Vizion Health - Brookhaven ("Vizion"): In May 2021, NHI acquired a 64-bed specialty behavioral hospital located in Oklahoma for a total purchase price of $40.3 million, including $0.3 million in closing costs, and leased the hospital to an affiliate of Vizion. The 15-year master lease, which includes two five-year extension options, has an initial lease rate of 8.5% with fixed annual escalators of 2.5%. NHI has committed to additional funding of capital improvements for the hospital of up to $2.0 million which will be added to the lease base as funded. NHI also provided a $20.0 million, five year loan to Vizion Health-Brookhaven, LLC to finance the acquisition of healthcare operations. The loan requires monthly principal and interest payments and bears an initial annual interest rate of 8.5% with fixed annual escalators of 2.5%.

Navion Senior Solutions ("Navion"): In June 2021, NHI acquired a 48-unit assisted living and memory care community in Tennessee for a purchase price of $6.6 million, including closing costs of $0.1 million. The community was added to an existing master lease with Navion whose term was reset for 12 years, has a lease rate of 7.5% with fixed annual escalators of 2.5% and offers two optional extensions of five years each. NHI also provided a ten-year corporate loan to Navion for $3.6 million. The loan requires interest-only payments at an annual interest rate of 8% until June 1, 2024, and gives the Company first option to provide permanent development financing for a future project.

Bickford Senior Living ("Bickford"): During the second quarter of 2021, NHI sold to affiliates of Bickford a portfolio of six properties that were being leased to Bickford for a purchase price of $52.9 million. NHI received approximately $39.9 million in cash consideration upon sale and originated a second mortgage note receivable for the remaining purchase price of $13.0 million. The Company recorded a $3.5 million gain on the sale. Rental income from this portfolio was $1.6 million and $3.0 million for the six months ended June 30, 2021 and 2020, respectively.

Florida Medical Office Building: During the second quarter of 2021, NHI sold a medical office building for approximately $4.3 million in cash consideration resulting in a gain of $3.0 million. Revenue for this property was $0.1 million and $0.2 million for six months ended June 30, 2021 and 2020 respectively.

Tennessee Behavioral Health Hospital: In July 2021 and pursuant to a tenant purchase option, NHI sold a behavioral health hospital for cash consideration of $31.2 million resulting in a gain of $8.6 million. Rental income was $0.7 million and $1.4 million, for both the three and six months ended June 30, 2021 and 2020, respectively.

Holiday Retirement ("Holiday"): In July 2021, NHI signed a non-binding letter of intent to sell a portfolio of nine properties to an institutional buyer that is leased to Holiday with an aggregate net book value of $133.5 million. NHI anticipates closing this transaction in August 2021 for total cash consideration of $129.8 million and will recognize an impairment of approximately $3.7 million in the third quarter of 2021 associated with this transaction. Rental income was $2.9 million and $5.8 million, for both the three and six months ended June 30, 2021 and 2020, respectively.

Collections and Deferrals

NHI collected 87.3% of contractual cash due for the quarter ended June 30, 2021. The remaining balance is comprised of the following: 8.0% in deferrals related to Bickford Senior Living ("Bickford"); 1.4% in deferrals related to Holiday; 2.7% in deferrals related to four other operators; and 0.6% related to lower forecasted revenue from transitioned properties prior to the start of the pandemic.

As previously announced, NHI has agreed with Bickford to defer $1.5 million in contractual rent due for July 2021 and agreed with Holiday to defer contractual rent due of $1.2 million for the second quarter and $0.6 million for July 2021. NHI also agreed to utilize $1.8 million of the lease deposit with Holiday as contractual rent with $1.2 million applied towards second quarter of 2021 contractual rent and $0.6 million towards July 2021 contractual rent. The balance of the lease deposit at June 30, 2021 was $9.4 million. NHI has reached agreement with two other tenants regarding additional rent deferrals of approximately $0.9 million for the third quarter 2021. NHI is in discussions with one other tenant for a rent deferral of approximately $0.7 million for the remainder of 2021. NHI anticipates some of our tenants may need additional rent deferrals to assist them with the impact of the pandemic on their operations. The timing and amount of any additional deferrals cannot yet be determined.

Occupancy

The following table summarizes the average portfolio occupancy for Senior Living Communities ("SLC"), Bickford and Holiday for the periods indicated, excluding development properties in operation less than 24 months, notes receivable, and properties transitioned to new operators or disposed.

Balance Sheet and Liquidity

At July 31, 2021, NHI had $25 million outstanding under a $550 million revolver and approximately $37.0 million in unrestricted cash and cash equivalents. Subsequent to June 30, 2021, NHI reduced borrowings under its term loan due August 2022 from $225 million to $175 million. The Company has approximately $417.4 million available under the ATM program.

Investor Conference Call and Webcast

NHI will host a conference call on Tuesday, August 10, 2021, at 12:00 p.m. ET, to discuss second quarter results. The number to call for this interactive teleconference is (800) 952-1438, with the confirmation number 21995595. The live broadcast of NHI's second quarter conference call will be available online at www.nhireit.com . The online replay will follow shortly after the call and remain available for one year.

About National Health Investors

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. NHI's portfolio consists of independent, assisted and memory care communities, entrance-fee retirement communities, skilled nursing facilities, medical office buildings and specialty hospitals. Visit www.nhireit.com for more information.

See Notes to Reconciliation of FFO, Normalized FFO and Normalized FAD.

Notes to Reconciliation of FFO, Normalized FFO and Normalized FAD

These supplemental performance measures may not be comparable to similarly titled measures used by other REITs. Consequently, our Funds From Operations ("FFO"), Normalized FFO and Normalized Funds Available for Distribution ("FAD") may not provide a meaningful measure of our performance as compared to that of other REITs. Since other REITs may not use our definition of these performance measures, caution should be exercised when comparing our FFO, Normalized FFO and Normalized FAD to that of other REITs. These financial performance measures do not represent cash generated from operating activities in accordance with generally accepted accounting principles ("GAAP") (these measures do not include changes in operating assets and liabilities) and therefore should not be considered an alternative to net earnings as an indication of performance, or to net cash flow from operating activities as determined by GAAP as a measure of liquidity, and are not necessarily indicative of cash available to fund cash needs. Beginning in the first quarter of 2021, the Company is no longer presenting Adjusted Funds from Operations as a supplemental measure of operating performance.

Funds From Operations - FFO

FFO, as defined by NAREIT and applied by us, is net income (computed in accordance with GAAP), excluding gains (or losses) from sales of real estate property, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures, if any. The Company's computation of FFO may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or have a different interpretation of the current NAREIT definition from that of the Company; therefore, caution should be exercised when comparing our Company's FFO to that of other REITs. Diluted FFO assumes the exercise of stock options and other potentially dilutive securities. Normalized FFO excludes from FFO certain items which, due to their infrequent or unpredictable nature, may create some difficulty in comparing FFO for the current period to similar prior periods, and may include, but are not limited to, impairment of non-real estate assets, gains and losses attributable to the acquisition and disposition of assets and liabilities, and recoveries of previous write-downs.

FFO and Normalized FFO are important supplemental measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets requires depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a REIT that uses historical cost accounting for depreciation could be less informative, and should be supplemented with a measure such as FFO. The term FFO was designed by the REIT industry to address this issue.

Funds Available for Distribution - FAD

In addition to the adjustments included in the calculation of Normalized FFO, Normalized FAD excludes the impact of any straight-line rent revenue, amortization of the original issue discount on our senior unsecured notes, amortization of debt issuance costs, non-cash stock based compensation, as well as certain non-cash items related to our equity method investment.

Normalized FAD is an important supplemental performance measure for a REIT. GAAP requires a lessor to recognize contractual lease payments into income on a straight-line basis over the expected term of the lease. This straight-line adjustment has the effect of reporting lease income that is significantly more or less than the contractual cash flows received pursuant to the terms of the lease agreement. GAAP also requires any discount or premium related to indebtedness and debt issuance costs to be amortized as non-cash adjustments to earnings. The Company also adjusts Normalized FAD for the net change in the allowance for expected credit losses, non-cash stock based compensation as well as certain non-cash items related to equity method investments such as straight-line lease expense and amortization of purchase accounting adjustments. Normalized FAD is an important supplemental measure of liquidity for a REIT as a useful indicator of the ability to distribute dividends to stockholders.