For Release:  February 14, 2005

Contact:  Gerald Coggin, Senior VP of Corporate Relations

Phone:  (615) 890-9100

NHI reports 2004 year end results

            MURFREESBORO, Tenn. –National Health Investors, Inc., (NYSE:NHI) announced income from continuing operations for the year ended December 31, 2004 of $55,082,000 or $2.00 per basic and $1.99 per diluted share of common stock compared to $43,290,000, or $1.56 per basic and $1.55 per diluted share of common stock for 2003.

            Net income for the year ended December 31, 2004 was $56,379,000 or $2.05 per common share, basic and $2.03 per common share, diluted, compared to net income of $43,808,000 or $1.58 per common share, basic and $1.57 per common share, diluted for 2003. 

            Funds from operations (“FFO”) for the year ended December 31, 2004 was $66,502,000, or $2.44 per basic and $66,622,000, or $2.42 per diluted share of common stock compared to $53,110,000, or $1.99 per basic and $53,259,000, or $1.97 per diluted share in 2003.

            Income from continuing operations for the fourth quarter ended December 31, 2004 was $18,597,000, or 68 cents per basic and 67 cents per diluted share of common stock compared to $9,846,000, or 35 cents per basic and diluted share of common stock for the same period in 2003.

            Net income for the fourth quarter ended December 31, 2004 was $18,951,000 or 69 cents per common share, basic and 68 cents per common share, diluted, compared to net income of $9,817,000 or 35 cents per basic and diluted share of common stock for the same period in 2003.

            For the fourth quarter ended December 31, 2004, FFO was $21,878,000 or 80 cents per basic and $21,907,000 or 79 cents per diluted share of common stock compared to $12,495,000 or 47 cents per basic and $12,529,000 or 46 cents per diluted share for the same period in 2003.

            Net income for the year was positively impacted by recoveries of prior year writedowns, net gains on the sales of real estate, income from the early payoff of loans and improved profitability of operated facilities.  Our balance sheet continues to be one of the strongest in the industry with cash and marketable securities exceeding total debt by $34.7 million.

            National Health Investors, Inc. is a long-term health care real estate investment trust that specializes in the financing of health care real estate by first mortgage and by purchase and leaseback transactions.  The common stock of the company trades on the New York Stock Exchange with the symbol NHI.  Additional information including NHI’s most recent press releases may be obtained on NHI’s web site at www.nhinvestors.com

            Statements in this press release that are not historical facts are forward-looking statements.  NHI cautions investors that any forward-looking statements made involve risks and uncertainties and are not guarantees of future performance.  All forward-looking statements represent NHI’s judgment as of the date of this release.
 

Reconciliation of Funds From Operations ⁽¹⁾⁽²⁾

            The following table reconciles net income to funds from operations applicable to common stockholders:

(in thousands, except share and per share amounts)

(1)     Management believes that funds from operations (FFO) is an important supplemental measure of operating performance for a real estate investment trust.  Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time.  Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a real estate investment trust that used historical cost accounting for depreciation could be less informative, and should be supplemented with a measure such as FFO.  The term FFO was designed by the real estate investment trust industry to address this issue.  Our measure may not be comparable to similarly titled measures used by other REITs.  Consequently, our funds from operations may not provide a meaningful measure of our performance as compared to that of other REITs.  Since other REITs may not use our definition of FFO, caution should be exercised when comparing our Company’s FFO to that of other REITs.  Funds from operations in and of itself does not represent cash generated from operating activities in accordance with GAAP (funds from operations does not include changes in operating assets and liabilities) and, therefore, should not be considered an alternative to net earnings as an indication of operating performance, or to net cash flow from operating activities as determined by GAAP in the United States, as a measure of liquidity and is not necessarily indicative of cash available to fund cash needs. 

(2)     We have complied with the SEC’s interpretation that recurring impairments taken on real property may not be added back to net income in the calculation of FFO.  The SEC’s position is that recurring impairments on real property are not an appropriate adjustment.

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