Ladies and gentlemen, thank you for standing by, and welcome to the National Health Investors' Fourth Quarter 2013 Conference Call. (Operator Instructions) (Technical difficulty)

On the call today will be Justin Hutchens, President and Chief Executive Officer; and Roger Hopkins, Chief Accounting Officer. The results, as well as notice of the accessibility on this conference call on a listen-only basis over the Internet were released this morning and a press release has been covered by the financial media. As we start, let me remind you that 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 and its periodic reports filed with the Securities and Exchange Commission, including the risk factors and other information disclosed in NHI's Form 10-K for the year ended December 31, 2013. Copies of these filings are available on SEC's website at www.sec.gov or at 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 company's earnings release and accompanying tables and schedules, which has been filed on 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'll now turn the call over to Justin Hutchens. Please go ahead.

Thank you, Tripp. Good morning, everyone, and thank you for joining us. With me today is Roger Hopkins, our Chief Accounting Officer. We ended the year at the high end of our previous guidance with $0.90 of normalized FFO in the quarter, a 7.1% increase; $3.55 per share for the year represented, an 11.6% increase from 2012. Normalized AFFO and FAD were also up for the quarter and the year. Our announced and completed investments reached over $751 million for the year with the closing of the Holiday transaction backed up by successful execution of a follow-on offering and expansion and extension of our credit facilities. Performance across the portfolio continued to meet our expectations. And our Bickford joint venture was once again a solid contributor. I'll speak more to these transactions and trends as well as the improvements for our balance sheet in a moment. Now I'll turn the call over to Roger to report our financial results.

Thanks, Justin. Good morning, everyone. My comments this morning are consistent with our disclosures in Form 10-K, our earnings press release and our supplemental data report filed this morning with the SEC. We are pleased to report another quarter and full year with strong financial results. Normalized FFO for the fourth quarter of 2013 was $26,749,000 or $0.90 per diluted common share compared with $23,369,000 or $0.84 per diluted share in the same period in 2012. Normalized AFFO for the fourth quarter was $24,624,000 or $0.82 per diluted common share compared with $22,029,000 or $0.79 per diluted share for the same period in 2012. Normalized FAD for the fourth quarter was $25,542,000 or $0.86 per diluted share compared with $22,771,000 or $0.82 per diluted share for the same period in 2012. Our normalized results for the fourth quarter of 2013 excluded the impact on net income of a purchase liability of $3,256,000 that was written off into income, as our [tenants] [ph] earn-out period had expired and we were not required to fund the liability, which we had previously assessed as probable. Net income attributable to common stockholders for the fourth quarter of 2013 was $27,776,000 or $0.93 per diluted share compared with net income of $41,105,000 or $1.48 per diluted share for the same period in 2012. Net income for the fourth quarter of 2013 included gains of $2,888,000 on the sale of three skilled nursing facilities and an assisted living facility. Net income for the fourth quarter of 2012 included the recovery of a previous write-down of $4,495,000 plus the gain of $11,996,000 on the sale of an assisted living facility. We planned to defer recognition of the tax gain on the sale of these facilities by utilizing the like-kind exchange rules under Section 1031 of the Internal…

Thank, Roger. Turning to our portfolio statistics, lease service coverage remained very strong with a weighted average lease service coverage ratio of 2.92 times. We have provided details on the ratios for our property types on Page 6 of our supplemental. [Ph] EBITDA is up 7.2% sequentially in the Bickford-RIDEA portfolio, while occupancy was 86.2% for the quarter, which is 140 basis point improvement over the prior quarter. I'll also note that the Holiday portfolio is ahead of our underwritten performance for Q4 and thus far in 2014. Investment volume reached $751.6 million for the year with the completion of the Holiday transaction in late December. We also closed a $135 million transaction with Bickford senior living during the middle of the year that significantly expanded our RIDEA partnership. This was a busy year and we demonstrated our ability to close quickly and remained disciplined. We don't expect to be in the market else and hunting for the large transactions. However, we have proven that we can and will opportunistically execute large transactions. Our typical growth pace will be between $100 million and $200 million a year. The pipeline remains active with mostly private-paid senior housing and senior care assets. Pricing has remained tight. We will maintain discipline though and continue to source through our proprietary pipeline. Turning to our outlook, we are introducing new estimates for normalized FFO and normalized AFFO. Given the significant amount of straight-line rental income that has generated from the Holiday transaction, year-over-year it's nearly tripled what we had in 2013. We have added the normalized AFFO measure. This should be a more accurate picture of the organic growth we can achieve from the NHI portfolio and is comparable to what we've seen among some of our peer group. As you recall, CapEx isn't really an issue for us. It's primarily the straight-line GAAP adjustment. For 2014, we expect normalized FFO to be in a range of $3.92 to $4 per diluted share. We expect AFFO to be in a range of $3.44 to $3.50 per diluted share. These estimates assume Q4 as the baseline, adjusting for the acquisitions made during the quarter along with the three dispositions we completed, the terming out of debt on our credit facility and a range of 3% to 6% growth from the Bickford joint venture. I want to make it clear that top end of our range does not include investment activity. We're excited about the outlook for the year. We recently increased the quarterly dividend by another 6.2%. And the acquisition of the Holiday portfolio has accelerated our growth curve. We remain true to our roots and very appreciative of the relationships we have with leading operators. We look forward to working together with them in 2014 and deliver the performance we have all come to expect from NHI. Operator, we're now ready for questions.

(Operator Instructions) And our first question comes from Karin Ford of KeyBanc Capital Markets.

First question, Justin, is you mentioned your sort of normalized acquisition volume goals. It sounds like they remain roughly steady at $100 million to $200 million for 2014. Just given the increased size of the company post-Holiday, I guess I was surprised that number wasn't a little bit bigger just to try to maintain sort of your external growth trajectory. Just talk about your thoughts now that you're a bigger entity and how you plan to maintain the external growth profile of the company?

Sure. First, let me just clarify that I mentioned that our fiscal growth pace is $100 million to $200 million, but that wasn't meant to be a guidance number for 2014. I was just pointing to the fact that we've run a little lower on average previously compared to 2013. In terms of our opportunities to grow moving forward, I feel very good about our opportunities. The pipeline is very active with marketed and direct referral transactions. One of my favorite stats this year is the fact that we've had multiple transactions with 11 of our customers over the past five years. And so our ability to get a repeat business is proving to be a strong part of our growth plan and we still continue to add customers. The marketplace is active. The marketplace is also competitive. But our existing customer base and some other relationships we've been nurturing has helped us to continue to grow. And we expect to have continued growth this year and beyond. So I like how we're positioned from a growth standpoint. We're just not giving an investment volume number as part of our guidance. Our guidance has other assumptions, but it does not include investment volumes.

Second question is can you just give us more detail on what the components are of the 3% to 6% deferred guidance?

Sure. All that is, is looking at their EBITDAR and assuming that it either grows 3% or 6%; we didn't include any underlying revenue or expense expectations to get to that number.

Is it expecting a big occupancy gains in the portfolio this year? Are you expecting to get good rate growth, can you talk about that?

Yeah. Well, one thing that helped was the Q4 had a little bit of a pop in terms of occupancy. And thus far in Q1, we think that number is holding. So that should position us for a good year. The flu season was muted. So occupancy levels have been able to hold a little better. And Bickford has historically been pretty consistent with their expense management. There's some seasonality considerations due to the weather that we've had in the Midwest that may impact Q1. But for the year, I think it's very reasonable to expect 3% to 6% growth, as they've been at a 6% level over the past 10 years.

Are there any purchase options or loan payoffs that you're expecting in 2014 and are they included in guidance?

Nothing material. I think most of the potential disposition activity that we would have had in our portfolio has already occurred. So I would expect 2014 to be quiet on that front.

Our next question comes from Todd Stender of Wells Fargo.

Just to clarify you don't have investments as assumed in the high-end of your guidance?

We do not have investments activity assumed in the high end of our guidance.

And the press release just had some wording on the top end of the range we're adding an assumptions for investment activity?

And we meant to change that. We failed to do so. We're going to file this transcript, so that it's widely available to everybody that see that. In fact, the investment activity was not included in the top end of our guidance.

Okay. Just growth from Bickford?

That's right.

And then in the low end, I guess, Roger, there's some assumptions for terming out your debt. Could you just share maybe - if there is a mix of debt and equity or is this strictly just debt and maybe just some of the interest rate surrounding that?

As we have said in previous calls, it is always a priority of ours to term out our debt, pay down the revolver. We're looking at several options right now. And as I stated in my prepared remarks, they would come with the higher interest rates, but certainly longer maturities. And we still continue to evaluate all those debt options. At this point, we're not evaluating equity, to pay down the revolver, but strictly debt options.

I would just add that we also plan to significantly expand our liquidity by the middle of the year as well.

Just kind of on that debt theme, just want to get an update on how the Board feels about where NHI's debt levels are as leverage metrics edge higher? It's all to fund new acquisitions, but just kind of get an update on the feeling of how the Board looks at debt.

The company has always been low leveraged and are financed to continue to stay low leveraged. Roger mentioned a metric that when we bring in the full effect of Holiday into 2014 that we expect our debt to EBITDA to be below 4 times, which we put at the very low end of the range. Clearly, we're comfortable leveraging up a little bit in order to take down investment activity. But the intent in the long run is to maintain a low leverage profile, as we have an overriding goal of being one of the most bankable companies in any given cycle.

Todd, I just wanted to point out that we only had eight days of revenue on the Holiday acquisition as we close that in late December. But yeah, we put the entire amount of $250 million in new debt on the balance sheet. So it sort of skews that metric.

And just finally, are you aware of anymore of the Holiday portfolio coming to market and would you acquire more? Are you full, I guess so to speak, in that investment class?

I’ll say this I think if there is any activity with Holiday, we'll be in the discussion or at least at the table, which is good, because they're a very large owner of real estate and it's been a great relationship. Whether we have an appetite for more can be consideration on a deal-by-deal basis.

Our next question comes from Daniel Bernstein of Stifel.

I wanted to talk a little bit about what you're seeing in terms of the type of portfolios that are out there? Are they mainly senior housing or are you looking at other areas such as skilled nursing? Just wondering if you could go ahead and fill the investment portfolio with something else that's a little bit hotter?

Through our acquisition activity in 2013, diversification of our portfolio has changed dramatically, with skilled nursing is only 40%. So we have room to grow in that category. It's not a category that we look at as often as we do senior housing because of the reimbursement risk. But we have made opportunistic investments in that asset class and we do it when we have a very high degree of confidence in the strength of the operator and the strength of the assets in the markets. So we surely would rule out growing in that category. We still maintain, though, that private-paid senior housing is our priority and continue to look at opportunities there. And if we can stay in the smaller portfolio or one-off asset marketplace, you can certainly preserve some pricing spread. But I do agree that definitely the pricing is tight and I would expect to see cap rates drift off a little bit when we have the next move and increased interest rates. But certainly in the market today, I think we'll continue to have relatively low cap rates in the private-paid market. And NHI though plans to participate in both senior housing and potentially skilled nursing moving forward. And we like our opportunities to get fairly solid spreads.

Are you seeing any signs that cap rates might go up? Are you seeing any deals that were more in the market a few months to go six months to go that are coming back now and getting re-priced, or is it just an assumption that as cost of capital grows up, eventual cap rates will kind of follow?

I don't see any of it re-pricing it. And I think the reason for that is there is a tremendous amount of investor interest in liquidity entering the sector. But I do think the natural evolution will be an increased interest rate will cause the cap rates to rise eventually. The margins will get too tight and something is going to have to happen. And I think we'll certainly have investment yields go up a little higher. But right now, today in the market, I don't see any change occurring.

(Operator Instructions) And our next question comes from Juan Sanabria of Bank of America.

Just wanted to follow-up on the financing assumptions. Could you just give us a range of what you expect to refinance on a long-term basis? Is 5% a good sort of number to plug into our models, or is that conservative?

We purposely did not give that detail in our guidance, because we'd rather come out with the exact numbers for you when we in fact do the refinancings. So if you can get by for now using our guidance range and the assumptions that you can use within that range, absent any acquisition activity, I hope that helps you complete your model. But we're apprised right now to really make that assumption for you.

Just a couple of follow-ups. Any sort of guidance you can give on G&A run rate or what you expect for the year?

I would expect that the run rate for G&A will be similar to 2013. We project, as I mentioned in my prepared remarks, the non-cash compensation expense is going to be roughly the same, the additions to our staff and normal increases. So we don't project anything at this point that would materially alter that.

Justin, you kind of referenced the fact that you're proud of the amount of repeat business you've done with relationships. Do you expect to be able to maybe increase the size of your Bickford-RIDEA joint venture throughout 2014?

Yeah, the Bickford-RIDEA joint venture will grow in a couple of ways. One is we have two assets that Roger mentioned opened late last year. They've opened with they both approaching 50% occupancy already and we expect them to stabilize throughout this year. And when we bring those into the mix, you'll see some growth through new acquisitions. We have another one on line with them that we think will open middle of 2014. And so our total properties with the Bickford relationship should be up to 30 at that point. We have a purchase option on six properties for $97 million and the timing on that is related to the performance when Bickford bought the buildings from their previous partner on those six assets, they purchased them about a 7-cap. We agreed that the joint venture to buy at the same price. But we wanted to wait till the NOI had stabilized a little bit more. And so our price would be a little bit north of an 8-cap on that portfolio. And then we're also considering expanding several of the communities that are 100% occupied, so that we can of course attract more volume. So I think there are quite a few opportunities to grow that relationship.

So you said that purchase option was for $96 million and that's potentially an 8-cap and that could potentially happen this year?

We have the right to do it really at any time and we're just waiting to see the performance stabilize. And there's indications that that might happen this year.

I noticed $3.2 million investment gain. Did you guys monetize any of your equity holding in terms of REIT peers? And if not, any thoughts that you may be monetizing those?

The $3.2 million gain in the fourth quarter was strictly related to the write-off of that purchase liability. It was an earn-out liability that we previously assessed as probable. The earn-out period expired. We did not have to pay that. And so for accounting purposes, you have to take that into income. So we normalized that adjustment during the fourth quarter.

And any thoughts on your equity holdings or I'm assuming those are still in place there?

There're marketable securities for stock holdings and other REITs are still there. There's been no change during the quarter.

There are no further questions at this time. Mr. Hutchens, I'll turn the call back over to you, sir, for any closing remarks.

Sure. I'm going to close with I think we highlighted for everybody and that is the fact that NHI is as strong as we've ever been. If you look at diversification of the portfolio to a heavier amount of private-pay, the lease sort of coverage ratio at 2.9 times and then the continued growth prospects that we've had over the past several years and the opportunity to grow with existing relationships and we continually source new relationships, we're very encouraged and excited about our results and look forward to delivering more good results to shareholders as we look forward throughout the year. Thank you for joining the call and we look forward to talking to everybody in the next call.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect all lines. Thank you and have a good day.