American Healthcare REIT has seen same-store growth in net operating income for its senior housing operated portfolio and integrated senior health campus segments in the second quarter, a bright spot as it continues to address debt with ongoing property sales and works toward an initial public offering, the company reported in an earnings update sent Tuesday via email.

The real estate investment trust’s earnings were down for the quarter ended June 30, at $24.1 million, or $0.37 per common share, compared with $37.8 million, or $0.57 per common share for same quarter in 2022. NOI for the second quarter of 2023 was $80.4 million compared with $77.6 million for the same quarter in 2022.

In a statement, President and CEO Danny Prosky credited the positive performance within its senior living and care segments to the REIT’s active participation in managing those properties versus its leased, fixed-rent portfolio segments. The REIT is leaning on those segments to deliver continued growth, he said.

“This participation for SHOP and integrated senior health campuses creates the potential for outsized NOI growth, and we are optimistic that the positive trend we have witnessed in both segments thus far in 2023 will carry on through the year and into 2024,” Prosky told investors.

As of June 30, the REIT had 10,982 senior housing beds and 9,478 skilled nursing beds. Integrated senior health campuses represented 36% of the REIT’s portfolio, whereas SHOP accounted for 16%, skilled nursing facilities represented 5.5% and leased senior housing accounted for 4%.

Its portfolio of SHOP and integrated senior health campuses achieved leased percentages of 78.6% and 83.9% in the second quarter, respectively. 

Debt strategy

The REIT is hopeful that continued NOI growth will aid in offsetting elevated interest expense while it uses the proceeds from property sales to pay down its ongoing variable rate debt. The company sold more than $90 million worth of properties year-to-date through June 30, has sold others since the quarter’s end and is under contract to sell more properties with closings anticipated by the end of the year, Prosky reported. 

“To further address our variable rate debt, we may look to additional property sales beyond those under contract, as well as opportunistic hedging of outstanding debt,” he said.

In 2022, the REIT had expanded its SHOP and integrated senior health campus segments by approximately $254 million, primarily through acquisitions and development.

IPO actions

Since the second quarter’s end, the company has taken additional steps toward the public offering it proposed in 2022, filing an amended registration statement on Form S-11 with the Securities and Exchange Commission and listing its common stock on the New York Stock Exchange.

Prosky said that the REIT has been heartened by recent improved activity in the initial public offering market and better share price performance among its REIT peers, but that the company’s chief focus is the recovery of its property operations and strengthening its balance sheet.

Board neutral on third-party mini-tender offer

Wednesday, the company notified shareholders of an unsolicited third-party mini-tender offer being made for shares of AHR common stock by CMG Partners LLC and its affiliates.

In a letter with Tuesday’s date, Prosky told shareholders that the offer “is an opportunistic attempt to purchase your shares.” CMG is offering to purchase up to an aggregate of 250,000 shares of AHR’s Class T and Class I common stock for $8.50 per share, which Prosky said was “low” and “equivalent to $2.13 per share before AHR’s one-for-four reverse stock split in November 2022.”

The offer price, he said, is 73% lower than the board’s most recent estimated net asset value of $31.40 per share as of Dec. 31.

AHR’s board, he said, has decided to remain neutral and not make a recommendation as to whether any stockholder should accept or decline the CMG offer for their shares.

As of June 30, American Healthcare REIT’s $4.4 billion portfolio included 19.1 million-square-feet of 300 medical office buildings, senior housing communities, skilled nursing facilities, hospitals and integrated senior health campuses located in 36 states, the United Kingdom and the Isle of Man, in addition to a real estate-related investment.