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1、2023 NATIONAL HEALTH INVESTORS ANNUAL REPORTLetter from our President and CEODear Fellow Stockholders-On behalf of our Board of Directors and everyone at NHI,I want to thank you for your continued investment and confidence in the Company as we have transitioned NHI through our portfolio optimization
2、 and are now in position to reignite growth through organic and external growth initiatives.The strategic decisions made in 2020-2022 to optimize our portfolio continued to resonate in 2023 through improved organic performance throughout the Company.Specifically,NHI increased the EBITDARM coverage r
3、atios across all asset classes;granted fewer tenant rent concessions;accelerated and received deferral repayments throughout the year;and improved occupancy and operating margins in the Senior Housing Operating Portfolio(“SHOP”).NHI divested twelve properties in 2023 for net proceeds of approximatel
4、y$59 million which was down from 22 properties and approximately$169 million in net proceeds during 2022.The Company was intentionally an active seller early in the pandemic when valuations remained elevated,and buyers were prevalent.The environment changed significantly in 2023 as interest rates in
5、creased and the buyer pool dried up.At the end of 2023,NHI had just one property classified as held for sale and is well positioned for external growth through accretive acquisitions.NHIs financial position continues to be solid and positions NHI to deploy capital for accretive transactions in 2024
6、and beyond.NHI invested approximately$74 million in 2023 at a weighted average yield of 8.3%without the need to raise equity capital and while maintaining leverage at a prudent 4.5 times net debt-to-adjusted EBITDA.NHI continues to maintain investment grade ratings from our three debt rating agencie
7、s and NHI is one of the lowest levered healthcare REITs and ranks in the top quartile for low leverage among all REIT asset classes nationally.The Company entered a$200 million term loan in June 2023 through a syndicate of nine lenders at difficult time for banks which we view as the markets acknowl
8、edgment of the Companys financial strength.We believe that this creates a significant strategic advantage as the supply of capital is shrinking just as demand is increasing.We accomplished a great deal in 2023.We achieved the high end of our initial February 2023 FAD guidance and concluded the year
9、on a strong note with both third and fourth quarter results exceeding our own internal expectations as well as analyst consensus estimates.We believe this momentum has carried into 2024 and positions NHI to return to growth as implied in our initial guidance for 2024.There are multiple factors drivi
10、ng our optimism in the near-and long-term prospects for NHI.Our multipronged organic growth opportunity in both the leased portfolio and SHOP is as strong as ever;the investment and lending environments are very favorable for well-capitalized,low levered capital providers like NHI;and the industry s
11、upply-demand balance is beginning to lean in our favor due to a lack of new construction.To conclude,NHI is poised to capitalize on opportunities in what we expect to be several years of exceptional growth.On behalf of our Board of Directors and everyone at NHI,I want to thank you for your continued
12、 investment and confidence in the Company.Best,Eric Mendelsohn UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2023 TRANSITION REPORT PURSUAN
13、T TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from _ to _Commission File Number 001-10822 National Health Investors,Inc.(Exact name of registrant as specified in its charter)Maryland62-1470956(State or other jurisdiction of incorporation or organization)(I.R
14、.S.Employer Identification No.)222 Robert Rose DriveMurfreesboroTennessee37129(Address of principal executive offices)(Zip Code)(615)890-9100(Registrants telephone number,including area code)Securities registered pursuant to Section 12(b)of the Act:Title of each ClassTrading Symbol(s)Name of each ex
15、change on which registeredCommon Stock,$0.01 par valueNHINew York Stock ExchangeSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the reg
16、istrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes No 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(or for such shorter
17、period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulat
18、ion S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files)Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,o
19、r an emerging growth company.See the definitions of“large accelerated filer”,“accelerated filer,”“smaller reporting company”and“emerging growth company”in Rule 12b-2 of the Exchange ActLarge Accelerated FilerAccelerated filerEmerging growth companyNon-accelerated filerSmaller reporting company If an
20、 emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a
21、 report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered
22、pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that requir
23、ed a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to Section 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No The
24、aggregate market value of shares of common stock held by non-affiliates on June 30,2023(based on the closing price of these shares on the New York Stock Exchange)was approximately$2,165,587,000.There were 43,409,841 shares of the registrants common stock outstanding as of February 15,2024.DOCUMENTS
25、INCORPORATED BY REFERENCEPortions of the registrants definitive proxy statement for its 2024 annual meeting of stockholders are incorporated by reference into Part III,Items 10,11,12,13,and 14 of this Annual Report on Form 10-K.Table of ContentsPagePart I.352134343637Cautionary Statement Regarding F
26、orward Looking Statements.Item 1.Business.Item 1A.Risk Factors.Item 1B.Unresolved Staff Comments.Item 1C.CybersecurityItem 2.Properties.Item 3.Legal Proceedings.Item 4.Mine Safety Disclosures.37Part II.3840416668105105108Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Iss
27、uer Purchases of Equity Securities.Item 6.Reserved.Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations.Item 7A.Quantitative and Qualitative Disclosures About Market Risk.Item 8.Financial Statements and Supplementary Data.Item 9.Changes in and Disagreements wit
28、h Accountants on Accounting and Financial Disclosure.Item 9A.Controls and Procedures.Item 9B.Other Information.Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.108Part III.109109109109Item 10.Directors,Executive Officers and Corporate Governance.Item 11.Executive Compensat
29、ion.Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.Item 13.Certain Relationships and Related Transactions,and Director Independence.Item 14.Principal Accountant Fees and Services.109Part IV.109110113Item 15.Exhibits and Financial Statement Sche
30、dules.Exhibit Index.Item 16.SummarySignatures.1142PART I.Unless the context otherwise requires,references throughout this document to“NHI”or the“Company”include National Health Investors,Inc.,and its consolidated subsidiaries.In accordance with the Securities and Exchange Commissions“Plain English”g
31、uidelines,this Annual Report on Form 10-K has been written in the first person.In this document,the words“we”,“our”,“ours”and“us”refer only to National Health Investors,Inc.and its consolidated subsidiaries and not any other person.Cautionary Statement Regarding Forward-Looking StatementsThis Annual
32、 Report on Form 10-K and other materials we have filed or may file with the Securities and Exchange Commission,as well as information included in oral statements made,or to be made,by our senior management contain certain“forward-looking”statements as that term is defined by the Private Securities L
33、itigation Reform Act of 1995.All statements regarding our expected future financial position,results of operations,cash flows,funds from operations,continued performance improvements,ability to service and refinance our debt obligations,ability to finance growth opportunities,and similar statements
34、including,without limitation,those containing words such as“may”,“will”,“should,”“believes”,“anticipates”,“expects”,“intends”,“estimates”,“plans”,“likely”and other similar expressions are forward-looking statements.Forward-looking statements involve known and unknown risks and uncertainties that may
35、 cause our actual results in future periods to differ materially from those projected or contemplated in the forward-looking statements as a result of factors including,but not limited to,the following:*We depend on the operating success of our tenants,managers and borrowers and if their financial c
36、ondition orbusiness prospects deteriorate,our financial condition and results of operations could be adversely affected;*We are exposed to the risk that our managers,tenants and borrowers may become subject to bankruptcy or insolvencyproceedings;*Certain tenants in our portfolio account for a signif
37、icant percentage of the rent we expect to generate from ourportfolio,and the failure of any of these tenants to meet their obligations to us could materially and adversely affectour business,financial condition and results of operations and our ability to make distributions to our stockholders;*Actu
38、al or perceived risks associated with pandemics,epidemics or outbreaks,such as the COVID-19 pandemic,havehad and may in the future have a material adverse effect on our operators business and results of operations;*Two members of our Board of Directors are also members of the board of directors of N
39、ational HealthCareCorporation,and their interests may differ from those of our stockholders;*We are exposed to risks related to governmental regulation and payors,principally Medicare and Medicaid,and theeffect of changes to laws,regulations and reimbursement rates on our tenants and borrowers busin
40、ess;*We are exposed to the risk that the cash flows of our tenants,managers and borrowers may be adversely affected byincreased liability claims and liability insurance costs;*We are exposed to the risk that we may not be fully indemnified by our tenants,managers and borrowers against futurelitigati
41、on;*We depend on the success of property development and construction activities,which may fail to achieve the operatingresults we expect;*We are exposed to the risk that the illiquidity of real estate investments could impede our ability to respond to adversechanges in the performance of our proper
42、ties;*We are exposed to risks associated with our investments in unconsolidated entities,including our lack of sole decision-making authority and our reliance on the financial condition of other interests;*We are subject to risks related to our joint venture investment with Life Care Services for Ti
43、mber Ridge,an entrance-fee continuing care retirement community,associated with Type A benefits offered to the residents of the jointventures entrance-fee community and the related accounting requirements;3*We are subject to additional risks related to healthcare operations associated with our inves
44、tments in unconsolidatedentities,which could have a material adverse effect on our results of operations;*Inflation and increased interest rates may adversely affect our financial condition and results of operations;*Adverse developments affecting the financial services industry,including events or
45、concerns involving liquidity,defaults,or non-performance by financial institutions,could adversely affect our business,financial condition,resultsof operations,or prospects;*We are exposed to operational risks with respect to our senior housing operating portfolio structured communities;*A cybersecu
46、rity incident or other form of data breach involving Company information could cause a loss ofconfidential consumer and other personal information,give rise to remediation and other expenses,expose us toliability under privacy and security and consumer protection laws,subject us to federal and state
47、 governmentalinquiries,damage our reputation,and otherwise be disruptive to our business;*We are exposed to risks related to environmental laws and the costs associated with liabilities related to hazardoussubstances;*We are subject to risks of damage from catastrophic weather and other natural or m
48、an-made disasters and the physicaleffects of climate change;*We depend on the success of our future acquisitions and investments;*We depend on our ability to reinvest cash in real estate investments in a timely manner and on acceptable terms;*Competition for acquisitions may result in increased pric
49、es for properties;*We depend on our ability to retain our management team and other personnel and attract suitable replacements shouldany such personnel leave;*We are exposed to the risk that our assets may be subject to impairment charges;*Our ability to raise capital through equity sales is depend
50、ent,in part,on the market price of our common stock,and ourfailure to meet market expectations with respect to our business,or other factors we do not control,could negativelyimpact such market price and availability of equity capital;*We may need to refinance existing debt or incur additional debt
51、in the future,which may not be available on termsacceptable to us;*We have covenants related to our indebtedness which impose certain operational limitations and a breach of thosecovenants could materially adversely affect our financial condition and results of operations;*Downgrades in our credit r
52、atings could have a material adverse effect on our cost and availability of capital;*We depend on revenues derived mainly from fixed rate investments in real estate assets,while a portion of our debtused to finance those investments bears interest at variable rates,which subjects us to interest rate
53、 risk;*We rely on external sources of capital to fund future capital needs,and if we encounter difficulty in obtaining suchcapital,we may not be able to make future investments necessary to grow our business or meet maturingcommitments;*Changes in our variable interest rates may adversely affect our
54、 cash flows;*We depend on the ability to continue to qualify for taxation as a real estate investment trust(“REIT”)for U.S.federalincome tax purposes;*There are no assurances of our ability to pay dividends in the future;4*Complying with REIT requirements may cause us to forego otherwise attractive
55、acquisition opportunities or liquidateotherwise attractive investments,which could materially hinder our performance;*Our ownership of and relationship with any taxable REIT subsidiaries that we have formed or will form will be limitedand a failure to comply with the limits would jeopardize our REIT
56、 status and may result in the application of a 100%excise tax;*Legislative,regulatory,or administrative changes could adversely affect us or our security holders;*We have ownership limits in our charter with respect to our common stock and other classes of capital stock whichmay delay,defer or preve
57、nt a transaction or a change of control that might involve a premium price for our commonstock or might otherwise be in the best interests of our stockholders;and*We are subject to certain provisions of Maryland law and our charter and bylaws that could hinder,delay or prevent achange in control tra
58、nsaction,even if the transaction involves a premium price for our common stock or ourstockholders believe such transaction to be otherwise in their best interests.See the notes to the consolidated financial statements,and“Item 1.Business”and“Item 1A.Risk Factors”herein for a further discussion of th
59、ese and of other factors that could cause our future results to differ materially from any forward-looking statements.You should carefully consider these risks before making any investment decisions in the Company.These risks and uncertainties are not the only ones facing the Company.There may be ad
60、ditional risks that we do not presently know of or that we currently deem immaterial.If any of the risks actually occur,our business,financial condition,results of operations,or cash flows could be materially and adversely affected.In that case,the trading price of our common stock could decline and
61、 you may lose part or all of your investment.Our forward-looking statements speak only as of the date made and we expressly disclaim any responsibility to update our forward-looking statements,whether as a result of new information,future events,or otherwise,except as required by law.Given these ris
62、ks and uncertainties,we can give no assurance that these forward-looking statements will,in fact,occur and,therefore,caution investors not to place undue reliance on them.ITEM 1.BUSINESSGeneralNational Health Investors,Inc.,established in 1991 as a Maryland corporation,is a self-managed REIT special
63、izing in sale-leaseback,joint venture,and mortgage and mezzanine financing of need-driven and discretionary senior housing and medical facility investments.We operate through two reportable segments:Real Estate Investments and Senior Housing Operating Portfolio(“SHOP”).Our Real Estate Investments se
64、gment consists of real estate investments and lease,mortgage and other notes receivables in independent living facilities,assisted living facilities,entrance-fee communities,senior living campuses,skilled nursing facilities and a hospital.As of December 31,2023,we had gross investments of approximat
65、ely$2.4 billion in 163 healthcare real estate properties located in 31 states and leased primarily pursuant to triple-net leases to 25 tenants,consisting of 97 senior housing communities,65 skilled nursing facilities and one hospital,excluding one property classified as assets held for sale.Our port
66、folio of 16 mortgages along with other notes receivable totaled$260.7 million,excluding an allowance for expected credit losses of$15.5 million,as of December 31,2023.Our SHOP segment is comprised of two ventures that own the operations of independent living facilities.As of December 31,2023,we had
67、gross investments of approximately$347.4 million in 15 properties located in eight states with a combined 1,733 units that are operated on behalf of the Company by independent managers pursuant to the terms of separate management agreements that commenced April 1,2022.The third-party managers,or rel
68、ated parties of the managers,own equity interests in the respective ventures.We fund our real estate investments primarily through:(1)operating cash flow,(2)debt offerings,including bank lines of credit and term debt,both unsecured and secured,and(3)the sale of equity securities.Our investments in r
69、eal estate and mortgage loans are secured by real estate located within the United States.Information about revenues from our tenants,resident fees,and borrowers,and our net income,cash flows and balance sheet can be found in“Item 8.Financial Statements and Supplementary Data”of this Annual Report o
70、n Form 10-K.5Sources of RevenuesOur revenues are derived primarily from rental income,mortgage and other notes receivable interest income and resident fees and services.During 2023,rental income was$249.2 million(77.9%),interest income from mortgages and other notes receivable was$21.8 million(6.8%)
71、and SHOP revenue was$48.8 million(15.3%)of total revenue of$319.8 million,an increase of 15.0%from 2022.Our revenues depend on the operating success of our tenants,borrowers and managers,whose sources and amounts of revenues are determined by(i)the licensed beds or other capacity of the facility,(ii
72、)their occupancy rate,(iii)the extent to which the services provided at each facility are utilized by the residents and patients,(iv)the mix of private pay,Medicare and Medicaid patients,and(v)the rates paid by private payors and by the Medicare and Medicaid programs.Classification of Properties in
73、our PortfolioWe operate our business through two reportable segments:Real Estate Investments and SHOP.We classify all of the properties in our Real Estate Investments portfolio as either senior housing or medical properties.Because our leases represent different underlying revenue sources and result
74、 in differing risk profiles,we further classify our senior housing properties as either need-driven(assisted living facilities and senior living campuses)or discretionary(independent living facilities and entrance-fee communities).Our SHOP segment is comprised of 15 independent living facilities loc
75、ated throughout the United States.Real Estate InvestmentsSenior Housing.As of December 31,2023,our portfolio included 97 senior housing properties(“SHO”)leased to operators and mortgage loans secured by nine SHOs.The SHOs in our portfolio are either need-driven or discretionary for end users and con
76、sist of assisted living facilities,senior living campuses,independent living facilities,and entrance-fee communities,which are more fully described below.Need-Driven Senior HousingAssisted Living Facilities.As of December 31,2023,our portfolio included 71 assisted living facilities(“ALF”)leased to o
77、perators and mortgage loans secured by eight ALFs.ALFs are free-standing facilities that provide basic room and board functions for elderly residents.As residents typically receive assistance with activities of daily living such as bathing,grooming,administering medication and memory care services,w
78、e consider these facilities to be need-driven senior housing.On-site staff personnel are available to assist in minor medical needs on an as-needed basis.Operators of ALFs are typically paid from private sources without assistance from the government.ALFs may be licensed and regulated in some states
79、,but generally do not require the issuance of a Certificate of Need(“CON”)as is often required for skilled nursing facilities(“SNFs”).Senior Living Campuses.As of December 31,2023,our portfolio included eight senior living campuses(“SLC”)leased to operators.SLCs contain one or more buildings that in
80、clude skilled nursing beds combined with an independent or assisted living facility that provides basic room and board functions for elderly residents.They may also provide assistance to residents with activities of daily living such as bathing,grooming and administering medication.On-site staff per
81、sonnel are available to assist with minor medical needs on an as-needed basis.As the decision to transition to a SLC is typically more than a lifestyle choice and is usually driven by the need to receive some moderate level of care,we consider this facility type to be need-driven.Operators of SLCs a
82、re typically paid from private sources and from government programs such as Medicare and Medicaid for skilled nursing residents.SLCs may be licensed and regulated as nursing homes in some states and may also require a CON.Discretionary Senior HousingIndependent Living Facilities.As of December 31,20
83、23,our portfolio included seven independent living facilities(“ILF”)leased to operators.ILFs offer specially designed residential units for active senior adults and provide various ancillary services for their residents including restaurants,activity rooms and social areas.Services provided by ILF o
84、perators are generally paid from private sources without assistance from government payors.ILFs are generally,but not always,unlicensed facilities and do not require the issuance of a CON as required for SNFs.As ILFs typically do not provide assistance with activities of daily living,we consider the
85、 decision to transition to an ILF to be discretionary.6Entrance-Fee Communities.As of December 31,2023,our portfolio included 11 entrance-fee communities(“EFC”)leased to operators and mortgage loans secured by one EFC.EFCs,frequently referred to as continuing care retirement communities(“CCRC”),typi
86、cally include a combination of detached cottages,an ILF,an ALF and a SNF on one campus.These communities appeal to residents because there is no need to relocate when health and medical needs change.EFCs are classified as Type A,B,or C depending upon the amount of healthcare benefits included in the
87、 entrance fee.“Type A”EFCs,or“Lifecare”communities,such as Timber Ridge,held by us since January 31,2020 in a joint venture,include substantially all future healthcare costs in the payment of an entrance fee and thereafter payment of a monthly set service fee.The entrance fee is divided into a refun
88、dable and non-refundable portion depending upon the residents chosen contract program.The service fee is determined at the time of move-in into an independent living(“IL”)unit and is subject to certain inflation-based adjustments regardless of the residents future care needs.A resident must move int
89、o an IL unit initially and not require care at the time of move-in.Thereafter,the residents care requirements from assisted living to memory care to skilled nursing are provided for.“Type B”EFCs are communities providing a modified healthcare contract offering access to skilled nursing care but only
90、 paying for a maximum number of days.Finally,“Type C”EFCs,the classification applicable to ten communities in our lease portfolio and one community securing a mortgage loan,are fee-for-service communities,which do not provide any healthcare benefits and correspondingly have the lowest entrance fees.
91、However,monthly fees may be higher to reflect the current healthcare components delivered to each resident.EFC licensure is state-specific,but generally skilled nursing beds included in our EFC portfolio are subject to state licensure and regulation.Certain services may also require a CON.As the dec
92、ision to transition to an EFC is typically made as a lifestyle choice and not as the result of a pressing medical concern,we consider the decision to transition to an EFC to be discretionary.Accordingly,the predominant source of revenue for operators of EFCs is from private payor sources.Medical.As
93、of December 31,2023,our portfolio included 66 medical facilities leased to operators and mortgage loans secured by seven medical facilities.The medical facilities within our portfolio consist of SNFs and a hospital,which are more fully described below.Skilled Nursing Facilities.As of December 31,202
94、3,our portfolio included 65 SNFs leased to operators and mortgage loans secured by seven SNFs.SNFs provide some combination of skilled and intermediate nursing and rehabilitative care,including speech,physical and occupational therapy.The operators of the SNFs receive payment from a combination of p
95、rivate pay sources and government payors such as Medicaid and Medicare.SNFs are required to obtain state licenses and are highly regulated at the federal,state and local levels.Operators in 9 of the 11 states in which we own SNFs must obtain a CON from the state before opening or expanding such faci
96、lities.Some SNFs also include assisted living beds.As the decision to utilize the services of a SNF is typically made as the result of a pressing medical concern,we consider this to be a need-driven medical facility.Hospitals.As of December 31,2023,our portfolio included one hospital(“HOSP”)leased t
97、o an operator.HOSPs provide a wide range of inpatient and outpatient services,which may include acute psychiatric,behavioral and rehabilitation services,and are subject to extensive federal,state and local legislation and regulation.HOSPs undergo periodic inspections regarding standards of medical c
98、are,equipment and hygiene as a condition of licensure.Services provided by HOSPs are generally paid for by a combination of private pay sources and government payors.As the decision to utilize the services of a HOSP is typically made as the result of a pressing medical concern,we consider this to be
99、 a need-driven medical facility.Medical Office Building.As of December 31,2023,our portfolio included no medical office buildings(“MOB”).We have a$50.0 million mezzanine loan and security agreement with Montecito Medical Real Estate for a fund that invests in medical real estate,including MOBs.Histo
100、rically,our investment strategy has included owning and leasing MOBs whose tenants are primarily physicians and other medical practitioners.As the decision to utilize the services of an MOB is typically made as the result of a pressing medical concern,we consider this to be a need-driven medical fac
101、ility.The MOB differs from conventional office buildings due to the special requirements of the tenants.Senior Housing Operating PortfolioAs of December 31,2023,our portfolio included 15 ILFs with a combined 1,733 units located throughout the United States,which we consider to be discretionary senio
102、r housing as discussed in more detail above.7Nature of InvestmentsOur investments are typically structured as acquisitions of properties through purchase-leaseback transactions,acquisitions of properties from other real estate investors,loans,or operations through structures allowed by the REIT Inve
103、stment Diversification Empowerment Act of 2007(“RIDEA”).We have provided construction loans for certain facilities for which we were already committed to provide long-term financing or for which the operator agreed to enter into a purchase option and lease with us upon completion of construction or
104、after the facility is stabilized.The annual interest rates we receive on our mortgage,construction and mezzanine loans ranged between 6.0%and 12.0%during 2023.We believe our lease and loan terms are competitive within our peer group.Typical characteristics of our investment transactions are as follo
105、ws:Leases.Our leases for the properties in our Real Estate Investments segment generally have an initial leasehold term of 10 to 15 years with one or more five-year tenant renewal options.The leases are“triple-net leases”under which the tenant is responsible for the payment of all taxes,utilities,in
106、surance premiums,repairs and other charges relating to the operation of the properties,including required levels of capital expenditures each year.The tenant is obligated at its expense to keep all improvements,fixtures and other components of the properties covered by“all risk”insurance in an amoun
107、t equal to at least the full replacement cost thereof,and to maintain specified minimum personal injury and property damage insurance,protecting us as well as the tenant.The leases also require the tenant to indemnify and hold us harmless from all claims resulting from the use,occupancy and related
108、activities of each property by the tenant,and to indemnify us against all costs related to any release,discovery,clean-up and removal of hazardous substances or materials,or other environmental responsibility with respect to each facility.Most of our existing leases contain annual escalators in rent
109、 payments.For financial statement purposes,rental income is recognized on a straight-line basis over the term of the lease where the lease contains fixed escalators.Certain of our tenants hold purchase options allowing them to acquire properties they currently lease from NHI.When present,tenant purc
110、hase options generally give the tenant an option to purchase the underlying property for consideration not less than our net investment basis.Some of the obligations under the leases are guaranteed by the parent corporation of the tenant,if any,or affiliates or individual principals of the tenant.In
111、 some leases,third parties or affiliated entities will also guarantee some portion of the lease obligations.Some obligations are backed further by other collateral such as security deposits,trade receivables,equipment,furnishings and other personal property.We monitor our triple-net tenant credit qu
112、ality and identify any material changes by performing the following activities:Obtaining financial statements on a monthly,quarterly and annual basis to assess the operational trends of our tenantsand the financial position and capability of those tenantsCalculating the operating cash flow for each
113、of our tenantsCalculating the lease service coverage ratio and other ratios pertinent to our tenantsObtaining property-level occupancy rates for our tenantsVerifying the payment of real estate taxes by our tenantsObtaining certificates of insurance for each tenantObtaining reviewed or audited financ
114、ial statements of our tenant corporate guarantors on an annual basis,if applicableConducting a periodic inspection of our properties to ascertain proper maintenance,repair and upkeepMonitoring those tenants with indications of continuing and material deteriorating credit quality through discussionsw
115、ith our executive management and Board of DirectorsMortgage loans.We have mortgage loans with original maturities generally less than five years,with varying amortization schedules from interest-only to fully amortizing.Most of the loans are at a fixed interest rate;however,some interest rates incre
116、ase based on a fixed schedule.In most cases,the owner of the facility is committed to make minimum annual capital expenditures for the purpose of maintaining or upgrading their respective facility.Additionally,most of our loans are collateralized by first or second mortgage liens and corporate or pe
117、rsonal guarantees.As of December 31,2023,we had eight mortgage loans bearing interest ranging from 7.0%to 12.0%per annum.Mezzanine loans.Frequently in situations calling for temporary financing or when our borrowers in-place lending arrangements prohibit the extension of mortgage security,we extend
118、credit based on corporate and/or personal guarantees.These mezzanine loans sometimes combine with an NHI purchase option covering the subject property.As of December 31,2023,we had seven mezzanine loans bearing interest rates ranging from approximately 6.0%to 10.0%per annum.Construction loans.From t
119、ime to time,we provide construction loans that become mortgage loans upon the completion of the construction of the subject facility.We may also obtain a purchase option to acquire the facility at a future date and,if purchased,will lease the facility back to the borrower.During the term of the cons
120、truction loan,funds are usually advanced 8pursuant to draw requests made by the borrower in accordance with the terms and conditions of the loan.Interest is typically assessed on these loans at rates equivalent to the eventual mortgage rate upon conversion.In addition to the security of the lien aga
121、inst the property,we will generally require additional security and collateral in the form of either payment and performance completion bonds or completion guarantees by the borrowers parent,affiliates of the borrower or one or more of the individuals who control the borrower.As of December 31,2023,
122、we had three construction loans bearing interest ranging from 8.5%to 9.0%per annum.Other notes receivable.We have provided two revolving lines of credit to borrowers involved in the senior housing industry who have provided either personal and business guarantees or other assets as security that bea
123、r interest at a fixed rate of 8.0%per annum and a variable rate of 8.9%as of December 31,2023.RIDEA Transactions.Our arrangement with an affiliate of Life Care Services,which we completed in January 2020 and is structured to be compliant with the provisions of RIDEA,permits NHI to receive rent payme
124、nts through a triple-net lease between a property company owned 80%by NHI and an unconsolidated operating company owned 25%by a taxable REIT subsidiary(“TRS”)of NHI and gives NHI the opportunity to capture additional value on the improving performance of the operating company through distributions t
125、o the TRS.This organizational structure allows the TRS to engage in a broad range of activities and share in revenues that would otherwise be non-qualifying income under the REIT gross income tests.The TRS is subject to state and federal income taxes.Senior Housing Operating Portfolio.Effective Apri
126、l 1,2022,15 senior housing ILFs previously part of the legacy Holiday Retirement(“Holiday”)properties were transferred from a triple-net lease to two separate ventures comprising our SHOP segment,which represents a new reportable segment in 2022.These ventures,in which NHI holds a majority interest,
127、own the underlying independent living operations and are structured to comply with REIT requirements that utilize the TRS for activities that would otherwise be non-qualifying for REIT purposes.These properties are operated by two third-party property managers that manage our communities in exchange
128、 for the receipt of a management fee,and as such,we are not directly exposed to the credit risk of the property managers in the same manner or to the same extent as we are to our triple-net tenants.However,we rely on the property managers personnel,expertise,technical resources and information syste
129、ms,proprietary information,good faith and judgment to manage our communities efficiently and effectively.We also rely on the property managers to set appropriate resident fees and otherwise operate our communities in compliance with the terms of our management agreements and all applicable laws and
130、regulations.As of December 31,2023,our SHOP segment consisted of 15 ILFs located in eight states with a combined 1,733 units.Operator CompositionFor the year ended December 31,2023,approximately 24%of our Real Estate Investments and SHOP portfolio net operating income(“NOI”)was from publicly owned o
131、perators,68%was from regional operators,4%was from privately owned national chains and 1%was from smaller operators.Tenants in our Real Estate Investments portfolio which individually provided more than 3%and collectively 61%of our total revenues were(parent companies,in alphabetical order):Bickford
132、 Senior Living(“Bickford”);Discovery Senior Living(“Discovery”);Encore Senior Living;Health Services Management;Life Care Services;National HealthCare Corporation(“NHC”);Senior Living Communities(“Senior Living”);and The Ensign Group.We make reference to the parent companies whenever we describe our
133、 business with these tenants,their subsidiaries and/or affiliates regardless of the specific subsidiary entity indicated on the lease or loan documents.For the year ended December 31,2023,our SHOP segment comprised approximately 3%of our NOI which is managed by two regional operators.Tenant Concentr
134、ationThe following table contains information regarding tenant concentration in our Real Estate Investments portfolio,excluding$2.6 million for our corporate office,$347.4 million for the SHOP segment,and a credit loss reserve of$15.5 million,based on the percentage of revenues for the years ended D
135、ecember 31,2023,2022 and 2021 related to tenants or affiliates of tenants that exceed 10%of total revenue($in thousands):9As of December 31,2023Revenues1AssetGross RealNotesYear Ended December 31,ClassEstate2Receivable202320222021Senior LivingEFC$573,631$48,950$51,274 16%$51,183 18%$50,726 17%NHCSNF
136、133,770 37,335 12%36,893 13%37,735 12%Bickford3ALF429,043 16,795 38,688 12%N/A N/A34,599 12%All others,netVarious 1,293,969 195,002 132,216 41%144,534 52%164,017 55%Escrow funds received from tenants for property operating expensesVarious 11,513 4%9,788 4%11,638 4%$2,430,413$260,747 271,026 242,398
137、298,715 Resident fees and services448,809 15%35,796 13%$319,835$278,194$298,715 1 Includes interest income on notes receivable and rental income from properties classified as held for sale.2 Amounts include any properties classified as held for sale.3 Revenues included in All others,net for years wh
138、en less than 10%.4 There is no tenant concentration in Resident fees and services because these agreements are with individual residents.At both December 31,2023 and 2022,the two states in which we had an investment concentration of 10%or more were South Carolina(12.1%)and Texas(10.7%).Senior Living
139、-As of December 31,2023,we leased ten retirement communities totaling 2,216 units to Senior Living pursuant to triple-net lease agreements maturing through December 2029.Straight-line rent revenue of$(1.2)million,$0.4 million and$2.5 million and interest revenue of$3.7 million,$3.7 million and$3.2 m
140、illion were recognized from Senior Living for the years ended December 31,2023,2022 and 2021,respectively.We have provided a$20.0 million revolving line of credit to Senior Living whose borrowings under the revolver are to be used for working capital and to finance construction projects within its p
141、ortfolio,including building additional units.Beginning January 1,2025,availability under the revolver will be reduced to$15.0 million.The revolver matures in December 2029 at the time of lease maturity.At December 31,2023,the$16.3 million outstanding under the revolver bore interest at 8.0%per annum
142、.The Company also provided a mortgage loan of$32.7 million to Senior Living that originated in July 2019 for the acquisition of a 248-unit CCRC in Columbia,South Carolina.The mortgage loan is for a term of five years with two one-year extensions and bears interest at a rate of 7.25%per annum.Additio
143、nally,the loan conveys to NHI a purchase option at a stated minimum price of$38.3 million,subject to adjustment for market conditions.NHC-The facilities leased to NHC,a publicly held company,are under a master lease and consist of three ILFs and 32 SNFs(four of which are subleased to other parties f
144、or whom the lease payments are guaranteed to us by NHC).Effective September 1,2022,we amended the master lease dated October 17,1991,concurrently with the sale of a portfolio of seven SNFs to increase the annual base rent due each year through the expiration of the master lease on December 31,2026.T
145、here are two additional five-year renewal options at a fair rental value as negotiated between the parties.In addition to the base rent,NHC pays any additional rent and percentage rent as required by the master lease.Under the terms of the amended lease,the base annual rent escalates by 4%of the inc
146、rease,if any,in each facilitys annual revenue over a 2007 base year.We refer to this additional rent component as“percentage rent.”Total percentage rent of$4.5 million,$3.1 million,and$3.5 million was recognized for the years ended December 31,2023,2022 and 2021,respectively.Straight-line rent reven
147、ue of$(1.2)million and$(0.5)million was recognized for NHC for the years ended December 31,2023 and 2022,respectively.No material straight-line rent was recognized for the year ended December 31,2021.Two of our board members,including our chairperson,are also members of NHCs board of directors.As of
148、 December 31,2023,NHC owned 1,630,642 shares of our common stock.Bickford-As of December 31,2023,we leased 39 facilities,under four leases to Bickford.During the second quarter of 2022,we converted Bickford to the cash basis of revenue recognition based upon information obtained from Bickford regard
149、ing 10its financial condition that raised substantial doubt as to its ability to continue as a going concern.As a result,we wrote off approximately$18.1 million of straight-line rents receivable and$7.1 million of lease incentives,that were included in“Other assets,net”on the Consolidated Balance Sh
150、eet,to rental income in 2022.Straight-line rent revenue of$(18.2)million and$1.7 million was recognized from the Bickford leases for the years ended December 31,2022 and 2021,respectively.In February 2023,we acquired a 64-unit assisted living and memory care community in Chesapeake,Virginia from Bic
151、kford.The acquisition price was$17.3 million,including the satisfaction of an outstanding construction note receivable of$14.2 million including interest,cash consideration of$0.5 million and approximately$0.1 million in closing costs.The acquisition price also included a reduction of$2.5 million in
152、 Bickfords outstanding pandemic-related rent deferrals that has been recognized in“Rental income”during the year ended December 31,2023.We added the community to an existing master lease with Bickford at an initial rate of 8.0%.During the first quarter of 2023,we disposed of one property that is inc
153、luded in the asset dispositions table in Note 3 to our consolidated financial statements under“2023 Asset Dispositions.”Cash rent received from Bickford for the years ended December 31,2023,2022 and 2021 was$33.4 million,$27.6 million and$29.5 million,respectively,including its repayment of outstand
154、ing pandemic-related rent deferrals of$2.3 million and$0.2 million for the years ended December 31,2023 and 2022,respectively.These amounts exclude$2.5 million and$3.0 million of rental income for the years ended December 31,2023 and 2022,respectively,related to the reduction of pandemic-related ren
155、t deferrals in connection with the acquisition of two ALFs located in Virginia discussed above and in Note 3 to our consolidated financial statements.As of December 31,2023,Bickfords outstanding pandemic-related rent deferrals were$18.0 million.During the first half of 2022,we transferred one ALF lo
156、cated in Pennsylvania from the Bickford portfolio to a new operator that is leased pursuant to a ten-year triple-net lease and wrote off approximately$0.7 million in a straight-line rents receivable,reducing rental income.Effective April 1,2022,we restructured and amended three of Bickfords master l
157、ease agreements covering 28 properties and reached agreement on the repayment terms of its outstanding pandemic-related rent deferrals.Significant terms of these agreements are as follows:Extended the maturity dates of the modified leases to 2033 and 2035.The remaining master lease agreement coverin
158、g11 properties with an original maturity in 2023 was previously extended to 2028.Reduced the combined rent for the portfolio(excluding the ALF in Virginia Beach acquired in the fourth quarter of2022)to approximately$28.3 million per year through April 1,2024,subject to a nominal annual increase,at w
159、hichtime the rent will be reset to a fair market value,but not less than 8.0%of our initial gross investment.Required monthly payments from October 2022 through December 2024 based on a percentage of Bickfords monthlyrevenues exceeding an established threshold to be applied to the outstanding pandem
160、ic-related rent deferrals granted toBickford.The deferrals may be reduced by up to$6.0 million upon Bickford achieving certain performance targets andthe sale or transition of certain properties to new operators of which$2.5 million was earned in the first quarter of2023 and$3.0 million was earned i
161、n the fourth quarter of 2022.Bickford Construction Loans-As of December 31,2023,we had one fully funded construction loan of$14.7 million to Bickford bearing interest at 9.0%per annum.The construction loan is secured by first mortgage liens on substantially all real and personal property as well as
162、a pledge of any and all leases or agreements which may grant a right of use to the property.Usual and customary covenants extend to the agreements,including the borrowers obligation for payment of insurance and taxes.NHI has a fair market value purchase option on the property at stabilization of the
163、 underlying operations.During the third quarter of 2023,we designated as non-performing a mortgage note receivable of$2.1 million due from Bickford.The note,due February 2025,bears interest at 7.0%per annum,and began amortizing on a twenty-five-year basis in January 2021.Holiday Portfolio Transition
164、 On April 1,2022,we completed the restructuring of our legacy Holiday portfolio comprised of 26 ILFs as of the beginning of 2021.Below is a summary of the pertinent restructuring activities:11On July 30,2021,Welltower Inc.(“Welltower”)completed the acquisition of a portfolio of legacy Holiday proper
165、tiesfrom Fortress Investment Group and entered into a new agreement with Atria Senior Living to assume operations ofthe Holiday portfolio.These transactions resulted in a Welltower-controlled subsidiary becoming the tenant under ourexisting master lease for the NHI-owned Holiday real estate assets.R
166、ental income from our Holiday portfolio was$23.5 million in 2021 prior to the change in tenant ownership.In the third quarter of 2021,we sold nine of these properties for net proceeds of$119.7 million.We received no rent from the Welltower-controlled affiliate due under the master lease after the ch
167、ange in tenantownership occurred in late July 2021.Accordingly,we placed the tenant on cash basis and filed suit against Welltowerand certain of its subsidiaries for default under the master lease.Reference Note 9 to the consolidated financialstatements for further discussion of the litigation and i
168、ts settlement in 2022.During the first quarter of 2022,we applied the remaining approximately$8.8 million legacy Holiday lease deposit topast due rents.On April 1,2022,we received$6.9 million upon settlement and dismissal of the Welltower litigation.Concurrentlywith the settlement and dismissal,we t
169、ransitioned 15 of the legacy Holiday ILFs into two separate partnership venturesthat own the underlying independent living operations,forming our SHOP segment.Reference Notes 5 and 9 to theconsolidated financial statements for more discussion.On April 1,2022,we disposed of one property classified in
170、 assets held for sale for net proceeds of$3.0 million andtransitioned one assisted living community in Florida to our existing real estate partnership with Discovery.Thetransitioned property was added to the partnerships in-place master lease.Commitments and ContingenciesIn the normal course of busi
171、ness,we enter into a variety of commitments,typically consisting of funding revolving credit arrangements,and construction and mezzanine loans to our operators to conduct expansions and acquisitions for their own account,and commitments for the funding of construction for expansion or renovation to
172、our existing properties under lease.In our leasing operations,we offer to our tenants and to sellers of newly acquired properties a variety of inducements that originate contractually as contingencies but which may become commitments upon the satisfaction of the contingent event.Contingent payments
173、earned will be included in the respective lease bases when funded.As of December 31,2023,we had working capital,construction and mezzanine loan commitments to six operators or borrowers for an aggregate of$130.7 million,of which we had funded$89.3 million toward these commitments.As of December 31,2
174、023,$11.7 million of the funding obligations are payable within 12 months with the remaining commitments due between three to five years.As of December 31,2023,we had$14.5 million of development commitments for construction and renovation of four properties,of which we had funded$11.0 million toward
175、 these commitments,with the remaining amount expected to be payable within 12 months.In addition to these commitments,we had approximately$1.0 million in various other commitments not yet funded as of December 31,2023.As of December 31,2023,we had an aggregate of$11.6 million in remaining contingent
176、 lease inducement commitments in four lease agreements which are generally based on the performance of facility operations and may or may not be met by the tenant.At December 31,2023,we had funded$2.7 million toward these commitments.In addition,we funded a$10.0 million lease incentive in February 2
177、023 to Timber Ridge OpCo based upon the achievement of all performance conditions.Competition and Market ConditionsWe compete primarily with other REITs,private equity funds,banks and insurance companies in the acquisition,leasing and financing of healthcare real estate.Operators of our facilities c
178、ompete on a local and regional basis with operators of facilities that provide comparable services.Operators compete for residents and/or patients and staff based on quality of care,reputation,location and physical appearance of facilities,services offered,family preference,physicians,staff and pric
179、e.Competition is with other operators as well as companies managing multiple facilities,some of which are substantially larger and have greater resources than the 12operators of our facilities.Some of these facilities are operated for profit,while others are owned by governmental agencies or tax exe
180、mpt not-for-profit entities.Our senior housing properties generally rely on private-pay residents who may be negatively impacted in an economic downturn.In addition,the success of these properties is often impacted by the existence of comparable,competing facilities in a local market.Environmental M
181、attersWe believe that integrating environmental and sustainability initiatives into our strategic business objectives will contribute to our long-term success and to the success of our tenants by enhancing the quality of life of the residents of the facilities.Listed below are some of the highlights
182、 of our efforts to promote environmental sustainability at our properties and with our tenants.We provide our triple-net lease operators capital improvement allowances for the redevelopment,expansions andrenovations at our properties which may include energy efficient improvements like LED lighting
183、and low emissioncarpeting,recycled materials and solar power;We provide our development partners with capital to build new state-of-the-art properties with energy efficientcomponents and design features;We obtain Phase I and Phase II environmental reports if warranted as part of our due diligence pr
184、ocedures whenacquiring properties and attempt to avoid buying real estate with known environmental contamination;andWe strive for efficiency and sustainability in our corporate headquarters,participate in a recycling program,andencourage our employees to reduce,reuse and recycle waste.Our document r
185、etention practices strive to reduce paperusage and encourage electronic file sharing.We are also subject to environmental risks and regulations in our business.See“Government Regulation Environmental Regulations”below;“Item 1A.Risk Factors Risks Related to our Business and Operations-We are exposed
186、to risks related to environmental laws and the costs associated with liabilities related to hazardous substances”and“We are subject to risks of damage from catastrophic weather and other natural or man-made disasters and the physical effects of climate change”for a description of the risks and regul
187、ations associated with environmental matters.Human CapitalWe employ individuals who possess a broad range of experiences,background and skills.We believe that to continue to deliver long-term value to our stockholders,we must provide and maintain a work environment that attracts,develops,and retains
188、 top talent and affords our employees an engaging work experience that allows for career development and opportunities.Along with a competitive compensation program including incentive bonuses and an equity incentive plan,NHI provides a 401(k)plan with a safe harbor contribution limit,paid employee
189、health insurance coverage and tuition reimbursement.As of December 31,2023,we had 26 full-time employees,an increase of one over the total at December 31,2022.Of those employees,22 are located in the Murfreesboro,Tennessee office,with one employee in each of Colorado,Florida,Oregon and Texas.The ten
190、ure of our current employees includes six who have been with the Company for over five years(but less than ten years),and three who have been with the Company over ten years(but less than 20 years).Two of our employees have been with the Company over 20 years.None of our employees are subject to a c
191、ollective bargaining agreement.We empower our employees and reinforce our corporate culture through onboarding,training,and social and team-building events.We actively support charitable organizations within our community that promote health education and social well-being,and we encourage our emplo
192、yees to personally volunteer with organizations that are meaningful to them.We consider our employee relations to be good.Certain essential services such as internal audit,tax compliance,information technology and legal services are outsourced to third-party professional firms.Government RegulationO
193、verview.Our tenants and borrowers that operate SNFs,nursing homes,HOSPs,SLCs,ALFs and EFCs are typically subject to extensive and complex federal,state and local healthcare laws and regulations,including those relating to Medicare 13and Medicaid reimbursement,fraud and abuse,relationships with refer
194、ral sources and referral recipients,licensure and certification,building codes,privacy and security of health information and other personal data,CON,appropriateness and classification of care,qualifications of medical and support personnel,distribution,maintenance and dispensing of pharmaceuticals,
195、communications with patients and consumers,and the operation of healthcare facilities.In addition,many of our tenants and borrowers that operate ILFs may be subject to state licensing,and all of our properties are subject to environmental regulations related to real estate.Applicable laws and regula
196、tions are wide-ranging,vary across jurisdictions,and are administered by several government agencies.Further,these laws and regulations are subject to change,enforcement practices may evolve,and it is difficult to predict the impact of new laws and regulations.We expect that the healthcare industry,
197、in general,will continue to face increased regulation.Our tenants may find it increasingly difficult and costly to operate within this complex and evolving regulatory environment.Noncompliance with applicable laws and regulations may result in the imposition of civil and criminal penalties that coul
198、d adversely affect the operations and financial condition of tenants,managers or borrowers,which in turn may adversely affect us.The following is a brief discussion of certain laws and regulations applicable to certain of our tenants,managers and borrowers and,in some cases,to us.Licensure and Certi
199、fication.Various licenses,certifications and permits are required to operate SNFs,ALFs,EFCs,HOSPs and,to a lesser degree,ILFs,to dispense narcotics,to handle radioactive materials and to operate equipment,among other regulated actions.Licensure,certification and enrollment with government programs m
200、ay be conditioned on requirements related to,among other things,the quality of medical care provided,qualifications of the operators administrative personnel and clinical staff,disclosure of ownership and related information,adequacy of the physical plant and equipment,staff-to-patient or resident r
201、atios,capital and other expenditures,record keeping,dietary services,infection prevention and control,and patient rights.For example,a final rule issued by the Centers for Medicare&Medicaid Services(“CMS”)in November 2023 requires Medicare-enrolled SNFs and Medicaid-enrolled nursing homes to disclos
202、e additional information about owners,operators and management,which will be publicly available.To increase transparency with regard to direct and indirect owning and managing entities,the rule establishes definitions of REIT and private equity company for purposes of Medicare enrollment and require
203、s providers to disclose whether an owner or manager is a REIT or private equity company.In addition,CMS issued requirements for certain healthcare facilities in response to the COVID-19 pandemic.Most of these requirements have expired,but requirements to report certain COVID-19-related data remain i
204、n effect.Licensed facilities are generally subject to periodic inspections by regulators to determine compliance with applicable licensure and certification standards.Further,some states have established requirements for facility spending,for example requiring nursing homes to spend a certain percen
205、tage of revenue on direct care for residents.Sanctions for failure to comply with these laws and regulations include(but are not limited to)loss of licensure and ability to participate in the Medicare,Medicaid,and other government healthcare programs,suspension of or non-payment for new admissions,f
206、ines,as well as potential criminal penalties.The failure of any tenant,manager or borrower to comply with such laws and regulations could affect its ability to operate its facility or facilities and could adversely affect any such tenants or borrowers ability to make lease or debt payments to us.In
207、addition,if we have to replace a tenant,we may experience difficulties in finding a replacement because our ability to replace the tenant may be affected by federal and state laws governing changes in control and ownership.The healthcare facilities in which we invest may be subject to state CON or s
208、imilar laws,which require government approval prior to the construction or establishment of new facilities,the expansion of existing facilities,the addition of beds to existing facilities,the addition of services or certain capital expenditures.CON requirements are not uniform throughout the United
209、States and are subject to change.We cannot predict the impact of regulatory changes with respect to CONs on the operations of our tenants,managers and borrowers.Medicare and Medicaid Reimbursement.A significant portion of the revenue of our SNF tenants and borrowers is derived from government-funded
210、 reimbursement programs,primarily Medicare and Medicaid.The Medicare and Medicaid programs are highly regulated and subject to frequent and substantial changes resulting from legislation,regulations and administrative and judicial interpretations of existing law.Medicare is a federal health insuranc
211、e program for persons age 65 and over,some disabled persons,and persons with end-stage renal disease or Lou Gehrigs disease/amyotrophic lateral sclerosis.Medicare generally covers SNF services for beneficiaries who require skilled nursing or therapy services after a qualifying hospital stay.Medicare
212、 Part A generally pays a per diem rate for each beneficiary.The reimbursement rates are set forth under a prospective payment system(“PPS”),an acuity-based classification system that uses nursing and therapy indexes,adjusted by additional factors such as geographic differences in wage rates,to calcu
213、late per diem rates for each Medicare beneficiary.The Medicare Part A payment rates cover most services to be provided to a beneficiary for a limited benefit period,including room and board,skilled nursing care,therapy,and medications.CMS updates Medicare payment rates annually.For fiscal year 2024,
214、which started October 1,2023,CMS estimates that payments to SNFs under the SNF PPS will increase by approximately$1.4 billion,or 4.0%,compared to fiscal year 2023.14CMS has implemented policies intended to shift Medicare to value-based payment methodologies that tie reimbursement to quality of care
215、rather than quantity.For example,CMS uses the Patient Driven Payment Model(“PDPM”)payment methodology for SNF services,which classifies beneficiaries into payment groups based on clinical factors using diagnosis codes rather than by volume of services.In addition,under the SNF Quality Reporting Prog
216、ram,CMS requires SNFs to report certain quality data,and SNFs that fail to do so are subject to payment reductions.Under the SNF Value-Based Purchasing Program,CMS reduces SNF Medicare payments by 2 percentage points,and redistributes the majority of these funds as incentive payments based on SNF qu
217、ality measure performance.From time to time,the U.S.Department of Health and Human Services(“HHS”)revises the reimbursement systems used to reimburse healthcare providers.For example,the Improving Medicare Post-Acute Care Transformation Act of 2014(“IMPACT Act”)requires HHS,in conjunction with the M
218、edicare Payment Advisory Commission(“MedPAC”),to work toward a unified payment system for post-acute care services provided by SNFs,inpatient rehabilitation facilities,home health agencies,and long-term care hospitals.A unified post-acute care payment system would pay post-acute care providers,inclu
219、ding SNFs,under a single framework according to a patients characteristics,rather than based on the post-acute care setting where the patient receives treatment.As required under the statute,CMS issued a report in July 2022 that presented a prototype for a unified post-acute care payment model,and M
220、edPAC issued a report in June 2023 evaluating a prototype design.Although both CMS and MedPAC determined that designing a unified prospective payment system for post-acute care providers is feasible,CMS noted that universal implementation of a unified model would require congressional action and Med
221、PAC cautioned that implementation would be complex.Due to the agency resources required to implement a unified model,MedPAC noted that CMS may consider smaller-scale site-neutral policies to address some of the overlap in patients treated in different settings and highlighted that recent changes to
222、various post-acute care payment systems address some of the concerns underlying the push for a unified model.Medicaid is a medical assistance program for eligible low-income persons that is funded jointly by federal and state governments.Medicaid programs are operated by state agencies under plans a
223、pproved by the federal government.Reimbursement methodologies,eligibility requirements and covered services vary from state to state.In many instances,revenues from Medicaid programs are insufficient to cover the actual costs incurred in providing care to patients,particularly in nursing facilities.
224、Outside of the government response to the COVID-19 pandemic,budgetary pressures have,in recent years,resulted in decreased spending,or decreased spending growth,for Medicaid programs in many states.Changes in federal policy and funding may be an additional source of uncertainty.For example,under ear
225、ly COVID-related legislation,states that maintain continuous Medicaid enrollment are eligible for a temporary increase in federal funds for state Medicaid expenditures.The resumption of redetermination for Medicaid enrollees in 2023 resulted in coverage disruptions and dis-enrollments of Medicaid en
226、rollees.Budgetary pressures are expected to continue in the future,and many states are actively seeking ways to reduce Medicaid spending,including for nursing home and assisted living care,by methods such as capitated payments,reductions in reimbursement rates,and increased enrollment in managed Med
227、icaid plans.Some states and managed care plans are pursuing alternatives to institutional care,such as home-based and community services.Several of the states in which we have investments have actively sought to reduce or slow the increase of Medicaid spending for care in nursing homes and other set
228、tings.In addition to reimbursement pressures and changes in governmental healthcare programs,healthcare facilities are experiencing increasing pressure from private payors attempting to control healthcare costs.In some cases,private payors rely on governmental reimbursement systems to determine reim
229、bursement rates and policies.Changes to Medicare and Medicaid that reduce payments under these programs or negatively affect utilization of services may negatively impact payments from private payors.We cannot make any assessment as to the timing or the effect that any such changes may have on our t
230、enants,managers and borrowers costs of doing business and on the amount of reimbursement by government and other third-party payors.There can be no assurance that future payment rates for either government or private payors will be sufficient to cover the cost of providing services to patients,inclu
231、ding any cost increases.Any changes in government or private payor reimbursement policies that reduce payments to levels that are insufficient to cover the cost of providing patient care could adversely affect the operating revenues of managers,tenants and borrowers in our properties that rely on su
232、ch payments,and thereby adversely affect their ability to make their lease or debt payments to us.COVID-19 Pandemic Provider Relief Fund.In response to the COVID-19 pandemic,the federal government authorized financial relief for eligible healthcare providers through the Public Health and Social Serv
233、ices Emergency Fund(“Provider Relief Fund”).Although,recipients are not required to repay Provider Relief Fund payments as long as they attest to and comply with certain terms and conditions,changes to interpretation of guidance on the underlying terms and conditions may result in derecognition of a
234、mounts previously received.A number of our tenants and borrowers received grants through the Provider Relief Fund.15Fraud and Abuse.Participants in the healthcare industry are subject to various complex federal and state civil and criminal laws and regulations governing a wide array of healthcare pr
235、ovider referrals,relationships and arrangements.These laws include but are not limited to:(i)federal and state false claims acts,which generally prohibit providers from filing false claims or making false statements to receive payment from Medicare,Medicaid or other federal or state healthcare progr
236、ams;(ii)federal and state anti-kickback and fee-splitting statutes,including the federal Anti-Kickback Statute,which prohibits the payment or receipt of any consideration in exchange for referral of Medicare and Medicaid patients;(iii)federal and state physician self-referral laws,including the fede
237、ral prohibition commonly referred to as the Stark Law,which generally prohibits referrals by physicians to entities for designated health services(which include hospital inpatient and outpatient services and some of the services provided in SNFs)with which the physician or an immediate family member
238、 has a financial relationship;and(iv)the federal Civil Monetary Penalties Law,which requires a lower burden of proof than other fraud and abuse laws.These laws and regulations subject violators to severe penalties,including exclusion from the Medicare and Medicaid programs,denial of Medicare and Med
239、icaid payments,punitive sanctions,fines and even prison sentences.They are enforced by a variety of federal,state and local agencies,and can also be enforced by private litigants through,among other things,federal and state false claims acts,which allow private litigants to bring qui tam or“whistleb
240、lower”actions.In recent years,both federal and state governments have significantly increased investigation and enforcement activity to detect and punish wrongdoers.It is anticipated that the trend toward increased investigation and enforcement activity will continue.In the event that any manager,te
241、nant or borrower were to be found in violation of any of these laws and regulations,that managers,tenants or borrowers ability to operate the facility could be jeopardized,which could adversely affect any such tenants or borrowers ability to make lease or debt payments to us and could thereby advers
242、ely affect us.Privacy and Security and Data Interoperability.Privacy and security regulations issued pursuant to the Health Insurance Portability and Accountability Act of 1996(“HIPAA”)restrict the use and disclosure of individually identifiable health information(“protected health information”),pro
243、vide for individual rights,require safeguards for protected health information and require notification of breaches of unsecure protected health information.Entities subject to HIPAA include health plans,healthcare clearinghouses,and most healthcare providers(including some of our managers,tenants a
244、nd borrowers).Business associates of these entities who create,receive,maintain or transmit protected health information are also subject to certain HIPAA provisions.Covered entities must report breaches involving unsecured protected health information to the affected individuals,HHS and,in large br
245、eaches,the media.Violations of HIPAA may result in substantial civil and/or criminal fines and penalties.There are several other laws and legislative and regulatory initiatives at the federal and state levels addressing privacy and security of personal data that may not be preempted by HIPAA.For exa
246、mple,the California Consumer Privacy Act(the“CCPA”)as amended by the California Privacy Rights Act,affords consumers,including those acting in an employment context,expanded privacy protections such as the right to know what personal information is collected and how it is used.Several other states h
247、ave enacted comprehensive consumer data privacy laws,providing residents of those states with additional or expanded rights with respect to their personal information such as a right to opt out of certain processing activities for sensitive data and a right to a portable copy of their personal infor
248、mation.State privacy laws typically provide for civil penalties for violations,and some states provide a private right of action for data breaches,which may increase data breach litigation.Beyond providing residents with certain explicit rights,consumer data privacy laws call for affirmative data pr
249、otection impact assessments to be conducted by subject businesses for certain personal information processing activities.Additional states are considering expanding or passing privacy laws in the near term.Specifically,Washington,Connecticut,and Nevada recently passed legislation aimed at protecting
250、 consumer health data,including but not limited to,reproductive health information.Washingtons My Health My Data Act provides for a private right of action.In addition,the Federal Trade Commission continues to pursue privacy as an enforcement priority,including addressing unfair or deceptive practic
251、es relating to privacy policies,consumer data collection and processing consent,and digital advertising practices.Federal and state legislative and regulatory bodies,including at the executive level,continue to signal increased scrutiny and potential rulemaking surrounding the creation,adoption,and
252、leveraging of artificial intelligence and/or machine learning based or enhanced tools,systems,and functions.The shifting regulatory and enforcement landscape in this space may require additional disclosures,risk assessments,or adjustments to our operations and systems that may leverage such technolo
253、gies.Marketing and patient engagement activities that the Company may engage in are subject to communications laws such as the Telephone Consumer Protection Act(the“TCPA”)and the Controlling the Assault of Non-Solicited Pornography and Marketing Act(“CAN-SPAM”).A determination by a court or regulato
254、ry agency that the Company engaged in communication or marketing practices that violate the TCPA or CAN-SPAM could subject us to civil penalties and result in negative publicity.16The costs to the business or,for an operator of a healthcare property,associated with developing and maintaining program
255、s and systems to comply with shifting data privacy and security laws,defending against privacy and security related claims or enforcement actions and paying any assessed fines can be substantial.Many of these privacy laws and regulations and related interpretations are subject to uncertain applicati
256、on,interpretation or enforcement standards that could result in claims against us and/or our tenants,borrowers,and operators,extensive changes to our business practices,systems and operational processes,including our data processing and security systems,penalties,increased operating costs or other i
257、mpacts on our businesses.New or expanding privacy and security laws could require substantial further investment in resources to comply with regulatory changes as privacy and security laws impose additional obligations.In addition,healthcare providers and industry participants are subject to a growi
258、ng number of requirements intended to promote the interoperability and exchange of patient information.Noncompliance may result in penalties or other disincentives.Americans with Disabilities Act.Our properties generally must comply with the Americans with Disabilities Act(the“ADA”)and any similar s
259、tate or local laws to the extent that such properties are public accommodations as defined in those statutes.The ADA may require removal of barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable.While under our triple-net le
260、ase structure,our tenants would generally be responsible for additional costs that may be required to make our facilities ADA-compliant,should barriers to access by persons with disabilities be discovered,we may be indirectly responsible for additional costs that may be required to make facilities A
261、DA-compliant.Noncompliance with the ADA could result in the imposition of fines or an award of damages to private litigants.Our commitment to make readily achievable accommodations pursuant to the ADA is ongoing,and we continue to assess our properties and make modifications as appropriate in this r
262、espect.Environmental Regulations.As an owner of real property,we are subject to various federal,state and local laws and regulations regarding environmental,health and safety matters.These laws and regulations address,among other things,asbestos,polychlorinated biphenyls,fuel,oil management,wastewat
263、er discharges,air emissions,radioactive materials,medical wastes,and hazardous wastes,and in certain cases,the costs of complying with these laws and regulations and the penalties for non-compliance can be substantial.We may be held primarily or jointly and severally liable for costs relating to the
264、 investigation and clean-up of any property that we own from which there is or has been an actual or threatened release of a regulated material and any other affected properties,regardless of whether we knew of or caused the release.Such costs typically are not limited by law or regulation and could
265、 exceed the propertys value.In addition,we may be liable for certain other costs,such as governmental fines and injuries to persons,property or natural resources,as a result of any such actual or threatened release.Under the terms of our triple-net leases,we generally have a right to indemnification
266、 by our tenants for any contamination caused by them.However,we cannot assure you that our tenants will have the financial capability or willingness to satisfy their respective indemnification obligations to us,and any such inability or unwillingness to do so may require us to satisfy the underlying
267、 environmental claims.Tax RegulationWe have elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986,as amended(the“Internal Revenue Code”),and since our formation,have filed our U.S.federal income tax return as a REIT.We believe that we have met the requirem
268、ents for qualification as a REIT since our initial REIT election in 1991,and we expect to qualify as such for each of our taxable years.Our qualification and taxation as a REIT depends upon our ability to meet on a continuing basis,through actual annual operating results,the various qualification te
269、sts and organizational requirements imposed under the Internal Revenue Code,including qualification tests based on NHIs assets,income,distributions and stock ownership.Provided we qualify for taxation as a REIT,we generally will not be required to pay U.S.federal corporate income taxes on our REIT t
270、axable income(computed without regard to the dividends-paid deduction or our net capital gain or loss)that is currently distributed to our stockholders.This treatment substantially eliminates the“double taxation”that ordinarily results from investment in a C corporation.We will,however,be required t
271、o pay U.S.federal income tax in certain circumstances.The sections of the Internal Revenue Code relating to qualification and operation as a REIT,and the U.S.federal income taxation of a REIT and its stockholders,are highly technical and complex.Some of the requirements depend upon actual operating
272、results,distribution levels,diversity of stock ownership,asset composition,source of income and record keeping.Accordingly,while we intend to continue to qualify to be taxed as a REIT,the actual results of our operations for any particular year might not satisfy these requirements for qualification
273、and taxation as a REIT.Accordingly,no assurance can be given that the actual results of our operation for any particular taxable year will satisfy such requirements.Further,the anticipated U.S.federal income tax treatment may be changed,perhaps retroactively,by legislative,administrative or judicial
274、 action at any time.To qualify as a REIT,we must elect to be treated as a REIT,and we must meet various(a)organizational requirements,(b)gross income tests,(c)asset tests,and(d)annual dividend requirements.17Organizational Requirements.The Internal Revenue Code defines a REIT as a corporation,trust
275、or association:(1)that is managed by one or more trustees or directors;(2)the beneficial ownership of which is evidenced by transferable shares,or by transferable certificates of beneficialinterest;(3)that would otherwise be taxable as a domestic corporation,but for Sections 856 through 859 of the I
276、nternal RevenueCode;(4)that is neither a financial institution nor an insurance company to which certain provisions of the Internal Revenue Codeapply;(5)the beneficial ownership of which is held by 100 or more persons;(6)during the last half of each taxable year,not more than 50%in value of the outs
277、tanding stock of which is owned,directlyor constructively,by five or fewer individuals,as defined in the Internal Revenue Code to also include certain entities;and(7)which meets certain other tests regarding the nature of its income and assets.We believe that we have been organized and have operated
278、 in a manner that has allowed us,and will continue to allow us,to satisfy conditions(1)through(7)inclusive,during the relevant time periods,and we intend to continue to be organized and operate in this manner.However,qualification and taxation as a REIT depend upon our ability to meet the various qu
279、alification tests imposed under the Internal Revenue Code,including through actual operating results,asset composition,distribution levels and diversity of stock ownership.Accordingly,no assurance can be given that we will be organized or will be able to operate in a manner so as to qualify or remai
280、n qualified as a REIT.Income Tests.We must satisfy two gross income tests annually to maintain our qualification as a REIT.First,at least 75%of our gross income for each taxable year(excluding gross income from prohibited transactions)must consist of defined types of income that we derive,directly o
281、r indirectly,from investments relating to real property or mortgages on real property or qualified temporary investment income.Qualifying income for purposes of that 75%gross income test generally includes:rents from real property;interest on debt secured by mortgages on real property,or on interest
282、s in real property(including interest on anobligation secured by a mortgage on both real property and personal property if the fair market value of the personalproperty does not exceed 15%of the total fair market value of all the property securing the obligation);dividends or other distributions on,
283、and gain from the sale of,shares in other REITs;gain from the sale of real estate assets;andincome derived from the temporary investment of new capital that is attributable to the issuance of our shares ofbeneficial interest or a public offering of our debt with a maturity date of at least five year
284、s and that we receive duringthe one-year period beginning on the date on which we received such new capital.Second,in general,at least 95%of our gross income for each taxable year(excluding gross income from prohibited transactions)must consist of income that is qualifying income for purposes of the
285、 75%gross income test,other types of interest and dividends,gain from the sale or disposition of stock or securities or any combination of these.Asset Tests.To maintain our qualification as a REIT,we also must satisfy the following asset tests at the end of each quarter of each taxable year:First,at
286、 least 75%of the value of our total assets must consist of:(a)cash or cash items,including certain receivables,(b)government securities,(c)real estate assets,including interests in real property,leaseholds and options to acquirereal property and leaseholds,(d)interests in mortgages on real property(
287、including an interest in an obligation securedby a mortgage on both real property and personal property if the fair market value of the personal property does notexceed 15%of the total fair market value of all the property securing the obligation)or on interests in real property,(e)stock in other RE
288、ITs,(f)debt instruments issued by publicly offered REITs(i.e.,REITs which are required to file18annual and periodic reports with the SEC under the Securities Exchange Act of 1943,as amended(the“Exchange Act”),(g)personal property leased in connection with real property to the extent that rents attri
289、butable to such personal property do not exceed 15%of the total rent received under the lease and are treated as“rents from real property”;and(h)investments in stock or debt instruments during the one-year period following our receipt of new capital that we raise through equity offerings or offering
290、s of debt with at least a five year term;Second,of our investments not included in the 75%asset class,the value of our interest in any one issuers securitiesmay not exceed 5%of the value of our total assets;Third,we may not own more than 10%of the voting power or value of any one issuers outstanding
291、 securities;Fourth,no more than 20%of the value of our total assets may consist of the securities of one or more TRSs;Fifth,no more than 25%of the value of our total assets may consist of the securities of TRSs and other non-TRStaxable subsidiaries and other assets that are not qualifying assets for
292、 purposes of the 75%asset test;andSixth,no more than 25%of our total assets may consist of debt instruments issued by publicly offered REITs thatqualify as“real estate assets”only because of the express inclusion of“debt instruments issued by publicly offeredREITs”in the definition of“real estate as
293、sets”.Distribution Requirements.Each taxable year,we must distribute dividends,other than capital gain dividends,to our stockholders in an aggregate amount not less than:the sum of(a)90%of our“REIT taxable income,”computed without regard to the dividends-paid deduction or our net capital gain or los
294、s,and(b)90%of our after-tax net income,if any,from foreclosure property,minus the sum of certain items of non-cash income.Taxable REIT Subsidiary.A REIT may directly or indirectly own stock in a TRS.A TRS may be any corporation in which we directly or indirectly own stock and where both NHI and the
295、subsidiary make a joint election to treat the corporation as a TRS,in which case it is treated separately from us and will be subject to U.S.federal corporate income taxation.Our stock,if any,of a TRS is not subject to the 10%or 5%asset tests.Instead,the value of all TRSs owned by us cannot exceed 2
296、0%of the value of our assets.We currently own all of the membership interests of NHI-SS TRS,LLC,and NHI-Discovery I TRS,LLC,and may form additional TRSs in the future.We also lease“qualified healthcare properties”on an arms-length basis to a TRS(or subsidiary thereof)and the property is operated on
297、behalf of such subsidiary by a person who qualifies as an“independent contractor”and who is,or is related to a person who is,actively engaged in the trade or business of operating healthcare facilities for any person unrelated to us or our TRS.Generally,the rent that we receive from our TRS in such
298、structures will be treated as“rents from real property.”Subsidiary REITs.We,along with our TRS,currently own all of the common interests in NHI PropCo Member LLC,an entity that has elected to be taxed as a REIT under the Internal Revenue Code(the“Subsidiary REIT”)and we may own and acquire direct or
299、 indirect interests in additional Subsidiary REITs in the future.We believe that the Subsidiary REIT is organized and operates in a manner that permits it to qualify for taxation as a REIT for U.S.federal income tax purposes.However,if the Subsidiary REIT were to fail to qualify as a REIT,then(i)the
300、 Subsidiary REIT would become subject to regular U.S.corporate income tax and(ii)our equity interest in the Subsidiary REIT would cease to be a qualifying real estate asset for purposes of the 75%asset test and could become subject to the 5%asset test,the 10%voting share asset test,and the 10%value
301、asset test generally applicable to our ownership in corporations other than REITs,qualified REIT subsidiaries(“QRSs”)and TRSs.If the Subsidiary REIT were to fail to qualify as a REIT and if we were not able to treat the Subsidiary REIT as a TRS of ours pursuant to certain prophylactic elections we h
302、ave made,it is possible that we would not meet the 10%voting share test and the 10%value test with respect to our interest in the Subsidiary REIT,in which event we could fail to qualify as a REIT unless we could avail ourselves of certain relief provisions.Failure to Qualify.If we lose our status as
303、 a REIT(currently or with respect to any tax years for which the statute of limitations has not expired),we will face serious tax consequences that will substantially reduce the funds available to satisfy our obligations,to implement our business strategy and to make distributions to our stockholder
304、s for each of the years involved because:We would be subject to U.S.federal income tax at the regular corporate rate applicable to regular C corporations onour taxable income,determined without reduction for amounts distributed to stockholders;19For tax years beginning after December 31,2022,we woul
305、d possibly be subject to certain taxes enacted by theInflation Reduction Act of 2022 that are applicable to non-REIT corporations,including the nondeductible 1%excisetax on certain stock repurchases;We would not be required to make any distributions to stockholders,and any dividends to stockholders
306、would betaxable as ordinary income to the extent of our current and accumulated earnings and profits(which may be subject totax at preferential rates to individual stockholders);andUnless we are entitled to relief under statutory provisions,we could not elect to be subject to tax as a REIT for fourt
307、axable years following the year during which we were disqualified.In the event we are no longer required to pay dividends to maintain REIT status,this could adversely affect the value of our common stock.See“Item 1A.Risk Factors-Risks Related to Our Status as a REIT.”Investment PoliciesOur investmen
308、t objectives are to(i)provide consistent and growing current income for distribution to our stockholders through investments primarily in healthcare-related facilities or in the operations thereof through independent third-party management,(ii)provide the opportunity to realize capital growth result
309、ing from appreciation,if any,in the residual value of our portfolio properties,and(iii)preserve and protect stockholders capital through a balance of diversity,flexibility and liquidity.There can be no assurance that these objectives will be realized.Our investment policies include making investment
310、s in real estate,mortgage and other notes receivable,and joint ventures structured to comply with the provisions of RIDEA.We consider the creditworthiness of the operator to be an important factor in underwriting the lease or loan investment,and we generally have the right to approve any changes in
311、operators.During 2023,we made commitments to fund new investments in real estate and loans totaling approximately$74.5 million.In making new investments,we consider such factors as(i)the geographic area and type of property,(ii)the location,construction quality,condition and design of the property,(
312、iii)the current and anticipated cash flow and its adequacy to meet operational needs,and lease or mortgage obligations to provide a competitive income return to our investors,(iv)the growth,tax and regulatory environments of the communities in which the properties are located,(v)occupancy and demand
313、 for similar facilities in the same or nearby communities,(vi)the quality,experience and creditworthiness of the management operating the facilities located on the property and(vii)the mix of private and government-sponsored residents.There can be no assurances that investments meeting our standards
314、 regarding these attributes will be found or closed.Our intention is to make investments in properties with substantial,long-term potential.However,we may choose to sell properties if they no longer meet our investment objectives.We will not,without the approval of a majority of the Board of Directo
315、rs and review of a committee comprised of disinterested directors,enter into any joint venture or partnership relationships with or acquire from or sell to any director,officer or employee of NHI,or any affiliate thereof,as the case may be,any of our assets or other property.The Board of Directors,w
316、ithout the approval of the stockholders,may alter our investment policies if it determines that such a change is in our best interests and our stockholders best interests.The methods of implementing our investment policies may vary as new investment and financing techniques are developed or for othe
317、r reasons.Management may recommend changes in investment criteria from time to time.Our investments in healthcare-related facilities may utilize borrowed funds or the issuance of equity.We may negotiate lines of credit or arrange for other short or long-term borrowings from lenders.We may arrange fo
318、r long-term borrowings from institutional investors or through public offerings.We have previously invested,and may in the future invest,in properties subject to existing loans or secured by mortgages,deeds of trust or similar liens with favorable terms or in mortgage investment pools.Investor Infor
319、mationWe publish our Annual Report on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K,and amendments to such reports on our website at .We have a policy of publishing these on the website as soon as reasonably practicable after filing them with,or furnishing them to,the SEC.Info
320、rmation contained on our website is not incorporated by reference into this Annual Report on Form 10-K.The SEC also maintains reports,proxy statements,information statements,and other information regarding issuers that file electronically at http:/www.sec.gov.20We also maintain the following documen
321、ts on our website:The NHI Code of Business Conduct and Ethics which has been adopted for all employees,officers and directors of theCompany.Information on our“NHI EthicsPoint”which allows all interested parties to communicate with NHI executive officersand directors.The toll free number is 877-880-2
322、974 and the communications may be made anonymously,if desired.The NHI Restated Audit Committee Charter.The NHI Revised Compensation Committee Charter.The NHI Revised Nominating and Corporate Governance Committee Charter.The NHI Corporate Governance Guidelines.We will furnish,free of charge,a copy of
323、 any of the above documents to any interested investor upon receipt of a written request.Our transfer agent is Computershare.Computershare will assist registered owners with the NHI Dividend Reinvestment Plan,change of address,transfer of ownership,payment of dividends,replacement of lost checks or
324、stock certificates.Computershares contact information is:Computershare Trust Company,N.A.,P.O.Box 43078,Providence,RI 02940-3078.The toll free number is 800-568-3476 and the website is .ITEM 1A.RISK FACTORSThere are many significant factors that could materially adversely impact our financial condit
325、ion,results of operations,cash flows,distributions and stock price.The following are risks we believe are material to our stockholders.There may be additional risks and uncertainties that we have not presently identified or have not deemed material.Some of the following risk factors constitute forwa
326、rd-looking statements.Please refer to“Cautionary Statement Regarding Forward-Looking Statements”at the beginning of this Annual Report on Form 10-K.Risks Related to Our Managers,Tenants and Borrowers We depend on the operating success of our tenants,managers and borrowers and if their financial cond
327、ition or business prospects deteriorate,our financial condition and results of operations could be adversely affected.We rely on our tenants,managers and borrowers and their ability to perform their obligations to us.Any of our tenants,managers or borrowers may experience a weakening in their overal
328、l financial condition as a result of deteriorating operating performance,changes in industry or market conditions,such as rising interest rates or inflation,or other factors.If the financial condition of any of our tenants,managers or borrowers deteriorates,they may be unable or unwilling to make pa
329、yments or perform their obligations to us in a timely manner if at all.Revenues for the operators of our properties are primarily driven by occupancy and reimbursement by Medicare,Medicaid and private payors.Revenues from government reimbursement have,and may continue to,come under pressure due to r
330、eimbursement cuts resulting from federal and state budget shortfalls and constraints,and both governmental and private payors are increasingly imposing more stringent cost control measures.Periods of weak economic growth in the U.S.which affect housing sales,investment returns and personal incomes m
331、ay adversely affect senior housing occupancy rates.An oversupply of senior housing real estate may also apply downward pressure to the occupancy rates of our operators.Expenses for the facilities are driven by the costs of labor,food,utilities,taxes,insurance and rent or debt service.Liability insur
332、ance and staffing costs continue to increase for our operators.Historically low unemployment has created significant wage pressure for our operators.In addition,inflation,both real and anticipated,as well as any resulting governmental policies,could adversely affect the economy and the costs of labo
333、r,goods and services for our operators.Because our operators are typically required to pay all property operating expenses,increases in property-level expenses at our leased properties generally do not directly affect us.Increased operating costs could have an adverse impact on our operators if increases in their operating expenses exceed increases in their revenue,which may adversely affect their
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