Good afternoon, and welcome to the Annual Shareholders Meetings for National Health Investors. Thank you for joining us today. We're glad to see some of you in person again at this meeting. I'm also glad for those who have joined, virtually. We'll proceed following the agenda that's on the screen. The meeting will be conducted in accordance with the rules of conduct for the meeting, which are also available. I'd like now to introduce our Chief Executive Officer, Eric Mendelsohn, to commence the meeting.
Good afternoon. Thanks for coming. I'm Eric Mendelsohn. I'm the President, CEO, and member of the Board of Directors of National Health Investors. It's my pleasure to call to order this 2024 Annual Meeting of Shareholders. On behalf of your directors, I welcome each of you. I'd like to first introduce the other members of our board that are present: Mr. Andy Adams, Mr. Robert Adams. Thank you. Yeah, raise your hand. Mr. Bob Webb, Ms. Charlotte Swafford, James Jouse , and we've got Rob McCabe and Tracy Colden attending virtually. So I'm sure they're raising their hands in cyberspace. I'd also like to introduce members of the senior management team. We've got John Spaid, our CFO, Kevin Pascoe, our Chief Investment Officer, Kristin Gaines , our Chief Transaction Officer, and David Travis, our Chief Accounting Officer, is on vacation. Also joining us today is Michael Berg of BDO USA.
Michael is the audit partner for NHI, and he'll be available to answer any questions about BDO's services to the company after the meeting. We'll now move to the formal business of the meeting, after which management will make a presentation. Following the presentation, we'll be glad to answer any questions of a general business nature that you may have about NHI. No material, non-public information allowed. We've allotted 10 minutes to answering questions of a general business nature submitted by shareholders, which could be extended or shortened at the company's discretion. Susan Sidwell, our Corporate Counsel from Bass, Berry & Sims, will serve as our Inspector of Elections for today's meeting. She will determine the presence of a quorum, receive and tabulate all votes, and determine results on all matters requiring a shareholder vote. I'll now turn the meeting over to Susan. Welcome, Susan.
Thank you, Eric. Good afternoon, everyone. Proper notice of the annual meeting was provided to shareholders of NHI on April 4, 2024. As of March 28, 2024, the record date, NHI had 43,424,841 shares of outstanding common stock. We have approximately 37 million shares, or 85.2%, represented in attendance or by proxies. I've therefore determined that a quorum is present, and accordingly, in accordance with the notice of the meeting, I call this annual meeting of NHI to order. During the meeting, shareholders can ask questions by raising their hands and being recognized by the chairman, and or by submitting questions in writing through the web portal.
If you have a question related to any of the proposals to be voted on at today's meeting, please ask your question while that proposal is being discussed and before the polls are closed. As set forth in the rules of conduct for the meeting, we ask that you limit yourself to one question. As we enter the stage of voting on the matters before this meeting, I note that motions and seconds will not be required for the proposals listed in your proxy statement and on the agenda, and I declare that the polls of this meeting are now open. A substantial majority of our outstanding shares have already been voted by proxy prior to the meeting.
But if you still need to vote your shares, or if you wish to change your vote, you may do so now by requesting a ballot if you are here, or clicking on the Vote Here button on the web portal. If you have already voted your shares, no further action is needed. If anyone needs a ballot, they could raise their hand, and we'll get one to you. The first item of business on our agenda is election of directors. Eric Mendelsohn, Charlotte Swafford, and Bob Webb are all current directors and have been nominated by NHI for re-election to serve as directors for a three-year term until the 2027 annual meeting of shareholders. There were no nominations submitted by the shareholders in accordance with the company's bylaws, and therefore, I declare that the nominations are closed.
The affirmative vote of the holders of a majority of the votes cast at the meeting is required to approve each director nominee. The second item of business is an advisory vote on the compensation of our named executive officers. The shareholders have been asked to approve the compensation paid to NHI's named executive officers, as disclosed in the company's proxy statement. The affirmative vote of the holders of a majority of the votes cast at the meeting is required to approve this motion. The final item of business on our agenda is the ratification of the Audit Committee's selection of BDO as the company's independent registered public accounting firm for the fiscal year ended December 31, 2024. The affirmative vote of the holders of a majority of the votes cast at the meeting is required for the ratification of BDO.
At this time, as all shareholders complete their voting, we will address questions relating to these items of business. If anyone has anything that they want to raise at this point, now is the time. Dana, is anything coming through on the web portal? All right. As there are no questions submitted and all shareholders have had time now to submit their proxies or ballots, I now announce that the polls for the meeting are closed. I will report on the preliminary results of the voting. On the motion for the election of directors, each of Mr. Mendelsohn, Mr. Adams, and Ms. Swafford. I'm sorry, Mr. Mendelsohn, Ms. Swafford, and Mr. Webb received the affirmative vote of a majority of the votes cast to elect each of them to the board of directors for the term described in the proxy statement.
Thus, I declare that each of Mr. Mendelsohn, Ms. Swafford, and Mr. Webb have been properly elected. On the advisory vote of the approval for the compensation paid to our named executive officers, the motion received affirmative vote of a majority of the votes cast. Thus, I declare that the motion has been properly approved. On the motion for the ratification of the selection of BDO as our independent registered public accounting firm, the motion received the affirmative vote of a majority of the votes cast. Thus, I declare that the ratification of BDO has been properly approved. The final vote results of the shareholders' meeting will be available to shareholders to review in our current report on Form 8-K, which will be filed with the SEC following four business days following the next meeting. That completes our business portion of the meeting for today.
Now that our formal business has been concluded, I would like to turn the meeting over to Eric Mendelsohn, the CEO, and John Spaid, the CFO, to update you on the operations of NHI.
Thank you, Susan, and congratulations, Charlotte, Bob. So John and I are going to give you a state of the company. Typically, we don't talk about anything that happened in the present year, 2024, but we have released 2024 first quarter earnings, so you may hear a few things about that since we have things to brag about. So if we could go to the first slide, the company overview. The second slide is Safe Harbor. The lawyers would like you to take a look at that and memorize it. Right. There'll be a quiz at the end. Next slide. Thank you. So this is the state of our company at the end of 2024, 30 operating partners, 31 states. You may notice that over the past couple of years, the numbers have been shrinking. That was by design.
As part of the pandemic response, we decided to sell buildings that were underperforming and change out operators that were underperforming. The rationale was that because of the pandemic, we weren't going to be making our numbers anyway, so we would use that as an opportunity to tinker with the mechanics of our company and make it better once the pandemic is over, and the economy recovered and the world recovered. And as you'll hear, I think that business plan has largely been successful. So I also want to point out that, partners, we've added some new partners and, like, for example, Bickford is a little bit smaller, and Holiday and others, a little bit bigger. And SHOP, that's new. That's the result of taking our Holiday portfolio and turning it into an operating company that we essentially control.
That's something new that we've never done before. There's no lease. We basically are the landlord, and we use a manager to run the building. So that, that is something we hope to develop more of, and it gives us direct operating exposure to senior housing, which investors seem to appreciate. So this next slide is an overview of our accomplishments in 2023. We've improved all of our coverage metrics. What is coverage? Coverage is the amount of money that's being made by a building after they pay us rent, and that's a very important metric that we keep an eye on because, of course, if there isn't coverage, then they're not able to pay us rent. We've also done a good job collecting deferral payments.
As you may know, during the pandemic, we were faced with the situation where tenants simply could not pay rent. Either residents had left the building or died, and there just was not enough money left over after dealing with the pandemic issues to pay rent, so we loaned them the money through what we call a deferral. We tried to strike a balance between being commercial and collecting every penny we're due, and being humane and understanding that at the end of the day, this is a healthcare company and that there are residents in the buildings, and sometimes people need help. And I think we've done that. We've done a good job collecting the money that's due, and the money is still coming in as we speak.
So I feel like we did right by shareholders without being too harsh on our residents and tenants. The other thing that we're bragging about this year is the SHOP portfolio. As I said, that has improved dramatically. We've improved our occupancy up to 85%, and the NOI has improved quarter-over-quarter from last quarter of 2023 to first quarter of 2024, and year-over-year by over 50%. So that is something we've been waiting for, and I thank the board for being patient. We know that we were taking a risk by doing that, but it would appear that that risk has paid off. And then amongst all of this, we have a very strong balance sheet.
We're very proud of our investment grade rating and our bond rating, and we were able to maintain that this past year and actually lower our leverage. Part of that is through increased NOI from our SHOP portfolio, and the other part of that is by simply paying down debt. This is a summary of all the steps we took during the pandemic and last year. Again, we talk about the optimization, where we sell underperformers, and that improves the portfolio dramatically, and we use the sale proceeds from selling the buildings to pay down debt. Sounds simple in retrospect, but getting there is tough, isn't it, Kristy?
SHOP organic growth, as I said, the SHOP portfolio is doing well, and by paying down our debt and increasing our NOI, we have the ability to do lots of acquisitions without changing our leverage. So Kevin's very excited about that, about the possibility of buying lots of new buildings. And then finally, the macro environment for senior housing is great. I don't have to remind everyone that the population of the country is skewing older, that they're making more 80-year-olds now, over the next 20 years, more than ever before, and those are all our demographic sweet spot. You know, people think that our residents are 75. They're not. They're really in their 80s. Today's 75-year-old is really yesteryear's 65-year-old. So people are skewing healthier. They're living longer. They're being independent longer.
Senior housing is really a target audience of people in their eighties, and I'm happy to say that the country is skewing that direction. This next slide is a little technical, but what it tells you is that every quarter, the coverage that I was talking about earlier, the coverage that allows our tenants to pay our rent, has improved. And for example, this 1.36 coverage refers to the 36% NOI above what the lease payment is. And then the next quarter, that has gone up to 1.45. So there, and these are averages, obviously. So our average tenant in that band of product is, in senior housing, making almost 50% above their lease payment. That's great.
That means that most of our tenants can easily pay our rent, can easily maintain the building, and can save up, and make some money themselves and invest in their company's future, hire more employees, more accountants, and, invest in software, to make their companies run better. Okay, this next slide talks about, the need-driven, and mostly Bickford, excluding Bickford here and including Bickford there. This is showing you occupancy recovering, after the pandemic down here from a low of 77 to a high of 85. This is a great trend that we're seeing. It's not a straight line, as, as one would, expect, and along with that occupancy comes increased margins, increased NOI. This is great to see. And then down here, remember those deferral payments we talked about?
This, this line here is tracking the deferral payments that we're receiving from Bickford, and that's a good example of what's happening overall with our deferral payments. As our tenants are making more money, that gives them the ability to pay back the money they owe us. And again, we're trying to be commercial, on one hand, but humane on the other. I tell people, because we have analysts that come see us and say, "You know, why don't you get all the deferrals in one year? You know, make it happen." And my response is, if you take every last dime from your tenants, they don't want to get out of bed in the morning. They don't want to go to work in the morning. Would you? It, it's not motivating.
So again, we had to find a balance between what's motivating to the tenant and what's commercial and beneficial for our shareholders. And I'd like to think that by the end of this year, you'll agree that we've struck that balance in a way that's beneficial to shareholders. If you listen to our earnings calls, which I know some of you do, or you can read them on Seeking Alpha, where they print them out, and some of the words are garbled, but that's okay. We talk about organic growth. What does that mean? Well, organic growth is growth that happens within the company without buying new buildings. So we do that a number of ways. We collect deferrals, we restructure rents, and reset rents higher. We have our SHOP portfolio that increases NOI as the occupancy improves and the margins improve.
So those are three ways that we increase growth organically, and then, of course, if we buy new buildings, that's a great way to increase growth externally. This next slide zeros in on how the SHOP portfolio is doing. Just briefly, the top shows you we have 15 buildings, 1,734 units. The trailing twelve occupancy is 78.2%, but the quarterly, look at the quarterly, way above that, and the last Q1 occupancy is 85.3%, and the revenue per unit is 2,988. So what's going on there? Why is it less than, say, the second quarter of 2023? It's less because we made a conscious decision to run rent specials to get people into the buildings.
As far as I can tell, that's working, 'cause as soon as the RevPOR dropped a little, occupancy popped up. So people like a good deal. And what does that look like? That looks like the first month free, or no move-in fee, or some sort of giveaway that will affect you in that quarter, but eventually burns off. They call that a lease incentive. And eventually, you should see that number go up. Right, Mike? Yeah. And then when that number goes up, the margins will go up, and margins are very important. That's, you know, the difference between the revenue and the expenses and how you're managing those expenses. So we'd like to see the margins go from the 20s to the 30s, even possibly 40 would be good.
This, this is a slide that John will talk about more in his presentation, but this is telling you that we're continuing to be a low-leveraged enterprise. We don't like to take on a lot of debt, and especially now, we do have some variable rate debt, and that is more expensive than it was when rates were lower. But we also believe that that will be a tailwind as rates tend to normalize and go lower, which we're anticipating by the end of the year. We also have a summary of some of the investments we've done, and you can see the yields on those investments are quite good, from 8.75 all the way up to 10 and 12.
One of our board members, Rob McCabe, is a banker, and he's very envious of the rates that we get. So we're very proud about that. Thank you, Kevin. Next page. This is kind of a macro view of the senior housing industry. You can see that because of the pandemic and because of high interest rates, inventory, and new construction has ground to essentially a halt. It's growing by 1 or 1.5%. Hasn't done that since the early 2000s, when we were in a recession then. And this second chart shows you new housing units started. And again, you can draw a direct line from there to the early 2000s and see 2010, and see that we're in a good position for new product. And then, as I was saying earlier, the U.S. population is skewing older.
You can look at the CAGR, or the compound annual growth rate, of 85+ population is going to jump in the next 10 years, and those are all potential customers for our buildings. We're very excited about that. Absorption, which is the rate at which people move in, is very strong, so we're excited about that as well. It's a good time to be in senior housing. I tell people that I've been waiting for this environment my whole senior housing career, 20+ years, so we're finally here. I hope to take advantage of it, and I hope all of you are pleased with how we do that. I'm gonna turn it over to John Spaid, our CFO. He's gonna discuss some of our financial metrics.
Thank you, Eric. Welcome, everybody. Good to see you. Good afternoon, and most of all, thank you very much for your continued investment in NHI. So I've got a number of things I want to share with everybody today.... But first, what I want to do is kind of give you a highlight of 2023. You can go to the next slide, please. Thank you. So for the year ended December 31, 2023, our net income, NAREIT FFO, NFFO results were $3.13, $4.39, and $4.33 per share, respectively. So year over year, that represents 112%, 24%, and 1% respective improvements. Funds available for distribution, or FAD, was $187.8 million, which was down 6.6% year over year.
Recall, though, that in the first and second quarters of 2022, we saw a significant amount of revenue recognition for prior year holiday rents, which were attributable to the settlement of our Welltower lawsuit. But I'm also pleased to report that for 2023, our results ended the year at the top end of our February 2023 FAD guidance. So 2023, all the impacts to the company's net income, which results from the pandemic, or maybe said another way, impairments of real estate, changes in credit loss reserves, write-offs, write-offs of straight-line receivables and lease intangibles, they were only $1.4 million in 2023. That was a $96.9 million improvement compared to 2022.
At the end of the year, we had only one property in assets held for sale, and that compares to 13 properties that were in assets held for sale at the end of the prior year. As Eric mentioned, SHOP NOI improved during the year, with the 2023's fourth quarter NOI results coming in at $2.9 million or a $900,000 improvement over the prior year's fourth quarter. Cash deferred rent repayments for the year were $5.6 million in 2023, which is up $4.9 million compared to 2022. Total new rent deferrals, though, that we provided in 2023 were down $10.7 million to $2.8 million compared to 2022 and 2023.
And last, I'd like to call your attention that total dividends paid and the common shares outstanding declined year-over-year, which was due to the 2.5 million shares that we purchased under our company's 2022 stock buyback program for $152 million. You can go to slide 17, please. So as Eric mentioned, our portfolio optimization strategy was designed to improve our performance. If you look at our return on invested capital, or our ROIC, through even the first quarter of this year, this is a good way to see the benefits from those results. So invested capital is both our debt and equity. Our portfolio optimization strategy allowed us to redeploy disposition proceeds into new investments.
We also used disposition proceeds to reduce our increasingly more expensive debt, and as I previously mentioned, to buy back our stock, which we did in 2022. In 2023, for example, proceeds from disposition and investment loans that were repaid totaled $70 million, and we were able to redeploy those proceeds into new investments totaling $74 million at an average yield of 8.3%. So if you want to find out more about this calculation, a reconciliation of ROIC can be found at the back of this information, this deck, on slide 27. Slide 18, please. Total debt before discounts and loan costs at December 31, 2023, was $1.15 billion. Managing our capital properly is critical to our future growth.
When compared to some of our peers, we view our leverage ratio and available liquidity as a real competitive advantage today. During 2023, we retired $415 million in debt. Proceeds from our revolver and a new $200 million-dollar term loan were used to retire that debt. Our variable debt at year-end was approximately 39%, but because of our lower leverage, we're comfortable with this ratio and believe interest rates are more likely to decline than increase, which means an opportunity for us. We believe our incremental weighted average cost of capital for our combined debt and equity is currently under 7%. This allows us to make accretive investments that yields around 8%.
For most of the last year, our borrowing rates have remained stable, but our average cost of debt continues to move higher as our lower interest fixed rate maturities are replaced with higher cost debt in this higher for longer interest rate environment. But I'd also like to point out that our recent improved stock price, stock price performance means our equity is not too much different in cost when compared to our incremental long-term borrowing rates. That makes this period an unusual capital environment, which we feel is becoming another advantage for a well-managed, publicly traded REIT balance sheet like ours. Next slide, 19. So we have three investment-grade credit ratings, which are unchanged from 2022, and our credit outlook remains stable. As an investment-grade REIT, maintaining our investment-grade rating is important to us. So you might have noticed on the previous slide...
That our weighted average maturity date was 3.7 years at the year-end, December 31, 2023. We view the 3-year average maturity date to be an important minimum maturity threshold, which we do not wish to follow up. So expect to see us do something this year to maintain a longer average maturity. For example, we have the right to extend our revolver and term loan facility, so we're working on possibly early executing those extensions. Maturities for the next 2 years total $401 million. But as I previously mentioned, the $200 million term loan, that maturity is in 2025. It's extendable at our option for an additional year. Our revolver is our primary source for our liquidity. At December 31, 2023, we had $455 million in revolver liquidity for new investments and our debt maturities.
But also recall that we do have an ATM in place, and we have $500 million of capacity there as well. Slide 20. So here's the good news. As can be seen by the most recent results on the left-hand side of this slide, which includes results through March 31, 2024, our total shareholder return is making a strong comeback. Beginning in 2023, our compensation committee and board of directors incorporated what we call TSR into the compensation program for our named executive officers. We asked you earlier today for your advisory vote on our NEO Incentive Compensation Plan, which continues to include TSR in the determination of NEO incentive compensation for 2024.
In addition to TSR, the other components for executive compensation include FAD growth, SHOP NOI growth, leverage and dividend payout ratios, deferral collections, and net investment yields above our weighted average cost of capital. Next slide, please. So our policy is to dividend at least 100% of our taxable income plus capital gains. When we maintain our dividends above 100%, we both stay in compliance with REIT tax regulations, but we also avoid any federal income tax payable at the corporation. In 2023, our dividends paid to our shareholders were 35% above our total taxable income and capital gains. The amount paid above our income is considered capital return.
So in a high interest rate environment, when our company is growing and needing additional capital for its growth, the company is now striving to balance dividend increases, which support our equity against providing additional capital for accretive investment needs. Slide 23, please. Here's some additional information related to what I was just talking about. As I previously mentioned, our incremental borrowing costs remain elevated, as shown on the bottom table. Our revolver rate is currently 6.5%, and our incremental indicative bond rate at March 31, 2024, was 6.8%. The good news is we're seeing a better FAD coverage on our dividends, while at the same time seeing improvements in our stock price and total shareholder return. So that concludes my remarks. Thank you all again. And Eric, do you have anything you want to say in closing remarks?
Thanks, everyone, for your continued interest. There are hard copies of this presentation in the back there on that table, if you want one. Any questions? Shareholder questions.
The portfolio is much better return on investment than other portion of portfolio. So if you're thinking that you're going to increase that portion gradually to increase the net investment return on what you've done, it's only ten percent of your portfolio right now. That's what you said. Gradually, you'll be increasing that, downstream.
So to paraphrase, paraphrase for folks on the internet, the question was, are we planning to increase our SHOP portfolio because we're so optimistic about the returns on that investment? And the answer is yes. We were patiently waiting to see if this investment was going to bear fruit, and it is. So we're in the market and looking for more SHOP investments. Anybody else? No. All right. Yes, sir.
Looks like the company, y'all done a great job working through this problem we've had. It's been pretty interesting to watch what you guys have done.
Thank you.
Everyone here got the corresponding land. I don't know who they are. I'll tell them about the NHC, so I've got two hats here. Can you comment on that a little bit? Because they talked about a lease. It's really hard to decide what they're getting at and where they're going with this. I know you guys know a whole lot more than I do. Can you just comment a little bit on that?
Sure. So, the question was, what's going on with the Land & Buildings people? Why are they sending us letters? Land & Buildings is an activist investor. They are a investment SHOP that specializes in not only just making investments in companies, but agitating for change if they believe that will help their investment. Land & Buildings believes that we should make changes to our board and the way that we govern our company and our board. We believe as a company that we'll decide when to make those changes and we'll decide which board members are capable and qualified to run our company. It's important to us as a management team to have that stability. So it is a conflict, but it's one that I believe we can manage.
We have good advisors to help us manage through the conflict. And I can't comment on NHC. That's an ongoing situation, and it's another public company here in Murfreesboro, so I have to respect that. Any other questions? All right. Thanks, everyone, for coming. See you next year.