NHI - NYSE

Greetings, and welcome to the NHI's Third Quarter 2025 Earnings Webcast and Conference Call. [Operator Instructions] And please note this conference is being recorded. I will now turn the conference over to your host, Dana Hambly. Dana, the floor is yours.

Thank you, and welcome to the National Health Investors conference call to review results for the third quarter of 2025. On the call today are Eric Mendelsohn, President and CEO; Kevin Pascoe, Chief Investment Officer; John Spaid, Chief Financial Officer; and David Travis, Chief Accounting Officer. The results as well as notice of the accessibility of this call were released after the market closed yesterday in a press release that's been covered by the financial media. Any statements in this conference call, which are not historical facts, are forward-looking statements. NHI cautions investors that any forward-looking statements may involve risks or uncertainties and are not guarantees of future performance. All forward-looking statements represent NHI's judgment as of the date of this conference call. Investors are urged to carefully review various disclosures made by NHI and its periodic reports filed with the Securities and Exchange Commission, including the risk factors and other information disclosed in NHI's Form 10-Q for the year ended December 31, 2024, and Form 10-Q for the quarter ended September 30, 2025. Copies of these filings are available on the SEC's website at sec.gov or on NHI's website at nhireit.com. In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in NHI's earnings release and related tables and schedules, which have been furnished on Form 8-K to the SEC. Listeners are encouraged to review those reconciliations provided in the earnings release together with all other information provided in that release. I'll now turn the call over to our CEO, Eric Mendelsohn.

Thank you. Hello, and thanks for joining us today. We had a solid quarter, highlighted by the transition of 7 properties to our SHOP portfolio which resulted in consolidated SHOP NOI growth of approximately 63% compared to the prior year's quarter. We also announced our first SHOP acquisition for $74.3 million effective October 1. We've surpassed last year's investment total with more deals expected to close this year, and we're working on a strong active pipeline that should generate similar or higher external investment activity in 2026. We're raising our guidance for the third time this year. Our updated guidance represents over 10% NFFO per share growth at the midpoint, which would be the strongest annual growth since 2014. The momentum at NHI is building. We are well positioned and laser-focused to capitalize on the generational growth in the senior housing industry over the next decade. As I noted last quarter, we have methodically invested in creating a strong foundation across all of our disciplines that will allow us to significantly expand our presence in private pay senior housing, where we see the greatest risk-adjusted returns. We've onboarded 11 properties and 2 new operators to the SHOP platform in just the last few months. Combined, the recent additions should more than double our annualized SHOP NOI from approximately 5% to 10% of total adjusted NOI. Through strong organic growth and continued acquisitions, our current view is that our SHOP NOI should more than double again in 2026 to at least 20%. We've taken corrective measures in the same-store portfolio and are confident that it returns to double-digit growth levels in 2026 as it did in 2024 and through the first half of this year. This portfolio has been an important part of our development as we are starting to ramp up the SHOP platform. As we evaluate new opportunities, we're placing a high priority on operators and assets with solid trailing performance that should lead to more consistent and exceptional multiyear NOI growth. The pipeline activity indicates that acquisitions will be a meaningful component of our growth profile for the next several years. We've announced investments of $303.2 million so far this year and currently have approximately $195 million under signed LOIs, which we expect to close in the next few months. We have a large incremental pipeline of active opportunities entirely focused on senior housing, including a significant number of SHOP deals. The balance sheet continues to be supportive of our ample capital needs. Our net debt to adjusted EBITDA at 3.6x is below the low end of our target range, and we have available liquidity of over $1 billion. We believe this low leverage and strong access to capital creates a real competitive advantage as we're able to move quickly and with limited closing risk. Touching briefly on the NHC rent negotiation, we disclosed last night that NHC has notified us of their intent to renew the master lease for one 5-year term commencing on January 1, 2027. Management and the special committee are currently reviewing the effectiveness and legality of NHC's notice. Before turning the call to Kevin, I'd like to conclude to say that NHI is in a great position with several levers to pull both internally and externally that we expect to drive exceptional long-term FFO per share growth. The third quarter benefited from some nonrecurring items, but we believe the core remains strong and well positioned to create sustained shareholder value. The industry tailwinds are gusting, our financial health is peak, and we have invested in the people and resources necessary to scale our future growth. Kevin?

Thank you, Eric. The transition of 7 properties to the SHOP portfolio is just over 3 months old, and we are happy with the early results. The third quarter NOI from these assets is above the prior cash rent, and we now expect that the 2025 NOI contribution exceeds our original forecast of approximately $3.7 million. As with any transition, we expect some impact to near-term growth with the introduction of new management and systems but still expect this portfolio to contribute meaningfully to SHOP NOI in 2026. We also completed our first SHOP acquisition, including 4 properties for $74.3 million on October 1 with Compass Senior Living as the operator. Our relationship with Compass formally began in 2024 through a $9.5 million mortgage loan with purchase options on 2 properties in Oklahoma. In the process of looking for ways to expand the relationship, Compass brought us the opportunity to acquire 2 more properties that they operate in Oregon, which led to our first SHOP acquisition. We expect the first year NOI yield on these stabilized properties to be 8.2% or 7.5% adjusting for recurring CapEx. As noted on our earnings press release, the balance of our mortgage and other notes receivable declined by $43.8 million compared to the second quarter due primarily to large paydowns on a couple of loans with limited or no opportunity for future ownership. While this may slightly weigh on near-term interest income, we are excited to be able to recycle this capital into investments with greater long-term value, including opportunities similar to the Compass deal I just described. On that note, the pipeline is active as ever with $195 million under LOI with an average yield of approximately 8.4%. This includes a mix of shop, triple net and loan-to-own opportunities all in senior housing. We expect to close these deals in the fourth quarter and first quarter of 2026. Turning to our operating performance. Total SHOP NOI increased by 62.6% compared to the third quarter of 2024 due to the transition of 7 properties on August 1. The same-store NOI on the 15 legacy Holiday properties declined by 2.2% year-over-year, which is obviously not an acceptable result for us. Occupancy declined by 110 basis points from the third quarter of 2024 and 160 basis points sequentially. We experienced higher move-outs during the quarter, key personnel changes, 15 units taken out of service and approximately $0.2 million in nonrecurring costs, all of which negatively impacted the result. We expect the out-of-service units to come back online in approximately 6 months and we have taken measures to improve the occupancy in operations. But that will take some time, which led us to adjust our same-store NOI growth for this year, we expect NOI growth for this group to return to double-digit levels in 2026. We have and continue to make investments in our asset management platform, understanding that organic NOI is our best and cheapest source of capital. As we grow the SHOP portfolio, we expect the variability in same-store portfolio will be reduced, particularly as we believe the assets we are adding are higher quality properties with more consistent growth. Across the triple net portfolio, we are generally experiencing the continuation of solid trends with no rent concessions, continued collection of deferred rents in excess of expectations and stable occupancy and EBITDARM coverages. Cash lease revenue increased approximately 12% year-over-year to $70.1 million during the quarter. Excluding approximately $3.9 million in cash rent received in connection with the Discovery lease terminations, cash revenue increased approximately 5.5% primarily due to acquisitions. On October 31, we exercised our purchase option on a CCRC in Columbia, South Carolina for $52.5 million, with an initial yield of 8.25%. This is a high-quality entrance fee community operated by our long-time partner, Senior Living Communities, and we are excited to bring this property into our own portfolio. Bickford continues to generate strong NOI. Bickford's third quarter occupancy increased by 90 basis points from the second quarter to 86.1%. Trailing 12-month EBITDARM coverage through June 30, including deferral repayments, was 1.49x. Bickford repaid $1.3 million in deferred rent during the third quarter and has an outstanding balance of $8.7 million at October 30. Due to their solid performance, we expect that we'll be able to capture more than the quarterly run rate of deferral repayments into the future base rent at the April 2026 reset with the ability to monetize any remaining deferral balances. I'll now turn the call over to John to discuss our financial results and guidance. John?

Thank you, Kevin, and hello, everyone. I'm pleased to report our third quarter results were above our expectations. I will highlight the significant areas that contributed to our positive quarter, but first, let me begin with our third quarter results. I'll be using average diluted common shares for all our per share results. For the quarter ended September 30, 2025, our net income per share was $0.69, up 6.2% from the prior year. Our NAREIT FFO results per share for the third quarter compared to the prior year period increased 5.8% to $1.09 per share. Our normalized FFO results per share for the third quarter increased 28% to $1.32 per share compared to the prior year third quarter. FAD for the third quarter ended September 30 compared to the prior year period, increased 26% to $62.2 million. On August 1, we completed the conversion of 7 assets from lease to shop. Together with the conversion, we recognized within our Real Estate Investments segment cash rent revenues of $4.6 million, noncash rental income related to operations transfer of $1.4 million and wrote off $12.1 million in straight-line rents placebo. Upon conversion, we then additionally recognized $2 million in additional SHOP NOI from the conversion properties for the 2 months of operations during the quarter. All of these impacts are reflected in net income and NAREIT FFO. Our normalized FFO and FAD results exclude the impact from the noncash rental income related to the operations transfer and straight-line receivable write-off. During the quarter, we also received approximately $52 million in loan receivable payoffs, not in our previous guidance, which resulted in an improvement of $2 million in credit loss reserve impacting net income, NAREIT FFO and NFFO but was adjusted out of our FAD. NOI from our 22 property SHOP segment for the quarter ended September 30, increased 62.6% to $4.9 million compared to the prior year period. We expect these results to continue to rapidly grow further as we recognize NOI from our recent SHOP acquisition and continue to make additional SHOP investments in the coming quarters. Our 15 property same-store SHOP portfolio saw NOI decline 2.2% to $3 million from the prior year period. Same-store SHOP revenues and expenses grew 2.1% and 3.3%, respectively, resulting in a 90 basis point margin decline to 21.1% year-over-year. Interest expense for the quarter was down 8% year-over-year, while weighted average common diluted shares were up 8.3% to 47.6 million shares as a result of the company's greater use of equity in lieu of debt to fund new investments over the last year. Sequentially, compared to the second quarter, cash G&A increased 5.4% to $5.3 million, while legal expenses declined $1 million. During the quarter, we did not close any new investments but did continue to fulfill our existing commitments. In October, we closed on new investments totaling $126.8 million which includes $46.7 million of previously deployed loan receivable capital. At the end of September, we issued $350 million in 5.35% coupon bonds resulting in net proceeds of $340 million after original issue discounts and bank fees. The bonds mature February 1, 2033. During the quarter, we settled approximately 155,000 common shares from our Q1 2025 forward ATM activity and an adjusted forward price of $73.96 per share after fees and forward costs, for proceeds of approximately $11.4 million. At September 30, 2025, we have remaining escrow forward equity proceeds of approximately $90.6 million available to us in exchange for the future delivery of 1.3 million common shares at an average price of $70.47 per share. We ended the quarter with $81.6 million in cash on our balance sheet and $600 million in revolving capacity after paying down the bank term loan of $75 million at the end of the quarter. Subsequent to the third quarter, we extended the maturity of our $125 million term loan for 6 months to June 16, 2026, retired a $50 million private placement loan and amended our bank credit facilities to remove a 10 basis point credit spread adjustment to our SOFR interest rate. Our balance sheet ended the third quarter in great shape with improvements in our leverage ratios and liquidity. Our net debt to adjusted EBITDA ratio was 3.6x for the quarter, and our available liquidity was approximately $1.1 billion attributable to the cash on our balance sheet, excess revolver, forward equity and additional ATM capacity. Let me now turn to our dividend and guidance. As we announced last night, our Board of Directors declared a $0.92 per share dividend for shareholders of record December 31, 2025, and payable January 30, 2026. We also adjusted our full year 2025 guidance, which includes increases to all our per share metrics. Our guidance includes the impacts from our SHOP conversion, announced subsequent events and our other expected results. Compared to 2024, NAREIT FFO guidance at the midpoint is $4.64 or an increase of 2%, and normalized FFO at the midpoint is $4.90 or an increase of 10.4%. Compared to our original February full year guidance, we increased normalized FFO guidance $0.27 per share. Our guidance for FAD at the midpoint is $232.6 million, up from our original February guidance of $221.7 million, and represents a 13.9% increase in FAD over 2024. Our guidance includes same-store SHOP NOI growth in the range of 7% to 9% over 2024. We are also providing guidance on our conversion plus new investment SHOP NOI for the full year of between $5.8 million and $6 million. Guidance also includes the continued collection of deferred rents and the fulfillment of our existing commitments. Our updated 2025 guidance includes $75 million in additional new unidentified investments and an average yield of 8%, which is an increase in our investment guidance as this is in addition to investments announced subsequent to our third quarter. Our guidance does not include any additional impacts in 2025 for selling additional forward equity although some settlement is likely to occur prior to our December [ x ] dividend date. Our actual equity settlements will be dependent upon the volume and timing of additional new investments. Once again, thank you for joining the call today, and that concludes our prepared remarks. So with that, operator, please open the lines for questions.

[Operator Instructions] Our first question is coming from Juan Sanabria with BMO Capital Markets.

Hoping to dig a little bit deeper into SHOP. You kind of made reference in the release in the opening remarks about some efforts to remediate things. So hoping you could talk a little bit about what that exactly means? And as part of that, I guess, the back story on why some units were taken offline, I guess, why now and what's the scope of work there?

Sure. Juan, this is Kevin. One thing I guess I'd like to point out is that when we're talking about our same-store portfolio, that's the Holiday portfolio, which has been noted difficult by some of our peers. It's definitely not had the trajectory that we would have liked that's a little more linear. But here we are. As it relates to the remediation, a lot of it is going back through the portfolio, making sure we have our units priced appropriately. We have the tour pass done right, a lot of the basic blocking and tackling. We really have probably 3 or 4 buildings that we're focused on occupancy that were the laggards that dragged our performance down. So making sure that we have the right people in place, all that has taken place. I think some of the good news here is that our lead volumes are still very good. It's a matter of just converting and making sure we have the right incentives in place for the people on the ground. So as we go through our budget processing right now, we're evaluating all those to make sure that we have the right incentives and again, the right pricing, being able to put the right programming in place and having the right resident engagement. So those are all things that are in process to feel like a lot of the corrective measures have been put in place. So as we discussed on the call, we'll be looking to get additional growth out of the portfolio next year. As it relates to the units that were taken offline, we have a building in California that had some earth movement a couple of years ago. But we found out over time that we had some issues on the bottom floor with some of the plumbing. And the initial scope of the project was less than we had it in our forecast. So we knew about it, but it ended up being that we had -- we needed to take all of the first 4 units off-line, so we made the tough decision to do the right thing and do the project in full scope versus trying to just piecemeal it and -- so get it right the first time. So it was a decision we made to go ahead and make it a little bit bigger projects. So that way, it was done right for the community.

And just to confirm, there's no tangent operators or one change contemplated? I know you've had some movement with Discovery and their remaining operator would SHOP and no longer triple that?

So -- correct. Discovery, as it relates to SHOP, Discovery and Merrill are our operators, our managers on those. We're working with them very closely to make sure we -- again, we have all the right people in place. I think as good stewards of the portfolio, we always have to keep in mind what's best for the portfolio. So -- but as it stands, we're working with them to go through the portfolio, make sure that we have all the right pieces in place to make sure that we get back on track from a performance standpoint.

Great. And then just a second question on NHC. Just curious on where we stand. I know the lease was put into default and NHC kind of came back. And then they sent you a renewal notice, but then there was a comment in the prepared remarks about analyzing the legality of that notice. Just curious on, I guess, the technicality of where we stand today and why you said examining that legality of the renewal notice?

Juan, this is Eric. Yes, that wording was artfully crafted. There could be a question about whether or not they're in default. And if they are in default, whether or not they're able to exercise their renewal option. The lease is pretty bare bones as you know, but it does say that if they're in default, they don't have the right to renew. So all of that could be subject to arbitration or litigation or legal interpretation. So that's what was meant by that comment.

Our next question is coming from Austin Wurschmidt with KeyBanc Capital Markets.

Just going back to the NHC question there a moment ago. I guess I was curious if the renewal option did prove to be legal, would that still be at the fair market rent? Or would it be at the current rent level? And I guess how else could that change NHI's negotiating position with respect to the adjustment to fair market rent?

Austin, recognizing that NHC is and their counsel are listening to this call, I will just say that all of that is on the table. If the renewal is determined not to be valid, then it's a wide open negotiation that could include third parties. If the arbitration or litigation does hold that the renewal is valid than the terms of the lease say that the renewal should be at a market rate, which is also a wide open interpretation. And as you know, we've hired Blueprint Advisors to help us survey the market and get touch points on lease rates and cap rates in the markets where these buildings reside.

That's helpful. And then Eric or Kevin, the pipeline of investment opportunities sounds very active. But it did appear like when some assets moved into the under LOI bucket and therefore, that investment pipeline was relatively stable. How far along are you in ramping that pipeline that you quote? And I'm just wondering if you guys are spending more time today on larger portfolios that maybe wouldn't go into the pipeline? Or are you more focused on deals that should over time tuck into the quoted investment pipeline as they move forward?

Austin, this is Kevin. I guess the way I would say is you definitely touched on an element of what we're looking at in the pipeline. In terms of the full scope of the pipeline, it's well over $1 billion. But we're not going to report to you a number that is we don't think is achievable. So there are some larger portfolios. Anything over $100 million, we're not reporting in our numbers because I think the percentage hit rate on those is going to be a little lower. So we want to make sure it's signed up before we would report that in terms of what we have under LOI or in our pipeline. So I think that's just a function of what we're looking at in a mix of the pipeline at the moment. So I would say it's as robust as it has been, if not more. It's been an extremely busy year here, and it continues to be. So I don't really have any hesitation on where our pipeline sits right now.

Our next question is coming from Farrell Granath with Bank of America.

I had a quick question about the guidance increase. I was wondering if you could bridge between the old and the new guidance. What in there is including term fee as well as any additional -- was there incremental positivity and outlook or just having better confidence? Just wondering if you could go through a few of the items.

Yes. Okay. Let me -- this is John Spaid. Let me see if I can start from the top. In August, we had to make a lot of assumptions regarding the conversion activity that we recognized in the third quarter. That activity was -- came in much better than expected. There's a couple of things that were -- onetime items that came in better than expected. There was also better than expected NOI that we recognized from the conversion SHOP portfolio. So that all influenced the raise. We also additionally saw a fair amount of loan receivable payoffs that occurred during the quarter. And oftentimes, what happens there is twofold, depending on what we're -- what's being paid off, we would then recognize credit loss reserve reversals, which flows through all of our metrics, except for FAD. So that was a significant change in our forecast. Interest income will also change, both for the third quarter as recognized as well as the fourth quarter because our mortgage investments now have declined. But when we saw those mortgage payoffs, we collected some accrued interest that was accruing but not recognized, and we also had some exit fees as well. And then I guess, finally, the same-store SHOP portfolio, we had to change that. We used to have a range of 13% to 16%. That's now 7% to 9% for the year. So I think those are the biggest factors.

Okay. And also going back to the SHOP portfolio in -- or in the acquisition pipeline. I was curious if you could add a few comments on how you're viewing with the competition in the market, you made the comment about the hit rates on the larger portfolios and across a lot of broader peer sets, we've been seeing an increase in SHOP activity as well as looking to buy full portfolios of SHOP. Just curious if you could just comment on competition. Is that impacting pricing? Is it leading others to pay above what you're underwriting for the pricing?

Sure. This is Kevin. The competition in the marketplace has definitely ramped up. That said, I feel like we have very strong ties with our operating partners that we were getting looks on properties that would be more off market. What you've seen close is indicative of that where we get a direct from our manager or operating partner and then also a function of our -- what we describe as our loan-to-own program. That's worked out really well for us. So it is a much more competitive environment. I think those are the deals that we try to exclude from our pipeline just because there are more groups that are looking at it. A lot of it is our REIT peers. When we look across the landscape, there's a little more private equity entering the space as well. The uniqueness that we have and our peer share is that we don't have financing contingencies. So we're actually able to get a little bit better pricing versus what I would consider the top bid because they know we can close. So -- we'll continue to pursue those marketed deals as well, but we're really focusing on making sure we have the right relationships and being able to pull in stuff at a better value.

Our next question is coming from Rich Anderson with Cantor Fitzgerald.

If we could just kind of close the circle on NHC for now. Can you remind the basics behind the whether or not they're in default. I know it's been said, but I just want to make sure we got that clear about your point of view on that topic.

Rich, this is Eric. So when we made the announcement that we sent them a notice of default, we said that there were nonmonetary provisions that they were not adhering to. That was certain audit requirements, that was certain reporting requirements, that was certain insurance requirements and CapEx requirements. We had done an inspection of all the buildings and found maintenance and level of CapEx to be lacking. So we put that in a letter and sent it to them. And then, of course, as I said earlier, under the terms of the lease, if they're in default, then they're not able to renew the lease. So that's kind of where we are. There's provisions that allow for arbitration. There's a question as to whether or not the lease renewal rate is subject to arbitration, so that's something that is a question mark that I can't really address. And...

But there -- this renewal offer from them is for the entirety of the portfolio. There's no cherry pick...

Correct. Correct. It's all or nothing.

Okay. I understand the hiccups during the quarter on the SHOP. I know it's small with -- relative to the rest of the portfolio. But -- Kevin, you want to put the right people in place and you kind of went through that whole response to Juan's question. But -- what -- I guess my question is this is not like you had this stuff in place yesterday. You had -- you've been in this portfolio for some time now. Like what is it do you think that suddenly hiccup on you with this portfolio, you mentioned higher move-outs. It just seems a little sudden given the fact that this is not a new portfolio to you.

Sure, this is Kevin. I understand your question. I would say we also telegraphed this last quarter that we saw. This was -- we knew that the third quarter was going to be softer than the second because of the things that we were seeing in the portfolio. So I don't think it crept up on us. I think it was a matter of -- we saw it coming. We telegraphed it. I would say the result was more -- was lower than what we would have liked to see. So we're trying to make the corrective measures that I described. I also think that this is a function of operations. We're looking at, as you've already said, a small portfolio, and we're drilling into a handful of buildings that are driving the result. As we continue to grow and we diversify our investment, that's going to be the key for us here in SHOP.

Right. Okay. Fair enough. Like a couple can really move the needle at this point. And then, John, if you could just -- you mentioned the new guidance, and you mentioned some better-than-expected onetime items. Can you just quantify the onetime items in the third quarter that contributed to the guidance raised just in dollars, so we can have that in our model?

Sure. Yes. This is John again. In my prepared remarks, I mentioned $4.6 million of cash revenues that came in under the converted properties. So that number included everything we collected, including 1 month's rent. We then recognized a $1.4 million, what we call it, a noncash rent revenues on operations transfer. And then we also recognized the $12.1 million straight-line receivable write-off. So when we recognize the cash rents, which flows all the way down through FAD, at the same time, we converted the SHOP and we recognized $2 million of NOI. So there's a little bit of doubling up there as a result. The other big onetime item I just want to point out is that when we have significant, particularly mezz type loan payoffs, we'll have a reversal of the credit loss reserves, which flows through all of our metrics, including FFO and not FAD. And as a result of all of these sort of changes, including the Fed results, we've also seen some nice reductions in our interest expense. And that also was another topic I didn't really mention in my prepared remarks too forcefully, but we're seeing some benefit there because we have some variable rate interest expense. And we are also to get -- we're able to get out that bond at a 5.35% coupon. I wasn't sure we could do it quite that nicely as we did in the third quarter. So the forecast is always kind of reflected a little higher expectation for interest rates for the year. Does that help?

Yes. That's good.

[Operator Instructions] Our next question is coming from Omotayo Okusanya with Deutsche Bank.

Quick question on -- you put an 8-K out yesterday, you were going to be losing 2 Board members by sometime in 2026. I know there's been a lot of board change in general at the company. But for these 2 particular roles, just talk a little bit about how the Board may potentially be thinking about replacement? Whether -- what particular type of skill sets of background you're looking for, whether it's someone who has Senior Housing operating experience? Just kind of curious what we may see that could help further bolster the Board going forward with these 2 opportunities?

Sure, Tayo. This is Eric. Yes, we made that announcement yesterday that 2 Board members will be rolling off. And as you will recall, we had an activist campaign earlier in the year, and we addressed Board refreshment as part of our strategy to address the activists. So here we are. We're conducting a search using Ferguson Search firm. Ferguson has helped us in the past with some Board members, and we're currently interviewing Board members and you're absolutely right. They will have some senior housing and operations exposure and stay tuned for announcements in that regard.

That's helpful. And then just going back to SHOP, and I think maybe this one maybe a little bit more for Kevin. But again, just given your experience with kind of with the Holiday portfolio and again, some of the changes you've made on the Discovery side. Just kind of talk about this idea of a SHOP moves from 5% to 10% to 20% of your portfolio, kind of like this next evolution kind of -- what are the kind of key things you're looking for from the operators to kind of prevent some of this kind of one step forward, one step back that you've kind of dealt with through, through your current experience with the same-store portfolio. Just -- what are you really looking for going forward that kind of says, this is the operator we want to deal with, and there's an operator we don't want to deal with?

Tayo, this is Eric again. I'm going to take this one. You're absolutely right. You'll recall that we kind of backed into the Holiday conversion of SHOP. The history of that portfolio, was a lease with Fortress and Holiday was the operator. The Holiday got bought by Atria and Fortress sold its portfolio to Welltower. And the entity that was our tenant to Welltower, and you'll recall that we had litigation with Welltower as a result of that. And it was a good opportunity for us to turn lemons into lemonade. Our Board had been on the fence about whether or not to engage and shop and operations, and this kind of forced the issue. So it was a science experiment. And generally, we're happy with the way it turned out. Last year's growth on the portfolio was 30%. Last quarter, we had good growth in holiday of 15%. We'll be chasing those numbers and working to get those back again. We've added new talent to our bench. You look on our web page, you'll see we have a new SVP of Asset Management. We have new VPs of Asset Management. We're very highly skewed towards operations now. And we're very savvy about what it takes to run an operating platform. Recall that both John and I -- came from Emeritus, a large operator. So I'm comfortable with this new footing that our company is engaged in and I'm excited about the opportunity to grow the new store. We converted 7 buildings this quarter, and we bought 6 buildings, and we bought 2 more from Compass and we converted a loan for a total of 4. So we are growing SHOP quickly. And I can tell you the majority of our pipeline is SHOP. So we're committed.

Our next question is coming from Juan Sanabria with BMO Capital Markets.

Just piggybacking on Tayo's question. Curious if you could provide any high-level thoughts about G&A with the additions of personnel and doubly down on asset management capabilities.

Sure. If you look in our supplemental, we address our G&A as a percentage of assets under management. And I would still pause it to you that we're cost-effective and very low compared to our peers. Looking at year-to-date, exclusive of stock comp at 0.56%. So that's a good metric. John, do you have anything?

Yes.

Just looking more for growth parameters, just given the investments in people and systems for next year. Is there any early thoughts?

Well, one way to think about it is -- and the way I think about it is revenues per employee. So I'm kind of working off of right now a metric of about $11 million of revenues per employee. I think that's probably something that might be a little bit heavy in terms of G&A for us as we move forward, but I'm thinking that way. And as I issued guidance, my guidance is including our expectations to grow internally as we take on more and more SHOP. So you can -- I'll give you a forward number here. If you think about our SHOP this year, we've grown it in terms of revenues, almost 60%. If you just look at what we've announced to date, excluding any new unidentified investments, our SHOP revenues year-over-year will probably be up in that 60% plus range, again before we talk about new investments again. So there you go. There's a couple of numbers you can work off of.

Okay. And then just for Bickford. Just curious if you can make any comments on their financial health and how we should think about the range of potential outcomes for that revenue set next spring?

Sure. Juan, this is Kevin. From a financial health standpoint, we disclosed our coverage ratios. The lease is doing very well. Again, somewhat similar to my comments about SHOP and our managers, we need to evaluate our entire portfolio, including Bickford on a continuous basis in terms of -- is there -- are there properties that need to go to a different home or to be sold, what have you. We'll be doing that exercise as we approach the reset to make sure that the properties we have are the most effective for the portfolio. But I feel good about our relationship with them, the coverage we have on our lease in terms of their overall health, they have some more capital planning. They need to do. We've talked about that in the past in terms of just getting some long-term debt in place. So we're not dealing with some of these or they are not dealing with some of these issues that they have, that has been a work in progress. They've made some decent progress on moving some of their owned assets to HUD. So that is long-term fixed capital for them. They need to do some more work there. So I feel like they're making progress. We still have some more -- or they have some more work to do. We'll be monitoring that very closely to make sure that work gets done. But overall, they've done what we've asked them to do. It's improving, but it's probably a little slower than we would have liked.

As we have no further questions in the queue at this time, I would like to hand the call back over to Mr. Mendelsohn for any closing remarks.

Thank you all for your time and attention today, and we look forward to seeing you at NAREIT.