Initiating at Market Perform With $17 Target — SHOP Opportunity; Execution Key

Research evidence excerpt

Initiating at Market Perform With $17 Target — SHOP Opportunity; Execution Key

National Health Properties - Block Summary Model

Income Statement 2025A 2026E 2027E

Revenues $342,279 $349,013 $364,162

Operating Expenses (218,898) (217,975) (226,818) Valuation

NOI from investment activity 0 (3,340) (4,921) We estimate NHP's forward NAV utilizing a 7.2% cap rate.

Our DCF estimate is based on a five-year free cash flow G&A (24,190.00) (26,527.19) (28,728.95)

to equity, using a 6.0% equity risk premium and a 3.5%

EBITDA $99,463 $106,881 $109,826 perpetuity growth rate. Our target price is based on a

combination of these metrics and AFFO multiple vs. peers Interest Expense (61,281) (48,295) (35,536)

and ROIC relative to WACC.

Other income (expense) 272 2,371 1,211

FFO (NAREIT) 18,268 43,827 68,601 Upside Scenario 20.00

Pricing power improves as industry-wide occupancy FFO (Company) 23,795 40,241 68,953

improves due to compelling demand/supply fundamentals,

Capex (30,535) (21,947) (19,687) while new developments remain at historical lows across

senior housing. Lower interest rates. Accretive acquisition Maint. Capex / Tenant concessions 30,535 33,502 29,687

and/or continued capital recycling into SHOP. Governance

Other adds/(deducts) to AFFO 12,012 12,888 14,658 improvements.

Cash Flow Statement 2025A 2026E 2027E

Downside Scenario 14.00

Net income plus depreciation 1,548 106,072 68,601

New supply softens senior housing fundamentals. Increased

Net acquisitions (188,759) (83,170) 0 competition or yield compression for acquisitions. Operator

poor performance or transitions. Labor cost pressures. Maint. Capex / Tenant concessions 30,535 33,502 29,687

Higher interest rates. Regulatory risks at the state or federal

Development Capex 8,523 14,023 14,023 level.