American Healthcare REIT Selling Properties to Retire Variable Rate Debt; Reports Higher NOI
In its recent second quarter 2023 investor update letter, American Healthcare REIT Inc. reported that it is actively selling properties to raise funds to retire its variable rate debt, which the company states is a drag on its earnings. Year-to-date, the company says it has raised $90 million via property sales and is actively pursuing additional property sales.
American Healthcare REIT reported total variable rate debt of approximately $331 million at the close of the second quarter, down from $368.6 million as of Dec. 31. 2022.
The company also reported year-over-year growth in net operating income, which totaled $80.4 million at the close of the second quarter, compared to $77.6 million as of June 30, 2022.
Funds from operations, however, declined year-over-year, from $32.7 million as of June 30, 2022 to $27.6 million at the close of the second quarter 2023.
Net loss for the quarter totaled $11.9 million, compared to net loss of $15.5 million during the second quarter 2022.
President and chief executive officer Danny Prosky noted that the company’s “property level results showed positive momentum in the second quarter and we were particularly pleased to see continued same-store growth in [net operating income] for our [senior housing operating properties] and integrated senior health campuses segments.”
As of June 30, 2023, the company’s property portfolio (excluding senior housing operating properties and integrated senior health campuses), achieved a leased percentage of 92.5% and weighted average remaining lease term of 6.9 years. The company’s portfolio of integrated senior health campuses and senior housing operating properties achieved leased percentages of 76.6% and 83.9%. Portfolio leverage was 53.6%.
In September 2022, AHR filed a Form S-11 with the SEC, with plans for a proposed underwritten public offering connected with the potential listing of its common stock on the New York Stock Exchange.
“We continue to pursue the goal of creating liquidity for our stockholders and subsequent to quarter end, we filed an amended Registration Statement on Form S-11,” said Prosky. “The amended registration statement in another important step in a proposed underwritten public offering in conjunction with a listing of our common stock on the New York Stock Exchange.”
American Healthcare REIT oversees a 19.1 million-square-foot portfolio of 300 medical office buildings, skilled nursing facilities and integrated senior health campuses located in 36 states, the United Kingdom and the Isle of Man, in addition to a real estate-related investment. The gross investment value of the portfolio is approximately $4.4 billion.
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