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, has reinstated distributions for June 2021 at an annualized rate of $0.20 per share, to be paid in cash in July 2021, according to a letter to shareholders outlining its financial results for the fourth quarter and year-end 2020.
In the early days of the pandemic, the REIT reduced its distribution rate from $0.60 per share to $0.30 per share beginning with the April 2020 distribution. 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 program in early 2021, citing the effects of the COVID-19 pandemic on the healthcare sector and its portfolio.
In the shareholder letter, the REIT stated that since the end of 2020, the COVID-19 case counts at its properties have “dramatically declined,” coinciding with the national vaccine program, which has “shown early signs of success within the most affected portions” of the REIT’s portfolio.
As previously reported, the company reduced its estimated net asset value per share to $8.55 as of September 30, 2020, compared to its previous NAV per share of $9.40 as of June 30, 2019. The company believes that the reduced valuation is almost entirely due to temporary disruptions wrought by the COVID-19 pandemic and will fade once the nation returns to a pre-pandemic environment.
Last month, the REIT disclosed that its board formed a special committee of independent directors to investigate and analyze strategic alternatives, which could include the sale of its assets, listing on a national securities exchange, or merger with another unlisted entity. An affiliated REIT, Griffin-American Healthcare REIT IV, also disclosed the formation of a special committee to review strategic alternatives.
Griffin-American Healthcare REIT III 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 was purchased for $3.1 billion and is currently valued at an estimated $3.7 billion.
The company indicated that portfolio occupancy, revenue and expenses have all been “severely impacted,” particularly within its senior housing properties and integrated senior health campuses.
Modified funds from operations, or MFFO, equaled $96.7 million for both 2019 and 2020. MFFO for the fourth quarter of 2020 equaled $16.5 million, compared to $24.5 million during the third quarter of 2019.
Funds from operations, or FFO, equaled $95.7 million for the year ended December 31, 2020, compared to $91.2 million for the same period in 2019. FFO for the fourth quarter of 2020 equaled $21.1 million, compared to $28.9 million during the fourth quarter of 2019.
Net income for 2020 was $8.9 million, compared to a net loss of ($852,000) for 2019. Net loss during the fourth quarter of 2020 equaled ($3.5 million), compared to net income of $9.5 million for the same period of 2019.
Net operating income, or NOI, totaled $218.3 million for 2020, compared to $221.4 million for 2019. NOI during the fourth quarter of 2020 totaled $43.5 million, compared to $56.2 million for the same period in 2019.
As of December 31, 2020, the company’s non-RIDEA property portfolio had a leased percentage of 91.9 percent and weighted average remaining lease term of 7.2 years. The senior housing portfolio RIDEA facilities had a leased percentage of 70 percent at the end of 2020, compared to 77.4 percent for the same period of 2019. Occupancy within the REIT’s large integrated senior health campus portfolio declined from 84 percent at year-end 2019 to 66.9 percent, as of December 31, 2020.
The company noted that higher operating costs at these facilities, stemming from the reliance on personal protective equipment and expanded labor costs continuing to negatively impact its overall performance. However, its medical office buildings and other components of the portfolio continue to perform “relatively well,” the company said.
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.