National Healthcare Properties: A Buyback-Driven REIT Poised for Outperformance

When a company spends its own cash to buy back its shares at a discount, it's a clear signal: management believes the stock is undervalued. For National Healthcare Properties (NHP), the message couldn't be louder. In Q2 2025, the REIT repurchased $1.8 million of preferred stock at a weighted average yield of 12.8%, a $10.87 discount to face value. That's not just a smart move—it's a masterclass in capital allocation.

The Buyback as a Strategic Signal

NHP's preferred buybacks in Q2 weren't just about reducing leverage (they trimmed $1.3 million off its “Net Debt + Preferred” balance sheet). They were a calculated bet on the company's intrinsic value. By repurchasing shares at a 12.8% yield, NHP is essentially saying, “We'd rather own our own stock at this price than invest in riskier alternatives.” For investors, this is a green light. When a company with a strong operational foundation—like NHP's 17.3% year-over-year Same Store Cash NOI growth in its Senior Housing Operating Property (SHOP) segment—chooses to deploy capital into its own shares, it's a sign of confidence.

Operational Strength Fuels Valuation Upside

NHP's fundamentals are bulletproof. The SHOP segment, which accounts for a significant portion of its revenue, saw occupancy jump to 82.8% in Q2, up 5.0% year-over-year. That's not just occupancy—it's demand. With an aging U.S. population and a surge in seniors housing needs, NHP is sitting on a goldmine. Meanwhile, its Outpatient Medical Facility (OMF) segment maintained a robust 92.2% occupancy, even with a slight 0.7% decline year-over-year. The 4.4% same-store NOI growth in OMF shows resilience in a sector where healthcare providers are increasingly shifting to outpatient care.

Combine this with a net leverage ratio of 9.3x (down from 9.7x in Q1) and a weighted average interest rate of 5.1%, and you've got a REIT that's not just surviving—it's thriving.

The Dividend Yield: A Magnetic Attraction

NHP's 13.2% dividend yield for its common stock is another head-turner. At $1.844 in forward annualized dividends, the REIT is offering a payout that dwarfs most peers. For income-focused investors, this is a no-brainer. But here's the kicker: NHP isn't just paying out—it's reinvesting. The $1.8 million in preferred buybacks isn't a one-off; it's part of a broader strategy to deleverage and prepare for an eventual public listing, as CEO Michael Anderson has hinted.

Why This Is a Buy-Now Opportunity

The healthcare REIT sector is in a sweet spot. With interest rates stabilizing and demand for seniors housing and outpatient facilities surging, NHP is uniquely positioned to outperform. Its Q2 results show a company that's not only managing its capital wisely but also building a foundation for long-term growth. The preferred buybacks at a 12.8% yield are a testament to its undervaluation—buying back shares at a discount is the ultimate vote of confidence.

For investors, the calculus is simple: NHP's operational metrics, aggressive deleveraging, and shareholder-friendly buybacks make it a compelling entry point. The REIT's preparation for a public listing adds a catalyst layer—once it goes public, the P/FFO (Price-to-Funds From Operations) ratio will likely expand to match industry benchmarks (typically 12x–16x for healthcare REITs). At current levels, NHP trades at a discount to that range, offering a margin of safety.

Final Call to Action

This isn't a speculative play—it's a disciplined, data-driven opportunity. NHP's Q2 performance proves it can generate cash flow, optimize its balance sheet, and reward shareholders. With a 13.2% yield, 17.3% NOI growth in its core segment, and a management team that's buying back shares at a 12.8% yield, the case for immediate entry is airtight.

Don't wait for the public listing to happen. The market is already pricing in the potential. For those who act now, NHP could be the next big winner in the healthcare REIT space.