Senior housing remains a “challenge,” but American Healthcare REIT is expecting to rebuild occupancy across its portfolio as inflationary pressures ease, the company told investors in a third-quarter update.
The company on Wednesday reported a 17.9% quarter-over-quarter decline in modified funds from operations, equalling $30.2 million, for the quarter ending Sept. 30. It cited lower grant income and higher interest expense on floating rate debt for the loss, which it said also influenced a decline of 19% in funds for operations over the same period. The company declared a quarterly distribution of $0.40 per share as of Sept. 29.
The update highlighted third-quarter “continued improvement” at American Healthcare’s integrated senior health campuses, which account for 35.3% of its portfolio. Other business segments include a senior housing operating portfolio (15%), skilled nursing facilities (6.1%), senior housing — leased (3.9%), medical office buildings and hospitals.
Quality and efficiency
“We believe that our properties should benefit from a greater emphasis on providing quality healthcare in the most efficient clinical setting,” said Danny Prosky, president and CEO, in a statement. “The long-term outlook for clinical healthcare real estate is positive given the favorable demographic backdrop over the coming decades, and we believe that we are well positioned to maximize value for our stockholders.”
The REIT has had an eventful year, with recent mergers making it the 11th largest healthcare REIT globally. In August, American Healthcare REIT added former Welltower Chief Financial Officer Scott Estes to its board of directors. And in September, it filed a registration statement to pursue an underwritten public offering with the U.S. Securities and Exchange Commission.
Formerly known as Griffin-American Healthcare REIT IV, in October 2021 the company completed a merger with Griffin-American Healthcare REIT III and also completed an acquisition of American Healthcare Investors, the co-sponsor of both REITs.
The combined company has a gross investment value of approximately $4.2 billion in healthcare real estate assets, with 312 facilities and campuses in the United States, the United Kingdom and the Isle of Man.
