AHR Stock Falls 3% Amid Legacy Investor Share Trading

American Healthcare REIT Inc. shares fell nearly 3% as legacy investors began trading their shares, coinciding with the release of Q2 2024 results and positively revised 2024 guidance.

August 07, 2024

American Healthcare REIT Inc. (NYSE: AHR) announced its second quarter 2024 results, coinciding with the end of the lock-up period for legacy investors from the merged Griffin-American Healthcare REIT III, Griffin-American Healthcare REIT IV, and American Healthcare Investors, allowing them to trade their shares.

AHR, which debuted on the NYSE on February 7, 2024, with an IPO of 56 million shares at $12 each, primarily sold to institutional investors, used the proceeds to reduce approximately $721 million in debt, significantly improving leverage metrics and financial flexibility.

Legacy retail investors, holding around 66 million shares purchased at an equivalent of $40 per share (adjusted for a 2021 one-for-four reverse stock split), had their shares converted to tradeable stock. AHR stock closed at $15.67, down 2.91%, amid a significant drop in major indices, with trading volume nearly tripling to over three million shares.

After the market closed, AHR's stock price rebounded to $15.83 in after-hours trading. The company released its Q2 earnings, reporting net income attributable to common stockholders of $0.01 per diluted share and positively revised its 2024 guidance.

AHR reported normalized funds from operations of $0.33 per diluted share, down from $0.37 per share in June 2023, and a GAAP net income of $2.9 million, compared to a GAAP net loss of $11.9 million in the same period of 2023.

“Our first year as a listed company is off to a great start. Demand for healthcare real estate is evident in our portfolio performance. Growth in the first half of 2024 is exceeding the expectations we set at the beginning of the year prompting our upward revisions to same-store NOI growth guidance and NFFO guidance,” said Danny Prosky, president and CEO.

The company reported same-store net operating income (NOI) of approximately $74 million for Q2, a 15.7% increase from $64 million in June 2023, primarily driven by occupancy gains in senior housing operating properties (SHOP) and integrated senior health campuses (ISHC), which saw same-store NOI growth of 49.1% and 24.1%, respectively.

Prosky expects the demand-supply imbalance in long-term care to sustain elevated same-store NOI growth into 2025. During the quarter, AHR exercised purchase options on three previously leased ISHC properties for about $45.8 million, with a lease rate of approximately 9.1%. The company aims to meet its full-year sales proceeds target of around $65 million, having sold $15.6 million of non-core properties in the first half of the year.

As of June 30, AHR’s total pro-rata debt was $1.8 billion, with $863.1 million in total consolidated liquidity. The net-debt-to-annualized adjusted EBITDA ratio stood at 5.9x.

“We 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,” said CFO Brian Peay. “The robust organic earnings growth thus far has allowed us to further improve our company’s leverage profile with improving net-debt-to-annualized-adjusted EBITDA and we anticipate continuing to improve with disposition proceeds and incremental earnings growth.”