NHI Extends, Restructures Lease for 25-Property Holiday Retirement Portfolio

MURFREESBORO, Tenn., and WINTER PARK, Fla. — National Health Investors (NYSE: NHI) has entered into a lease amendment and guaranty release with one of its tenants, an affiliate of Holiday Retirement.

The agreement extends the term of the lease, increases required minimum capital expenditure per unit, and provides NHI with stronger pro forma lease coverage ratio. NHI leases 25 independent living facilities to Holiday at an original cost to NHI of $493 million.

Under the Agreement:

  • NHI will receive consideration of approximately $65.8 million in cash (or property in lieu of cash at NHI’s option), which includes the forfeiture to NHI of half of the current $21.3 million security deposit.
  • NHI shall have sole discretion to acquire a Holiday property in lieu of cash that will be leased back to NHI subject to the same terms and conditions of the amended master lease.
  • The lease maturity is extended by five years to Dec. 31, 2035, and will be secured by the remaining half of the NHI-held security deposit. Additionally, NHI is requiring $5 million of equity to be contributed into the Holiday tenant entity.
  • NHI requires that $6.5 million of equity be contributed to the Holiday management company.
  • Effective Jan. 1, 2019, Holiday rent will be $31.5 million for the existing 25 assets, as opposed to the $39 million previously obligated. Rent escalators between 2 and 3 percent will commence annually starting Nov. 1, 2020. 
  • NHI has committed to invest up to $5 million into the communities in capital expenditures. In addition, Holiday has dedicated a minimum of $1,500 per unit in annual capital expenditures.
  • NHI and Holiday are contemplating the sale of up to five properties within the existing Holiday lease

NHI is a publicly traded REIT based in Murfreesboro. Holiday is an independent living operator based in Winter Park.

NHI’s stock price closed at $74.19 per share on Monday, Nov. 5, down from $76.66 one year ago.