Griffin-American Healthcare REIT III Inc., a publicly registered non-traded real estate investment trust co-sponsored by American Healthcare Investors and Griffin Capital Company, recently filed its third quarter 2020 financials and provided a letter to its shareholders outlining the results.
The REIT invests in healthcare real estate assets, focusing primarily on medical office buildings, hospitals, skilled nursing facilities, senior housing and other healthcare-related facilities. The company’s portfolio is valued at approximately $3.7 billion.
Modified funds from operations, or MFFO, equaled $16.2 million for the third quarter of 2020, representing year-over-year decline of 27.5 percent compared to MFFO of $22.3 million during the third quarter 2019.
Funds from operations, or FFO, equaled $21 million for the third quarter of 2020, representing year-over-year growth of 33.1 percent compared to FFO of $15.7 million during the third quarter 2019.
Net loss during the quarter was $680,000 compared to net loss of $17.1 million during the third quarter 2019.
Net operating income, or NOI, totaled $46.2 million for the third quarter of 2020, representing a decrease of 8.9 percent over third quarter 2019 NOI of $50.7 million.
As of September 30, 2020, the company’s non-RIDEA property portfolio achieved a leased percentage of 91.5 percent and weighted average remaining lease term of 7.3 years. Portfolio leverage was 46 percent.
The company has more than $133.3 million cash-on-hand and nearly $134.4 million available on its corporate lines of credit, as of September 30, 2020, according to a filing with the Securities and Exchange Commission.
“While medical office buildings continue to perform relatively well in the face of rising case counts, admission of new residents to our senior housing properties continues to be a significant problem as a result of the pandemic,” said Danny Prosky, president and chief operating officer.
Occupancy in the REIT’s senior housing – RIDEA properties declined from 82.8 percent for the first nine months of 2019 to 75.5 percent for the same period in 2020. Occupancy at its integrated senior health campuses decreased from 86.1 percent for the first nine months of 2019 to 79 percent for the same period in 2020.
Prosky noted that the REIT’s skilled nursing facilities “have yet to recover the resident occupancies seen prior to March.”
In the early days of the pandemic, the REIT enacted a number of steps to preserve capital including eliminating all “unnecessary” expenditures, reducing its distribution rate from $0.60 per share to $0.30 per share (annualized) beginning with the April 2020 distribution, and placing limitations on its share repurchase plan.
The REIT later suspended monthly distributions to shareholders after paying the May 2020 distribution on June 1, 2020. The company also suspended its distribution reinvestment plan and share repurchase plan, citing the effects of the COVID-19 pandemic on the healthcare sector and its portfolio. In addition, the REIT’s advisor deferred half the asset management fee for six months beginning in June 2020.
“We remain optimistic that the COVID-19 pandemic ultimately will be brought under control, but fully understand that we have at least several more challenging months ahead of us,” added Prosky.
Griffin-American Healthcare REIT III launched its initial public offering in February 2014 and closed in March 2015 after raising more than $1.9 billion. As of September 30, 2019, the REIT owned a portfolio of 97 properties (101 buildings) and 118 integrated senior health campuses purchased for roughly $3 billion. In addition, the REIT had invested $60.4 million in real estate-related investments.