Griffin-American Healthcare REIT III Reports Second Quarter 2021 Results

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 released its second quarter 2021 financial results.

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 released its second quarter 2021 financial results.

As of June 30, 2021, the company’s non-RIDEA property portfolio had a leased percentage of 92 percent, compared to 91.7 percent the previous quarter, and weighted average remaining lease term of 6.9 years. The senior housing portfolio RIDEA facilities had a leased percentage of 73.9 percent, compared to 70.3 percent in the previous quarter. Occupancy within the REIT’s integrated senior health campus portfolio was 77.4 percent up from 70.7 percent the previous quarter. Portfolio leverage was 47.2 percent.

Modified funds from operations, or MFFO, equaled $18.7 million for the second quarter of 2021, a year-over-year decline of 48.7 percent compared to $36.5 million for the same period last year. MFFO for the first quarter of 2021 equaled $10.5 million.

The company noted the year-over-year change in MFFO was largely due to the economic impact of the COVID-19 pandemic, particularly on the integrated senior health segment, which continued to experience increased operational costs tied to the pandemic.

Funds from operations, or FFO, equaled $17.9 million for the second quarter of 2021, compared to $37.4 million for the same period last year, a decline of 52.1 percent. FFO for the first quarter of 2021 equaled $10.3 million.

The year-over-year FFO decline was the result of decreased revenues and increased operational expenses tied to the pandemic, the company said. This was offset by fluctuations in the fair market value of its interest rate swaps and foreign exchange rates.

Net loss during the second quarter of 2021 was $8 million, compared to net income of $20.8 million for the second quarter of 2020. Net loss during the first quarter of 2021 was $16.3 million.

Net operating income, or NOI, totaled $49.5 million for the second quarter of 2021, a decline of 31.6 percent compared to $72.4 million for the same period last year. NOI totaled $38.1 million for the first quarter of 2021.

As previously reported, the REIT reinstated distributions for June 2021 at an annualized rate of $0.20 per share, to be paid in cash in July 2021. 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.

Griffin-American Healthcare REIT III agreed to merge with Griffin-American Healthcare REIT IV in a stock-for-stock transaction to create a combined company with approximately $4.2 billion in healthcare real estate assets. The combined company will be renamed American Healthcare REIT, and the merger is expected to close in October 2021 and list on a national stock exchange in 2022.

In light of the proposed merger, the board has authorized a distribution to shareholders of record as of the close of business on September 17, 2021 to be paid around September 20th.

In a letter to shareholders, Danny Prosky, president and chief operating officer, said, “Our medical office buildings continued to perform well during the second quarter with impressive tenant retention. We have also experienced a significant recovery in occupancy within our ‘senior housing – managed,’ or RIDEA, and sizable ‘integrated senior health campuses’ portfolios, although these components of our portfolio will take some time before their occupancy levels and financial performance recover to pre-pandemic levels.”

“We remain optimistic and confident in our recovery from the worst of the pandemic, but continue to closely monitor the assorted variants of COVID-19 that have emerged in recent months and their potential impact on our operations as the national effort to expand the vaccination rate and develop effective medical treatments continues,” added Prosky.

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 is comprised of 220 properties purchased for $3.3 billion.

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