NHI Reports Third Quarter Income

MURFREESBORO, Tenn.--(BUSINESS WIRE)--National Health Investors, Inc. (NYSE:NHI) announced its net income and funds from operations (“FFO”) for the three and nine month periods ended September 30, 2008.

Net income for the three months ended September 30, 2008 was $15,951,000 or $.57 per basic and diluted common share.

Net income previously reported for the same period in 2007 was $36,538,000 or $1.32 per basic and $1.31 per diluted common share and included a recovery (income) of an earlier writedown of a mortgage loan receivable of $21,300,000 or $.77 per basic and $.76 per diluted common share. Adjusting for the above-mentioned item, net income for the same period in 2007 would have been $15,238,000 or $.55 per basic and diluted common share.

FFO for the three months ended September 30, 2008 was $17,869,000, or $.64 per basic and diluted common share.

FFO previously reported for the same period in 2007 was $39,486,000 or $1.43 per basic and $1.42 per diluted common share and included the recovery (income) item above of $23,100,000 or $.77 per basic and $.76 per diluted common share. Adjusting for this item, FFO for the same period in 2007 would have been $18,186,000 or $.66 per basic and diluted common share.

Net income for the nine months ended September 30, 2008 was $44,143,000 or $1.59 per basic and diluted common share.

Net income previously reported for the same period in 2007 was $67,000,000 or $2.42 per basic and $2.41 per diluted common share and included items (income) favorably impacting net income of $24,179,000 or $.88 per basic and $.87 per diluted common share attributable to recoveries of earlier writedowns of mortgage loan receivables, gains from realty sales and a gain from a note collection. Adjusting for these items, net income for the same period in 2007 would have been $42,821,000 or $1.54 per basic and diluted common share.

FFO for the nine months ended September 30, 2008 was $49,910,000 or $1.80 per basic and diluted common share.

FFO previously reported for the same period in 2007 was $75,177,000 or $2.71 per basic and $2.70 per diluted common share and included the items above (excluding realty sales not in FFO) of $23,468,000 or $.85 per basic and $.84 per diluted common share. Adjusting for these items, FFO for the same period in 2007 would have been $51,709,000 or $1.86 per basic and diluted common share.

National Health Investors, Inc. is a long-term health care real estate investment trust that specializes in the financing of health care real estate by first mortgage and by purchase and leaseback transactions. The common stock of the company trades on the New York Stock Exchange with the symbol NHI. Additional information including NHI’s most recent press releases may be obtained on NHI’s web site at www.nhinvestors.com.

Statements in this press release that are not historical facts are forward-looking statements. NHI cautions investors that any forward-looking statements made involve risks and uncertainties and are not guarantees of future performance. All forward-looking statements represent NHI’s judgment as of the date of this release.

Condensed Statements of Income
(in thousands, except share and per share amounts)
				Three Months Ended					Nine Months Ended
				September 30					September 30
				2008		2007			2008		2007
Revenues:
	Mortgage interest income			$ 2,400		$ 2,599			$ 7,214		$ 9,092
	Rental income			13,220		12,989			40,017		38,052
				$ 15,620		$ 15,588			$ 47,231		$ 47,144
Expenses:
	Interest expense			$ 62		$ 465			$ 247		$ 4,475
	Depreciation			1,925		2,083			5,936		6,163
	Amortization of loan costs			3		3			11		71
	Legal expense			310		161			1,041		554
	Franchise, excise and other taxes			108		68			525		330
	General and administrative			453		1,227			2,241		4,438
	Loan and realty losses (recoveries)			-		(21,300	)		-		(23,000	)
				$ 2,861		$ (17,293	)		$ 10,001		$ (6,969	)
Income Before Non-Operating Income				$ 12,759		$ 32,881			$ 37,230		$ 54,113
	Non-operating income (investment Interest and other)			701		2,556			4,464		9,010
Income From Continuing Operations				$ 13,460		$ 35,437			$ 41,694		$ 63,123
Discontinued Operations
	Income from operations - discontinued			2,491		1,101			2,449		3,208
	Net gain on sale of real estate			-		-			-		669
				$ 2,491		$ 1,101			$ 2,449		$ 3,877
Net income				$ 15,951		$ 36,538			$ 44,143		$ 67,000
Weighted average common shares outstanding:
	Basic			27,767,394		27,703,539			27,750,377		27,703,439
	Diluted			27,785,708		27,786,198			27,783,141		27,787,604
Earnings per share:
	Basic:
		Income from continuing operations		$ 0.48		$ 1.28			$ 1.50		$ 2.28
		Discontinued operations		0.09		0.04			0.09		0.14
		Net income available to common stockholders		$ 0.57		$ 1.32			$ 1.59		$ 2.42
	Diluted:
		Income from continuing operations		$ 0.48		$ 1.27			$ 1.50		$ 2.27
		Discontinued operations		0.09		0.04			0.09		0.14
		Net income available to common stockholders		$ 0.57		$ 1.31			$ 1.59		$ 2.41
Funds from operations
	Basic			$ 17,869		$ 39,486			$ 49,910		$ 75,177
	Diluted			$ 17,869		$ 39,486			$ 49,910		$ 75,177
Funds from operations per common share
	Basic			$ 0.64		$ 1.43			$ 1.80		$ 2.71
	Diluted			$ 0.64		$ 1.42			$ 1.80		$ 2.70
Dividends declared per common share				$ 0.55		$ 0.50			$ 1.65		$ 1.50
In accordance with Statement of Financial Accounting Standard No. 144, the results of operations for facilities meeting the accounting criteria as being sold or held for sale, including the gain or loss on such sales, have been reported in the current and prior periods as discontinued operations. The reclassifications to retroactively reflect the disposition of these facilities had no impact on previously reported net income.

Selected Balance Sheet Data
(in thousands)
		September 30		December 31
		2008		2007
Real estate properties, net		$ 183,283		$ 187,455
Mortgages receivable, net		109,935		141,655
Assets held for sale, net		629		-
Preferred stock investment		38,132		38,132
Cash and marketable securities		136,060		131,172
Notes and bonds payable		5,705		9,512
Stockholders' equity		446,256		446,138

Reconciliation of Funds From Operations(1)(2)
The following table reconciles net income to funds from operations available to common stockholders: (in thousands, except share and per share amounts)
			Three Months Ended				Nine Months Ended
			September 30				September 30
			2008		2007		2008		2007
Net income			15,951		36,538		44,143		67,000
Elimination of non-cash items in net income:
	Real estate depreciation		1,905		2,201		5,728		6,719
	Real estate depreciation in discontinued operations		13		747		39		2,169
	Gain on sale of real estate-continuing operations		-		-		-		(42	)
	Gain on sale of real estate-discontinued operations		-		-		-		(669	)
Basic funds from operations			17,869		39,486		49,910		75,177
Other Adjustments			-		-		-		-
Diluted funds from operations			$ 17,869		$ 39,486		$ 49,910		$ 75,177
Basic funds from operations per share			$ 0.64		$ 1.43		$ 1.80		$ 2.71
Diluted funds from operations per share			$ 0.64		$ 1.42		$ 1.80		$ 2.70
Shares for basic funds from operations per share			27,767,394		27,703,539		27,750,377		27,703,439
Shares for diluted funds from operations per share			27,785,708		27,786,198		27,783,141		27,787,604
(1) Management believes that funds from operations (FFO) is an important supplemental measure of operating performance for a real estate investment trust.  Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time.  Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a real estate investment trust that uses historical cost accounting for depreciation could be less informative, and should be supplemented with a measure such as FFO.  The term FFO was designed by the real estate investment trust industry to address this issue.  Our measure may not be comparable to similarly titled measures used by other REITs.  Consequently, our funds from operations may not provide a meaningful measure of our performance as compared to that of other REITs.  Since other REITs may not use our definition of FFO, caution should be exercised when comparing our Company’s FFO to that of other REITs.  Funds from operations in and of itself does not represent cash generated from operating activities in accordance with GAAP (funds from operations does not include changes in operating assets and liabilities) and therefore should not be considered an alternative to net earnings as an indication of operating performance, or to net cash flow from operating activities as determined by GAAP in the United States, as a measure of liquidity and is not necessarily indicative of cash available to fund cash needs.
(2) Our computations above are intended to comply with the SEC’s interpretation that recurring impairments taken on real property may not be added back to net income in the calculation of FFO.  The SEC’s position is that recurring impairments on real property are not an appropriate adjustment.

National Health Investors, Inc.
Portfolio Summary
September 30, 2008
Portfolio Statistics					Investment
			Properties		Percentage		Investments
	Real Estate Properties		73		63%		$ 183,912,000
	Mortgages and Notes Receivables		51		37%		109,935,000
	Total Real Estate Portfolio		124		100.0%		$ 293,847,000
Real Estate Properties			Properties		Beds		Investments
	Long term Care Centers		50		6,923		$ 104,164,000
	Assisted Living Facilities		14		1,133		56,520,000
	Medical Office Buildings		4		124,427 sq.ft.		9,242,000
	Independent Living Facilities		4		458		7,621,000
	Hospitals		1		55		6,365,000
	Total Real Estate Properties		73				$ 183,912,000
Mortgages and Notes Receivables			Properties		Beds		Investments
	Long term Care Centers		34		3,581		$ 106,133,000
	Developmentally Disabled		17		108		3,802,000
	Total Mortgages and Notes Receivable		51				$ 109,935,000
	Total Real Estate Portfolio		124				$ 293,847,000
Summary of Facilities by Type:
					Percentage of		Total
			Properties		Total Dollars		Dollars
	Long term Care Centers		84		71.6%		$ 210,297,000
	Assisted Living Facilities		14		19.2%		56,520,000
	Medical Office Buildings		4		3.1%		9,242,000
	Independent Living Facilities		4		2.6%		7,621,000
	Hospitals		1		2.2%		6,365,000
	Developmentally Disabled		17		1.3%		3,802,000
	Total Real Estate Portfolio		124		100.0%		$ 293,847,000
Portfolio by Operator Type
			# of		Percentage of		Total
			Properties		Total Dollars		Dollars
	Regional		48		57.8%		$ 169,979,000
	Public		65		32.1%		94,273,000
	Small Operator		11		10.1%		29,595,000
			124		100.0%		$ 293,847,000

Public Operators
						Percentage
				Dollar		Of Total
				Amount		Portfolio
	National HealthCare Corp.			$ 58,187,000		19.8	%
	Sunrise Senior Living Services			12,361,000		4.2	%
	Community Health Systems, Inc.			11,910,000		4.1	%
	Sun Healthcare			8,013,000		2.7	%
	Res-Care, Inc.			3,802,000		1.3	%
	Total Public Operators			$ 94,273,000		32.1	%

National Health Investors, Inc.
Summary of Facilities by State
September 30, 2008
																		Percent
				Acute				Dev.		Asst.		Retire-				Investment		Total
		LTC		Care		MOB		Disab.		Living		ment		Total		Amount		Portfolio
Florida		11				1		14		4				30		$ 72,568,000		24.7	%
Texas		8				2								10		47,729,000		16.2	%
Tennessee		20						3		3		2		28		26,454,000		9.0	%
Missouri		8										1		9		20,652,000		7.0	%
Virginia		8												8		19,353,000		6.6	%
Arizona		1								4				5		17,025,000		5.8	%
Kansas		6												6		14,047,000		4.8	%
Massachusetts		4												4		14,908,000		5.1	%
New Jersey										1				1		12,361,000		4.2	%
Georgia		6												6		9,539,000		3.2	%
New Hampshire		3												3		9,051,000		3.1	%
Kentucky		2		1										3		7,243,000		2.5	%
South Carolina		4								1				5		10,685,000		3.6	%
Idaho		1										1		2		4,873,000		1.7	%
Pennsylvania										1				1		4,094,000		1.4	%
Alabama		2												2		1,886,000		0.6	%
Illinois						1								1		1,379,000		0.5	%
		84		1		4		17		14		4		124		$ 293,847,000		100.0	%