National Healthcare Properties Posts Q2 Loss

Company executes asset sales, repays debt, and realigns operations post-internalization.

August 06, 2025

National Healthcare Properties (NHP) posted a net loss of $24.2 million for the second quarter of 2025. But under the surface, the company is moving quickly—scaling back leverage, shedding non-core assets, and reorganizing operations following its management internalization last year.

The transition is already showing up in the numbers. Operating expenses fell sharply year-over-year, and NHP used proceeds from recent sales to cut debt and boost cash reserves. The losses this quarter reflect timing and restructuring, not hesitation.

Portfolio shifts drive lower revenue, but gains on sale help offset impact

Revenue from tenants came in at $85.3 million for the quarter, down from $88.8 million in Q2 2024. The drop ties back to asset sales—NHP sold 18 properties in the first half of 2025, bringing in $189.8 million in gross proceeds. That move resulted in a $27.6 million gain on sale, which helped soften the quarter’s operating loss.

Expenses dropped to $93.5 million from $189 million a year earlier. One-time termination and advisory fees tied to the internalization accounted for much of last year’s higher spend. With those no longer on the books, NHP’s run-rate cost structure is leaner.

Impairment charges came in at $15.2 million, tied primarily to properties marked for sale or facing near-term performance risk. Interest expense fell to $15.8 million as debt balances came down. Net loss for the quarter was $20.8 million—less than one-fifth of the $116.9 million loss reported a year ago.

Internalization cuts fees and aligns structure

In September 2024, NHP moved to bring management in-house. It terminated its external advisory agreement and absorbed key operating functions, including property management. The $106.6 million in upfront payments related to that transaction were made mostly in cash, with the remaining $30.3 million repaid via promissory note in January 2025.

The impact is immediate. Recurring advisory and property management fees—$118.6 million in the first half of 2024—are now off the books. The company now controls its day-to-day operations directly, with costs consolidated under general and administrative expense.

Segment performance: stability in SHOPs, revenue decline in OMFs

NHP’s portfolio includes 175 healthcare properties across 30 states. These are split across two operating segments: outpatient medical facilities (OMFs) and senior housing operating properties (SHOPs).

OMFs: Revenue dropped to $29.3 million, down from $34.7 million a year ago, reflecting property dispositions.

SHOPs: Revenue came in at $56.1 million—slightly higher than Q2 2024. NOI improved to $10.2 million from $8.9 million. However, the segment absorbed $14.1 million in impairment charges, driven by a few underperforming assets.

NHP has 41 SHOPs in the portfolio, all operated under a RIDEA structure with third-party managers.

Balance sheet: leaner, more liquid, and less leveraged

The company ended the quarter with $103.2 million in cash, up from $74.1 million at year-end. Real estate investments, net of depreciation, dropped to $1.57 billion from $1.77 billion, driven by the asset sales.

Debt reduction highlights:

Mortgage notes payable fell by $82.7 million over six months.

Credit facility balances declined by $24.6 million.

$82.5 million of sale proceeds were allocated directly to mortgage repayments.

Unencumbered real estate assets now total $431.6 million (at cost), offering flexibility for future financing strategies. The company holds $1.04 billion in total debt, but now with stronger liquidity and lower leverage.

Preferred stock repurchase program launched

In May, NHP approved a $50 million preferred stock buyback program. During the quarter, it repurchased:

56,916 shares of Series A preferred stock at an average price of $14.46

66,213 shares of Series B preferred stock at an average price of $13.83

No new common shares were issued. The share count remains stable at around 28.3 million, following the end of stock dividend issuances in early 2024.

Outlook: focus on liquidity, performance, and control

NHP is prioritizing balance sheet health, operational control, and cost discipline. The internalization is done. Fee structures have been eliminated. Proceeds from asset sales are being redeployed toward debt reduction and liquidity enhancement.

The SHOP segment still carries some risk, but performance improved this quarter. Management expects to meet its preferred dividend commitments and fund operations over the next year without raising new capital.

With better control and a simplified structure, the company is positioned to navigate the next stage of its strategy more deliberately and efficiently. The foundation has shifted. The focus now is execution.