DEFC14A: Land & Buildings Seeks Boardroom Change at National Health Investors, Citing Governance Concerns

Land & Buildings is soliciting proxies to elect its two nominees to the board of National Health Investors, aiming to address what it perceives as archaic corporate governance and conflicts of interest.

Summary

• Land & Buildings Capital Growth Fund is seeking to elect two director nominees, James Hoffmann and A. Adam Troso, to the board of National Health Investors (NHI) at the 2025 Annual Meeting of Stockholders.
• Land & Buildings believes that NHI's corporate governance is outdated and rife with conflicts of interest, leading to undervaluation and poor investor sentiment.
• They are concerned about the ongoing lease negotiations with National HealthCare Corporation (NHC), a major tenant, due to relationships between some NHI board members and NHC.
• Land & Buildings also highlights the opportunity for NHI to drive earnings through acquisitions, estimating a potential increase in FFO/share by nearly 10% with $1 billion in acquisitions over the next 12-24 months.
• The proxy statement outlines the background to the solicitation, including previous communications with NHI management and concerns raised about board composition and independence.
• Stockholders will vote on the election of directors, a proposal to declassify the board, an advisory vote on executive compensation, and the ratification of the selection of BDO USA, P.C. as the independent registered public accounting firm.
• Land & Buildings recommends voting for its nominees and two of the Company's nominees (Candice W. Todd and Robert W. Chapin, Jr.).
• The annual meeting is scheduled to be held virtually on May 21, 2025.
• Land & Buildings estimates its expenses in connection with this solicitation to be up to $800,000.

Sentiment

Score: 4

Explanation: The document expresses concerns about the company's governance and performance, indicating a negative sentiment. However, it also highlights potential opportunities for value creation, preventing a lower score.

Positives

• Land & Buildings believes NHI has a significant opportunity to drive earnings accretion through acquisitions.
• The proxy statement highlights the qualifications and experience of Land & Buildings' nominees, emphasizing their expertise in real estate, REIT investment, and corporate governance.
• Land & Buildings supports the Company's proposal to declassify the board, viewing it as a step towards improved corporate governance.

Negatives

• Land & Buildings believes NHI's corporate governance is archaic and rife with conflicts of interest.
• The proxy statement highlights concerns about the independence of the board, particularly in relation to the NHC lease renewal.
• Land & Buildings believes NHI is significantly undervalued due to its outdated corporate governance practices.
• The proxy statement notes that the Land & Buildings Nominees will constitute a minority on the Board and there can be no guarantee that they will be able to implement the actions that they believe are necessary to do so.

Risks

• There is no guarantee that the Land & Buildings Nominees will be able to implement the changes they believe are necessary to enhance stockholder value.
• The Company may take actions that have the effect of disqualifying any Land & Buildings Nominee.
• The actual costs of the proxy solicitation could exceed the current estimate of $800,000.

Future Outlook

Land & Buildings forecasts that NHI may acquire upwards of $1 billion of senior housing properties over the next 12-24 months, increasing earnings power (FFO/share) by nearly 10%, per their estimates.

Management Comments

• Land & Buildings believes NHI possesses valuable assets but has underperformed and is significantly undervalued principally due to its outdated corporate governance practices.
• Land & Buildings believes the Board is not sufficiently independent to best represent the interests of all stockholders.
• Land & Buildings is highly concerned that the Board as currently composed does not have the objectivity and independence required to maximize value for all stockholders.

Industry Context

The document references CareTrust REIT (CTRE) as a comparable company, noting that CareTrust's recent lease signings for similar skilled nursing assets were at a rent level of 75% or more per bed than the current rent NHC is paying NHI.

Comparison to Industry Standards

• The document compares NHI's rent per bed to that of CareTrust REIT (CTRE), noting that CTRE's recent lease signings for similar skilled nursing assets were at a rent level of 75% or more per bed than the current rent NHC is paying NHI.
• This comparison suggests that NHI's rents are below market, potentially due to conflicts of interest on the board.

Stakeholder Impact

• The outcome of the proxy vote could significantly impact shareholders, as Land & Buildings aims to improve corporate governance and enhance stockholder value.
• The lease negotiations with NHC could affect the company's financial performance and, consequently, its stakeholders.

Next Steps

• Stockholders are urged to vote on the GOLD universal proxy card to elect Land & Buildings' nominees and in accordance with their recommendations on other proposals.
• The Annual Meeting will be held virtually on May 21, 2025, where stockholders can vote on the proposals.

Key Dates

Keywords

proxy solicitation, board of directors, corporate governance, National Health Investors, Land & Buildings, director nominees, NHI, NHC, lease renewal, acquisitions, REIT