1995
period. Interest expenses decreased $5.0 million or 33.8% in the
1996 six month period as compared to the 1995 period.
Depreciation and amortization increased $0.2 million or 7.0% when
compared to the same period in 1995. The decrease in interest
expense was due to decreased debt levels resulting from the
paydown of credit facility debt (average outstanding balance,
$138.3 million in the six months ended June 30, 1995, -0- in the
six months ended June 30, 1996) and from the conversion of 7.375%
and 10% convertible debentures to common stock (average
outstanding balance $102.1 million in 1995, $25.3 million in
1996). The decrease in interest expense was offset in part by
the interest on 7.75% convertible debt, $45.0 million of which
was issued in December, 1995 and $55.0 million of which was
issued in January, 1996. Depreciation increased as a result of
the Company's placing of newly constructed assets in service in
1995.
Future Growth
The Company expects increases in both mortgage interest
income and rental income from additional investments in mortgage
loans and owned facilities during 1996. The Company expects to
continue to make additional investments in health care facilities
that would increase interest and rental revenues as well as
interest and depreciation expense. Increases in revenues are
expected to more than offset increases in associated expenses.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. None
Item 2. Changes in Securities. Not applicable
Item 3. Defaults Upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information. None
Item 6. Exhibits and Reports on Form 8-K.
(a) List of exhibits - none required
(b) Reports on Form 8-K - none required
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
NATIONAL HEALTH INVESTORS, INC.
(Registrant)
Date July 30, 1996 S/Richard F. LaRoche, Jr.
Richard F. LaRoche, Jr.
Secretary
Date July 30, 1996 S/Donald K. Daniel
Donald K. Daniel
Principal Accounting Officer
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<PERIOD-END> JUN-30-1996
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41,323,000
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