American Healthcare REIT, Inc. (AHR) is a self-managed real estate investment trust (REIT) that acquires, owns, and operates a diversified portfolio of clinical healthcare real estate properties, focusing primarily on senior housing, skilled nursing facilities (SNFs), outpatient medical (OM) buildings, and other healthcare-related facilities. The company has built a fully-integrated management platform that operates clinical healthcare properties throughout the United States, the United Kingdom, and the Isle of Man.
Business Overview and History
American Healthcare REIT was formed in 2016 through the merger of Griffin-American Healthcare REIT III, Inc. and Griffin-American Healthcare REIT IV, Inc. The combined entity, renamed American Healthcare REIT, Inc., became a self-managed REIT with a portfolio of over 300 properties across the United States, the UK, and the Isle of Man.
In 2021, the company completed the acquisition of American Healthcare Opps Holdings, LLC, which solidified its status as a self-managed REIT and provided greater control over daily operations and property management. This move was accompanied by a name change from Griffin-American Healthcare REIT IV, Inc. to American Healthcare REIT, Inc.
Throughout 2022, American Healthcare REIT continued to expand its portfolio through strategic acquisitions, particularly focusing on skilled nursing facilities and senior housing properties. However, the company faced challenges during the COVID-19 pandemic, as healthcare facilities experienced increased costs and operational disruptions. American Healthcare REIT worked closely with its operators to navigate these difficulties and maintain the quality of care provided in its facilities.
A significant milestone was reached in 2024 when American Healthcare REIT completed its initial public offering and listed its common stock on the New York Stock Exchange under the ticker symbol "AHR". This move provided the company with access to public capital markets to support its growth initiatives. Through the IPO and subsequent equity offerings, American Healthcare REIT raised over $1.2 billion, which was used to pay down debt and fund new acquisitions and developments.
As of December 31, 2024, the company owned and/or operated 314 buildings and integrated senior health campuses, representing approximately 19.16 million square feet of gross leasable area, for an aggregate contract purchase price of $4.53 billion.
Financial Performance and Position
For the full year 2024, American Healthcare REIT reported total revenues of $2.07 billion, up from $1.86 billion in 2023. However, the company incurred a net loss of $35.6 million, or $0.29 per diluted share, compared to a net loss of $76.9 million, or $1.08 per diluted share, in the prior year.
The company's normalized funds from operations (NFFO), a key performance metric for REITs, was $1.41 per diluted share in 2024, within the guidance range provided to investors. This represented a significant improvement from the $0.92 per diluted share reported in 2023.
American Healthcare REIT's balance sheet remains strong, with a net debt to adjusted EBITDA ratio of 4.3x as of December 31, 2024, down from 8.5x at the end of 2023. This improvement was driven by the company's successful capital markets activities, including a $1.36 billion equity raise in 2024, as well as its disciplined approach to capital allocation and debt reduction.
For the most recent quarter (Q4 2024), the company reported revenue of $542.74 million, representing a year-over-year growth of 12.44%. However, the company recorded a net loss of $31.77 million for the quarter.
The company's operating cash flow for the full year 2024 was $176.09 million, with free cash flow of $84.15 million. As of December 31, 2024, American Healthcare REIT had a cash balance of $76.70 million and $461 million available under its $1.15 billion 2024 Credit Facility.
Operational Highlights
The company's diversified portfolio and integrated management platform have enabled American Healthcare REIT to deliver strong operational performance, particularly in its managed segments, which include the integrated senior health campuses and SHOP.
In 2024, the company's integrated senior health campuses segment, which operates under the Trilogy brand, achieved same-store net operating income (NOI) growth of 23.8% for the full year. This was driven by occupancy gains, private pay rate growth, and disciplined expense management. Trilogy's average portfolio-wide CMS star rating exceeded 4 stars, underscoring the high-quality care provided to residents.
The SHOP segment also delivered exceptional results, with same-store NOI growth of 52.8% for the full year 2024. This was fueled by accelerating revenue per occupied room (RevPOR) growth, occupancy gains, and strong expense management. The company's focus on managing its SHOP properties has resulted in significant margin expansion, with same-store NOI margins improving by 500 basis points compared to 2023.
Looking ahead, American Healthcare REIT expects to continue capitalizing on favorable supply-demand dynamics in the long-term care industry, projecting same-store NOI growth of 10-12% for Trilogy and 18-22% for SHOP in 2025. The company's strong balance sheet and access to capital provide it with the flexibility to pursue accretive external growth opportunities and fund its captive Trilogy development pipeline.
Business Segments
American Healthcare REIT operates through four reportable business segments:
1. Integrated Senior Health Campuses: This segment accounted for 44.6% of the company's aggregate contract purchase price as of December 31, 2024, and contributed 54.1% of AHR's annualized base rent/NOI. These facilities provide a continuum of care, including independent living, assisted living, memory care, and skilled nursing services, all within a single campus setting.
2. Outpatient Medical (OM) Buildings: The OM segment consists of 84 buildings leased to third-party tenants. As of December 31, 2024, this segment accounted for 26.1% of AHR's aggregate contract purchase price and contributed 24.7% of the company's annualized base rent/NOI.
3. Senior Housing Operating Properties (SHOP): This segment includes 84 senior housing and skilled nursing facilities operated under a RIDEA structure. It accounted for 20.6% of AHR's aggregate contract purchase price and 13.5% of annualized base rent/NOI as of December 31, 2024.
4. Triple-Net Leased Properties: This segment includes 20 senior housing, skilled nursing, and hospital facilities leased to third-party tenants under triple-net or absolute-net leases. As of December 31, 2024, it accounted for 8.2% of AHR's aggregate contract purchase price and 7.7% of annualized base rent/NOI.
Geographic Presence
American Healthcare REIT's portfolio is primarily concentrated in the United States, with a small international presence. As of December 31, 2024, properties in the US accounted for 98.7% of the company's annualized base rent/NOI, while international properties in the UK and Isle of Man accounted for 1.3%.
Future Outlook and Guidance
For the full year 2025, American Healthcare REIT has issued guidance of $1.56 to $1.60 of NFFO per fully diluted share. This guidance does not assume any additional capital markets or transaction activity beyond what has already been announced.
The company's segment-specific guidance for 2025 same-store NOI growth is as follows:
- Trilogy: 10% to 12% growth
- Outpatient Medical: -1% to +1% growth
- SHOP Segment: 18% to 22% growth
- Triple Net Leased Properties: -1.5% to -0.5% decline
In aggregate, American Healthcare REIT expects its total portfolio same-store NOI growth to be between 7% and 10% for the full year of 2025. The company anticipates that this same-store NOI growth, combined with completed or announced investment activity, will translate to double-digit NFFO per share growth in 2025 compared to 2024.
Risks and Challenges
While American Healthcare REIT has demonstrated its ability to navigate the challenging healthcare real estate landscape, the company faces several risks and challenges that investors should consider.
The healthcare industry is heavily regulated, and changes in laws or regulations, or the loss of licensure, could adversely affect the company's tenants and operators, impacting their ability to make rent payments or operate efficiently. Additionally, reimbursement rates from third-party payors, including Medicare and Medicaid, that do not rise as quickly as inflation could negatively impact the company's tenants and operators.
The company's geographic concentration in certain states, such as Indiana and Ohio, which account for a significant portion of its portfolio, exposes it to economic and real estate market conditions in those regions. Any downturn in those local economies could have a disproportionate impact on American Healthcare REIT's performance.
Furthermore, the company's reliance on its Trilogy management platform to operate its integrated senior health campuses poses a risk, as adverse developments in Trilogy's business or financial strength could have a material adverse effect on the REIT.
Industry Trends
The healthcare REIT industry is benefiting from favorable demographic trends, including an aging population and increasing healthcare expenditures. Industry experts project the 80+ population in the US to grow by over 700,000 individuals per year on average through 2030, against limited new senior housing supply additions. This demographic tailwind is expected to drive demand for healthcare services and facilities, potentially benefiting companies like American Healthcare REIT.
Conclusion
American Healthcare REIT has established itself as a leading healthcare REIT, leveraging its diversified portfolio, integrated management platform, and strong balance sheet to deliver consistent operational and financial performance. The company's focus on high-quality, need-driven healthcare real estate assets positions it well to capitalize on the favorable long-term trends in the sector, including the aging U.S. population and limited new supply of senior housing and skilled nursing facilities.
Despite the challenges facing the healthcare industry, American Healthcare REIT's disciplined approach to capital allocation, portfolio management, and operator relationships have enabled it to navigate the landscape effectively. The company's improved financial position, evidenced by its reduced leverage and strong liquidity, provides a solid foundation for future growth. As American Healthcare REIT continues to execute on its strategic initiatives and capitalize on market opportunities, investors will be closely watching for its ability to drive sustainable growth and shareholder value in the years ahead.