Nhi Narrows Shop Focus After $560m National Healthcare Corporation Portfolio Sale

National Health Investors (NYSE: NHI) made progress focusing on its senior housing operating segment in the first quarter of 2026 after inking a $560 million skilled nursing sale last month.

NHI’s leaders are using proceeds from the sale to transact on a “robust” pipeline of senior housing opportunities, according to President and CEO Eric Mendelsohn. In the first quarter of 2026, the company continued to grow its senior housing operating portfolio (SHOP) segment through acquisitions.

The company in February invested $105.5 million to acquire nine communities in Kentucky, South Carolina and Tennessee. The company is assigning those properties to Allegro Living once they ink a management agreement. In May, during the second quarter, NHI also acquired a seven-community portfolio in Colorado for $106.9 million. 

NHI’s senior housing operating portfolio (SHOP) now makes up just shy of one-quarter of its total portfolio with 35 properties. The segment now comprises 15% of the real estate investment trust‘s (REIT’s) annualized net operating income. NHI also has 109 senior housing properties under triple-net leases. 

Overall, NHI has 223 properties with 41 operating partners in 33 states.

As Mendelsohn has said before, he is focused on growing the company’s SHOP segment in 2026. NHI with its most recent skilled nursing divestment is taking a “two step forward, one step back” approach, he added. By that, he means the company is trading potential future revenue gained by re-leasing the portfolio to another skilled nursing operator for more dollars with which to invest in SHOP.

“We’re excited about the opportunity of focusing on senior housing, having less legacy issues with NHC,” Mendelsohn said during the earnings call Tuesday. “We’re almost halfway through that $560 million gain, and if we can redeploy the rest of that – call it $360 million in the next six months – then I would consider that a win, especially if it’s senior housing, and even more, especially if it’s SHOP.”

Normalized funds from operations came out to $1.23 per share for the quarter, a 7% increase year-over-year, which exceeded internal expectations.

The company’s stock is priced at $73.09, down 3.5% from the previous close.

NHI bets on SHOP

Like other senior housing REITs, NHI is for now putting its chips behind its SHOP growth strategy. So far in 2026, NHI has closed on over $212 million in investments.

NHI’s leaders have signed letters of intent on community deals totaling $20.3 million as they continue to manage the company’s growth pipeline. Overall in 2026 they are evaluating a pipeline of $560 million including SHOP growth, sale-leasebacks and loans with purchase options, mostly for senior housing communities.

NHI seeks to acquire newer communities with some element of healthcare associated with them, according to Chief Investment Officer Kevin Pascoe. While independent living isn’t a “negative” for communities, the REIT prefers properties that have a combination of multiple unit types, including assisted living and memory care. The company isn’t necessarily searching for value-add opportunities, and is open to turnarounds.

“We feel like there’s better pricing power on that side, and [that we would] be able to add the element of care and create a bit of a continuum,” Pascoe said.

The new senior housing acquisitions reportedly have a “much better growth profile” to them as well, Pasco said.

NHI reported average same-store SHOP portfolio occupancy of 85.8%. Although the 15-community segment’s operators grew revenue by just under 1%, those gains were offset by a 340 basis point occupancy decline between the first quarter of 2026 and the same period in 2025. As a result, the segment’s same-store margins declined 170 basis points to 21.4% during that time frame.

Around $200 million of the proceeds from the NHC sale were used in 1031 exchanges to pay down debt. NHI leaders seek to deploy the remaining $360 million over the next six months toward primarily senior housing opportunities

Looking ahead, Pascoe said there is “ample opportunity” to continue growing the company’s senior housing portfolio outside of its existing pipeline.

“We’re reviewing a large amount of opportunities,” he said. “I feel like we have a solid chance at landing these.”

NHI is pairing its acquisitions with sales of certain properties outside of its NHC portfolio deal. Since the start of the year, the company has sold properties totaling $53.4 million in proceeds.

Ironing out challenges in the Holiday portfolio ‘science experiment’

As was the case earlier this year, NHI has reported turbulence within its subset of 15 communities formerly operated by now-defunct operator Holiday Retirement. In February, Mendelsohn said the Holiday portfolio represents “more of a science experiment that we backed into when Holiday sold to Atria and Welltower.”

NHI reported that the segment’s same-store net operating income decreased by 2.4% in the first quarter of 2026 versus 1Q25. Seasonal occupancy dips and a handful of properties struggling to stem losses overall led to the underperformance, NHI’s leaders said.

While the segment doesn’t have a big material impact on the REIT’s overall finances, NHI is reviewing strategic alternatives for the Holiday segment of its SHOP portfolio. The company also is undertaking extensive capital expenditures at certain communities within the segment.

“The problem is fairly isolated,” Pascoe said.

NHI also in 1Q26 revised a master lease for a 38-community segment with previously troubled tenant Bickford Senior Living to reset it to “fair market value,” totaling an annual payment of about $38.4 million.

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