NHI

NHI is a self-managed healthcare REIT with 189 Real Estate Investment properties across 32 states (110 SHOs, 65 SNFs, 1 hospital) leased to 31 tenants on 10–15 year triple-net leases with CPI-linked escalators, plus a smaller SHOP segment of 26 properties (3,009 units) operated via third-party managers under RIDEA. The triple-net structure pushes opex risk to tenants and the CPI escalators provide modest organic growth, while the demographic tailwind from an aging population underpins long-term demand for both need-driven (ALF/SLC) and discretionary (ILF/EFC) communities. FY2025 results show the business is executing: revenue rose 47.1% to $80.1M (boosted by SHOP consolidation, since SHOP resident-fee revenue runs through the top line while triple-net rent does not), operating cash flow grew 13.9% to $237M, and equity is up 11.3% YoY.

The quality, however, is partly offset by capital intensity and a stretched payout. Capex jumped 86.2% to $294M — well above $237M of operating cash flow — meaning the company is funding growth and a $170M dividend (up 8.4%) with external capital; share count rose 5.9% and cash fell 19.2% to just $19.6M. Diluted EPS actually slipped 3.5% to $3.02 despite the revenue surge, so dividends paid ($170M) exceed GAAP net income attributable to common ($142M), a payout that only works because REIT distributions are measured against FFO, not EPS. Leverage at 0.83x liabilities/equity is reasonable for a REIT, but $1.26B of liabilities against $19.6M cash leaves no buffer if rates stay higher for longer or if a major tenant — the filing notes 31 tenants across the triple-net book — runs into operator stress.