American Healthcare REIT ("AHR") Announces Fourth Quarter 2023 and Full Year 2023 Results; Issues Full Year 2024 Guidance

Rhea-AI Summary

American Healthcare REIT, Inc. (AHR) reported its fourth quarter and full year 2023 results, showcasing a GAAP net loss but positive Normalized Funds from Operations. The company achieved revenue and NOI growth in its portfolio, disposed of non-core properties, completed a successful stock offering, and paid down debt. The CEO highlighted the commitment to stockholder value. The COO emphasized the recovery of the portfolio post-pandemic. The company provided guidance for 2024 and detailed transactional and balance sheet activities.

Positive

• Positive financial results with revenue and NOI growth in the portfolio.
• Successful completion of a stock offering and listing on NYSE under symbol 'AHR'.
• Significant debt repayment and improvement in leverage metrics.
• Strong commitment to stockholder value and optimal portfolio performance.
• Guidance for 2024 includes mid-single-digit NOI growth.
• Transactional activities include acquisitions, lease buyouts, and asset disposals.
• Capital markets activity with swap agreements and public offering.
• Conservative approach to leverage and focus on growth opportunities.
• Regular quarterly cash distribution declared for stockholders.

Negative

• Reported GAAP net loss for the fourth quarter and full year 2023.
• Public offering of 64.4 million shares of common stock leading to dilution for existing shareholders.
• Interest expense savings on an annualized basis may not fully offset debt repayment costs.
• Uncertainty in predicting the impact of non-GAAP measures on reported measures.
• Potential risks associated with maintaining a low net-debt-to-adjusted-EBITDA range.

Insights

Financial Analyst

The financial results of American Healthcare REIT, Inc., particularly the reported GAAP net loss and Normalized Funds from Operations (NFFO), are indicative of the company's operational efficiency and fiscal health. The NFFO, a key metric for REIT investors, reflects the company's ability to generate cash flow from its operations. The reported growth in Same-Store revenue and Net Operating Income (NOI) suggests an upward trajectory in the company's core operations, driven by occupancy gains, which is an encouraging sign for investors. The strategic disposal of Non-Core Properties and the subsequent debt reduction with proceeds from a public offering demonstrate a proactive approach to balance sheet management. This could be perceived positively by the market as it improves the company's leverage metrics, potentially leading to a re-rating of the stock by analysts.

The guidance for 2024, with projected mid-point NAREIT FFO per share and Normalized FFO per share, provides investors with a benchmark for future performance. While these figures show a conservative outlook compared to the actual figures from 2023, they still signal confidence in the company's ability to maintain growth in a challenging healthcare real estate market. The company's capital market activities, including the swap agreement and the public offering, reflect a strategic move to manage interest rate risk and strengthen the balance sheet. The significant interest expense savings anticipated from these activities could enhance the company's profitability and shareholder value in the long term.

Real Estate Investment Trust (REIT) Analyst

From a REIT-specific perspective, American Healthcare REIT's focus on its Integrated Senior Health Campuses (ISHC) and the SHOP (Senior Housing Operating Properties) segment suggests a strategic emphasis on high growth potential areas within the healthcare real estate sector. The reported NOI growth rates, particularly the strong performance in the SHOP and ISHC segments, highlight the company's ability to capitalize on the increasing demand for senior housing and healthcare facilities. This could attract investors who are looking for exposure to a niche within the broader real estate market that has demographic tailwinds.

The company's transactional activity, including acquisitions and disposals, is a critical aspect of its operational strategy. The acquisition of a senior housing portfolio and the management agreement with Compass Senior Living could expand the company's operational footprint and diversify its income streams. The yield on cost for these acquisitions, projected at around 9%, is a significant figure that might catch the eye of investors seeking high-yield opportunities within the REIT sector. Furthermore, the company's reduction in debt and improvement in leverage metrics could lead to increased financial stability and flexibility, which is vital for sustaining growth and weathering potential market downturns.

Market Research Analyst

The healthcare real estate market, in which American Healthcare REIT operates, is influenced by macroeconomic factors such as demographic shifts, healthcare policy changes and economic cycles. The company's performance, particularly its Same-Store revenue growth and NOI improvements, reflects a robust demand for healthcare-related real estate, which is likely to continue given the aging population. The REIT's strategic focus on RIDEA-operated assets and SHOP facilities aligns with the broader industry trend towards more integrated and operationally efficient senior healthcare services.

The listing of the company's common stock on the NYSE is a significant milestone that could enhance liquidity and attract a broader investor base. The entry into a swap agreement to manage interest rate exposure is a prudent step in the current environment of interest rate uncertainty. The company's forward-looking statements regarding occupancy gains and NOI growth in 2024 suggest a positive outlook, but these projections should be weighed against potential market risks, including changes in healthcare legislation, shifts in consumer preferences and broader economic headwinds that could impact the healthcare real estate sector.

IRVINE, Calif., March 21, 2024 /PRNewswire/ -- American Healthcare REIT, Inc. (the "Company") (NYSE: AHR) announced today its fourth quarter and full year 2023 results. Further, the Company reported various subsequent-to-quarter-end items.

Key Highlights:

• Reported GAAP net loss attributable to stockholders of $(0.42) and $(1.08) per basic and diluted share for the three and 12 months ended December 31, 2023.
• Reported Normalized Funds from Operations attributable to stockholders ("NFFO") of $0.38 and $1.40 per basic and diluted share for the three and 12 months ended December 31, 2023, respectively.
• Achieved 5.2% and 7.7% total portfolio Same-Store ("SS") revenue growth for the three and 12 months ended December 31, 2023, respectively, compared to the same periods in 2022 largely driven by occupancy gains in the Company's RIDEA-operated assets.
• Achieved year-over-year total portfolio Same-Store Net Operating Income ("NOI") growth of 8.6%, highlighted by 27.2% and 14.0% Same-Store NOI growth from our SHOP and Integrated Senior Health Campuses ("ISHC"), respectively.
• Disposed of approximately $195 million of Non-Core Properties across the Company's Outpatient Medical and SHOP segments during the 12 months ended December 31, 2023.
• Subsequent to year end, completed a public offering of 64.4 million shares of our common stock priced at $12.00 per share and listed our common stock on the New York Stock Exchange ("NYSE") under the symbol "AHR".
• Subsequent to year end, paid down approximately $721 million of outstanding debt obligations carrying a weighted average interest rate of approximately 7.53% using the net proceeds from the public offering, meaningfully improving leverage metrics and providing the Company with additional capacity and flexibility.

"We are proud of our 2023 operating results and have begun 2024 with a successful common stock offering and the listing of our common stock on the NYSE. As a publicly listed company, we are committed to being responsible stewards of capital for all our stockholders. The entire team at American Healthcare REIT is working diligently to ensure optimal performance across our entire portfolio," said Danny Prosky, American Healthcare REIT's President and CEO.

Fourth Quarter and Full-Year 2023 Results

"Our portfolio continues to recover since the onset of the pandemic, with the trajectory of revenue growth drivers all heading in the right direction. We have continued to see occupancy gains since the end of 2023. Our unique investment in Integrated Senior Health Campuses remains the most attractive part of our portfolio with operating performance metrics such as occupancy already surpassing pre-pandemic levels," said Gabe Willhite, the Company's Chief Operating Officer.

SS NOI Growth Rates: Quarter Ended December 31, 2023 Relative to Quarter Ended December 31, 2022
Metric	4Q 2023 Actual
ISHC Outpatient Medical SHOP Triple-Net Leased Total Portfolio	13.9% 2.3% 44.9% 3.5% 9.5%
SS NOI Growth Rates: Year Ended December 31, 2023 Relative to Year Ended December 31, 2022
Metric	FY 2023 Actual
ISHC Outpatient Medical SHOP Triple-Net Leased Total Portfolio	14.0% 3.2% 27.2% 2.0% 8.6%

Same-Store revenue for our RIDEA-operated assets grew by 6.0% and 8.9% during the three months and year ended December 31, 2023, respectively, compared to the same periods in 2022. Expense growth across our SHOP assets has moderated, partially due to recent operator transitions and normalizing compensation expenses as a result of less agency-labor usage across the portfolio. In aggregate, NOI growth remains well above historical levels across the portfolio, as margin and occupancy continue to recover from pandemic-era troughs.

Full Year 2024 Guidance

The Company has established the following guidance ranges for the year ending December 31, 2024:

	Full Year 2024 Guidance
Metric	FY 2023 Actual	FY 2024 Range	FY 2024 Midpoint
NAREIT FFO per share Normalized FFO per share   Total Portfolio SS NOI Growth:	$0.99 $1.40   8.6%	$1.13 to $1.19 $1.18 to $1.24   5.0% to 7.0%	$1.16 $1.21   6.0%

Certain of the assumptions underlying the Company's 2024 outlook can be found within the Non-GAAP reconciliations in this earnings release and in the appendix of the Company's Fourth Quarter 2023 Supplemental Financial Information ("Supplemental"). A reconciliation of Net Loss calculated in accordance with GAAP to NAREIT FFO and NFFO can be found within the Non-GAAP reconciliations in this earnings release. Non-GAAP financial measures and other terms, as used in this earnings release, are also defined and further explained in the Supplemental. Within this release, we provide certain forward-looking non-GAAP financial information, which management uses for planning and measuring performance. We are not able to reconcile forward-looking non-GAAP measures to reported measures without unreasonable efforts because it is not possible to predict with a reasonable degree of certainty the actual impact or exact timing of items that may impact comparability throughout the year.

"We believe 2024 should be another year of occupancy gains within our SHOP segment that should support NOI growth and margin expansion. Looking at our ISHC segment, we expect occupancy to remain at or above pre-pandemic levels over the course of the year. In aggregate, our guidance estimates another year of mid-single-digit NOI growth across our entire diversified healthcare portfolio," said Prosky.

Transactional Activity

During full year 2023, the Company completed a campus acquisition and three lease buyouts within its ISHC segment for total consideration of approximately $43.9 million, plus closing costs. We expect these acquisitions to generate a yield on cost of approximately 9.0%.

During 2023, the Company sold 16 Non-Core outpatient medical facilities and six Non-Core SHOP facilities generating approximately $195 million in gross proceeds.

Subsequent to quarter end, the Company continued to opportunistically dispose of Non-Core assets, and has sold an outpatient medical building in Marietta, Georgia and a SHOP facility in Menlo Park, California for approximately $11 million in aggregate gross proceeds.

Additionally, as previously announced, on February 1, 2024, the Company closed on the acquisition of a senior housing portfolio in Oregon consisting of 856 beds across 12 facilities. The total consideration consisted of $94.5 million of assumed debt, plus closing costs, reflecting a price per bed of approximately $110,000. The assumed debt has a fixed interest rate of 4.54% and matures on January 1, 2028. The portfolio will be managed by Compass Senior Living through a RIDEA structure. The Company has a longstanding relationship with Compass Senior Living as a tenant in our triple-net leased segment and recognized the strength of the operator through the COVID-19 pandemic. The management agreement will be the Company's first with Compass Senior Living expanding the Company's high-quality operator relationships.

Capital Markets and Balance Sheet Activity

On December 21, 2023, the Company entered into a $200 million swap agreement relating to debt at the ISHC portfolio, swapping SOFR for a fixed rate of 4.40% on its variable-rate debt. This agreement was effective as of January 5, 2024. The Company now carries $750 million of interest rate swap agreements fixing SOFR at a weighted average interest rate of 4.16%.

Subsequent to quarter end, the Company completed a public offering of 64.4 million shares of its common stock, raising gross proceeds of $772.8 million, and listed its common stock on the NYSE under the symbol "AHR".  This represented the largest REIT offering and listing event in the US since 2018[1]. Net offering proceeds were used to pay down approximately $721 million of outstanding debt with a weighted average interest rate of 7.53%. As previously announced, as of February 16, 2024, the Company had $747 million of outstanding balances on its lines of credit and term loan, with a weighted average interest rate of 5.91% (taking into account the effect of swap instruments), and $803 million of undrawn capacity under its lines of credit and term loan. This significant reduction in outstanding debt has resulted in an improvement in the Company's leverage by meaningfully reducing near-term maturities and high-interest floating-rate debt. In aggregate, the pay downs will result in approximately $54 million in interest expense savings on an annualized basis.

"After repaying approximately $721 million of indebtedness with the net proceeds from our January 2024 public equity offering, we estimate that we will be in the low 6x net-debt-to-adjusted-EBITDA range at March 31, 2024. As we look ahead, we will maintain a conservative approach to leverage, while being selective regarding external growth opportunities. The offering and debt repayment were transformative for our capital structure, and we believe that the embedded growth within our SHOP and ISHC segments will allow our leverage profile to continue to improve," said Brian Peay, the Company's Chief Financial Officer.

Distribution

As previously announced, the Company's Board of Directors declared a regular quarterly cash distribution for the quarter ending March 31, 2024 of $0.25 per share of its common stock, Class T common stock and Class I common stock. The distribution is payable on or about April 19, 2024 to stockholders of record as of the close of business on March 28, 2024.

Supplemental Information

The Company has disclosed supplemental information regarding its portfolio, financial position and results of operations as of December 31, 2023 and for the quarter and year then ended, and certain other information, which is available on the Company's website at https://ir.americanhealthcarereit.com.

Conference Call and Webcast Information

The Company will host a webcast and conference call at 1:00 p.m. Eastern Time on March 22, 2023. During the conference call, Company executives will review fourth quarter and full year 2023 results, discuss recent events, and conduct a question-and-answer period.

To join via webcast, investors may use the following link: https://events.q4inc.com/attendee/923600160.  

Alternatively, to join via telephone, please pre-register at the following link using the Conference ID 66737.

A digital replay of the call will be available on our website at https://ir.americanhealthcarereit.com shortly after the conclusion of the call.

Forward-Looking Statements

Certain statements contained in this press release, including statements relating to the Company's expectations regarding its portfolio growth, interest expense savings, balance sheet, net income or loss per share, FFO per share, NFFO per share, total portfolio Same-Store NOI growth, occupancy, NOI growth, revenue growth and margin expansion may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in those acts. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "can," "expect," "intend," "anticipate," "estimate," "believe," "continue," "possible," "initiatives," "focus," "seek," "objective," "goal," "strategy," "plan," "potential," "potentially," "preparing," "projected," "future," "long-term," "once," "should," "could," "would," "might," "uncertainty," or other similar words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Any such forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which the Company operates, and beliefs of, and assumptions made by, the Company's management and involve known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied therein, including, without limitation, risks disclosed in the Company's periodic reports filed with the Securities and Exchange Commission. Except as required by law, the Company does not undertake any obligation to update or revise any forward-looking statements contained in this release.

About American Healthcare REIT, Inc.

American Healthcare REIT, Inc. is a self-managed real estate investment trust that acquires, owns and operates a diversified portfolio of clinical healthcare real estate properties, focusing primarily on outpatient medical buildings, senior housing, skilled nursing facilities and other healthcare-related facilities. Its properties are located in 36 states, the United Kingdom and the Isle of Man. For additional information, please visit www.AmericanHealthcareREIT.com.

1Per NAREIT based on data available since 2000, which can be found at: https://www.reit.com/data-research/reit-market-data/reit-capital-offerings

 

AMERICAN HEALTHCARE REIT, INC. CONSOLIDATED BALANCE SHEETS As of December 31, 2023 and 2022 (In thousands, except share and per share amounts) (Unaudited)
	December 31,
	2023		2022
ASSETS
Real estate investments, net	$          3,425,438		$          3,581,609
Debt security investment, net	86,935		83,000
Cash and cash equivalents	43,445		65,052
Restricted cash	47,337		46,854
Accounts and other receivables, net	185,379		137,501
Identified intangible assets, net	180,470		236,283
Goodwill	234,942		231,611
Operating lease right-of-use assets, net	227,846		276,342
Other assets, net	146,141		128,446
Total assets	$          4,577,933		$          4,786,698
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgage loans payable, net	$          1,302,396		$          1,229,847
Lines of credit and term loan, net	1,223,967		1,281,794
Accounts payable and accrued liabilities	242,905		243,831
Identified intangible liabilities, net	6,095		10,837
Financing obligations	41,756		48,406
Operating lease liabilities	225,502		273,075
Security deposits, prepaid rent and other liabilities	76,134		49,545
Total liabilities	3,118,755		3,137,335
Redeemable noncontrolling interests	33,843		81,598
Equity:
Stockholders' equity:
Preferred stock, $0.01 par value per share; 200,000,000 shares authorized; none      issued and outstanding	—		—
Class T common stock, $0.01 par value per share; 200,000,000 shares authorized;      19,552,856 and 19,535,095 shares issued and outstanding as of December 31,      2023 and 2022, respectively	194		194
Class I common stock, $0.01 par value per share; 800,000,000 shares authorized;      46,673,320 and 46,675,367 shares issued and outstanding as of December 31,      2023 and 2022, respectively	467		467
Additional paid-in capital	2,548,307		2,540,424
Accumulated deficit	(1,276,222)		(1,138,304)
Accumulated other comprehensive loss	(2,425)		(2,690)
Total stockholders' equity	1,270,321		1,400,091
Noncontrolling interests	155,014		167,674
Total equity	1,425,335		1,567,765
Total liabilities, redeemable noncontrolling interests and equity	$          4,577,933		$          4,786,698

 

AMERICAN HEALTHCARE REIT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS For the Years Ended December 31, 2023, 2022 and 2021 (In thousands, except share and per share amounts) (Unaudited)
	Years Ended December 31,
	2023		2022		2021
Revenues and grant income:
Resident fees and services	$             1,668,742		$             1,412,156		$             1,123,935
Real estate revenue	190,401		205,344		141,368
Grant income	7,475		25,675		16,951
Total revenues and grant income	1,866,618		1,643,175		1,282,254
Expenses:
Property operating expenses	1,502,310		1,281,526		1,030,193
Rental expenses	57,475		59,684		38,725
General and administrative	47,510		43,418		43,199
Business acquisition expenses	5,795		4,388		13,022
Depreciation and amortization	182,604		167,957		133,191
Total expenses	1,795,694		1,556,973		1,258,330
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs,      debt discount/premium and loss on debt extinguishments)	(163,191)		(105,956)		(80,937)
(Loss) gain in fair value of derivative financial instruments	(926)		500		8,200
Gain (loss) on dispositions of real estate investments, net	32,472		5,481		(100)
Impairment of real estate investments	(13,899)		(54,579)		(3,335)
Impairment of intangible assets and goodwill	(10,520)		(23,277)		—
(Loss) income from unconsolidated entities	(1,718)		1,407		(1,355)
Gain on re-measurement of previously held equity interests	726		19,567		—
Foreign currency gain (loss)	2,307		(5,206)		(564)
Other income	7,601		3,064		1,854
Total net other expense	(147,148)		(158,999)		(76,237)
Loss before income taxes	(76,224)		(72,797)		(52,313)
Income tax expense	(663)		(586)		(956)
Net loss	(76,887)		(73,383)		(53,269)
Net loss (income) attributable to noncontrolling interests	5,418		(7,919)		5,475
Net loss attributable to controlling interest	$                (71,469)		$                (81,302)		$                (47,794)
Net loss per Class T and Class I common share attributable to controlling       interest — basic and diluted	$                    (1.08)		$                    (1.24)		$                    (0.95)
Weighted average number of Class T and Class I common shares outstanding      — basic and diluted	66,047,114		65,807,868		50,081,140
Net loss	$                (76,887)		$                (73,383)		$                (53,269)
Other comprehensive income (loss):
Foreign currency translation adjustments	265		(724)		(65)
Total other comprehensive income (loss)	265		(724)		(65)
Comprehensive loss	(76,622)		(74,107)		(53,334)
Comprehensive loss (income) attributable to noncontrolling interests	5,418		(7,919)		5,582
Comprehensive loss attributable to controlling interest	$                (71,204)		$                (82,026)		$                (47,752)

 

AMERICAN HEALTHCARE REIT, INC. FFO and Normalized FFO Reconciliation For the Years Ended December 31, 2023, 2022 and 2021 (In thousands, except share and per share amounts) (Unaudited)
	Years Ended December 31,
	2023		2022		2021
Net loss	$           (76,887)		$           (73,383)		$           (53,269)
Depreciation and amortization related to real estate — consolidated properties	182,452		167,860		133,191
Depreciation and amortization related to real estate — unconsolidated entities	401		1,102		3,116
Impairment of real estate investments — consolidated properties	13,899		54,579		3,335
(Gain) loss on dispositions of real estate investments, net — consolidated properties	(32,472)		(5,481)		100
Net loss (income) attributable to noncontrolling interests	5,418		(7,919)		5,475
Gain on re-measurement of previously held equity interests	(726)		(19,567)		—
Depreciation, amortization, impairments, net gain/loss on dispositions and gain on      re-measurements — noncontrolling interests	(26,518)		(22,614)		(22,270)
NAREIT FFO attributable to controlling interest	$             65,567		$             94,577		$             69,678
Business acquisition expenses	$               5,795		$               4,388		$             13,022
Amortization of above- and below-market leases	9,744		2,596		953
Amortization of closing costs — debt security investments	278		237		201
Change in deferred rent	1,149		(3,355)		(20)
Non-cash impact of changes to equity instruments	5,621		3,909		1,008
Capitalized interest	(163)		(150)		(628)
Loss on debt extinguishments	345		5,166		2,655
Loss (gain) in fair value of derivative financial instruments	926		(500)		(8,200)
Foreign currency (gain) loss	(2,307)		5,206		564
Impairment of intangible assets and goodwill	10,520		23,277		—
Adjustments for unconsolidated entities	(321)		113		573
Adjustments for noncontrolling interests	(4,786)		(3,530)		(1,653)
Normalized FFO attributable to controlling interest	$             92,368		$           131,934		$             78,153
Weighted average Class T and Class I common shares outstanding — basic and       diluted	66,047,114		65,807,868		50,081,140
Net loss per Class T and Class I common share attributable to controlling interest      — basic and diluted	$               (1.08)		$               (1.24)		$               (0.95)
NAREIT FFO per Class T and Class I common share attributable to controlling interest      — basic and diluted	$                 0.99		$                 1.44		$                 1.39
Normalized FFO per Class T and Class I common share attributable to controlling      interest — basic and diluted	$                 1.40		$                 2.00		$                 1.56

 

AMERICAN HEALTHCARE REIT, INC. FFO and Normalized FFO Reconciliation For the Three Months Ended December 31, 2023 and 2022 (In thousands, except share and per share amounts) (Unaudited)
	Three Months Ended December 31,
	2023		2022
Net loss	$              (30,959)		$              (49,300)
Depreciation and amortization related to real estate — consolidated properties	43,922		45,220
Depreciation and amortization related to real estate — unconsolidated entities	147		59
Impairment of real estate investments — consolidated properties	1,389		15,388
Gain on dispositions of real estate investments, net — consolidated properties	(2,695)		(2,685)
Net loss attributable to noncontrolling interests	3,534		1,769
Depreciation, amortization, impairments, net gain on dispositions — noncontrolling interests	(6,846)		(7,704)
NAREIT FFO attributable to controlling interest	$                   8,492		$                   2,747
Business acquisition expenses	$                   3,551		$                   2,227
Amortization of above- and below-market leases	(2,489)		692
Amortization of closing costs – debt security investments	74		63
Change in deferred rent	(89)		(22)
Non-cash impact of changes to equity instruments	1,377		1,250
Capitalized interest	(36)		(28)
Loss on debt extinguishments	—		128
Loss in fair value of derivative financial instruments	9,126		—
Foreign currency gain	(1,935)		(3,483)
Impairment of intangible assets and goodwill	10,520		23,277
Adjustments for unconsolidated entities	38		(49)
Adjustments for noncontrolling interests	(3,810)		(1,452)
Normalized FFO attributable to controlling interest	$                 24,819		$                 25,350
Weighted average Class T and Class I common shares outstanding — basic and diluted	66,079,343		66,023,570
Net loss per Class T and Class I common share attributable to controlling interest — basic and diluted	$                  (0.42)		$                  (0.72)
NAREIT FFO per Class T and Class I common share attributable to controlling interest — basic and diluted	$                     0.13		$                     0.04
Normalized FFO per Class T and Class I common share attributable to controlling interest — basic and diluted	$                     0.38		$                     0.38

 

AMERICAN HEALTHCARE REIT, INC. Cash NOI Reconciliation For the Three Months Ended and Years Ended December 31, 2023 and 2022 (In thousands) (Unaudited)
	Three Months Ended December 31,				Year Ended December 31,
	2023		2022		2023		2022
Net loss	$            (30,959)		$            (49,300)		$            (76,887)		$            (73,383)
General and administrative	11,341		11,745		47,510		43,418
Business acquisition expenses	3,551		2,227		5,795		4,388
Depreciation and amortization	43,960		45,253		182,604		167,957
Interest expense	41,185		34,762		163,191		105,956
Loss (gain) in fair value of derivative financial instrument	9,126		—		926		(500)
Gain on dispositions of real estate investments	(2,695)		(2,685)		(32,472)		(5,481)
Impairment of real estate investments	1,389		15,388		13,899		54,579
Impairment of intangible assets and goodwill	10,520		23,277		10,520		23,277
Loss (income) from unconsolidated entities	794		273		1,718		(1,407)
Gain on re-measurement of previously held equity interest	—		—		(726)		(19,567)
Foreign currency (gain) loss	(1,935)		(3,483)		(2,307)		5,206
Other income	(1,649)		(665)		(7,601)		(3,064)
Income tax (benefit) expense	(112)		87		663		586
Total NOI	$              84,516		$              76,879		$            306,833		$            301,965
Grant Income	(30)		(2,959)		(7,475)		(25,675)
Total NOI (excluding Grant Income)	$              84,486		$              73,920		$            299,358		$            276,290
Straight line rent	(584)		(1,110)		(3,481)		(6,522)
Facility rental expense	8,774		9,248		37,025		25,155
Other non-cash adjustments	(2,397)		714		9,946		3,052
COVID subsidy	—		—		(171)		—
Consolidated Cash NOI	$              90,279		$              82,772		$            342,677		$            297,975
Cash NOI attributable to noncontrolling interests (1)	(13,439)		(11,804)		(48,724)		(39,084)
Pro-Rata Cash NOI	$              76,840		$              70,968		$            293,953		$            258,891

(1)	All quarters are based upon current quarter's ownership percentage.

 

AMERICAN HEALTHCARE REIT, INC. Same-Store NOI Reconciliation For the Three Months Ended and Years Ended December 31, 2023 and 2022 (In thousands) (Unaudited)
	Three Months Ended December 31,				Year Ended December 31,
	2023		2022		2023		2022
ISHC
Cash NOI	$            37,431		$            32,859		$          135,598		$          108,376
New acquisitions/dispositions/transitions	(12,385)		(10,872)		(46,204)		(29,943)
Same-Store NOI	$            25,046		$            21,987		$            89,394		$            78,433
Outpatient Medical
Cash NOI	$            20,813		$            22,558		$            87,993		$            89,807
New acquisitions/dispositions/transitions	(1)		(2,205)		(4,643)		(9,028)
Other normalizing adjustments	—		—		—		(39)
Same-Store NOI	$            20,812		$            20,353		$            83,350		$            80,740
SHOP
Cash NOI	$              6,461		$              2,684		$            20,045		$              9,358
New acquisitions/dispositions/transitions	(2,336)		184		(3,793)		3,760
Non-Core Properties	115		176		242		831
Other normalizing adjustments	171		—		758		(387)
Same-Store NOI	$              4,411		$              3,044		$            17,252		$            13,562
Triple-Net Leased Properties
Cash NOI	$            12,135		$            12,867		$            50,317		$            51,350
Debt security investment	(2,011)		(1,944)		(8,040)		(7,818)
New acquisitions/dispositions/transitions	(545)		(1,668)		(4,541)		(6,542)
Same-Store NOI	$              9,579		$              9,255		$            37,736		$            36,990
Total
Cash NOI	$            76,840		$            70,968		$          293,953		$          258,891
Debt security investment	(2,011)		(1,944)		(8,040)		(7,818)
New acquisitions/dispositions/transitions	(15,267)		(14,561)		(59,181)		(41,753)
Non-Core Properties	115		176		242		831
New acquisitions/dispositions/transitions	171		—		758		(426)
Same-Store NOI	$            59,848		$            54,639		$          227,732		$          209,725

 

AMERICAN HEALTHCARE REIT, INC. Same-Store Revenue Reconciliation For the Three Months Ended and Years Ended December 31, 2023 and 2022 (In thousands) (Unaudited)
	Three Months Ended December 31,				Year Ended December 31,
	2023		2022		2023		2022
ISHC
GAAP revenue and Grant Income	$           384,993		$           360,279		$        1,489,355		$        1,279,485
Grant Income	(30)		(2,959)		(7,475)		(24,820)
Cash revenue attributable to noncontrolling interest (1)	(99,846)		(92,675)		(384,347)		(325,416)
Cash revenue	285,117		264,645		1,097,533		929,249
Revenue attributable to non-Same-Store properties	(135,193)		(123,135)		(516,746)		(400,298)
Same-Store revenue	$           149,924		$           141,510		$           580,787		$           528,951
Outpatient Medical
GAAP revenue	$             36,257		$             36,919		$           146,068		$           148,717
Straight line rent	(291)		(382)		(1,320)		(3,292)
Other non-cash adjustments	(2,995)		(113)		(3,349)		(469)
Cash revenue attributable to noncontrolling interest (1)	(156)		(139)		(592)		(535)
Cash revenue	32,815		36,285		140,807		144,421
Revenue attributable to non-Same-Store properties	(32)		(3,914)		(8,201)		(15,886)
Other normalizing revenue adjustments	—		—		—		(104)
Same-Store revenue	$             32,783		$             32,371		$           132,606		$           128,431
SHOP
GAAP revenue and Grant Income	$             48,321		$             41,331		$           186,862		$           158,346
Grant Income	—		—		—		(855)
Cash revenue attributable to noncontrolling interest (1)	(271)		(409)		(1,287)		(1,612)
Cash revenue	48,050		40,922		185,575		155,879
Revenue attributable to non-Same-Store properties	(14,059)		(9,212)		(53,624)		(30,983)
Revenue attributable to Non-Core Properties	(539)		(285)		(1,923)		(934)
Other normalizing revenue adjustments	—		—		(30)		66
Same-Store revenue	$             33,452		$             31,425		$           129,998		$           124,028
Triple-Net Leased Properties
GAAP revenue	$             13,010		$             14,054		$             44,333		$             56,627
Straight line rent	(293)		(728)		(2,161)		(3,230)
Other non-cash adjustments	206		460		11,833		1,820
Cash revenue attributable to noncontrolling interest (1)	(186)		(181)		(738)		(720)
Cash revenue	12,737		13,605		53,267		54,497
Debt security investment	(2,011)		(1,944)		(8,040)		(7,818)
Revenue attributable to non-Same-Store properties	(572)		(1,891)		(5,113)		(7,251)
Other normalizing revenue adjustments	—		—		—		(178)
Same-Store revenue	$             10,154		$               9,770		$             40,114		$             39,250

 

AMERICAN HEALTHCARE REIT, INC. Same-Store Revenue Reconciliation For the Three Months Ended and Years Ended December 31, 2023 and 2022 (In thousands) (Unaudited)
	Three Months Ended December 31,				Year Ended December 31,
	2023		2022		2023		2022
Total
GAAP revenue and Grant Income	$           482,581		$           452,583		$        1,866,618		$        1,643,175
Straight line rent	(584)		(1,110)		(3,481)		(6,522)
Other non-cash adjustments	(2,789)		347		8,484		1,351
Grant Income	(30)		(2,959)		(7,475)		(25,675)
Cash revenue attributable to noncontrolling interest (1)	(100,459)		(93,404)		(386,964)		(328,283)
Cash revenue	378,719		355,457		1,477,182		1,284,046
Debt security investment	(2,011)		(1,944)		(8,040)		(7,818)
Revenue attributable to non-Same-Store properties	(149,856)		(138,152)		(583,684)		(454,418)
Revenue attributable to Non-Core Properties	(539)		(285)		(1,923)		(934)
Other normalizing revenue adjustments	—		—		(30)		(216)
Same-Store revenue	$           226,313		$           215,076		$           883,505		$           820,660

(1)	All quarters are based upon current quarter's ownership percentage.

 

AMERICAN HEALTHCARE REIT, INC. Earnings Outlook Reconciliation For the Year Ending December 31, 2024 (In millions, except per share amounts) (Unaudited)
	Low		High
Net (loss) income attributable to common stockholders	$        (4.15)		$             3.19
Depreciation and amortization(1)	147.26		147.26
NAREIT FFO attributable to common stockholders	$      143.11		$        150.45
Amortization other intangible assets(1)	$          1.66		$            1.66
Change in deferred rent(1)	(0.42)		(0.42)
Non-cash impact of changes to equity plan(1)	6.04		6.04
Other adjustments	(0.80)		(0.80)
Normalized FFO attributable to common stockholders	$      149.58		$        156.92
NAREIT FFO per common share	$          1.13		$            1.19
Normalized FFO per common share	$          1.18		$            1.24
Total Portfolio Same-Store NOI growth	5.00 %		7.00 %

(1)	Amounts presented net of noncontrolling interests' share and AHR's share of unconsolidated entities.
	The Company does not provide guidance for the most comparable GAAP financial measures of total revenues and property operating and maintenance expenses. Additionally, a reconciliation of the forward-looking non-GAAP financial measures of Same-Store NOI growth to the comparable GAAP financial measures cannot be provided without unreasonable effort because the Company is unable to reasonably predict certain items contained in the GAAP measures, including non-recurring and infrequent items that are not indicative of the Company's ongoing operations. Such items include, but are not limited to, impairment on depreciated real estate assets, net (gain)/loss on sale of previously depreciated real estate assets, stock-based compensation, casualty loss, non-Same-Store revenues, and non-Same-Store operating expenses. These items are uncertain, depend on various factors, and could have a material impact on the Company's GAAP results for the guidance period.

Definitions

Adjusted EBITDA: Adjusted EBITDA is defined as EBITDA excluding the impact of stock-based compensation expense, acquisition and pursuit costs, gain (loss) on sales of real estate, unrealized foreign currency gain (loss), change in fair value of financial instruments, impairment of real estate assets, lease termination revenue, non-recurring items, and adjusted for non-controlling interest.
Affiliated: means an OM (as defined on the next page) that, as of a specified date, has 25.0% or more of its square footage occupied by at least one healthcare system.
AL: refers to assisted living units.
Annualized Adjusted EBITDA: current period (shown as quarterly) EBITDA multiplied by 4.
Annualized Base Rent or ABR: contractual base rent for the last month of the applicable period multiplied by 12.
Cash NOI: Cash NOI is defined as NOI but excluding the impact of, without duplication, (1) non-cash items such as straight-line rent and the amortization of lease intangibles, (2) third party facility rent payments and (3) other items set forth in the Cash NOI reconciliation included herein. Both Cash NOI and Same-Store NOI include ownership and other adjustments.
EBITDA: EBITDA is a non-GAAP financial measure that is defined as earnings before interest, taxes, depreciation, and amortization.
EBITDAR: Earnings before interest, taxes, depreciation, amortization and facilities rent. We use unaudited, periodic financial information provided solely by tenants to calculate EBITDAR and have not independently verified the information.
EBITDAR Coverage: represents the ratio of EBITDAR to contractual rent for leases or interest and principal payments for loans. EBITDAR Coverage is a measure of a property's ability to generate sufficient cash flows for the operator/borrower to pay rent and meet other obligations.
EBITDARM: Earnings before interest, taxes, depreciation, amortization, rent and management fees. We use unaudited, periodic financial information provided solely by tenants to calculate EBITDARM and have not independently verified the information.
EBITDARM Coverage: represents the ratio of EBITDARM to contractual rent for leases or interest and principal payments for loans. EBITDARM coverage is a measure of a property's ability to generate sufficient cash flows for the operator/borrower to pay rent and meet other obligations, assuming that management fees are not paid.
GAAP revenue: revenue recognized in accordance with Generally Accepted Accounting Principles ("GAAP"), which includes straight line rent and other non-cash adjustments.
GLA: gross leasable area.
Grant Income: stimulus funds granted to us through various federal and state government programs, such as the CARES Act, established for eligible healthcare providers to preserve liquidity in response to lost revenues and/or increased healthcare expenses associated with the COVID-19 pandemic; such grants are not loans and, as such, are not required to be repaid, subject to certain conditions.
Hospital: hospital properties typically will include acute care, long term acute care, specialty and rehabilitation hospitals and generally will be leased to single tenants or operators under triple-net lease structures.
IL: refers to independent living units.
Integrated senior health campuses or ISHC: Integrated senior health campuses include a range of senior care, including independent living, assisted living, memory care, skilled nursing services, and certain ancillary businesses. Integrated Senior Health Campuses are predominantly operated utilizing a RIDEA structure.
Maintenance Capex: AHR-invested capital expenditures, whether routine or non-routine (including second generation tenant incentives and leasing commissions), that extend the useful life of a property but are not expected to generate incremental income for the Company.
MC: refers to memory-care units.
NAREIT FFO or FFO: funds from operations attributable to controlling interest is a non-GAAP financial measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT (the "White Paper"). The White Paper defines FFO as net income (loss) computed in accordance with GAAP, excluding gains or losses from sales of certain real estate assets, gains or losses upon consolidation of a previously held equity interest, and impairment write downs of certain real estate assets and investments, plus depreciation and amortization related to real estate, and after adjustments for unconsolidated partnerships and joint ventures. While impairment charges are excluded from the calculation of FFO as described above, investors are cautioned that impairments are based on estimated future undiscounted cash flows. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO.
NAV: Net asset value.
Net Debt: Total long-term debt, excluding operating lease liabilities, less cash and cash equivalents and restricted cash pertaining to debt.
NOI: Net operating income is a non-GAAP financial measure that is defined as net income (loss), computed in accordance with GAAP, generated from properties before general and administrative expenses, business acquisition expenses, depreciation and amortization, interest expense, gain or loss on dispositions, impairment of real estate investments, impairment of goodwill, income or loss from unconsolidated entities, gain on re-measurement of previously held equity interest, foreign currency gain or loss, other income, and income tax benefit or expense.
Non-Core Properties: assets that have been deemed not essential to generating future economic benefit or values to our day-to-day operations and/or are scheduled for closure or to be sold.
Normalized FFO attributable to controlling interest or NFFO: Normalized FFO attributable to controlling interest is defined as FFO further adjusted for the following items included in the determination of GAAP net income (loss): expensed acquisition fees and costs, which we refer to as business acquisition expenses; amounts relating to changes in deferred rent and amortization of above and below-market leases (which are adjusted in order to reflect such payments from a GAAP accrual basis); the non-cash impact of changes to our equity instruments; non-cash or non-recurring income or expense; the noncash effect of income tax benefits or expenses; capitalized interest; impairment of goodwill; amortization of closing costs on debt investments; mark-to-market adjustments included in net income (loss); gains or losses included in net income (loss) from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan; and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect Normalized FFO on the same basis.
Occupancy: OM occupancy represents the percentage of total rentable square feet leased and occupied, including month-to-month leases, as of the date reported. Occupancy for all other property types represents average quarterly operating occupancy based on the most recent quarter of available data. The company uses unaudited, periodic financial information provided solely by tenants to calculate occupancy and has not independently verified the information. Occupancy metrics are reflected at our pro rata share.
OM: Outpatient Medical Buildings.
OP unit: units of limited partnership interest in the Operating Partnership, which are redeemable for cash or, at our election, shares of our common stock on a one-for-one basis, subject to certain adjustments.
Operating Partnership: means American Healthcare REIT Holdings, LP, a Delaware limited partnership, through which we conduct substantially all of our business and of which Continental Merger Sub, LLC, a Delaware limited liability company and our wholly-owned subsidiary, is the sole general partner.
Pro-Rata: As of December 31, 2023, we owned and/or operated our 125 integrated senior health campuses through entities of which we owned 74.1% of the ownership interests and 10 other buildings through entities of which we owned 86.0% to 98.0% of the ownership interests. Because we have a controlling interest in these entities, these entities and the properties these entities own are consolidated in our financial statements in accordance with GAAP. However, while such properties are presented in our financial statements on a consolidated basis, we are only entitled to our pro rata share of the net cash flows generated by such properties. As a result, we have presented certain property information in this supplemental presentation based on our pro rata ownership interest as of the applicable date in properties included in these entities and not on a consolidated basis. In such instances, information is noted as being presented on a "pro-rata share" basis.
RevPOR: Revenue per occupied room. RevPOR is calculated as total revenue generated by occupied rooms divided by the number of occupied rooms.
RIDEA: used to describe properties within the portfolio that utilize the RIDEA structure as described in "RIDEA structure".
RIDEA structure: a structure permitted by the REIT Investment Diversification and Empowerment Act of 2007, pursuant to which we lease certain healthcare real estate properties to a wholly-owned taxable REIT subsidiary (TRS), which in turn contracts with an eligible independent contractor (EIK) to operate such properties for a fee. Under this structure, the EIK receives management fees, and the TRS receives revenue from the operation of the healthcare real estate properties and retains, as profit, any revenue remaining after payment of expenses (including intercompany rent paid to us and any taxes at the TRS level) necessary to operate the property. Through the RIDEA structure, in addition to receiving rental revenue from the TRS, we retain any after-tax profit from the operation of the healthcare real estate properties and benefit from any improved operational performance while bearing the risk of any decline in operating performance at the properties.
Same-Store or SS: Properties owned and consolidated the full period in both comparison periods and that are not otherwise excluded. Properties are excluded from same-store if they are: (1) sold, classified as held for sale or properties whose operations were classified as discontinued operations in accordance with GAAP; (2) impacted by materially disruptive events such as flood or fire for an extensive period of time; or (3) and properties that are scheduled to undergo major expansions/renovation, business model transitions, or have transitioned business models after the start of the prior comparison period.
Same-Store NOI or SS NOI: is defined as Cash NOI for our Same-Store properties. Same-Store NOI is used to evaluate the operating performance of our properties using a consistent population which controls for changes in the composition of our portfolio. Both Cash NOI and Same-Store NOI include ownership and other adjustments.
Senior Housing-Leased: Senior housing facilities cater to different segments of the elderly population based upon their personal needs, and include assisted living, memory care, and independent living. Residents of assisted living facilities typically require limited medical care and need assistance with eating, bathing, dressing, and/or medication management and those services can be provided by staff at the facility. Resident programs offered at such facilities may include transportation, social activities, and exercise and fitness programs. Our Senior Housing-Leased properties are triple-net leased.
SHOP: senior housing operating properties.
SNFs: skilled nursing facilities.
SOFR: The Secured Overnight Financing Rate (SOFR) is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities. SOFR as it relates to the Company is used as the benchmark rate for its floating-rate debt obligations. 
Square Feet or Sq. Ft.: Net rentable square feet calculated utilizing Building Owners and Managers Association measurement standards.
Total Debt: The principal balances of the Company's revolving credit facility, term loans, and secured indebtedness as reported in the Company's consolidated financial statements.
Trilogy: Trilogy Investors, LLC, one of our consolidated joint ventures, in which we indirectly owned a 74.1% interest as of December 31, 2023.
Triple-net leased: a lease where the tenant is responsible for making rent payments, maintaining the leased property and paying property taxes and other expenses.
Yield on cost: annualized in-place Cash NOI or EBITDAR divided by the aggregate investment cost and any debt being assumed.

Contact: Alan Peterson
Email: investorrelations@ahcreit.com

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SOURCE American Healthcare REIT, Inc.

FAQ

What were the GAAP net loss figures reported by American Healthcare REIT, Inc. (AHR) for the three and 12 months ended December 31, 2023?

The Company reported a GAAP net loss attributable to stockholders of $(0.42) and $(1.08) per basic and diluted share for the three and 12 months ended December 31, 2023.

What was the price per share in the public offering of 64.4 million shares of common stock by American Healthcare REIT, Inc. (AHR)?

The public offering of 64.4 million shares of common stock was priced at $12.00 per share.

What was the total consideration for the campus acquisition and three lease buyouts within the ISHC segment of American Healthcare REIT, Inc. (AHR) during 2023?

The total consideration for the campus acquisition and three lease buyouts within the ISHC segment during 2023 was approximately $43.9 million, plus closing costs.

What was the fixed interest rate on the assumed debt for the senior housing portfolio acquisition by American Healthcare REIT, Inc. (AHR) in Oregon?

The assumed debt for the senior housing portfolio acquisition in Oregon had a fixed interest rate of 4.54% and matures on January 1, 2028.

What was the net offering proceeds used for by American Healthcare REIT, Inc. (AHR) after the public offering of 64.4 million shares of common stock?

The net offering proceeds were used to pay down approximately $721 million of outstanding debt obligations with a weighted average interest rate of 7.53%.