■ 2019 NATIONAL HEALTH INVESTORS ■ _ ... .... --- .._.._ ..... _ ..._..._..._ -.... .... ..... -- ~" " ''' Dear Fellow Shareholders: At the time of this writing, the world is grappling with the COVID-19 virus and its spread across borders. It seems somehow inappropriate to write about the challenges of 2019 in the context of what is happening right now. We in the senior housing business feel a sense of urgency given that our core business is caring for the senior population which is particularly at risk. I believe when history reflects back on our industry and its practices during this time, there will be operators who are hailed as heroes. Our operators are taking great pains to do everything in their power to protect residents from infection and are focused on keeping residents as safe and healthy as possible. Reputations are made during a crisis and I see operators making good decisions and taking action based on the principles they value - selflessly caring for their residents, nurturing a company culture that appreciates employees and providing guidance and comfort to the families of their residents. Insofar as 2019 is concerned, our full year cash flow growth was below the high standards that we expect of ourselves. Normalized AFFO per share increased 1.3% which is below our annual goal of 5%. In late 2018 and early 2019, we made hard decisions including restructuring the master lease with one of our largest operating partners and replacing three operators in nine of our communities. We knew 2019 revenue growth was going to be difficult to achieve from the onset. We worked hard and gained momentum throughout the year and announced $329 million in accretive investments which made up for the lost revenue. This helped us to reach the high end of our guidance for 2019 and put us in a much better position as we started 2020. We also announced a 5% dividend increase which marked the 11th straight year that NHI has increased the quarterly dividend by 5% or more. Looking internally, you should know that NHI’s management team and Board have deep experience managing during times of crisis. I believe our strong balance sheet and liquidity together with strong lender and market relationships puts us on firm footing. NHI has a strong team, a strong portfolio and with our operating partners will strive to navigate through this difficult period and integrate the past lessons we have learned into the fabric of the Company. Stay Healthy- Eric Mendelsohn President and Chief Executive Officer UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission File Number 001-10822 National Health Investors Inc (Exact name of registrant as specified in its charter) Maryland 62-1470956 (State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.) organization) 222 Robert Rose Drive Murfreesboro Tennessee 37129 (Address of principal executive offices) (Zip Code) (615) 890-9100 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each Class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.01 par value NHI New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large Accelerated Filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No The aggregate market value of shares of common stock held by non-affiliates on June 30, 2019 (based on the closing price of these shares on the New York Stock Exchange) was approximately $3,495,872,000. There were 44,591,660 shares of the registrant’s common stock outstanding as of February 14, 2020. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant’s definitive proxy statement for its 2020 annual meeting of stockholders are incorporated by reference into Part III, Items 10, 11, 12, 13, and 14 of this Form 10-K. Table of Contents Page Part I. Forward Looking Statements. 3 Item 1. Business. 4 Item 1A. Risk Factors. 15 Item 1B. Unresolved Staff Comments. 21 Item 2. Properties Owned or Associated with Mortgage Loan Investments. 22 Item 3. Legal Proceedings. 23 Item 4. Mine Safety Disclosures. 23 Part II. Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities. 24 Item 6. Selected Financial Data. 26 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. 27 Item 8. Financial Statements and Supplementary Data. 56 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 89 Item 9A. Controls and Procedures. 89 Item 9B. Other Information. 93 Part III. Item 10. Directors, Executive Officers and Corporate Governance. 94 Item 11. Executive Compensation. 94 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 94 Item 13. Certain Relationships and Related Transactions. 94 Item 14. Principal Accountant Fees and Services. 94 Part IV. Item 15. Exhibits and Financial Statement Schedules. 94 Item 16. Summary 98 Signatures. 99 Exhibit Index. 95 2 PART I. Forward Looking Statements References throughout this document to NHI or the Company include National Health Investors, Inc., and its consolidated subsidiaries. In accordance with the Securities and Exchange Commission’s “Plain English” guidelines, this Annual Report on Form 10-K has been written in the first person. In this document, the words “we”, “our”, “ours” and “us” refer only to National Health Investors, Inc. and its consolidated subsidiaries and not any other person. Unless the context indicates otherwise, references herein to “the Company” include all of our consolidated subsidiaries. This Annual Report on Form 10-K and other materials we have filed or may file with the Securities and Exchange Commission (the “SEC”), as well as information included in oral statements made, or to be made, by our senior management contain certain “forward-looking” statements as that term is defined by the Private Securities Litigation Reform Act of 1995. All statements regarding our expected future financial position, results of operations, cash flows, funds from 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 as a result of factors including, but not limited to, the following: * We depend on the operating success of our tenants and borrowers for collection of our lease and note payments; * We depend on the success of property development and construction activities, which may fail to achieve the operating results we expect; * We are exposed to the risk that our tenants and borrowers may become subject to bankruptcy or insolvency proceedings; * Certain tenants in our portfolio account for a significant percentage of the rent we expect to generate from our portfolio, and the failure of any of these tenants to meet their obligations to us could materially and adversely affect our business, financial condition and results of operations and our ability to make distributions to our stockholders; * We are exposed to the risk that the illiquidity