National Health Investors, Inc. (NHI) has entered into an agreement to finance the development of a 144-bed skilled nursing facility in Oak Creek, Wisconsin, near Milwaukee, for a commitment of $25,350,000 with a 9.5% initial yield. The yield earned during construction will be capitalized into NHIs investment. The initial funding under the commitment totaled $4,700,000 and construction is underway and expected to be completed in the 2nd quarter of 2020. A 12-year lease term begins post-construction with two 10-year renewals and a 2.0% annual escalator. In addition, there is a $2,000,000 earn out based on the operator meeting certain operating metrics in 2024 and 2025. The facility, Ignite Medical Resort Oak Creek, will be operated by a tenant entity owned by affiliates of Villa Healthcare (Villa) and Ignite Medical Resorts (Ignite).
Eric Mendelsohn, NHIs President and CEO, stated, We are excited to enter into a new relationship with Villa and Ignite, under a newly formed entity by principals with extensive experience operating large portfolios of skilled nursing facilities and strong relationships in the market area. We believe this new relationship will provide an excellent opportunity to expand our presence in this market.
Ben Israel, President of Villa Healthcare, stated, Villa has had great success in the State of Wisconsin and we are looking forward to furthering our commitment to the Milwaukee Market. Opening the newest and most modern Skilled Nursing Facility in the State of Wisconsin through this new partnership with NHI, as well as continuing our ongoing relationship with Ignite Medical Resorts in this venture, was an easy decision as their values align with ours.
Incorporated in 1991, National Health Investors, Inc. (NYSE:NHI) is a real estate investment trust specializing in sale-leaseback, joint-venture, mortgage and mezzanine financing of need-driven and discretionary senior housing and medical investments. NHIs portfolio consists of independent, assisted and memory care communities, entrance-fee retirement communities, skilled nursing facilities, medical office buildings and specialty hospitals. For more information, visit www.nhireit.com.
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This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding the Company’s, tenants’, operators’, borrowers or managers’ expected future financial position, results of operations, cash flows, funds from operations, dividend and dividend plans, financing opportunities and plans, capital market transactions, business strategy, budgets, projected costs, operating metrics, capital expenditures, competitive positions, acquisitions, investment opportunities, dispositions, acquisition integration, growth opportunities, expected lease income, continued qualification as a real estate investment trust (REIT), plans and objectives of management for future operations, continued performance improvements, ability to service and refinance our debt obligations, ability to finance growth opportunities, and similar statements including, without limitation, those containing words such as may, will, believes, anticipates, expects, intends, estimates, plans, and other similar expressions are forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from those projected or contemplated in the forward-looking statements. Such risks and uncertainties include, among other things; the operating success of our tenants and borrowers for collection of our lease and interest income; the success of property development and construction activities, which may fail to achieve the operating results we expect; the risk that our tenants and borrowers may become subject to bankruptcy or insolvency proceedings; risks related to governmental regulations and payors, principally Medicare and Medicaid, and the effect that lower reimbursement rates would have on our tenants and borrowers business; the risk that the cash flows of our tenants and borrowers would be adversely affected by increased liability claims and liability insurance costs; risks related to environmental laws and the costs associated with liabilities related to hazardous substances; the risk that we may not be fully indemnified by our lessees and borrowers against future litigation; the success of our future acquisitions and investments; our ability to reinvest cash in real estate investments in a timely manner and on acceptable terms; the potential need to incur more debt in the future, which may not be available on terms acceptable to us; our ability to meet covenants related to our indebtedness which impose certain operational; the risk that the illiquidity of real estate investments could impede our ability to respond to adverse changes in the performance of our properties; risks associated with our investments in unconsolidated entities, including our lack of sole decision-making authority and our reliance on the financial condition of other interests; our dependence on revenues derived mainly from fixed rate investments in real estate assets, while a portion of our debt bears interest at variable rates; the risk that our assets may be subject to impairment charges; and our dependence on the ability to continue to qualify for taxation as a real estate investment trust. Many of these factors are beyond the control of the Company and its management. The Company assumes no obligation to update any of the foregoing or any other forward looking statements, except as required by law, and these statements speak only as of the date on which they are made. Investors are urged to carefully review and consider the 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 NHIs Annual Report on Form 10-K for the most recently ended fiscal year. Copies of these filings are available at no cost on the SECs web site at http://www.sec.gov or on NHIs web site at http://www.nhireit.com.
Roger Hopkins, Chief Accounting Officer