Colleen Sullivan - Director, IR Justin Hutchens - CEO and President Roger Hopkins - CAO Eric Mendelsohn - EVP, Corporate Finance Kevin Pascoe - EVP, Investments.

Juan Sanabria - Bank of America Merrill Lynch Todd Stender - Wells Fargo Securities Gordon Saddler - KeyBanc Capital Markets.

Hello, everyone. My name is Colleen Sullivan, Director of Investor Relations and I welcome you to the National Health Investors Conference Call, to review the Company's results for the Second Quarter of 2015.

The results as well as notice of the accessibility of this conference call on a listen-only basis over the Internet were released yesterday after market closed and a press release that's been covered by the financial media.

As we start let me remind you the statements in this conference call that 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 in 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 March 31, 2015.

Copies of these filings are available on the SEC’s Web site at www.sec.gov or at NHI’s Web site at www.nhireit.com. In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the Company’s earnings release and accompanying tables and schedules, which has been filed in Form 8-K with the SEC.

Listeners are encouraged to review those reconciliations provided in the earnings release, together with all other information provided in that release. I will now turn the call over to Justin Hutchens..

Thank you, Colleen. Hello, everyone, and thank you for joining us. I’m pleased to report, we put another excellent quarter in the books, and 2015 has proven to be a productive year for us thus far with over 297 million in investments. This is one of our strongest starts to date.

Following my commentary Roger Hopkins, Chief Accounting Officer will review the Company’s performance for the quarter. Eric Mendelsohn, Executive Vice President and Corporate Finance will discuss our capital stack and balance sheet metrics. Kevin Pascoe, Executive Vice President of Investments will cover our portfolio performance and new investments.

I am thrilled to report outstanding results for the second quarter. We reported a 9.5% increase in normalized FFO per share and a 7.4% increase in normalized AFFO per share. We continue to create value for our shareholders by creating cash flow growth on a per share basis above and beyond our healthcare REIT peer group averages.

I always like to remind NHI shareholders that we offer strong balance sheet metrics that rival that of a large cap company combined with the growth profile of the smaller company for each investment yield a more meaningful impact. We are finding better investment yields in new development, small portfolio and one-off leaseback transactions.

Much of our growth and our ongoing success depend on our high quality operating partners. Kevin will highlight the solid and consistent performance of NHI Bickford Senior Living and Holiday Retirement Corporation portfolio.

I am also pleased to report that Senior Leaving Communities our large entrance fee portfolio investment that we made in Q4 of 2014 is exceeding our internal forecast for lease service coverage with 1.5 times EBITDA coverage on a trailing three months basis.

I am also pleased about our recent acquisitions totaling 88 million, which are great examples of relationship oriented directly refereed transactions that have been our bread and butter for the past several years. We remain disciplined in our underwriting with an eye for long-term success.

I will now turn the call over to Roger to provide some color on the quarterly results..

Thanks, Justin. Hello everyone. As Justin mentioned, we have recorded another strong quarter of financial performance for the second quarter of 2015. Normalized FFO increased to $1.15 per diluted share. Our normalized AFFO increased to $1.01 per diluted share, which represents a 9.5% and 7.4% increase respectively over the second quarter of 2014.

Normalized FAD for the second quarter increased to $1.02 per diluted share, which is a 7.4% increase from the previous year. These increases reflect the results of our large investments in late 2014 and in 2015 related to acquisitions, construction and loans with industry leading companies in the Senior Housing Industry.

Our general and administrative expenses for the second quarter were 2.5 million or 4.5% of our revenue as compared to 1.8 million or 4.2% other revenue in 2014. Our payroll and related expenses have increased due to additions to our management team and corporate staff.

Our consulting and professional fees have increased due to the volume of new investments and new financing arrangements. Marketing expenses have increased as we continue to expand our brand awareness and promotional activities. Turning to our existing investments.

We continue to fund our constriction and mortgage loans to a premier interest fee community in Issaquah Washington Main Timber Ridge. We have funded 48 million thus far in 2015 and estimate we will fund the full 154.5 million commitments over the next 18 months.

As we have previously disclosed, we estimate that we will receive repayment on one of our loans in 2017, leaving a mortgage loan balance of 60 million for which we have scheduled a 10-year maturity. In June, we received full payment of our mortgage loan of 11.7 million from one of our borrowers located in Mesa, Arizona. This loan was due in July.

In June, we also received $491,000 from the settlement of bankruptcy proceedings from one of our former borrowers in a matter that dates back to more than 10 years.

In June, we also committed to a plan with our tenant fundamental to sell two skilled nursing facilities in Texas that were part of a disposal group of six scale nursing facilities that are over 40 years old and that we're originally under contract to sell the fundamental beginning in 2011.

One facility was sold in 2011, three were sold in 2013, and the remaining two are expected to be sold on September 30 this year. As previously disclosed, upon completion of the four property disposal in 2013, the lease amount was fixed at $250,000 per month for the remainder of the original lease scheduled to expire on February 2016.

We have anticipated this loss in future revenue and expect to offset it with revenue from our new investments. Moving on to our dividend; yesterday we announced a second quarter dividend of $0.85 per common share, which is 2.4% above the same quarter in 2014. The normalized FFO dividend payout ratio was 73.9% for the second quarter.

Turning to guidance we have updated our estimates for the full year. The range for normalized FFO is a $4.55 to $4.59 per share and the normalized AFFO range is $4.02 to $4.04 per share. Our guidance range allows for the uncertainty and the structure and timing of the financing [indiscernible] previously announced investments.

I’ll now turn the call over to Eric Mendelsohn to discuss the capital plan and balance sheet metrics..

Thank you, Roger. We’ve had a busy quarter and expanding our borrowing capacity on the revolver and extending debt maturities. Let me start with our industry leading balance sheet metrics, which include the following. Net debt to annualized EBITDA was 4.2 times for the quarter. Our weighted average debt maturity is 7.5 years.

Our weighted average debt cost of capital is 3.56% and our fixed charge coverage remains a very solid 6.3 times. During the quarter we expanded the capacity of our revolver. We amended and increased our $450 million credit facility to 550 million, extended the maturity to June 2020.

The amended credit facilities provide for a 550 million unsecured revolving credit facility with interest at a 150 basis points over LIBOR and three existing term loans which remain in place totaling 250 million also maturing in June of 2020 and bearing interest in a 175 basis points over LIBOR.

These loans are swapped with a notional amount of a 130 million fixed to 3.91% until 2020 with an interest rate swap agreement in place. A second amount of 40 million fixed at 3.29% until 2019 and a third notional amount of 80 million being fixed to 3.86% until 2020.

The facilities can be expanded under an accordion feature up to an additional 250 million. The amendment accomplished three things. It increased our capacity and liquidity and also extended our loan maturity. As of June 30, we had a 101 million outstanding on the revolver with an available capacity of 449 million.

Turning to our aftermarket shop offering that closed earlier this year, the company did not issue any equity under the ATM during the second quarter. I’ll now turn the call over to Kevin Pascoe, who will cover portfolio details and new investments.

Kevin?.

Thank you, Eric. I’ll start with our portfolio performance. The EBITDARM covered ratio is 2.18 times, our skilled nursing coverage remains very strong in 2.98 times, while our senior housing portfolio is 1.31 times. Our relationship with Holiday Retirement Corporation accounts for 16% of our cash revenue.

The Holiday Retirement portfolio of independent living communities continues to improve occupancy ending the quarter with 92.8%, compared to 91.6% at the end of the prior quarter. The cash flow cushion remains solid with an EBITDARM coverage ratio 1.23 times. Senior Living community is performing ahead of our underwritten pro forma.

SLC accounts for 15% of our cash revenue. The SLC portfolio has an EBITDARM coverage of 1.23 times on a trailing 12 month basis and a 1.57 coverage on a trailing 3 month basis through June 30th of this year.

National Healthcare Corporation which represents 18% of our cash revenue and over half of our skilled nursing revenue continues to perform consistently and enjoy the 3.91 times corporate cash coverage. The Bickford joint venture which accounts for 12% of NHI’s cash revenue continues to deliver strong performance and growth opportunities.

This contribution to NHI’s revenue has grown 13.2% when comparing total revenue from Q2 2015 to the same period in 2014. The portfolio EBITDARM is up 15.2% when comparing the second quarter of 2015 to the second quarter of 2014 and is up 1.4% sequentially.

The current occupancy in the total portfolio is 85.5%, up from 80.8% in the prior year quarter and improved 40 basis points sequentially. The five new development projects continue to move forward and each one has a plan to groundbreaking by the end of 2015.

Moving onto new investments; as Justin mentioned year-to-date, we have announced over 297 million of investments. At beginning of July, we announced $67 million purchase of three Senior Living communities in North Carolina, Indiana and Tennessee and a sale leaseback transaction with affiliate of Eastway capital management.

The 413 unit portfolio is 86% occupied and comprised of 205 independent living, 137 assisted living and 71 memory care units. These communities are 100% private pay and are operated by New Horizon Senior Living and affiliate both Eastway Capital Management.

The lease term of 10 years with renewal options at a lease rate of 7% plus 3.5% fixed annual escalators for the first three years and 3% thereafter. The GAAP yield is 8.12%. NHI has committed to fund up to 8 million of incentive payments based upon financial performance of these communities.

This transaction is a product of NHI’s relationship oriented off market pipeline. Earlier this week, we announced the NHI Bickford Senior Living joint venture acquired Fairfield Village, a 92 units assisted living and memory care community in Lancaster Ohio near Columbus for 21 million.

Fairfield Village will be leased to the joint venture under term structure to comply with RIDEA provisions. The community was valid at an 8% capitalization rate on its trailing net operating income performance. Opened 2006, the community is 95% occupied, 80% private pay and generates approximately 3,900 and revenue per unit, per month.

Operations will be managed by Bickford Senior Living. This acquisition expands the NHI's Bickford Senior Living joint venture to 32 communities in 6 states. The purchase was funded with borrowings on NHI’s revolving credit facility. In summary, the portfolio continues to perform well and we continue to find accretive relationship driven investments.

With that, I will hand the call back over to Justin..

Thank you, Kevin. As you can tell from the results NHI is on very solid footing. We have found success, growing with industry leading operators, while managing our balance sheet conservatively and ultimately delivering shareholder value. Thank you for your ongoing interest in the company. We will take questions at this time..

[Operator Instructions] And our first question comes from the line of Juan Sanabria with Bank of America Merrill Lynch. Please go ahead..

I was just hoping you could speak a little bit to the Bickford RIDEA portfolio on the same-store pulls; some declines in the EBITDARM sequentially and the year-over-year sequentially and now on the year-over-year basis, it kind of -- of that was the flu -- the direct referred, and some of your peers talk so much about that, and actually some dismissed, but just hoping for some color there?.

Sure, Juan this is Kevin. We did see a higher number of moves out due flu, but occupancy has flattened out so far in the third quarter.

There is some wage pressure that we mentioned last quarter, on the hiring and retention of employees, and there is some pressure on revenue and margin due to replacing higher acuity residents that move out with lower acuity residents. But again so far this quarter is flat with Q2..

Then Juan, I just wanted to highlight, if you don't mind, that I just want to highlight that the total portfolio performance, Kevin mentioned in the prepared remarks is up 15% year-over-year, which is I think a critical point, because we have a stabilized same-store portfolio that at a minimum producers 3% growth for NHI because we have a preferred payment arrangement in the joint venture.

Anything better than that we will keep 85% of it. But in the total portfolio the strategy of course has been to get some low hanging fruit picked in the focused properties which are turning nicely and then also enjoy the outsized returns from the developments.

So the 15% year-over-year growth for the whole relationship is I think an important highlight that I think to just to follow-up on Kevin’s comment that the sequential same-store performance looks to a flattened and so far this quarter, so it doesn’t look like there is any type of trend forming..

Okay.

And then are you expecting occupancy to tick up and maybe if you could just comment on if the expense increases sort of a one-time nature or at one point in time if you reset wages annual at this time of the year, or how that works?.

There is a wage increase that occurs at Bickford, they are experiencing that is one-time in nature. We’ll see it offsetting rent increase that comes in a couple of months, that will help preserve margin. Occupancy so far looks flat. Historically, third quarter is a growth quarter, now just for Bickford bid for the industry.

So we’ll see what happens but so far it looks flat..

Great, and on the separate note, if you could just comment on what you are seeing in the pipeline, what your focuses, mix of asset types and maybe cap rates if you don't mind?.

Sure, we noted on prepared remarks, on recent transactions one of the one-off acquisition, the other was a small portfolio. Portfolio came at a seven cap, then one-off came at an eight cap. The smaller transactions I think are most represented of our current pipeline.

And particularly the relationship oriented direct referred transaction like those and even some of that that we would consider with our current customers is a good representation of what we are seeing.

Some of the larger deals on the marketplace, we’ve notice that have $100 million or more price tag attached to that are attracting interest from non-traded reason particularly are bidding quite high.

So we’ve managed to stay out of that market focus on our historical niche, which is really the ones and twos and small portfolios, and we have a healthy pipeline. And we also have extremely healthy development pipeline with a $170 million of committed over the next year and a half.

So I would say that we have quite a bit of growth built into the developments and that we have quite a bit under review that are our bread and butter, which is the smaller transactions..

And have you seen any --.

I would just say that the cap rates I mentioned are in the neighborhood of what we are seeing..

Okay.

And do you think we’ll see any infection in cap rates, given what’s happening in the capital markets or are you seeing any retrading, or are we hearing of any retrading of portfolios or any thoughts there?.

Yes, just broadly, interestingly enough even though there has been a tick up in the cost of capital in the ten years, drifted up a bit. Cap rates on the large transaction seem to be continuing to fall. So clearly there is going to be a point in time when rates go up enough that there'll be a bit aft disconnect.

And I think there will be a little bit of a slowdown in deal activity in the marketplace and then a reset of cap rates to follow which will generate more activity again. But at least in my point of view none of that happened yet, there is still very aggressive pricing. .

Thank you. And our next question comes from the line of Todd Stender with Wells Fargo. Please go ahead..

Justin, can you provide more detail around the incentive payment that you entered into through you acquisition of the East Lake properties, maybe went into the negotiation.

Just want to see if the seller was asking more and that you are spreading out some of the purchase price over a longer duration?.

Yes. I will take the first part and then Kevin can jump in and would give you a little bit more nitty-gritty in terms of how they achieve the earnout. But the thought behind there now is that the opinion of the operator that there is upside in the portfolio. We agreed. There is no guarantee they will achieve it, but if they do that benefits NHI.

It's really two things. It creates more cash flow cushion, more coverage for us and also it gives us the opportunity to deploy more capital on a performing asset. So the earnout really is reward to the operator for creating value, but also creates value for the NHI shareholder because it's worked into our lease bases..

And what I will add to that is the test for us is over a trailing 24 month period. So these communities will, as they get repositioned and stabilized and the operator creates that upside, there will be a healthy cushion as Justin mentioned on the lease payments. And it will be taken over a trailing 24 month period.

So it's really just kind of paying the coverage back down to what we would see bit to be a normalized level once they achieve that performance. And the plan is in place working, but it's again 24 months they would have that ability to access it..

So this is under a triple net lease, right..

That's right..

Okay.

Was the opportunity there to enter into RIDEA, if you do agree that there should be some upside here?.

Well, there is kind of two points of view on that and I think the case first this particularly portfolio, we are most comfortable entering into the triple net lease and allowing the operator to build more credit through cash flow growth, give us cushion over NHI's income stream and then get the return that we get through the lease payment by deploying more capital.

We went in at seven cap, we have solid escalators on this as well. So feel like we are capturing some upside, I think as a 3.5% escalator.

3 years, correct..

Yes, for the first three years. So we have found a way to capture some upside. We are still enjoying the security if you will with triple net lease structure..

Thanks Justin.

And how about coverage, well was this entered in that and what do you think it is going to project it to be?.

We entered at about 1 to 1 cover and projected better than one in a quarter or more once it realized stabilization..

And I think you guys said the RIDEA structure that you just entered was another asset with Bickford, did I catch that right?.

That's right..

And it was a pretty high yield of 8%, it was above what your net lease asset went out at 7, can you just talk about, that pretty high yield, how do you guys arrive at that?.

Well, in that case you are buying; it is a joint venture asset. So you are buying the operations and the real estate. We are in a triple net; we are really just putting the value on the real estate portion of the asset, so there is a little bit higher yield attached for that reason.

It's a one off asset that generally attracts a little bit higher yield. And the seller had previous transactions with NHI and I think they gave a lot of credit as well to just surety of close. And the fact that they know they could count on that we will deliver when we say we would deliver..

And what kind of risk for award profile would you say that asset has, is it what’s the occupancy and then how you guys look at that asset?.

This is Kevin. So the occupancy there is pretty stable. It’s about 95% occupied. There is some upside with taking the community 100% private pay and also having Bickford particularly rounds a little bit higher acuity. So I think that can attract a little bit higher rate overtime.

So there is some upside there, but generally, it’s a very stable well-performing community..

[Operator Instructions] Our next question comes from the line of Gordon Saddler with KeyBanc Capital Markets. Please go ahead..

So first question is, just given the capital markets environment, what's sort of the appetite on the investment fund right now, as your cadence changing at all, I mean the pace of play going to be a little bit more moderate for the rest of the year given sort of the commitments that you already have? Or are you seeing sort of steady flow out there and just continue to execute, how are you thinking about it?.

Well, let me just Kevin sort of was about to say, was the fact that we really don’t give investment volume guidance. But I’m happy to speak a little bit to the pacing. We’ve had the best start in terms of volume that we’ve had in seven years so far this year.

And so we’re off to a strong start, we had, if you look at the last couple of years, the yeas are kind of strong, but this year we started out stronger.

The pipeline at this time has the development commitments which I mentioned; but there also are some smaller transactions as well that I would describe, if we're able to execute as covenant study execution opportunity. But we’re only half way through the year. So it’s hard to predict exactly what will happen, but I like where we’re position.

And I feel really good about the growth we delivered so far this year..

I guess along the same line, during the same context which sort of the -- you've got the ATM in place, in terms of using that. You’re comfortable using that to fund.

But where do you want to be leverage-wise and how are you thinking about leverage including sort of development commitments?.

Gordon, this is Eric Mendelsohn. First of all, we’re very mindful of the ATM’s dilutive effect. So we want to marry its use with our acquisition and development pipeline when we do use it. And as you probably know and have figured out our formula for funding acquisitions and development is 60% equity, 40% debt.

That said, looking at the development pipeline, which is a very predictable capital need, and in the case of Timber Ridge repayment schedule, we probably relay primarily on our recently amended revolver for the debt portion of those capital needs..

And just remind you that Timber Ridge project, when it opens in 2017, the entrance fee collected from the new residence pace the principal down on the debt.

So we’re expecting about a $90 million repayment at that time and then we’ll keep in place a $60 million senior loan, but we’ll have a deleveraging event throughout ’17 through the entrance fees, which are over 80% pre-sold at this point..

Last one, Justin, just any update on the purchase option properties or appetite there?.

Nothing, no news on the purchase option properties. Thanks for asking that..

And at this time there are no further questions over the phone line..

Well, very good, we sure appreciate everybody’s interest in NHI and look forward speaking more in the next call..

Thank you. Ladies and gentlemen that does conclude today’s conference call. We thank you for your participation and ask could you please disconnect. Have a good day..