A more favorable cost of capital and a more narrow bid-ask spread in deals has National Health Investors (NYSE: NHI) preparing to ramp up investments this year.

NHI has spent much of 2024 preparing for new growth, and CEO Eric Mendelsohn said the Murfreesboro, Tennessee-based company expects that “external investment activity will be a significant driver of cash-flow growth in the foreseeable future.”

So far, the real estate investment trust (REIT) has closed on $56.6 million in investments in 2024 and has signed letters of intent for other deals valued at $155.4 million.

“We are convinced that we’re in the early days of exceptional growth for several years to come,” Mendelsohn said during an Aug. 7 earnings call with investors and analysts.

As of the end of the second quarter, NHI has holdings including 194 properties, 95 of which are senior housing communities.

The company reported normalized funds from operations (FFO) of $1.18 per share during the second quarter of 2024.

NHI’s stock ended the day at $74.65 up 0.4% from the previous close. 

‘Deal flow has been pretty strong’

During the second quarter of 2024, NHI acquired a 110-unit assisted living community from Encore Senior Living for $32.1 million, transitioned a skilled nursing facility to a new operator and sold two assisted living communities in Louisiana.

Looking ahead, NHI’s leaders say the company has many potential avenues ahead for new growth.

The company has line of sight on a mix of opportunities valued at $1.8 billion all told, though NHI Chief Investment Officer Kevin Pascoe said that total includes some of the larger joint-venture portfolio deals the company is looking at. And some of those deals will likely be screened out as the REIT digs into the details.

“It’s a mix of operator relationships that we’ve been building, real estate sellers that we’ve been working on over the last year or two, and then just seeing what’s in the market right now,” Pascoe said during the earnings call. “I think deal flow has been pretty strong over the last few quarters. It continues to remain robust, and we feel good about our prospects.”

Still, he added that the REIT is keeping its options open and does not want to signal it’s doing “a lot of business without having better line of sight to its execution.”

“We want to make sure we get it right,” Pascoe said. “If we’re going to take a big swing like that, it takes a little extra scrutiny.”

Beyond the company’s current deals, NHI has a current $270 million pipeline for potential opportunities, including additions to the company’s SHOP segment along with sale-leaseback deals and loans with purchase options, primarily for senior housing assets.

As it has done in recent quarters, NHI is continuing to focus on its SHOP segment, which currently includes 15 properties. As of the end of July, the segment carried an average occupancy of 88.2%.

“As occupancy gets closer to 90%, we expect to start reducing move-in incentives, which should lead to an improvement in margin given the significant operating leverage in the independent living model,” Pascoe said.