Activist investor launches proxy fight to replace directors at National Health Investors

Land & Buildings announced Wednesday that it is launching a proxy fight to replace two board members at Murfreesboro, TN-based real estate investment trust National Health Investors.

Jonathan Litt, founder and chief investment officer of the registered investment manager, is seeking to remove Robert Adams and James Jobe from the NHI board. As replacements, Land & Buildings is nominating James Hoffmann, a real estate investment expert, and A. Adam Troso, a former investment banker. 

Land & Buildings holds about a 1% stake in NHI, which has a market capitalization of about $3.1 billion, the Wall Street Journal reported Tuesday.

This is the second time in less than a year that Stamford, CT-based Land & Buildings has encouraged NHI shareholders to vote against two incumbent directors. In April, Litt encouraged the removal of board members Robert Webb and Charlotte Swafford.

At that time, the activist investor said that the REIT was “significantly undervalued in large part due to the company’s poor corporate governance practices and web of interlocking relationships and conflicts of interest” among board members. NHI asked stockholders to reject Land & Building’s recommendation and proposed removing its classified board structure, adding a “disinterested” director to the board following a search process overseen by NHI, and further evaluating the composition of the board and director term limits/age requirements. Land & Buildings called the proposals “half measures.”

Land & Buildings has said that the REIT’s board is too closely tied to one of its largest tenants, National Healthcare Corp. In April, Litt said that NHC represented 15% of NHI’s net operating income.

“Since last year’s annual meeting, the board has apparently taken a number of reactive actions intended to demonstrate a newfound focus on shareholder concerns. We believe these have been too little, too late and fall well short of what is needed to fix the broken governance at the company and to ensure that value is maximized for the benefit of all NHI shareholders,” Litt said Wednesday.

Ongoing lease renewal negotiations mean that the need for change is urgent, Litt posted on LinkedIn on Wednesday. “We believe NHI shares have 50% upside over the next year given undervaluation, the potential for multiple years of double-digit earnings growth, and an over 5% dividend yield,” he said.

Land & Buildings’ activist activities have involved other long-term care-related companies as well, among them Brookdale Senior Living, Ventas and Healthcare Realty Trust.