National Health Investors (NHI) risk factors, FY2024 10-K

Risks Related to Our Managers, Tenants and Borrowers

1. 01We depend on the operating success of our managers, tenants and borrowers and if their financial condition or business prospects deteriorate, our financial condition and results of operations could be adversely affected
2. 02We are exposed to the risk that our managers, tenants and borrowers may become subject to bankruptcy or insolvency proceedings
3. 03Actual or perceived risks associated with pandemics, epidemics or outbreaks have had and may in the future have a material adverse effect on our operators’ business and results of operations
4. 04A member of our Board of Directors is also the chairman of the board of directors of NHC, and his interests may differ from those of our stockholders
5. 05We are exposed to risks related to governmental regulations and payors, principally Medicare and Medicaid, and the effect of changes to laws, regulations and reimbursement rates on our tenants’ and borrowers’ business
6. 06We are exposed to the risk that the cash flows of our managers, tenants and borrowers may be adversely affected by increased liability claims and liability insurance costs
7. 07We are exposed to the risk that we may not be fully indemnified by our managers, tenants and borrowers against future litigation

Risks Related to Our Business and Operations

1. 08We depend on the success of property development and construction activities, which may fail to achieve the operating results we expect
2. 09We are exposed to the risk that the illiquidity of real estate investments could impede our ability to respond to adverse changes in the performance of our properties
3. 10Our investments are concentrated in healthcare properties
4. 11We are subject to risks related to our investment with Life Care Services for Timber Ridge, an entrance fee CCRC, associated with Type A benefits offered to the residents of the CCRC and related accounting requirements
5. 12We are exposed to risks associated with our investment in Timber Ridge OpCo, including our lack of sole decision-making authority and our reliance on the financial condition of other interests and related healthcare operations of the entity
6. 13Inflation and increased interest rates may adversely affect our financial condition and results of operations
7. 14Adverse developments affecting the financial services industry, including events or concerns involving liquidity, defaults, or non­performance by financial institutions, could adversely affect our business, financial condition, results of operations, or our prospects
8. 15Adverse geopolitical developments could have a material adverse impact on our business
9. 16We are exposed to operational risks with respect to our SHOP structured communities
10. 17In the event that any of the agreements with our managers are terminated, we can provide no assurances that we could find a replacement manager or that any replacement manager will be successful in managing our SHOP structured communities
11. 18We are exposed to risks related to environmental laws and the costs associated with liabilities related to hazardous substances
12. 19We are subject to risks of damage from catastrophic weather and other natural or man-made disasters and the physical effects of climate change
13. 20We depend on the success of our future acquisitions and investments
14. 21We depend on our ability to reinvest cash in real estate investments in a timely manner and on acceptable terms
15. 22Competition for acquisitions may result in increased prices for properties
16. 23We depend on our ability to retain our management team and other personnel and attract suitable replacements should any such personnel leave
17. 24We are exposed to the risk that our assets may be subject to impairment charges
18. 25Our ability to raise capital through equity sales is dependent, in part, on the market price of our common stock, and our failure to meet market expectations with respect to our business, or other factors we do not control, could negatively impact such market price and availability of equity capital
19. 26Settlement provisions contained in the August 2024 forward sale agreements, the ATM forward sale agreements or any other forward sale agreement we may enter into could result in substantial dilution to our earnings per share or result in substantial cash payment obligations
20. 27In case of our bankruptcy or insolvency, any forward sale agreement then in effect will automatically terminate, and we would not receive the expected proceeds from such forward sale of shares of our common stock
21. 28The U.S. federal income tax treatment of the cash that we might receive from cash settlement of the forward sale agreements is unclear and could jeopardize our ability to meet the REIT qualification requirements
22. 29We may in the future enter into additional forward sale agreements that subject us to risks similar to those described above

Risks Related to Our Debt

1. 30We may need to refinance existing debt or incur additional debt in the future, which may not be available on terms acceptable to us
2. 31We have covenants related to our indebtedness which impose certain operational limitations and a breach of those covenants could materially adversely affect our financial condition and results of operations
3. 32Downgrades in our credit ratings could have a material adverse effect on our cost and availability of capital
4. 33We rely on external sources of capital to fund future capital needs, and if we encounter difficulty in obtaining such capital, we may not be able to make future investments necessary to grow our business or meet maturing commitments
5. 34We depend on revenues derived mainly from fixed rate investments in real estate assets, while a portion of our debt used to finance those investments bears interest at variable rates, which subjects us to interest rate risk

Risks Related to Our Status as a REIT

1. 35We depend on the ability to continue to qualify for taxation as a REIT for U.S. federal income tax purposes
2. 36There are no assurances of our ability to pay dividends in the future
3. 37Complying with REIT requirements may cause us to forego otherwise attractive acquisition opportunities or liquidate otherwise attractive investments, which could materially hinder our performance
4. 38Our ownership of and relationship with any TRS that we have formed or will form will be limited, and a failure to comply with the limits would jeopardize our REIT status and may result in the application of a 100% excise tax
5. 39Legislative, regulatory, or administrative tax changes could adversely affect us or our security holders

Risks Related to Our Organizational Structure

1. 40We have ownership limits in our charter with respect to our common stock and other classes of capital stock which may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or might otherwise be in the best interests of our stockholders
2. 41We are subject to certain provisions of Maryland law and our charter and bylaws that could hinder, delay or prevent a change in control transaction, even if the transaction involves a premium price for our common stock or our stockholders believe such transaction to be otherwise in their best interests