8-K: American Healthcare REIT Reports Full Year 2023 Results, Issues 2024 Guidance After Successful NYSE Listing

American Healthcare REIT announced its fourth quarter and full year 2023 results, highlighted by strong same-store revenue and NOI growth, and provided full year 2024 guidance following its successful NYSE listing.

Summary

• American Healthcare REIT reported a GAAP net loss attributable to stockholders of $(0.42) per share for the quarter and $(1.08) per share for the year ended December 31, 2023.
• The company's Normalized Funds from Operations (NFFO) was $0.38 per share for the quarter and $1.40 per share for the year ended December 31, 2023.
• Same-store revenue grew by 5.2% for the quarter and 7.7% for the year, driven by occupancy gains in RIDEA-operated assets.
• Total portfolio same-store Net Operating Income (NOI) increased by 8.6% year-over-year, with SHOP and Integrated Senior Health Campuses (ISHC) showing 27.2% and 14.0% growth respectively.
• The company disposed of approximately $195 million in non-core properties during 2023.
• Subsequent to year-end, the company completed a public offering of 64.4 million shares at $12.00 per share and listed on the NYSE.
• The company used the proceeds from the public offering to pay down approximately $721 million of debt with a weighted average interest rate of 7.53%.

Sentiment

Score: 8

Explanation: The document presents a generally positive outlook, with strong operational performance, successful capital raising, and debt reduction. The company's future guidance is also encouraging, although some risks remain.

Positives

• The company's portfolio is recovering from the pandemic, with revenue growth drivers trending positively.
• Occupancy gains have continued since the end of 2023.
• The Integrated Senior Health Campuses (ISHC) segment is performing strongly, with occupancy surpassing pre-pandemic levels.
• Expense growth across SHOP assets has moderated due to operator transitions and normalizing compensation expenses.
• The public offering and debt repayment have significantly improved the company's capital structure.
• The company has a conservative approach to leverage and is selective about external growth opportunities.
• The company declared a regular quarterly cash distribution of $0.25 per share for the quarter ending March 31, 2024.

Negatives

• The company reported a GAAP net loss attributable to stockholders of $(0.42) per share for the quarter and $(1.08) per share for the year ended December 31, 2023.
• The company disposed of $195 million in non-core properties, which may indicate a need to streamline the portfolio.
• The company's net loss per share was $(1.08) for the year ended December 31, 2023.

Risks

• The company's forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.
• The company's ability to achieve its 2024 guidance depends on various factors, including market conditions and operational performance.
• The company's SHOP segment is subject to operational risks, including occupancy fluctuations and expense management.
• The company's reliance on third-party operators exposes it to risks related to their performance and financial stability.
• The company's debt levels, although reduced, still present a risk, especially if interest rates rise or operating performance declines.

Future Outlook

The company expects 2024 to be another year of occupancy gains within its SHOP segment, supporting NOI growth and margin expansion, with ISHC occupancy remaining at or above pre-pandemic levels, and anticipates mid-single-digit NOI growth across its diversified healthcare portfolio.

Management Comments

• 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, said Danny Prosky, American Healthcare REITs President and CEO.
• Our portfolio continues to recover since the onset of the pandemic, with the trajectory of revenue growth drivers all heading in the right direction, said Gabe Willhite, the Companys Chief Operating Officer.
• 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 Companys Chief Financial Officer.

Industry Context

This announcement reflects a broader trend in the healthcare REIT sector, where companies are focusing on operational improvements, portfolio optimization, and balance sheet strengthening following the pandemic. The successful NYSE listing and debt reduction are positive steps for the company, aligning with investor preferences for stable and well-capitalized REITs.

Comparison to Industry Standards

• The same-store revenue growth of 7.7% for the year is strong compared to some peers in the healthcare REIT sector, such as Healthpeak Properties (HCP) which reported 3.8% same-store cash NOI growth in their senior housing segment for the full year 2023.
• The 27.2% same-store NOI growth in the SHOP segment is particularly impressive, outperforming many competitors in the senior housing space, such as Welltower (WELL) which reported 11.5% same-store NOI growth in their senior housing operating portfolio for the full year 2023.
• The debt reduction of $721 million is a significant move, bringing the company's leverage more in line with industry standards, where many REITs aim for a net debt to EBITDA ratio in the 5-7x range, similar to what Ventas (VTR) targets.
• The company's focus on RIDEA structures is also a common strategy in the senior housing sector, allowing for greater operational control and potential upside, similar to the approach taken by companies like National Health Investors (NHI).

Stakeholder Impact

• Shareholders will benefit from the improved financial position, reduced debt, and potential for future growth.
• Employees will benefit from the company's focus on operational improvements and growth.
• Customers (residents and patients) will benefit from the company's focus on high-quality healthcare facilities.
• Creditors will benefit from the company's reduced debt and improved financial stability.
• Suppliers will benefit from the company's continued operations and growth.

Next Steps

• The company will continue to focus on optimizing performance across its portfolio.
• The company will maintain a conservative approach to leverage while being selective about external growth opportunities.
• The company will host a webcast and conference call on March 22, 2024, to discuss the results and recent events.

Key Dates

Keywords

Healthcare REIT, Senior Housing, Outpatient Medical, Real Estate Investment Trust, NYSE, RIDEA, Same-Store NOI, Occupancy, Debt Reduction, Public Offering, NFFO