Colleen Sullivan – Director, Investor Relations Eric Mendelsohn – President and Chief Executive Officer Roger Hopkins – Chief Accounting Officer Kevin Pascoe – Chief Investments Officer John Spaid – Executive Vice President, Finance.

Chad Vanacore – Stifel Nicolaus Katie Morgan – KeyBanc Capital Markets Richard Anderson – Mizuho Securities John Kim – BMO Capital Markets.

Hello, everyone. This is Colleen Sullivan, Director of Investor Relations. Welcome to the National Health Investors Conference Call to review the Company's result for the second quarter 2017.

On the call with me today is Eric Mendelsohn, President and CEO; Roger Hopkins, Chief Accounting Officer; Kevin Pascoe, Chief Investment Officer; and John Spaid, Executive Vice President, Finance.

The results as well as notice of the accessibility of this conference call on a listen-only basis over the internet were released this morning before market opened in a press release that's been covered by the financial media.

As we start, let me remind you that any statements in this conference call, which are not historical facts, are forward-looking statements. NHI cautions investors that any forward-looking statement may involve risk or uncertainty 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 quarter ended June 30, 2017.

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

Listeners are encouraged to review those reconciliations provided in earnings release together with all other information provided in that release. I'll now turn the call over to Eric Mendelsohn..

Hello everyone, and thank you for joining us today. I would like to start by inviting you to attend our upcoming Investor Day this fall. We'll be hosting investors and analysts in Greenville, South Carolina at Cascades Verdae; a CCRC operated by senior living communities.

And this event will take place on Tuesday, September 19, and will feature a management presentation, a Q&A session, and a property tour. We hope to see you all there. For more detailed information, see our Investor Relation section on our website. Moving on to earnings, I am happy to say that Q2 was another strong quarter for NHI.

Normalized FFO increased 8.2% and adjusted FFO increased 7.3 per share compared to the same quarter in 2016. In a year that has seen weak public buying activity, NHI has continued to grow with both new and existing customers. Year-to-date, we've executed 158 million of investments.

And as Kevin will discuss later, we just gained a new operator Evolve Senior Living. We have spoken in the past about the potential deals to be had as new developments and inexperienced operators and inexperienced capital play out in the market. The building now run by Evolve Senior Living is a great example of that.

This building was purchased out of bankruptcy from an owner operator who lacked the skills needed to run the business. NHI partnered with the local operator to take advantage of a premium property at a distressed price. As the lending markets begin to tighten up, we expect to an increase in similar deals crossing our path.

Many of these deals will be similar to the opportunity seen during the recession. NHI is well positioned to take advantage of these opportunities with a competitive cost to capital, excellent operators, and deep relationships in the senior housing industry that lead to healthy deal flow.

With that, I'll now hand the call over to Roger Hopkins to walk through our financial results in detail. Roger..

Thanks, Eric. Hello, everyone. I am pleased to report excellent financial results for the second quarter as they are reflective of steady investment growth over the past year with new and existing tenants, and a low cost of debt and equity capital with which to fund.

In addition, we finalized amended lease agreements with our tenants HSM in Florida and Bickford Senior Living which Kevin will discuss later. Normalized FFO per diluted share increased 8.2% to $1.32 compared to $1.22 for the same period one year ago. Normalized AFFO increased 7.3% to $1.18 per diluted share compared to $1.10 one year ago.

With approximately $158 million of announced investment so far this year, we continue to deploy a careful mix of debt and new equity to maintain our low leverage profile. NHI's total revenues for the second quarter showed strong growth of 14.1% over the same quarter in 2016.

This growth has been primarily fueled by our new investments in 2017 and the full year impact in 2017 of investments made throughout 2016. For the second quarter of 2017, our general and administrative expenses were $2.5 million.

And when compared to the same period one year ago, increased slightly due to additions to our corporate staff and in incentive and non-cash share based compensation. Our non-cash stock based compensation expense in the second quarter was $342,000 and is estimated to be approximately the same for each of the next two quarters.

We currently estimate our total general and administrative expenses will be between $2.5 million and $3 million during each of those same periods. For the first six months of 2017, revenues increased 15% over the same period in the prior year. Normalized FFO increased 8% over the prior year. And normalized AFFO increased 7.9% over the prior year.

Over the last 12 months, we have liquidated our long held investment in LTC common stock; thereby, generating approximately $75 million in proceeds that have used to fund real estate investments.

General and administrative expenses have increased approximately $1.5 million when compared to 2016, primarily due to additions to our corporate staff, incentive compensation, and to our non-cash stock compensation expense calculated by the Black-Scholes pricing model.

We now have 15 full-time employees and continue to outsource functions such as legal, internal audit, tax compliance, IT, and payroll to other professional firms. This model is very efficient and has served us well over the years. As mentioned last quarter, our management team is focused and incentivized on annual growth in AFFO on a per share basis.

This non-GAAP metric excludes the accounting convention of non-cash straight line rent income and gives credit to our actual lease escalators and to our investments for which no straight line rent calculation is required. Importantly, it assures management's focus on making accretive new investments over our blended cost of debt and equity capital.

For 2017, we increased our quarterly dividend 5% to $0.95 per share or $3.80 on an annual basis. We currently estimate our total dividend for 2017 will result in normalized FFO payout ratio in the low 70% range and a normalized AFFO payout ratio in the low 80% range.

Moving on to guidance for 2017, we have raised our normalized FFO guidance from a range of $5.06 to $5.12 per share to a new range of $5.22 to $5.26. Likewise, we have raised our normalized AFFO guidance from a range of $4.61 to $4.65 to a new range of $4.70 to $4.72.

We have successfully executed on transaction so far this year that support those estimates. We do not include an estimate of our investment involve in our guidance range. However, our guidance includes the effects of expected transactions for which we have clarity, including financing transactions.

We have confidence in our guidance ranges for 2017 and in the full-year impact of those investments in 2018. I'll now turn the call over to John Spaid, who will discuss our capital transactions..

Thank you, Roger. For the quarter ended June 30, our debt capital metrics were net debt to annualized EBITDA at 4.3 times, weighted average debt maturity at 6.1 years, weighted average cost of debt at 3.5%, and our fixed charge coverage ratio at 5.9 times.

Looking at the revolver, at the end of the second quarter, we had $188 million outstanding with an available capacity of $362 million. We did not make use of our ATM equity program during the second quarter. However, we continue to have $319 million available under our shell perspectives filed February 22, 2017.

As mentioned in our Q2 earnings press release, on August 3, 2017, we closed a new syndicated $800 million unsecured credit facility which replaces our existing $800 million revolver in term loan facility.

The new facility lowers our borrowing cost, consolidates our three bank term loans into a single term loan, allows greater flexibility in the investments we may make and extends the maturities of our revolver in term loans to 2021 and 2022 respectively.

With the payment of the 10 basis point extension fee, our revolver maybe extended one year to be coterminous with our term loan.

At closing, and reflective of our current leverage ratio, the 30-day LIBOR spreads on our new credit facility will reduce 35 basis points from 150 to 215 basis points for our revolver and 45 basis points from the 175 to 130 basis points for our term loan, in addition our revolver transition for non-used capacity fee of 40 basis points to a facility fee of 20 basis points.

On a trailing four quarter pro forma basis, we estimate the improved pricing under the new facility would have been approximately $0.05 accretive to AFFO. Additional details may be found in our 10-Q in the Company's SEC filings. We are grateful to all our banking partners as well as our private lenders for all their hard work and cooperation.

I'll now turn the call over to Kevin Pascoe to discuss the portfolio..

Thank you, John. This quarter has been a great example of NHI's focus on accretive investments, good asset management, and strong tenant relationships combining to produce consistent positive results. Our lease renewals with health services management is just one example that showcases these priorities and results they lead to.

The new lease affected this May consists of a $9.8 million lease payment, which is an increase of over 2.5 million when compared to the original lease. A lease carried fixed escalators of 2% with a lease term of 12 years and two five year extension options.

Under the new lease, the trailing 12 EBITDA and coverage [indiscernible] would have been 1.7 times. We are delighted to continue our partnership with HSM. They are an outstanding operator with a great track record. They current run over 20 skilled nursing and assisted living facilities in South and Midwest.

The NHI owned facility run by HSM, which are all located in Florida, average above four star rating. In addition quarterly billings have a gold seal designation, which is a remarkable feet. Of the 683 license nursing homes in the state, only 25 other buildings have received the same recognition.

With each investment, we focus on partnering with high quality operators like HSM, which helps in HI continue to deliver consistent results.

Turning to the overall portfolio, at the end of first quarter, the EBITDA and coverage ratio on the portfolio was 1.76 times, our skilled nursing coverage is 2.64 times, and our senior housing portfolio is 1.27 times.

Looking at our larger operating leases senior living communities, which represents 17% of our cash revenue has an EBITDA and coverage ratio of 1.34 times on a trailing 12-month basis as of first quarter-end.

Our relationship with National HealthCare Corporation accounts for 16% of our cash revenue and has a corporate fixed charge coverage of 3.63 times. Holiday Retirement has an EBITDA and coverage of 1.18 times as of first quarter-end and represents 15% of our cash revenue.

So, leading indicators from the portfolio are positive coming out of the second quarter of this year. As the community management transition has been fully implemented. Occupancy for July ended at over 91%, which is the highest since November of 2016.

Our partnership with Bickford Senior Living accounts for 14% of our cash revenue and has an EBITDA and coverage ratio of 1.21 times for the trailing 12 months ending March 31st. During the quarter, we signed a leased extension on 32 existing Bickford buildings extending the lease of 13 buildings for five years and 19 buildings for 14 years.

The development properties continue to lease up nicely ahead of the respective performance Bickford has now opened all of the NHI on development properties. The two remaining development with Bickford underway are under a loan structure of NHI has a favorable purchase option of stabilization.

One project is slated to open in the fourth quarter of 2017 and the other is expected to open in the third quarter of 2018. During the quarter, we further expanded our relationship with Bickford when NHI acquired a 60 unit of assisted living and memory church community in Lansing, Michigan.

NHI with short investment was $10.4 million but from additional commitment of 475,000 for capital improvements, which is expected to be fully funded over the first lease year. The building originally built from 2001 will be renovated and leash the Bickford senior living.

The lease has a term of 14 years with renewal options and initial lease rate of 7.35% plus annual escalators. The acquisition brings the total number of NHI facility lease for Bickford to 43. In addition to this non-investment Monday we announced the $10 million mortgage of a 40 unit memory care community in Raleigh, Hampshire.

The community originally built-in 2013 is managed by both senior living, a small operator with solid industry experience and good growth prospects. The loan will have a term of 5 years with renewal options at an interest rate of 8% and NHI will have an option to purchase the property after stabilization.

At the end of July, NHI made a land acquisition for $4.8 million and had entered into a ground lease with Acadia Healthcare. Acadia leases and operates TrustPoint hospital in Murfreesboro, Tennessee, a 101 bed acute care general hospital specializing in rehabilitation and inpatient psychiatric treatment.

NHI and Acadia re-fixed in Acadia's purchase option of two years to 2020. With the land addition Acadia will expand its operations by building 116 bed hospital on the campus that will be utilized for additional psychiatric programs.

Our pipeline remains solid with good opportunities to add to our existing relationships and expand our current customer base for accretive deals. The marketplace is competitive and we remain selective to make sure we are adding high quality operator in communities. With that, I'll hand the call back over to Eric..

Thank you, Kevin. We hope to see you all at our Investor Day September 19. And with that, we will now open the line for questions..

Thank you. [Operator Instructions] And our first question comes from the line of Chad Vanacore with Stifel. Please proceed with your question..

Hi, good afternoon..

Hi, Chad..

So, just thinking about your new investment [indiscernible], is this more of a one-off type investment or is there more opportunities to be done beyond that?.

Hi, Chad, it's Kevin.

We are talking specifically with of all I mean, that's I think the idea that we have with each of our relationship to try and help them grow over time, so it's our expectation that we can help them into the future but and then also as Eric kind of mentioned there are some other deals in the marketplace that would be similar in terms of just value add and then we think we might be able to get some better pricing on.

So we remain to be on look out for those types of opportunities..

All right. Thanks, Kevin.

So moving on to Senior Housing, the Holiday portfolio, they better change it over in your executive management structure, what's the main pack in occupancy in the quarter?.

So for the second quarter recently ended we actually saw a pretty good outcome that's starting to get some traction on their sales programs and leaving the manager model changes that's communities, that's fully implemented along with the sales trend program, so last three months we've seen consecutive net occupancy growth in the portfolio with July ending over 91%, so we still are watching closely but the leading indicators for occupancy are positive right now..

All right, that actually sounds pretty good.

Then you got another portfolio that Ensign has leased which had been struggling, can you give us an update and some color there?.

I'm sorry Chad with Ensign?.

Yes..

The neutral plan, new [indiscernible] yes, so you are asking specifically about the new addition, is that right?.

No, I was actually a bit asking about the alleging portfolio but we talked about the new additions as well?.

Yes, so I think they've mentioned this on their call as well that transition is taking a little bit longer than expected. But they are expecting some better results in the second half of this year, the leading indication there or positive as well.

So again I spent something that's taken a little bit longer but they are seeing the tight turn in their favor and something that they think they are going to have some positive outcomes, second half of this year..

Thanks for taking the questions..

Thank you, Chad..

Our next question comes from the line of Jordan Sadler with KeyBanc Capital Markets. Please proceed with your question..

Hi, this is Katie Morgan on for Jordan. I'm just touching upon the Holiday portfolio. I was wondering if you could discuss their coverages and how you expect them to trend over the second half of '17 given the changes at the management level? Thank you..

Sure this is Kevin. The coverage -- EBTIDA on coverage on the portfolio is 1.18 times through the first quarter and we are watching it closely. It will see you know, as the occupancy improves, how that trends for now it's pretty steady, so we are again watching it closely, but that EBITDA on coverage has been steady through the information we have..

Thank you.

And then, separately during the quarter, you guys made a land acquisition with TrustPoint Hospital and you mentioned that they will be developing an additional hospital on the land, would you be interested in funding the expansion on the property?.

This is Kevin again. We would be very interested in growing our relationship with Acadia. So this was one kind of foray to help them out, we had already owned the land and improvements with the existing hospital.

So this was a way for us to allow them to expand the footprint to be honest with you we -- they've got a very good cost of capital, so with a little more efficient for them to do the improvements themselves but if they have -- if they would like us to do some development with them we'd be more than happy to do as it stands we just did a ground lease we'll do the improvements and we were able to negotiate an extension to purchase option they have.

So we'll keep the lease in place for at least two more years beyond what we already had in place..

[Operator Instructions] And our next question comes from the line of Richard Anderson with Mizuho Securities. Please proceed with your question..

Thanks, good afternoon Kevin.

When went through the EBITDA coverages, could you like quantify what it would be on EBITDA basis for each of those top four I felt that you listed?.

So from a conversion standpoint on senior housing, if you take out an industry-standard management fee you're probably looking at about 0.1 to 0.15 on the coverage..

Okay, all right, and so and I see to matter it's so big and I mean its fixed charge number I understand okay.

Roger, something that you guys always saying guidance every quarter is the guidance doesn't include acquisitions except for acquisitions that it does include I don't know exactly how you put it, but it like I hear one thing and then you say - but it does include stuff we have certainty on or something like that.

So can you tell me then what is in the guidance and what is not is it just the stuff that you've completed or is there an assumption of more somewhat I never really understood?.

Yes, we have had a significant growth in our guidance for the full-year. We have the full last half of the year impact of the investments that we've made so far about $158 million. We do have ongoing construction, development projects loan commitments those are fully disclosed in our 10-Q.

We got about $94 million of loan commitments and development commitments that we will fund over the course of the next year. We also talk about the significant renewal of the lease with HSM of Florida with some very excellent skilled nursing facilities there that is an incremental increase of about $2.5 million in base rent per year.

This lease also has a fixed escalator and so they'll be some straight-line rent in the FFO number.

And then finally, John, in his remarks talked about the amended and extended bank credit facility this is an $800 million facility that we had and we were able to reduce our interest rates by 35 basis points on the revolver and 45 basis points on the bank term loans.

So you take the investments we've made, the HSM lease, the credit facility we've also done a smaller renewal with a portion of the Bickford assets which we talk about. And that is what drives this increase now in guidance and positions us well for 2018.

We do have clarity on transactions the last half of the year including financing transactions with which to pay for those investments..

Okay, yes, so I just wanted to clear there is no additional on unannounced acquisitions in the guidance I got other types of transactions and loan commitments and what not, but no other third-party acquisitions in the guidance is that correct?.

This is Eric. Hi, Rich, no that isn't correct the guidance also includes some acquisition activity and even some disposition activity..

Okay, all right..

The trick, Rich, as we're looking at you know the fourth quarter now so it's either not going to be a material impact to 2017 its more of a 2018 thing and a lot of times we do transactions where we have to assume debt and we're not really in control of when it closes we're waiting for higher or some other lender to approve and those things move at a snail's pace.

So we have to be careful about relying on that that revenue showing up and when..

Okay, so when you say the company is not included in estimate of investment volume in its guidance range that just means that there's something in there or you're just not telling us what it is?.

Yes..

Okay..

Yes, we don't want you to rely on something we can't deliver on right..

Right, but the number -- if the guidance includes it why not just tell us what it is?.

Because it's proprietary Rich these are deals that haven't closed yet..

Okay, I guess I like a little mystery in life but….

There you go..

So I am going to understand. And then Eric you started off the conversation talking about purchasing assets out of bankruptcy and I got really kind of interested. And then we didn't hear much more about it in the call.

So the question was asked earlier [indiscernible] but what's the kind of the opportunity set there something along those lines is it just a couple more deal that you see that you could buy out of bankruptcy and kind of have this value add motive to it or is it a bigger opportunity given some of the disruption that's happened in the senior housing space as of late?.

Well, we're seeing -- what used to be trickle of the stress building has turned into a regular flow whether or not that's going to increase or maintain remains to be seen.

But we are seeing more half filled buildings that were just open and belly flopped and if you can get those at the right price even if it's in an overbuilt market you have an advantage kind of like Sam Zell's Grave Dancer strategy..

Okay, so for this purchase out of banks did you see how big the evolve deal was I don't remember if you did?.

$10 million..

Was that the loan that Kevin talked about?.

Yes..

Okay I guess….

Yes, because as a REIT we don't really want to buy unstable properties that don't cover that would make guys like you unhappy. So the way to shelter that is to do to a loan..

That's my fault, I didn't drawn that line I apologize for that so is that an 8% on the loan is that what you said Kevin?.

Yes..

Okay. And trickle of distress into flow means we could see an increment into your loan book at least in the short-term as these deals kind of flow..

Correct..

Okay, all right, thanks very much..

Thanks, Rich..

Our next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question..

Good afternoon. So did not question but in your 10-Q this quarter under risk factors you added an extension regarding breaches in security information.

I was wondering if there was any particular reason why you added in this quarter?.

Well, this will be in our 10-K next year and so we're giving notice of that. This is an item that is of great concern to all companies and the SEC. And so we take it very seriously and we think that we have as good measures as we can possibly have to safeguard information.

And when you think about what we collect we're collecting proprietary information on our tenants and borrowers and that's really the significant private data. And so anything can happen we - there are always stories about hacking and that sort of thing but we take every measure we can possibly take to safeguard that information.

But nothing has happened, John, nothing to be concerned about we're just kind of raising our level of awareness and in our investor's level of awareness about the issu..

Nothing for your company but anything regarding your partners or maybe some of your competitors or I guess any additional cost that you foresee spending to alleviate this risk?.

No, nothing has happened to anyone, we're aware of. But with all the phishing emails we get, we're constantly on our toes..

Okay.

And then my second question is you had a relatively minor increase in looks like maintenance CapEx you guys call it renovations, do you expect CapEx to increase going forward either as the portfolio ages or potentially as something you worked with some of your tenants?.

Hey, John, it's Kevin. We don't have any CapEx currently that we are -- that we are spending and not getting a return on, when we've done CapEx, it goes to our -- we would fund it to our tenant and in return we would get a lease rate back for that..

And we just to point out that's different than a lot of other REITs that have idea and their CapEx is actually going into a building that they own and may or may not pay or rate of return..

Have you received any pushback from any of your tenant, I mean some of the EBITDA and coverage ratios there pretty tight..

Pushback with regard to….

Providing capital for CapEx..

No, this is Kevin again.

No we haven't received any pushback per se we always work with our tenants to make sure we understand what their needs are and to the extent there's a way for us to help when they have the coverage to support the increase lease payment, that's definitely something we would look at it with them but its there's not been any elements of them coming to saying we don't have money to fund our CapEx..

Got it, okay. Thank you..

Thank you, John..

And there are no further questions at this time. Please continue with your closing remarks..

Thank you everyone for joining us today. We hope to see you at our Investor Day next month..

Ladies and gentlemen that does conclude the conference call for today. We thank you for your participation and I thank you please disconnect your lines..