Another Orange County-based real estate investor in medical facilities was able to successfully sell itself to Wall Street.
American Healthcare REIT Inc. ended its first week of trading on Feb. 13 at $13.35 a share, up 11% from its $12 IPO price. At press time, it had a $1.7 billion market cap (NYSE: AHR).
“Now, more than ever, is an exciting time for healthcare real estate,” Chief Executive Danny Prosky said in a Feb. 13 letter to shareholders. “We believe an aging population, along with increasing life expectancy, means that there is a growing need and demand for healthcare services across the country.”
American Healthcare joins other OC-based owners and operators of health industry properties that are publicly traded: San Juan Capistrano-based Ensign Group, which has a $6.7 billion market cap (Nasdaq: ENSG), San Clemente-based CareTrust REIT Inc., which has a $2.5 billion market cap (NYSE: CTRE), and Tustin’s Sabra Health Care REIT Inc.
(Nasdaq: SBRA), which has a $3.1 billion cap (Nasdaq: SBRA). Altogether, these four companies generated about $6.3 billion in revenue in 2023 with control of some 1,180 medical facilities that include almost 100,000 beds.
It’s the second big IPO in the past month for a health industry company headquartered in Irvine. Since CG Oncology Inc. (Nasdaq: CGON), a clinical stage drugmaker, went public on Jan. 25 at $19 a share, its shares have more than doubled to $45 and a $2.9 billion market cap.
Of the 33 OC-based public companies with a market cap topping $1 billion, 16 are in the health industry, led by Edwards Lifesciences Corp., which has a $52 billion market cap (NYSE: EW).
Debt Paydown
American Healthcare owns medical offices, senior housing, skilled nursing facilities, hospitals and other healthcare-related facilities. It has 298 properties in the U.S. and U.K with properties totaling 18.9 million square feet. Its assets total $4.6 billion, making it the ninth-largest public reporting healthcare REIT by total assets. None of its holdings are in Orange County.
The company reported $1.6 billion in revenue for 2022, and $1.3 billion for the nine months ended Sept. 30, 2023.
Like other Orange County healthcare property owners, it’s constantly in the market to buy and sell properties. Currently, it’s under contract to buy a dozen senor housing facilities in Oregon for $94.5 million.
The offering netted $717.6 million, which the company used to reduce debt. Before the offering, the company had about $1.8 billion of debt outstanding.
“We believe that this will strengthen the company’s balance sheet, improve the company’s cost of capital and enhance the company’s performance through internal and strategic external growth,” Prosky said.
