Executive Summary / Key Takeaways

• Dominant Growth in Long-Term Care: American Healthcare REIT (AHR) is capitalizing on a "golden era" for long-term care, driven by accelerating demand from the aging 80-plus population and historically low new supply, leading to robust occupancy gains and pricing power.
• Operational Excellence and Technological Edge: AHR's integrated management platform, particularly through its wholly-owned Trilogy segment, leverages a sophisticated revenue management system and best-in-class operational practices, driving superior financial outcomes and competitive differentiation.
• Strong Financial Performance and Deleveraging: The company reported a 22% year-over-year increase in Q3 2025 Normalized FFO per share and significantly improved its net debt-to-EBITDA ratio to 3.5x, demonstrating disciplined capital allocation and balance sheet strength.
• Accretive Growth Pipeline: AHR maintains a robust pipeline of over $450 million in awarded deals, primarily in its high-growth Senior Housing Operating Properties (SHOP) segment, and a $177 million development pipeline, fueled by strategic operator partnerships and a favorable cost of capital.
• Positive Outlook with Strategic Flexibility: Management has raised its full-year 2025 NFFO guidance to $1.69-$1.72 per share and anticipates continued double-digit same-store NOI growth, while strategically mitigating risks like inflation and potential Medicaid policy shifts through operational agility.

The Dawn of a New Era in Healthcare Real Estate

American Healthcare REIT, Inc. (AHR) stands at the forefront of a transformative period in the healthcare real estate sector, strategically positioned to harness the profound demographic shifts underway. As a self-managed REIT, AHR has meticulously cultivated a diversified portfolio of clinical healthcare properties across the U.S., U.K., and Isle of Man, with a pronounced and increasingly dominant focus on senior housing, particularly through its Integrated Senior Health Campuses (ISHC), known as Trilogy, and Senior Housing Operating Properties (SHOP) segments. This strategic emphasis, underpinned by a fully integrated management platform and the RIDEA (REIT Investment Diversification and Empowerment Act) structure, allows AHR to directly participate in the operational upside of its properties, a critical differentiator in today's market.

The industry landscape is characterized by an unprecedented supply-demand imbalance. The 80-plus population is projected to expand by over 700,000 individuals annually through 2030, while new senior housing unit additions have remained below 20,000 per year since 2020. This structural deficit creates a compelling backdrop for sustained growth in long-term care, a sentiment echoed by management who describe the current environment as the "best operating environment for long-term care" in decades. AHR's overarching strategy is to not merely acquire assets but to foster operational excellence and high-quality resident care, believing that superior patient outcomes and employee satisfaction are direct precursors to strong financial performance.

AHR's competitive positioning is significantly bolstered by its integrated management platform and strategic operator partnerships. Unlike many peers, AHR often identifies and partners with operators before acquiring properties, leveraging these relationships to source off-market opportunities and mitigate operational execution risk. This approach allows AHR to compete effectively against larger, more established healthcare REITs like Welltower (WELL) and Ventas (VTR), where AHR's operational integration and strategic adaptability provide a qualitative edge, even if it may lag in overall scale. Against specialized players like Omega Healthcare Investors (OHI), AHR's diversification offers greater resilience, while its management depth helps it contend with Healthpeak Properties (PEAK) in core healthcare segments.

Central to AHR's competitive moat and operational prowess is its technological differentiation, particularly evident within its Trilogy segment. Trilogy employs a sophisticated, centralized revenue management system that integrates market rates, occupancy levels, unit-specific attributes, and discount control features. This system has demonstrably optimized revenue, especially in highly occupied facilities, directly contributing to Trilogy's robust growth. The tangible benefits are clear: Trilogy's overall CMS (Centers for Medicare & Medicaid Services) rating consistently exceeds four stars, significantly outperforming the national average of below three stars. This high-quality care drives outsized demand and facilitates an increasing mix shift towards higher-reimbursing Medicare Advantage plans, which accounted for 7.2% of resident days in Q3 2025, up from 5.8% a year prior. Medicare Advantage reimbursement rates are notably higher and growing faster than other sources, providing a powerful tailwind for revenue growth.

Beyond revenue optimization, Trilogy's operational excellence extends to human capital. Its employee retention rates are "industry-leading," returning to pre-COVID levels in the 40% range, a stark contrast to the 100% turnover often seen among peers. This stability reduces labor costs and enhances care quality. The success of Trilogy's CNA (Certified Nursing Assistant) training program is a testament to its commitment to attracting and retaining skilled staff. AHR is actively test-piloting Trilogy's revenue management system and other operational best practices (including sales, marketing, and employee training strategies) with its other regional SHOP operators. The stated goal is to augment these partners with back-office support and resources, creating platform value and helping them scale to meet growing demand. Furthermore, AHR leverages Trilogy's internal development capabilities to identify expansion opportunities within its existing SHOP portfolio on owned land, aiming for "high IRRs" and extending its multi-year growth runway. This technological and operational framework is not merely an efficiency tool; it is a foundational element of AHR's strategy, directly contributing to its competitive moat, superior financial performance, and long-term growth.

Historical Evolution and Strategic Pivots

AHR's journey to its current market position has been marked by strategic evolution. The company's operational roots trace back at least to 2015, but a pivotal moment arrived on February 7, 2024, with its public listing on the NYSE. This transition provided substantial capital, which was immediately deployed to reshape its portfolio. A key strategic pivot involved the aggressive expansion and consolidation of its RIDEA-structured senior housing assets. In 2024, AHR acquired portfolios of senior housing properties in Oregon and Washington, leveraging its position as a lender to secure these assets.

A transformative event was the acquisition of the remaining 24% minority interest in Trilogy in September 2024 for approximately $258 million, making AHR the sole owner. This move, funded by a follow-on public offering, was designed to optimize capital allocation and accelerate the development of purpose-built facilities within Trilogy. By July 2025, AHR further solidified its control by acquiring a 51% controlling interest in Trilogy Opportunity Fund I, LLC, bringing its ownership of five ISHC properties to 100%. This consolidation allows AHR to fully leverage Trilogy's operational expertise and development capabilities across its growing portfolio.

Concurrently, AHR has actively managed its portfolio through strategic divestitures. In Q4 2024, approximately $140 million in properties, including lower-quality skilled nursing facilities, were sold to enhance portfolio quality and fund higher-growth opportunities. This trend continued into Q3 2025 with $13 million in non-core dispositions. The company has also expanded its SHOP segment through targeted acquisitions, such as properties in Virginia ($65 million in April 2025) and the Atlanta MSA ($7.5 million in late 2024/early 2025), often securing off-market deals through relationships with lenders and special servicers. New regional operating partners, WellQuest Living and Great Lakes Management, were introduced in 2025, further broadening AHR's geographic reach and access to new investment opportunities.

Operational Excellence and Segment Performance

AHR's operational strategy has consistently translated into sector-leading performance. In the third quarter of 2025, the total portfolio delivered a robust 16.4% same-store Net Operating Income (NOI) growth year-over-year, marking its seventh consecutive quarter of double-digit growth. This performance underscores the effectiveness of AHR's hands-on asset management and its RIDEA-focused model.

The Integrated Senior Health Campuses (ISHC) segment, or Trilogy, remains a powerhouse. For the three months ended September 30, 2025, ISHC generated $449.72 million in resident fees and services revenue, contributing $61.32 million in segment NOI, representing a 26.7% year-over-year NOI growth. Year-to-date, ISHC revenues reached $1.30 billion, with NOI of $174.11 million, a 28.3% increase over the prior year. Occupancy averaged 90.2% in Q3 2025, up more than 270 basis points from the prior year, while the average daily rate increased roughly 7%. This growth is fueled by increased resident occupancy, higher billing rates, and strategic acquisitions. Management noted that the slight sequential dip in Q3 2025 margins was due to specific, non-recurring factors like flu vaccine purchases and employee health insurance costs, with an expectation for continued margin improvement over time as the AL/IL component of Trilogy's business grows.

The Senior Housing Operating Properties (SHOP) segment also delivered exceptional results. For Q3 2025, SHOP reported $82.34 million in resident fees and services revenue, yielding $16.21 million in segment NOI, a remarkable 43.3% year-over-year NOI growth. Year-to-date, SHOP revenues were $233.61 million, with NOI of $43.18 million, a 54.4% increase. SHOP same-store NOI increased 25.3% in Q3 2025, with RevPOR (revenue per occupied room) up 5.6% year-over-year and NOI margins expanding nearly 300 basis points to 21.5%. The segment achieved record move-in activity during the spring and summer, with spot occupancy now exceeding 90%. This performance is a testament to the curated regional operators and AHR's active asset management.

In contrast, the Outpatient Medical (OM) segment experienced a decline, with revenues of $31.18 million and NOI of $19.13 million in Q3 2025, down 7.5% and 9.3% year-over-year, respectively. This is primarily due to strategic dispositions of OM buildings in 2024 and 2025. AHR has been actively divesting these assets, reducing OM's contribution to total NOI from 35% a few years ago to 20% today, with expectations for this trend to continue. The remaining OM portfolio consists of larger, more institutional buildings, and management expresses optimism for the next 12 months as health systems' downsizing upon renewal appears to be largely behind them.

The Triple-Net Leased Properties segment, the smallest in the portfolio, also saw a revenue decrease to $9.70 million and NOI to $9.16 million in Q3 2025, down 26.9% and 28.2% year-over-year, respectively. This decline is primarily attributed to the disposition of eight triple-net leased properties in Missouri in December 2024, which were deemed lower quality with limited growth potential.

Financial Strength and Capital Allocation

AHR has demonstrated remarkable financial discipline and balance sheet improvement. The company's net debt-to-EBITDA ratio dramatically improved from 8.5x at the end of 2023 to 4.3x by the end of 2024, and further to an impressive 3.5x by Q3 2025. This significant deleveraging was achieved through robust organic growth and strategic capital markets activity, including nearly $1.4 billion in equity raises in 2024 and continued issuances through its ATM program in 2025.

As of September 30, 2025, AHR reported $147.36 million in cash and cash equivalents, with total assets of $4.77 billion and total equity of $2.72 billion. The company's 2024 Credit Facility provides substantial liquidity, with $550.00 million outstanding and $600.00 million available. The weighted average effective interest rate on outstanding debt, factoring in interest rate swaps, was 4.34% per annum, and all variable-rate loan balances are hedged, insulating against interest rate increases.

AHR's capital allocation strategy is focused on accretive external growth and internal development. The company has closed over $575 million in acquisitions year-to-date in 2025, all within its RIDEA segments. It maintains a robust pipeline of over $450 million in awarded deals, expected to close in Q4 2025 or early 2026, primarily in the SHOP segment. The in-process development pipeline totals approximately $177 million, with $52 million already spent, aimed at new campuses, independent living villas, and wing expansions. These projects are expected to extend AHR's multi-year growth runway at attractive yields.

Net cash provided by operating activities increased for the nine months ended September 30, 2025, driven by improved operating performance and reduced interest payments. AHR's board has authorized a quarterly distribution of $0.25 per share, which the company expects to maintain, funded by legally available funds and retained earnings, which management views as the "cheapest source of equity."

Outlook and Growth Trajectory

AHR's management is highly optimistic about the company's future, reflected in its increased full-year 2025 guidance. Normalized FFO guidance has been raised to a range of $1.69 to $1.72 per fully diluted share, implying growth in excess of 20% year-over-year at the midpoint. Total portfolio same-store NOI growth guidance has also been increased to a range of 13% to 15%.

Segment-level same-store NOI growth guidance for 2025 includes:

• ISHC: 17% to 20%
• SHOP: 24% to 26%
• Outpatient Medical: 2% to 2.4%
• Triple-net leased properties: -0.25% to +0.25%

These projections are based on several key assumptions: continued occupancy gains, RevPOR growth outpacing expense growth, and the expectation that seasonality in Q4 2025 could be muted due to accelerating demand from the baby boomer population. Management anticipates being able to increase pricing at a rate higher than inflation, targeting approximately 200 basis points above a 3% inflation rate. The strategic mix shift towards Medicare Advantage within Trilogy is expected to drive robust revenue growth due to higher reimbursement rates and increased accessibility for enrollees. The development pipeline, with its mix of new campuses, villas, and expansions, is designed to provide predictable cash flow and extend the multi-year growth runway.

Risks and Mitigations

Despite the compelling growth narrative, AHR faces several pertinent risks. Inflationary pressures on labor, services, energy, and supplies remain a concern, potentially impacting profitability. However, AHR's RIDEA managers have proactively mitigated this by implementing higher-than-average annual rent and care fee increases for residents and adjusting market rates frequently.

The increasing reliance on artificial intelligence (AI) also presents both opportunities and risks. While AI tools can optimize operations, they carry potential for inaccuracy, bias, intellectual property infringement, and cybersecurity threats. AHR acknowledges the risk of competitive disadvantage if peers utilize AI more effectively. Cybersecurity threat actors may also leverage AI to enhance attacks. AHR utilizes AI-based tools for threat detection but recognizes the evolving sophistication of these threats.

Potential changes in Medicaid policy, such as those outlined in the One Big Beautiful Bill Act (OBBBA) with estimated cuts to Medicaid spending, pose a risk. While management acknowledges the uncertainty, Trilogy's business model offers significant flexibility. With Medicaid representing only about 21% of Trilogy's revenue, the company can pivot by converting rooms to assisted living, memory care, or Medicare beds if reimbursements become unfavorable. Management also highlights that the skilled nursing industry generally operates on thin margins, suggesting that significant Medicaid cuts would severely impact many facilities, potentially leading to widespread closures and reduced access to care, but also creating market share opportunities for resilient operators like Trilogy.

Finally, geographic concentration, with properties in Indiana and Ohio accounting for 37.80% and 12.20% respectively of the portfolio's annualized base rent or NOI, exposes AHR to regional economic fluctuations.

Conclusion

American Healthcare REIT is executing a compelling investment thesis, firmly rooted in the demographic tailwinds of an aging population and a favorable supply-demand dynamic in the long-term care sector. The company's strategic transformation into a RIDEA-focused entity, coupled with its integrated management platform and deep operator partnerships, positions it for sustained, accretive growth. AHR's technological differentiators, particularly Trilogy's advanced revenue management system and operational best practices, are critical enablers, driving superior financial performance and a robust competitive moat.

With a significantly strengthened balance sheet, a robust acquisition and development pipeline, and a clear outlook for double-digit NFFO and same-store NOI growth, AHR is well-equipped to capitalize on the ongoing "golden era" for long-term care. While risks such as inflation, AI vulnerabilities, and potential Medicaid policy changes warrant attention, AHR's proactive mitigation strategies and operational flexibility, especially within its Trilogy segment, provide resilience. For discerning investors, AHR represents a high-growth opportunity within healthcare real estate, leveraging its unique operational model and technological leadership to unlock substantial long-term value.