National Health Investors Inc (NHI) 2017 Q4 法說會逐字稿

Hello, everyone. This is Colleen Schaller, Director of Investor Relations. Welcome to the National Health Investors conference call to review the company's results for the fourth quarter of 2017. On the call with me today is Eric Mendelsohn, President and CEO; Roger Hopkins, Chief Accounting Officer; Kevin Pascoe, Chief Investment Officer; and John Spaid, Executive Vice President of Finance.

The results as well as notice of the accessibility of this conference call on a listen-only basis over the Internet were released this morning before market opened in the press release that's been covered by the financial media. As we start, let me remind you that any statements in this conference call, which are not historical facts, are forward-looking statements. NHI cautions investors that any forward-looking statements may involve risk or uncertainties and are not guarantees of future performance.

All forward-looking statements represent NHI's judgment as of the date of this conference call. Investors are urged to carefully review various disclosures made by NHI and its periodic reports filed with the Securities and Exchange Commission, including the risk factors and other information disclosed in NHI's Form 10-K for the year ended December 31, 2017. Copies of these filings are available on the SEC's website at www.sec.gov or on NHI's website at www.nhireit.com.

In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in NHI's earnings release and related tables and schedules, which have been filed on Form 8-K with the SEC. Listeners are encouraged to review those reconciliations provided in the earnings release, together with all other information provided in that release.

I'll now turn the call over to Eric Mendelsohn.

Thank you, Colleen. Hello, everyone, and thank you for joining us today. As announced this morning, we ended the year with a strong fourth quarter. From a financial standpoint, we reported an 8.6% and an 8.2% increase per share in normalized FFO and normalized AFFO, respectively, year-over-year. We've also raised the dividend, bringing value to our shareholders through a 5.25% increase, as Roger will discuss later.

From an investment standpoint, we executed nearly $50 million of accretive investments in Q4, bringing the total amount invested in 2017 to $214 million. This is in addition to a lease renewal that took place earlier in the year, resulting in $2.5 million rent increase for the first full year.

Moving to 2018, it seems we're in a period of price discovery, as public and private buyers sort out pricing and cost of capital. We're very watchful of rising interest rates this year and if rates do continue to rise, we'll look for cap rates to respond in kind.

While new competition from construction is also on our radar, we haven't seen the widespread drops in occupancy that's been reported elsewhere. Kevin will give more detail on the occupancy front later in the call.

In addition, the recent downdraft in REIT equity pricing, in our view, is a bit overdone. A market that is choppy and uncertain creates opportunity for well-funded and disciplined players who are able to execute. For example, our proactive financial management has positioned us well during this time. We continue to see benefits of amending our credit agreements earlier in the year. And as John will discuss, we've also been buying back our convertible debt. We'll look forward to more acquisitions that come our way in 2018 as a result of all the uncertainty.

Before we dive in the numbers, I'd like to give an update on our operating partner we mentioned last quarter that was working through a technical default. I'm pleased to say that things are trending in the right direction. Rent continues to be paid in full. They've made significant improvement in the terms of their accounts payable, substantially decreasing their AP since October. Over the last 90 days, they've increased occupancy 340 basis points for a January ending occupancy of 91.2%. We've seen progress in other areas of the company as well, such as accounts receivable and home office and operational efficiencies. We continue to stay in close communication with the operator and are encouraged by the progress we've seen over the past few months.

I'll now turn the call over to Roger Hopkins to walk through the financial results. Roger?

Thanks, Eric. Hello, everyone. We've had a good fourth quarter, as our results reflect a consistent level of new investments during 2017, including $49.9 million during the quarter. We enjoyed a low cost of debt and equity capital during 2017, although those costs have risen so far in 2018.

Our results were $0.03 per diluted share better than expected, as we collected the full amount of monthly rent due from a tenant who was experiencing issues, as Eric described a moment ago. Our additional management focus on assisting this tenant has resulted in a positive trend of performance over the last 4 months.

Normalized FFO per diluted share for the fourth quarter increased 6.3% to $1.35 compared to $1.27 for the same period 1 year ago. Normalized AFFO increased 5.2% to $1.21 per diluted share compared to $1.15 1 year ago. Along with $215 million of announced investments in 2017, we continued to fund our development and loan commitments totaling $97 million at December 31, as outlined in our Form 10-K. We deployed a careful mix of debt and equity to maintain our low leverage profile, which is a hallmark of our company.

NHI's total revenues for the fourth quarter showed growth of 9.3% over the same quarter in 2016. This growth has been primarily fueled by our new investments in 2017 and the renewal of a significant lease with one of our skilled nursing operators that added $2.5 million of revenue on an annual basis.

For the fourth quarter of 2017, our general and administrative expenses were $3.1 million, and when compared to the same period 1 year ago, increased from $2.5 million due to additions to our corporate staff, incentive compensation and noncash share-based compensation. Our noncash share-based compensation expense in the fourth quarter was $342,000.

We also opportunistically bought back a portion of our convertible notes due in April 2021. We recognized a loss of $1,624,000 on the note purchases during the fourth quarter.

For the full year 2017, revenues increased 12.2% over 2016 to $278.6 million. Normalized FFO increased 8.6% over the prior year, and normalized AFFO increased 8.2% over the prior year.

General and administrative expenses have increased approximately $2.4 million when compared to 2016, primarily due to additions to our corporate staff, incentive compensation and noncash share-based compensation expense calculated using the Black-Scholes pricing model. We recognized a loss during 2017 of $2.2 million on the purchase of a portion of our convertible notes.

Investors who have come to know us over the years understand that NHI's management team is incentivized on annual growth in dividends and AFFO on a per share basis, thereby ensuring that we keep our focus on making accretive investments with a careful blend of long-term debt and equity capital. Our AFFO is a non-GAAP measure of performance, which excludes the accounting convention of noncash straight-line rent income and gives credit to our actual lease escalators and to our investments for which no straight-line rent calculation is required.

I am pleased to report a 5.25% increase in our quarterly dividend for 2018 to $1 per share. We currently estimate our total dividends for 2018 will result in a normalized FFO payout ratio near 70% and a normalized AFFO payout ratio near 80%, thereby providing NHI with excess cash to be used for new investments.

Moving on to guidance for 2018. We are optimistic for the year ahead, as evidenced by the fact we have already closed $28.4 million in new investments in January. Our pipeline is active with new investments we expect to close this year. We currently estimate a 2018 normalized FFO range of $5.45 to $5.51 and a normalized AFFO range of $4.99 to $5.03 per diluted share, as shown in our earnings press release. This guidance anticipates approximately $65 million of new investments by mid-year at lease rates of approximately 7%, and the funding during 2018 of current commitments and other new investments of $80 million having a blended rate of 8%. As we move forward in the year, we will give more information on the volume of expected new investments that we have included in our guidance ranges.

I'll now turn the call over to John Spaid, who will discuss further our uses of debt and equity capital.

Thank you, Roger. For the quarter ended December 31, our debt capital metrics were: net debt to annualized EBITDA at 4.2x; weighted average debt maturity at 6.5 years; weighted average cost of debt at 3.61%; and fixed charge coverage ratio at 6.8x. As NHI has mentioned in the past, it is the objective of the company to maintain its net debt to adjusted EBITDA metric between 4x and 5x.

Looking at the revolver. At the end of the second quarter, we had $221 million outstanding, with an available capacity of $329 million. Turning to our ATM. We did not issue any shares through our ATM equity program during the fourth quarter, and we continue to have $275.6 million in new equity capacity available to us under our shelf facility.

On a final note, during Q4, we engaged in open market purchases of our convertible debt and acquired $40 million in par value notes. A few comments on this program. NHI's convertible notes are not callable. The notes become freely convertible at the holders' option October 1, 2020, and mature April 1, 2021. We view our convertible notes to be our most expensive source of debt due to the embedded equity conversion feature and our view of NHI's future stock price.

Each quarter, when NHI declares a dividend above $0.77 per share, the conversion price to redeem our notes into NHI stock ratchets down. Because NHI has consistently grown its dividends since issuing the convertible notes, the quarterly reduction to the conversion price has steadily become more impactful. The conversion price is currently $70.25 per NHI share, down from $71.81 at issuance. For the entire year ending December 31, 2017, we acquired approximately $52.4 million in par value notes. We will continue to opportunistically evaluate the acquisition of our convertible debt in the future.

I'll now turn the call over to Kevin Pascoe to discuss the portfolio.

Thank you, John. Looking at the overall portfolio, at the end of the third quarter, the EBITDARM coverage ratio on the portfolio is 1.66x. Our senior housing portfolio's performance is steady at 1.21x, and our skilled portfolio remains strong at 2.52x.

Looking at the fourth quarter, occupancy for both skilled nursing and senior housing held steady for the portfolio. Wage pressure still remains the top concern of our operators and is something that is being monitored closely. Fortunately, we are not seeing widespread impacts of the flu or overdevelopment affecting the portfolio at this time.

Taking a look at our larger operating leases. Our relationship with Senior Living Communities represents 16% of our cash revenue and has an EBITDARM coverage ratio of 1.21x on a trailing 12-month basis as of third quarter end. Entry fees for the calendar year 2017 were solid, and early 2018 performance indicators look positive.

Bickford Senior Living, which represents 15% of our cash revenue, has an EBITDARM coverage ratio of 1.22x for the trailing 12 months ending September 30. In January of 2018, one of the developments structured under a loan agreement where NHI has a favorable purchase option opened, and NHI closed on another site in Virginia under the same arrangement. The remaining development is under construction and is expected to open in late third quarter of this year. Overall, the development properties continue to perform at or ahead of their respected pro formas, and several have managed to hit 100% occupancy during lease-up.

Looking at National HealthCare Corporation, our partnership with NHC accounts for 15% of our cash revenue, and has a corporate fixed charge coverage of 3.61x. Holiday Retirement has an EBITDARM coverage of 1.16x as of third quarter end and represents 14% of our cash revenue. Occupancy through the fourth quarter continued to improve as the company's average occupancy increased 10 basis points in sequential quarters.

Holiday was recently named second in the inaugural J.D. Power Senior Living Satisfaction survey. Kudos to the team for their achievement.

Looking at our recent investments. In December, we were delighted to expand our relationship with Discovery Senior Living through the acquisition of The Country Club of Woodland Hills, a 200-unit independent and assisted living community in Tulsa, Oklahoma. NHI's total investment of $35.1 million includes $500,000 for capital improvements, which is expected to be fully funded by the end of 2019. The lease is set for a term of 15 years with renewal options, at an initial lease rate of 7% plus annual fixed escalators.

Also in December, we announced that NHI acquired Spring Arbor of Durham, an assisted living and memory care community in Durham, North Carolina. The community was part of a purchase option negotiation with NHI's tenant, Navion Senior Solutions, when NHI purchased 2 communities in North Carolina in February of 2017. NHI's investment will include the purchase price of $7.55 million and up to $650,000 for an expansion and improvement to the existing building. The community was added to an existing master lease at a yield of 7.15%, with annual escalators and 2 5-year renewal options.

In January, we announced a $14.4 million acquisition of a 121-bed skilled nursing facility in Waxahachie, Texas that was leased to an affiliate of The Ensign Group. The acquisition is the second of 4 that NHI has previously committed to and will be added to the existing lease at an initial rate of 8.2% plus annual lease escalator based on inflation. The facility, which opened in November of 2016, joins the current Ensign assets comprised of 16 skilled nursing facilities located in Texas.

Turning to our pipeline. We see opportunity to grow with both new and existing customers. The prospects for new investment remain healthy, with a large amount of private pay senior housing opportunities under review.

With that, I will hand the call back over to Eric.

Thank you, Kevin. With that, we'll now open the line for questions.

(Operator Instructions) Our first question is coming from the line of Chad Vanacore with Stifel.

So I just want to parse something. Your comments on senior housing, you mentioned occupancy has held up and flu hasn't had a material impact. And that's a different take from other operators that have made statements publicly. Can you parse some details on what your operators are seeing in terms of occupancy? And then, hazard a guess as to why they wouldn't be as impacted?

Chad, this is Kevin. As we talked to our operators, there are some changes throughout some of the markets in terms of what they're seeing, whether it was flu in some isolated cases or what have you. But I think just good fundamentals from their part. They're able to keep the pipeline for their respective buildings. Good to be able to replace residents as -- or get new move-ins as people pass on or what have you. I can't speak to other people's portfolios, but what we're seeing is things have been stable thus far, and happy to see that they've been weathering the storm as other people have been having a little more choppiness.

All right. Kevin, so when you make those comments on occupancy, are you talking about the first quarter or are we talking about lagging occupancy, like in the fourth quarter?

The comments were specific to third quarter and what we're seeing -- what we saw in fourth quarter was that they were stable. I think it's too soon to call it for first quarter. Leading indicators are okay at this point, nothing that we're overly concerned about. As we've talked about or has been disclosed on some of the other calls, there are some things that people are watching as it relates to occupancy. The good news for us is we haven't seen that yet. That's not to say that it won't affect our portfolio at some point, but it hasn't in any widespread manner to-date.

All right. And then you lay out some investment expectations for 2018. It looks like 7% cap rate in the first half, 8% in the second half. What changes that number? What's the expected mix of assets versus senior housing, skilled nursing, loans or whatever?

So it just varies based on what we're seeing in our pipeline and what type of investments we have. Where we're going to see a little bit higher yields could be some skilled nursing opportunities. We still do have the 2 commitments for the Legend Ensign buildings, which would be a higher-yielding asset, some development like where we've mentioned that we have in our K about doing development with Bickford. That's at a higher yield. So it's just -- it's more of a -- it's not that we're doing different investments, it's just as those different types of investments close, the cadence is such that, like the development, that's at a higher yield and that will come over time as those sites close and as we fund on those developments.

Our next question is from the line of Daniel Bernstein with Capital One Securities.

I got a question on Holiday. I guess you made some cautious statements in the past on them and the lease coverage is down a bp. Not a big deal and maybe picking up some number -- some of the noise in early -- in 2017. But have you seen any trends there that are stabilizing for that portfolio?

Dan, so this is Kevin again. What we've seen so far is that -- or for third and fourth quarter, is that occupancy was up a little bit. They continue to make progress on that front. So it's one where we're still watching very closely how they're doing. But the indicators that they've shown us is that occupancy has improved, very happy with that. They've had some good publicity lately. So it's one where they continue to make some progress.

Okay. And you're not making any forecast as to where that coverage will go? But you're -- essentially, you're getting more comfortable that the coverage is going to be okay at this point, that they would stabilize?

We're comfortable that they're doing what they said they would do, in terms of, they're able to fill the -- they're able to get the leads, get conversions, get people to move in. And that's the basis of their business. It's a hospitality business that's really based on driving occupancy. And what we've seen, like what we said from third and fourth quarter, that was slightly positive.

Our next question is from the line of Jordan Sadler with KeyBanc Capital Markets.

First, I just wanted to start off with one for you, Roger. Sequentially, I noticed that your NOI was a little bit softer relative to the third quarter and given the nature of your portfolio and the fact that you guys are making acquisitions, I don't -- I'm not accustomed to that, I think -- which is a good thing, I think. But I'm curious, is there anything going on in the number there that caused the NOI to come down?

You're talking -- yes, you're talking about NHI's NOI, specifically. We had incentive compensation at -- during the fourth quarter, at the end of the year. We didn't know exactly how much that would be going into the quarter.

But net operating income, I mean -- so I'm thinking net rent before G&A.

Jordan, this is Eric. Recall that we had swapped out an operator up in Minnesota, the White Pine's property. And so that operator went away and the Bickford organization picked up the building and we gave them, I want to say, 3 months free rent, so...

It was 2, with an option for 3.

Yes, so you saw a blip there, and that building might be what you're seeing.

Our next question is from the line of John Kim with BMO Capital Markets.

Eric, you mentioned in your prepared remarks, price discovery for assets. Can you just provide some more color on what type of asset? Is that senior housing, assisted, independent or skilled nursing?

Well, if we're discovering, we'll find out together, won't we? Not to make light of it, but with equity prices for REITs where they are right now, and the other headwinds that are in the market, I have to believe that buyers are going to be more selective and more demanding in terms of higher cap rates and just more value. So I think you're starting to see some of that in skilled nursing. There's been so much press around what's going on with skilled nursing that, that seems to be impacting pricing. And we're hopeful that we'll see some deals on assisted living, independent and memory care.

And you mentioned your balance sheet today is 4.2x net debt-to-EBITDA, with the goal of 4x to 5x. But what's the magic with 5? I mean, could you take it up higher if you see something opportunistic and you have capacity that maybe some private buyers don't have?

So I would say that, that's been a long-standing policy of our company. But let me say it a different way. We have credit facilities that have some embedded pricing changes in them that once we get past certain leverage ratios, results in coupon changes and we're not going to do that, unless that makes great sense for us for some reason.

Is that level 5x or higher than 5x?

No, it's a different calculation than what we're publishing. You can find it inside of all of our credit facilities as well as the private placement facilities. So that's always a consideration. And then, finally, I would like to note is that our board has always historically taken a very conservative view in terms of how we're going to manage our balance sheet. So that overrides kind of everything that we've talked about.

Our next question is from the line of Juan Sanabria with Bank of America.

Just on the guidance. Is there anything assumed in terms of a rent cut or rent deferral? You mentioned that asset, White Pine, in Minnesota. And then Eric, you started the conversation talking about a tenant in technical default. So I'm just trying to see if there's any delta from the fourth quarter run rate in NOI that we should be forecasting. And at the same time, is there any rent cuts contemplated given you're about 1x EBITDAR coverage for both your non-NHC SNF portfolio and your seniors housing portfolio?

No, there is no rent cut modeled in those numbers.

And is there anything rolling off or coming back on from the fourth quarter dip that you talked about, with the Minnesota asset?

Well, the Minnesota property is paying rent now.

They've -- yes, they've fully been transitioned to Bickford and are paying rent in accordance with the new agreement. So there's nothing -- there wouldn't be anything in the numbers there.

Okay. So they paid a full fourth quarter of rent?

No, sorry. So we gave them the ability to abate rent for 2 months, with an option for a third, which that was the fourth quarter. And then, effective January 1, they're paying full rent each month going forward.

So you're going to pick up an extra couple months in the first quarter versus the fourth quarter run rate?

Probably (inaudible).

Well, the way the accounting works, you have straight-line rent, even for the fourth quarter, even though they didn't have to pay rent until December. So we will have a little pickup in AFFO because we exclude straight-line rent.

Okay, all right. And then, just on the balance sheet question, and Eric, your comments about a disconnect in the private market despite -- I'm sorry, in the public market despite the fact that you expect cap rates to tick up, it sounds like. Any thought about using that balance sheet capacity to fund a buyback?

Well, it's not off the table. It'd be something we would discuss with our board. And I do want to point to the fact that we are buying back our convertible bond debt. So in a sense, we are buying back NHI securities already.

Okay. And what's assumed in the guidance for that bond buyback, the convertible bond buyback?

Not much...

Nothing.

We're almost finished with the authorization that we have now, so there won't be much more activity.

Okay. And last one from me, any guidance on G&A for '18?

Well, I would recommend modeling a 10% increase. We don't know yet what the noncash comp will be for the year. But I would model about a 10% increase in total. And I'll remind you -- I'll remind you that due to the vesting of those options, a good number of those, we had higher G&A in the first quarter.

Our next question is from the line of Phil DeFelice with Wells Fargo Securities.

It's Phil for Todd Stender. Both of your investments thus far in 2018 have been with existing relationships. I realize it's a small sample size, but was just wondering, of the additional $65 million expected to close by mid-year, or maybe those that you're looking at in general, do you find yourself skewing more towards familiarity and existing relationships in the current environment? Any change in the philosophy there?

Phil, this is Kevin. From our perspective, I don't think there's any change in the philosophy. We're trying to make new relationships every day. And there is something to be said for having real familiarity in relationships and be able to have go-to operators. But you always want to broaden your base and be able to make sure you have some diversity. So we're seeing a mix of that in our pipeline, still looking to expand some relationships. But we have high-quality operators in our portfolio. So to the extent we can continue to build on those, we want to do that as well.

Makes perfect sense. Okay, the SNF you acquired here in Q1 was the first SNF since Q1 of last year. What are your thoughts on that asset class specifically, given most public and private capital seems to be focused on other asset classes?

Yes, I don't think we're out of business as it relates to skilled. We -- we're -- the customers we have on the skilled side are top-notch and we feel very comfortable with them. So if we can expand those relationships, we like that. To the extent we can build some new ones, we'd love to. I think there, we're -- there's a little bit of a disconnect from where the market has been looking at coverage versus where we would like to see it. That said, things have been, I think, moving our way. So it's something we're still evaluating, and we want to make sure we keep a balance of how we do our investment. So it's something we'd look at, but it has to be a good-quality operator, good markets, a lot -- all the -- nothing from our underlying criteria would have changed there.

Okay. And to your point about top-notch operators, your cap rates on your latest SNF acquisitions have been in the low 8% range. We typically see closer to 9% or higher. Would you say it's more a function of the quality of the asset, specifically? Or more a function of differences in your risk tolerance, given that Ensign is the operator?

Yes, I think the distinction I'd like to make is just the lease rate has been there and the cap rate would be much higher because of the cash flow that is at the building. But the quality of the building, the quality of the market, the quality of the operator, all factors into how we look at that lease yield. And we're happy to have Ensign as a customer in that -- in those buildings, for sure.

Our next question is from the line of Rich Anderson with Mizuho Securities.

So Roger, the investment pace that you outlined in your guidance, first of all, I appreciate the clarity. As you know, I like that we have something to chew on there a little bit, but...

We did that just for you, Rich.

If we were to kind of wage a bet on if you think you'll do more or less. And the reason you might do more is because you see rising cap rates. And the reason you might do less is because your cost of capital has gone up. Where do you think it would bend towards, more or less versus what you're seeing today?

I'm going to take that question, Rich. It's Eric. I'm looking at Kevin. I would bet on Kevin that we're going to do more. Never bet against Kevin. So -- and I'm one of the guys who made it through the wars of the Great Recession in good shape. And I think that if we do have some price discovery and more uncertainty, that we're going to see some good opportunities. And because of our low leverage and our strong balance sheet, we're going to be ready to pounce if we need to.

Okay. And I think it was Juan who asked the question about a buyback, but maybe I'll go the other direction. You're trading kind of right around consensus NAV right now. How does that make you feel about your convertible buyback program, notwithstanding, if something really great came along, would you be willing to use equity at this point? Or is that discussion completely off the table at the moment?

Well, we do pay attention to NAV and I would hesitate to sell equity below NAV. And it's funny, isn't it, a lot of the analyst community picked on us and didn't recommend us because we were so high above NAV. So here we are, it's a buying opportunity. But we -- we're at, what, 4.2 leverage?

Right.

We have a lot of headroom on our revolver and our credit that we could draw on. So that would probably give us $200 million to $300 million if we needed it, and...

Additionally, we capture over $40 million a year in cash after we make all of our dividend payments and principal payments that we have to on our HUD debt.

Right, right. And Rich, think about this -- one last thought, think about this. There's other equity besides selling our shares in public. There are JVs with private equity. There are foreign investors. So there's other ways to supply equity without selling your shares if they're under NAV.

Okay. But so you believe you're trading under NAV now?

I haven't checked this morning.

NAV is in the eye of the beholder, right? Because you have to assume a cap rate on our various product lines. So everybody's NAV is a little bit different. We're just going on where the [all] say.

So you're the -- in the eye of -- you're the beholder, like what do you think? I mean -- or you're not going to -- you're not inclined to suggest if NAV consensus is too high? Or you're not in that...

Right, right. Right, no.

That's for you guys to decide.

Okay. Last question for me. You mentioned, I think, Roger, 80% payout on an AFFO basis. I'm curious if that is a policy-driven number that you manage to, if it's higher or lower than you've seen in your life cycle? Just I'm curious where that number stands. It's clearly not danger zone, of course, but just wondering where it is relative to your line of thinking.

Rich, those percentages have been going down as we've been growing. And it's not a board policy, but it's something that we discuss at the board meetings. And we sort of have an expectation of using that excess cash and redeploying that in new investments. So it's just something that has evolved to our favor, I believe.

Right. So you'd be more likely to see the 80% go to 79%, not to 81%, is that fair?

That's correct.

(Operator Instructions) Our next question is from Jordan Sadler with KeyBanc Capital Markets.

I think, John, you said that the convert was your most expensive piece of capital. I was trying to get a sense of how you viewed it. Were you looking at the strip yield or the yield to worst on that?

No, because that's not the complete cost of the convert, right? So the convert isn't something we can really do anything with, other than what we have done. We have to wait until, basically, October 2020, to really find out what its ultimate cost is going to be. So we kind of laid out what's troubling us about the instrument. The first case is the...

It's getting more expensive as you ratchet up your dividend, it sounds like?

Yes, yes. So that conversion price -- go ahead.

I'm trying to understand what you paid, relative to par.

Well, I'm not going to tell you, because we've got a program ongoing. But I mean, if you go back and look at it, it's a very thinly-traded instrument. And you can go on Bloomberg and kind of see what the trades have looked like for the last couple of quarters and get some sense.

Okay. And ultimately, so I'm not sure how big this program has been -- you would buy back another 50? Or you take out the whole thing eventually? What's sort of the appetite?

Well, the problem with doing it this way is we have an undefined tender offer rule out there that we have to be very careful about as we do this program. So we just need to be kind of careful about what we say.

Okay, that's fair.

And we just wanted to let you know that we're very optimistic about our future. And if you think about it that way, then you can see that this is a pretty expensive piece of paper.

Okay, that's helpful. I guess, my other question is, I -- also, harkening back to, Eric, your comment regarding the volatility and potential opportunity. Are there good opportunities for assets in the private market these days? Obviously, we're seeing the volatility in your stock price and the capital markets, but I'm just curious what you're seeing on the asset pricing side.

I'm going to let Kevin take that one.

Sure. There's -- we feel like the market's been -- and there is some discovery going on. Still trying to piece through what we see out there, but I do feel like there is some good opportunity for private pay senior housing assets. We're turning over rocks and talking to people every day to see what's available, but we do feel like there are some good buildings, some good operators. And I think it still plays to our strength, which we've been cultivating relationships, playing more on smaller portfolios or onesie-twosie type transactions. And that's still meaningful for us, and we can be able to put those in with existing relationships or create some new ones. But we just got to keep just chopping wood every day to make sure we're seeing everything that's in the market. And I feel like we're able to do that.

There are no further questions at this time. I will now turn the call back to the presenters for closing remarks.

All right. Thanks, everyone, for your time and attention today. And we'll look forward to seeing you all at NIC or Nareit.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.