American Healthcare REIT - Q3 2026 Earnings Conference Call - AMERICAN HEALTHCARE REIT INC

Financial Performance:

• Same-store NOI grew 13.8% YoY (11th consecutive double-digit quarter), with Trilogy growing 15.7% and SHOP accelerating to 28.2% growth.
• Normalized FFO per diluted share was $0.58, up 31.8% YoY; full-year 2026 NFFO guidance raised to $2.23–$2.26 (implying >30% growth).
• Same-store NOI margin expanded significantly: SHOP reached 23.5% (+350 bps YoY); Trilogy achieved 21% (+200 bps YoY).
• Total portfolio same-store NOI guidance raised to 12–14% midpoint.
• Net debt to EBITDA improved to 1.9x (down 1.6x YoY and 0.5x sequentially); balance sheet deleveraging continues while growing.
• Controllable operating expenses at Trilogy declined 3.7% YoY; SHOP revenue grew 9% while expense growth was minimal (0.8%).

Guidance and Future Outlook:

• Full-year 2026 NFFO per diluted share guidance raised to $2.23–$2.26 (midpoint); same-store NOI guidance raised to 12–14%.
• Segment-specific guidance raises: SHOP (23–26%), Trilogy (14.5–16.5%), Outpatient Medical (0.5–1%), Triple Net (2.5–3.5%).
• Pipeline exceeds $1 billion in awarded deals, expected to close in late Q4 2026 and Q1 2027; fully match-funded by unsettled forward sale agreements.
• Management expects sustained high-quality growth, with Q4 implied NFFO growth tracking Q3's high 20s percentage growth.
• Outlook emphasizes long-term value creation through "measured aggression," focusing on supply-constrained, affluent infill markets.

Business Segments and Product Lines:

• SHOP: Occupancy averaged 90%; RevPOR grew 5.4% YoY; REVPOR to expense spread widened to ~460 bps; portfolio expanded to 109 properties/10,000+ units with average vintage improved to 18.1 years.
• Trilogy: Same-store occupancy 91.2% (+110 bps); skilled nursing occupancy 90.2% (+30 bps seq); quality mix improved to 75.7%; CMS star ratings averaged 4.2.
• Acquisitions: $2.1 billion completed YTD; notable deals include Kensington (6 of 8 Class A communities closed, $572M) and LCB (8 communities, $696M), adding Northeast footprint and new operator relationships.
• Asset Quality: Average vintage of SHOP portfolio at 18.1 years; focus on newer vintage (2019+), high-acuity memory care/assisted living, and fortress markets with high barriers to entry.
• Dispositions: Active net seller strategy for Outpatient Medical (OM); NOI contribution reduced from 35% to ~10%; potential portfolio-level dispositions expected in 2027.

Market and Competitive Landscape:

• Portfolio concentrated in "fortress" markets with long entitlement timelines, restrictive zoning, and no developable land (e.g., LA, SF, NYC, DC).
• Competition for high-quality assets remains strong; deal volume expected to remain at 2x previous year levels; significant portion of pipeline secured via relationship/off-market channels rather than price competition.
• Industry trends show demand surge from Baby Boomer generation driving occupancy and pricing power; shift toward larger units (1-bed/2-bed) and higher amenity counts.
• Management views sector fundamentals as strong but emphasizes that execution and operator partnerships, not just demographics, will determine winners.

Risks and Challenges:

• Regulatory risks regarding skilled nursing reimbursement and Medicare Advantage rate increases; split Congress anticipated to result in business-as-usual predictability.
• Operational risks if operators expand too rapidly; strategy focuses on aligning growth ambitions with operator capacity to prevent cultural or performance dilution.
• Asset concentration in specific MSAs and reliance on key operating partners (e.g., Trilogy, Kensington, LCB).
• Interest rate volatility and refinancing needs for term loans/swaps maturing in January 2027.

Management Commentary and Tone:

• Tone is highly confident and forward-looking, emphasizing "ambition and discipline" and a shift from "entering the public market" (Phase 1) to "platform enhancement" (Phase 2).
• Leadership transition noted: Brian Pay retired; Eric Chang joined as CFO (ex-Public Storage); new executives Ann Lacey (Asset Management) and John Crozier (CTO) added to strengthen data and asset support.
• Management consistently highlights the "operating platform" model, claiming their integrated system of capital, data, and operator support creates tangible value beyond real estate alone.
• CEO Jeff Hansen reiterated that "the sector tailwind is not the AHR advantage; our platform and execution is."

Analyst Questions and Answers:

• Pipeline Quality: CFO Stephan Oh and CEO Hansen confirmed high deal flow continues, with new acquisitions in fortress markets and existing operator bases; no signs of slowing volume.
• SHOP NOI Drivers: Gabe Wilhite attributed growth to sequential occupancy gains, pricing power (RevPOR +5.4%), and expense controls; confirmed durability for 2027 based on structural advantages and data analytics rollouts.
• Trilogy Expense Controls: Management attributed controllable expense declines to one-time employee benefits optimization but noted the trend is repeatable due to operator efficiency and incentive alignment.
• Non-Same Store Growth: Trilogy development (3–5 campuses/year) and expansions via excess land are key non-same store growth drivers; Kingston portfolio expected to enter same-store pool in 2027.
• Acquisition Pricing: Jeff Hansen clarified that higher price-per-unit reflects larger, more amenitized units and superior asset quality, not compressed yields; yields remain consistent (mid-5s to mid-6s).
• Capital Markets: Eric Chang confirmed the pipeline is fully funded; no immediate equity raise planned; refinancing work ongoing for January 2027 maturations with a new swap hedged in October.
• Technology: New CTO John Crozier leading AI and data initiatives to enhance revenue management, benchmarking, and asset management visibility.

Other Key Points:

• $3+ billion in closed/pipeline investments all accretive to NFFO and NAV; average vintage of 2019.
• Strategic shift in SHOP to "newer vintage" assets; average asset age reduced from 22.9 to 18.1 years.
• Emphasis on "measured aggression": moving decisively when quality/criteria are met, patience otherwise; prioritizing relationship deals over broad market auctions.
• Trilogy's integrated campus model (post-acute + private pay) mitigates seasonality risks and drives stable NOI.
• Management believes the industry is shifting conversation from price-per-unit to price-per-square-foot/amenity value.