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AHR Reports Significant Growth in Q1 2024 Results

American Healthcare REIT Inc. (NYSE: AHR) shared its first quarter 2024 results this week, which included a net loss attributable to common stockholders of $0.04 per share, a significant improvement over the $0.39 per share net loss attributed to common stockholders for the three-month period ended March 2023. The company reported net operating income of $82.2 million for the recent quarter, a 22.9% year-over-year improvement; the NOI was $66.9 million in March 2023.

The company reported normalized funds from operations attributable to stockholders equal to approximately $31.1 million, or $0.30 per basic and diluted share, as compared to approximately $20.2 million, or $0.31 per share at the end of March 2023. Funds from operations totaled $31.3 million for the quarter, equal to $0.30 per share, compared to $11.7 million and $0.18 per share reported for the first quarter 2023.

AHR also reported positive portfolio-level performance, with 7.1% total portfolio same-store revenue growth for the three months ended March 31, 2024, compared to the same period in 2023, largely driven by improved performance in the company’s REIT Investment and Diversification Empowerment Act-operated assets.

The company achieved a total portfolio same-store NOI growth of 13% for the three months ended March 31, 2024, compared to the same period in 2023. This growth was highlighted by 33.5% and 19.9% same-store NOI growth from its senior housing operating properties and integrated senior health campuses, respectively.

As previously reported by The DI Wire, AHR – a self-managed real estate investment trust that acquires, owns, and operates a diversified portfolio of clinical healthcare real estate properties, focusing primarily on medical office buildings, senior housing, skilled nursing facilities, hospitals and other healthcare-related facilities – debuted on the New York Stock Exchange Feb. 7, 2024. Legacy investors in the non-traded REITs that formed AHR are eligible to trade their shares on the exchange beginning Aug. 8.

“After completing our offering and listing event in February, our main focus is on delivering strong operating performance across our property segments. The year is off to a solid start, as we captured outsized growth within our RIDEA-operated assets due to the supply-demand imbalance present in the senior housing industry. Our assets are well-positioned and staffed appropriately to capitalize on further near-term demand tailwinds, which we believe will drive additional occupancy gains and rate growth,” said Danny Prosky, AHR’s president and chief executive officer.

Also in Q1 2024, AHR disposed of approximately $15.6 million of non-core properties across the company’s outpatient medical and senior housing operating property segments and acquired a 14-property portfolio in Oregon for approximately $94.5 million that is managed by Compass Senior Living in a RIDEA structure.

After pricing its public offering of 64.4 million shares of its common stock at $12 per share, AHR started the trading day at $12.85. At the close of trading, shares finished at $13.22, up 10.17%. At the close of trading May 14, 2024, shares finished at $14, up 16.67% over the IPO price.

Using the net proceeds from its public offering, AHR paid down approximately $721 million of its outstanding debt obligations carrying a weighted average interest rate of approximately 7.5%. The company said this meaningfully improved leverage metrics and provided it with additional capacity and flexibility.

“Our hands-on active asset management approach is proving its merits, as evidenced by the stellar performance of our recently acquired Oregon portfolio. After only two months of owning and operating the portfolio, with Compass Senior Living as our operating partner, the properties have meaningfully improved bottom-line performance and, while still early, are trending ahead of our initial expectations,” said Gabe Willhite, the company’s chief operating officer.

Indeed, at least six institutions initiated coverage and earnings per share estimates for AHR this month, with price targets for the stock ranging from $14 to $17. Each, acknowledging U.S. population demographics and corresponding senior housing needs, hypothesized that AHR will benefit from the long-term trends driving healthcare real estate. Risks identified by one or more of the firms included operational execution, concentration (both tenant and geographical), and elevated dividend coverage.

AHR was formed by the 2021 merger of Griffin-American Healthcare REIT III, Griffin-American Healthcare REIT IV, and American Healthcare Investors. Investors in those non-traded REITs typically paid $10 per share of common stock. The company executed a one-for-four reverse stock split in November 2021, and last March adopted an updated estimated per share net asset value of the company’s common stock of $31.40, calculated as of Dec. 31, 2022.

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