XML 58 R13.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

Debt | 12 Months Ended
--- | ---
Dec. 31, 2019
Debt Instruments [Abstract] |
Debt Disclosure | DEBT Debt consists of the following (in thousands):
| December 31, 2019 |  | December 31, 2018
Revolving credit facility - unsecured | $ | 300,000 |  |  | $ | 84,000 |
Bank term loans - unsecured | 550,000 |  |  | 550,000 |
Private placement term loans - unsecured | 400,000 |  |  | 400,000 |
HUD mortgage loans (net of discount of $1,238 and $1,320) | 42,138 |  |  | 42,906 |
Fannie Mae term loans - secured, non-recourse | 95,706 |  |  | 96,044 |
Convertible senior notes - unsecured (net of discount of $303 and $1,391) | 59,697 |  |  | 118,609 |
Unamortized loan costs | (7,076 | ) |  | (9,884 | )
| $ | 1,440,465 |  |  | $ | 1,281,675 |
Aggregate principal maturities of debt as of December 31, 2019 for each of the next five years and thereafter are as follows (in thousands):
For The Year Ended December 31, |
2020 | $ | 1,230 |
2021 | 61,279 |
2022 | 551,328 |
2023 | 476,379 |
2024 | 76,429 |
Thereafter | 282,437 |
| 1,449,082 |
Less: discount | (1,541 | )
Less: unamortized loan costs | (7,076 | )
| $ | 1,440,465 |
Revolving credit facility and bank term loans - unsecured Our unsecured bank credit facility consists of $250,000,000 and $300,000,000 term loans and a $550,000,000 revolving credit facility. The $250,000,000 term loan and $550,000,000 revolving facility mature in August 2022, and the $300,000,000 term loan matures in September 2023. On March 22, 2019 and June 28, 2019, we entered into swap agreements to fix the interest rates on $340,000,000 of term loans and $60,000,000 of our revolving credit facility through December 2021, when LIBOR is scheduled for discontinuation. The revolving facility fee is currently 20 basis points per annum, and based on our current leverage ratios, the facility presently provides for floating interest on the revolver and the term loans at 30-day LIBOR plus 120 bps and a blended 132 bps, respectively. At December 31, 2019 and December 31, 2018, 30-day LIBOR was 176 and 252 bps, respectively. Within the facility, the employment of interest rate swaps on our debt leaves only $240,000,000 of our revolving credit facility exposed to interest rate risk through June 2020, when our $80,000,000 and $130,000,000 swaps expire. Our swaps and the financial instruments to which they relate are described in the table below, under the caption “Interest Rate Swap Agreements.” At December 31, 2019, we had $250,000,000 available to draw on the revolving portion of our credit facility, subject to usual and customary covenants. Among other stipulations, the unsecured credit facility agreement requires that we maintain certain financial ratios within limits set by our creditors. At December 31, 2019, we were in compliance with these ratios. Pinnacle Bank is a participating member of our banking group. A member of NHI’s board of directors and chairman of our audit committee is also the chairman of Pinnacle Financial Partners, Inc., the holding company for Pinnacle Bank. NHI’s local banking transactions are conducted primarily through Pinnacle Bank. Private placement term loans - unsecured Our unsecured private placement term loans, payable interest-only, are summarized below (in thousands):
Amount |  | Inception |  | Maturity |  | Fixed Rate
$ | 125,000 |  |  | January 2015 |  | January 2023 |  | 3.99%
50,000 |  |  | November 2015 |  | November 2023 |  | 3.99%
75,000 |  |  | September 2016 |  | September 2024 |  | 3.93%
50,000 |  |  | November 2015 |  | November 2025 |  | 4.33%
100,000 |  |  | January 2015 |  | January 2027 |  | 4.51%
$ | 400,000 |  |  |  |  |  |  |
Except for specific debt-coverage ratios, covenants pertaining to the private placement term loans are generally conformed with those governing our credit facility. Our unsecured private placement term loan agreements include a rate increase provision that is effective if any rating agency lowers our credit rating on our senior unsecured debt below investment grade and our compliance leverage increases to 50% or mo re. HUD mortgage loans Our HUD mortgage loans are secured by 10 properties leased to Bickford and having a net book value of $49,147,000 at December 31, 2019. Nine mortgage notes require monthly payments of principal and interest from 4.3% to 4.4% (inclusive of mortgage insurance premium) and mature in August and October 2049. One additional HUD mortgage loan assumed in 2014, at a discount, requires monthly payments of principal and interest of 2.9% (inclusive of mortgage insurance premium) and matures in October 2047. The loan has an outstanding principal balance of $8,492,000 and a carrying value of $7,254,000, which approximates fair value. Fannie Mae term loans - secured, non-recourse In March 2015 we obtained $78,084,000 in Fannie Mae financing. The term debt financing consists of interest-only payments at an annual rate of 3.79% and a 10-year maturity. The mortgages are non-recourse and secured by thirteen properties leased to Bickford. In a December 2017 acquisition, we assumed additional Fannie Mae debt that amortizes through 2025 when a balloon payment will be due, is subject to prepayment penalties until 2024, bears interest at a nominal rate of 4.60%, and has remaining balance of $17,622,000 at December 31, 2019. All together, these notes are secured by facilities having a net book value of $134,192,000 at December 31, 2019. Convertible senior notes - unsecured In March 2014 we issued $200,000,000 of 3.25% senior unsecured convertible notes due April 2021 (the “Notes”) with interest payable April 1st and October 1st of each year. The Notes were convertible at an initial rate of 13.93 shares of common stock per $1,000 principal amount, representing a conversion price of approximately $71.81 per share for a total of approximately 2,785,200 underlying shares. The conversion rate is subsequently adjusted upon each occurrence of certain events, as defined in the indenture governing the Notes, including the payment of dividends at a rate exceeding that prevailing in 2014. The conversion option was accounted for as an “optional net-share settlement conversion feature,” meaning that upon conversion, NHI’s conversion obligation may be satisfied, at our option, in cash, shares of common stock or a combination of cash and shares of common stock. Because we have the ability and intent to settle the convertible securities in cash upon exercise, we use the treasury stock method to account for potential dilution. During the years ended December 31, 2019 and 2018, we undertook targeted open-market repurchases of certain of these convertible notes. Payments of cash negotiated in the transactions were dependent on prevailing market conditions, our liquidity requirements, contractual restrictions, individual circumstances of the selling parties and other factors. Beginning in December 2019, through the issuance of common stock and cash in retirement of $60,000,000 of our convertible notes, we funded our Timber Ridge acquisition, which closed January 2020. Settlement of the notes requires management to allocate the consideration we ultimately pay between the debt component and the equity conversion feature as though they were separate instruments. The allocation is effected by recording the fair value of the debt component first, with any remainder allocated to the conversion feature. Amounts expended to settle the notes are recognized first as a settlement of the notes at our carrying value and then are recognized in income to the extent the portion allocated to the debt instrument differs from carrying value. The remainder of the allocation, if any, is treated as settlement of equity and adjusted through our capital in excess of par account. A roll-forward for 2019 of our convertible note balances, including the effect of year-to-date amortization, net of issuance costs, is presented below:
| December 31, 2018 | Exchange | Amortization | December 31, 2019
Face amount | $ | 120,000 |  | $ | (60,000 | ) | $ | — |  | $ | 60,000 |
Discount | (1,391 | ) | $ | 328 |  | $ | 760 |  | (303 | )
Unamortized loan costs | (910 | ) | $ | 210 |  | $ | 505 |  | (195 | )
Carrying value | $ | 117,699 |  |  |  | $ | 59,502 |
Total consideration given in the exchange of $73,102,000 included the issuance of 626,397 shares of NHI common stock with a fair value of $51,002,000 and cash disbursed of $22,100,000. Total consideration given in the exchange was allocated as $60,285,000 to the note retirement with the remaining expenditure of $12,816,000 allocated to retirement of the equity feature of the notes. A loss of $823,000 for the year ended December 31, 2019, resulted from the excess allocation of cash expenditures over the book value of the notes retired, net of discount and issuance costs. As of December 31, 2019, our $60,000,000 of senior unsecured convertible notes were convertible at a rate of 14.62 shares of common stock per $1,000 principal amount, representing a conversion price of approximately $68.39 per share for a total of 877,356 remaining underlying shares. For the year ended December 31, 2019, dilution resulting from the conversion option within our convertible debt is 210,224 shares. If NHI’s current share price increases above the adjusted $68.39 conversion price, further dilution will be attributable to the conversion feature. On December 31, 2019, the value of the convertible debt, computed as if the debt were immediately eligible for conversion, exceeded its face amount by $11,487,000. Interest Rate Swap Agreements Our existing interest rate swap agreements will collectively continue through December 2021 to hedge against fluctuations in variable interest rates applicable to $610,000,000 ($400,000,000 after June 2020) of our bank loans. During the next year, approximately $1,710,000 of gains, which are included in accumulated other comprehensive income (loss), are projected to be reclassified into earnings. As of December 31, 2019, we employ the following interest rate swap contracts to mitigate our interest rate risk on our bank term and revolver loans described above (dollars in thousands):
Date Entered |  | Maturity Date |  | Fixed Rate |  | Rate Index |  | Notional Amount |  | Fair Value (Liability)
June 2013 |  | June 2020 |  | 3.46% |  | 1-month LIBOR |  | $ | 80,000 |  |  | $ | (177 | )
March 2014 |  | June 2020 |  | 3.51% |  | 1-month LIBOR |  | $ | 130,000 |  |  | $ | (316 | )
March 2019 |  | December 2021 |  | 3.51% |  | 1-month LIBOR |  | $ | 100,000 |  |  | $ | (1,318 | )
March 2019 |  | December 2021 |  | 3.52% |  | 1-month LIBOR |  | $ | 100,000 |  |  | $ | (1,344 | )
June 2019 |  | December 2021 |  | 2.89% |  | 1-month LIBOR |  | $ | 150,000 |  |  | $ | (200 | )
June 2019 |  | December 2021 |  | 2.93% |  | 1-month LIBOR |  | $ | 50,000 |  |  | $ | (79 | )
If the fair value of the hedge is an asset, we include it in our Consolidated Balance Sheets among other assets, and, if a liability, as a component of accounts payable and accrued expenses. See Note 11 for fair value disclosures about our interest rate swap agreements. Net asset (liability) balances for our hedges included as components of consolidated other comprehensive income (loss) on December 31, 2019 and December 31, 2018 were $(3,434,000) and $1,297,000, respectively. The following table summarizes interest expense (in thousands):
| Year Ended December 31,
| 2019 |  | 2018 |  | 2017
Interest expense on debt at contractual rates | $ | 53,923 |  |  | $ | 45,789 |  |  | $ | 40,385 |
Losses reclassified from accumulated other |  |  |  |  |
comprehensive income (loss) into interest expense | (791 | ) |  | 164 |  |  | 2,627 |
Ineffective portion of cash flow hedges | — |  |  | — |  |  | (353 | )
Capitalized interest | (399 | ) |  | (212 | ) |  | (510 | )
Charges taken on amending bank credit facility | — |  |  | — |  |  | 583 |
Amortization of debt issuance costs and debt discount | 3,566 |  |  | 3,314 |  |  | 3,592 |
Total interest expense | 56,299 |  |  | 49,055 |  |  | 46,324 |

X
- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
Name: | us-gaap_DebtDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DebtInstrumentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration