NHI Defers $1.8 Million in Holiday Retirement Rent Through July

National Health Investors (NYSE: NHI) on Thursday announced $1.8 million in rent deferrals for Holiday Retirement. The deferrals relate to rent for May, June and July.

The Murfreesboro, Tennessee-based health care real estate investment trust (REIT) also agreed to release $600,000 per month from Holiday’s security deposit, for the same time frame. The deposit totaled $10.6 million prior to the deferral agreement.

The move was expected. Discussions between NHI and Winter Park, Florida-based Holiday on a rent deferral were ongoing during the REIT’s Q1 2021 earnings call last month. At the time, CEO Eric Mendelsohn acknowledged that the deposit could be used to cover deferred rent, but it would only provide a temporary respite and was an option NHI preferred not to use.

The remaining monthly base rent, totaling $1.7 million, will be paid in cash. The deferrals carry an 8% interest rate and are expected to be repaid over an 18-month period, beginning January 1, 2022.

NHI is also weighing other options to optimize its portfolio of properties operated by Holiday, which currently consists of 26 communities and accounts for 16% of its annualized cash revenue. These options include future referrals, lease restructurings or sales of underperforming assets.

NHI has already deferred $14.6 million in rent from Bickford Senior Living, including $3.75 million in the first quarter of 2021 and $5 million in April and May.

The REIT collected 87.1% of rent due in May. Bickford and Holiday account for 9.8% of its rent deferrals; the balance isrelated to two other tenants, as well as lower forecasted revenue from transitioned properties prior to the start of the pandemic.

In April and May, NHI collected 86.2% of rent due. Bickford accounted for 9.3% of deferrals, and Holiday 1.1%.

On June 1, NHI announced the $40.3 million acquisition of Brookhaven Hospital, a specialty behavioral health hospital in Tulsa, Oklahoma. NHI also provided a $20 million corporate loan to Vizion, the operator who is leasing the hospital and acquiring the Brookhaven NeuroNetwork.

Analysts with Stifel were positive on the Brookhaven acquisition and believe that senior housing performance should improve as well.

“We believe 2Q21 should be at or close to the earnings bottom,” the analysts wrote in a note issued June 3. “The recovery in senior housing occupancy should improve revenue and coverage in 2H21, and NHI’s strong balance sheet (5.0x debt/EBITDA) lessens near-term pressure.”