- Land & Buildings is advocating for boardroom changes at National Health Investors (NHI, Financial) due to governance and performance concerns.
- NHI has significantly underperformed its peers, with stock returns down 61% over five years.
- NHI's upcoming lease renewal with National Healthcare Corp (NHC) could potentially increase FFO/share by 12%.
Land & Buildings Investment Management, a major stockholder in National Health Investors (NHI), has issued a call for change in the company's boardroom. The activist investor has filed definitive proxy materials and sent a letter to stakeholders highlighting concerns over corporate governance and conflicts of interest. At the heart of these concerns lie ongoing lease negotiations with National Healthcare Corp (NHC), where potential value may be left on the table due to perceived conflicts.
The firm is advocating for the addition of two independent directors, Adam Troso and Jim Hoffmann, to the NHI board. Both nominees bring extensive experience in real estate investment trusts (REITs), which Land & Buildings believe is crucial for steering NHI toward improved governance and shareholder value.
One of the primary issues raised by Land & Buildings is NHI’s underperformance compared to its peers in the senior housing sector. Over the past five years, NHI's stock returns have lagged peers by 61%, a figure suggesting deeper systemic problems that extend beyond market conditions. Furthermore, despite potential upside in upcoming lease renewals, NHI’s governance structure, including a board with conflicts of interest, seems to be stalling effective decision-making.
The potential for a brighter financial future hinges on successful NHC lease renewals, which could deliver a 60% rent increase translating to an estimated $0.55 per share boost to NHI's funds from operations (FFO). These negotiations could substantially impact NHI’s financial standing if handled with greater independence and alignment toward shareholder interests.
In its proxy materials, Land & Buildings also outlines a forecast where NHI may acquire up to $1 billion in senior housing properties over the next two years, with a possible 10% increase in FFO/share. The activist investor emphasizes that bringing its candidates to the board could unlock these strategic opportunities and realign NHI’s market valuation with its intrinsic potential.
