American Healthcare REIT Inc., a healthcare-focused real estate investment trust, says its first six months as a publicly traded company have gone well.
โOur first year as a listed company is off to a great start,โ Chief Executive Danny Prosky said in a statement. โDemand for healthcare real estate is evident in our portfolio performance.โ
Since going public at $12 a share in February, itโs risen 38% to $16.57 and a $2.2 billion market cap (NYSE: AHR). The increase includes a 6.4% rise on Aug. 6 after reporting second-quarter results that topped analystsโ expectations.
Several healthcare-focused REITs based in Orange County are doing well this year, rising anywhere from 20% to 30%. Itโs a significant change from four years ago when these companies, particularly those with nursing homes, were hit hard by the pandemic. By contrast, the S&P 500 Healthcare Index is up 9.3% year to date.
San Juan Capistrano-based Ensign Group now has an $8 billion market cap (Nasdaq: ENSG); San Clemente-based CareTrust REIT Inc. is up to a $4.3 billion market cap (NYSE: CTRE) and Tustinโs Sabra Health Care REIT Inc. has climbed to a $3.9 billion cap (Nasdaq: SBRA).
Altogether, these four OC-based companies generated about $6.3 billion in revenue in 2023, with control of some 1,180 medical facilities that include almost 100,000 beds.
19.45M-SF
American Healthcare REIT 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 inย the United States, the United Kingdom and the Isle of Man. None of its holdings are in Orange County.
It currently has 20,767 senior housing and skilled nursing beds at 318 properties that total 19.45 million square feet under management. The company reported $1.6 billion in revenue for 2022 and $1.86 billion in 2023.
Prosky, who has been with the REIT since 2015 as president and then CEO, has a long history in the industry. Heโs worked in executive roles for Griffin-American Healthcare REIT Advisor, Grubb & Ellis Healthcare REIT Advisor LLC. and HCP Inc., which is now known as Healthpeak Properties Inc. (NYSE: DOC).
700+ BPS Improvement
On the basis of normalized funds from operations (NFFO), American Healthcare REIT reported 33 cents per share for the three months ended June 30, topping the 29 cent average of three analysts. It reported GAAP net income swung to a profit, $2.9 million, compared with a loss of $11.9 million for the same period in 2023. Revenue climbed 7.9% to $504.6 million.
The company pointed out its total portfolio same-store net operating income jumped 15.7% in the quarter, led by senior housing operating properties and integrated senior health campuses, respectively.
Hence, it increased its forecast for same-store net operating income (NOI) this year by 700 basis points at the midpoint from a range of 5% to 7% to a revised range of 12% to 14%, due to better-than-expected operations across all of its property segments.
It also boosted its NFFO to $1.23 to $1.27 for 2024, up from a prior prediction of $1.18 to $1.24.
โWe are increasing our full year 2024 same-store NOI growth and earnings guidance to reflect the occupancy gains and results we have achieved in 2024,โ Chief Financial Officer Brian Peay said in the statement.
It also reduced its leverage to 5.9 times net debt to annualized adjusted EBITDA as of June 30 from 6.4 times on March 31. The company has $1.80 billion in debt and $863.1 million of liquidity comprised of cash and undrawn capacity on its lines of credit.
โThe robust organic earnings growth thus far has allowed us to further improve our companyโs leverage profile,โ Peay said.