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

Explicit Guidance:

• FY2026 NFFO per diluted share: Raised guidance to a range of $2.23–$2.26, implying midpoint growth of over 30% versus FY2025; prior range was $2.15–$2.19.
• FY2026 Same-Store NOI Growth: Raised guidance to a range of 12%–14% (midpoint up 100 bps from prior); prior range implied lower growth.
• Segment Specifics (FY2026):
  • Shop (SH): Same-store NOI growth guidance raised to 23%–26% (up 500 bps).
  • Trilogy: Same-store NOI growth guidance raised to 14.5%–16.5% (up 100 bps).
  • Outpatient Medical: Same-store NOI growth guidance raised to 0.5%–1.0% (up 25 bps).
  • Triple Net: Same-store NOI growth guidance raised to 2.5%–3.5% (up 50 bps).
• FY2026 G&A: Guidance remains unchanged, reflecting efficiency gains despite platform scaling.
• FY2026 Q4 Implied Performance: Consistent with Q3's high 20% same-store NOI growth print.
• FY2027 Outlook: No specific numerical guidance provided for FY2027; management expresses confidence in durability of current growth rates based on structural advantages and demand surge.

Business-Segment Outlook:

• Shop Segment:
  • Growth Drivers: Accelerating revenue per available room (REVPOR) growth to 5.4% YoY; widening REVPOR-to-expense spread (~460 bps) driving margin expansion to 23.5%.
  • Occupancy & Pricing: Occupancy at 90%; transition to rate-focused growth model; rent concessions reduced by 34% YoY.
  • Portfolio Composition: 109 properties (>10,000 units); average portfolio age reduced to 18.1 years (from 22.9 years).
  • Future Expansion: Focus on "fortress markets" (supply-constrained, high barrier-to-entry) and larger unit mixes (1-2 bedrooms) to align with boomer demand for amenitized space.
• Trilogy Segment:
  • Growth Drivers: Quality mix improvements (75.5%); CMS Star Ratings at 4.2; optimized Medicare Advantage reimbursement; expense control (controllable costs down 3.7%).
  • Development: 3–5 new campuses annually via internal development; 30+ campuses with expansion potential on excess land.
  • Acquisition Integration: Kingston portfolio assets expected to enter same-store pool and contribute to growth in 2027.
  • Operational Efficiency: Focus on private-pay rate capture and optimizing high-acuity reimbursement partners.
• Non-Core Dispositions:
  • Outpatient Medical (OM): Continuing to act as net sellers; NOI contribution dropped from 35% to ~10%; no new focus on retaining OM assets; potential for portfolio-level dispositions or single-asset sales in early 2027 for non-core/older assets.

Market and Competitive Outlook:

• Acquisition Pipeline: Awarded pipeline stands at > $1 billion; expected to close late Q4 2026 and remainder in Q1 2027.
• Market Conditions: Strong deal flow expected to continue into 2027; industry-wide transaction volume in 2026 was 2x 2025 levels.
• Supply Dynamics: "Fortress markets" characterized by 5–9 years of new supply delivery due to zoning/entitlement barriers; limited developable land in key infill submarkets (LA, SF, DC, NYC, Northeast).
• Competitive Moat: 80–90% of product controlled by specific brokerage teams; AHR securing off-market deals via operator relationships and not always being the highest bidder but preferred by sellers.
• Yield Expectations: Acquired assets yielding mid-5% to mid-6% (stabilized >7%); pricing per unit reflects higher quality and unit size, not yield compression.

Macro / Industry Outlook:

• Regulatory Environment: Post-election "split Congress/White House" scenario anticipated to result in business as usual for skilled nursing regulation and reimbursement; no major negative regulatory changes expected in base case.
• Demographics: Baby Boomer generation demand surge expected to drive continued occupancy pressure and demand for higher-acuity, amenitized senior housing.
• Rates & Capital: Management hedging floating rate exposure via new swaps maturing January 2027; refinancing of term loan and swaps underway; capital raising planned only for match-funded, accretive opportunities.

Strategic Initiatives:

• M&A Activity: $2.1 billion in investments closed YTD; $1 billion+ in pipeline. Key transactions include Kensington Senior Living ($572M closed, $873M total) and LCB Senior Living ($696M) establishing Northeast footprint.
• Operational Platform Expansion:
  • Talent: Hired Eric Chang (CFO), Ann Lacey (EVP Portfolio/Asset Mgmt), and John Crozier (CTO).
  • Technology: Deployment of AI, advanced revenue management analytics, and portfolio-wide dashboards to operators; real-time operational data integration.
  • Operator Support: Innovation forums to cross-pollinate best practices (beyond Trilogy model); asset management team acting as "high-end consulting" to optimize assets.
• Balance Sheet Strategy: Target net debt/EBITDA of 1.9x; material deleveraging continues while funding growth; full funding secured via $1.3B unsettled forward sales and $850M credit facility capacity.

Risks and Headwinds to Outlook:

• Execution Risk: Potential for operators to "get over their skis" by scaling too fast, diluting culture/performance; mitigated by selective growth aligned with operator capacity.
• Market/Supply Risk: Vulnerability to new supply entering specific micro-markets; requires continuous tracking of local development pipelines.
• Regulatory Risk: While base case is stable, state-level regulatory changes remain a monitoring priority.
• Guidance Caveats: Guidance reflects closed transactions only; excludes all pipeline deals and future acquisitions. No update obligation for forward-looking statements unless required by law.

Management Tone on the Future:

• Confidence: High confidence in durability of >13% same-store NOI growth and 30% NFFO growth; views current trajectory as proof of an integrated operating platform working.
• Strategic Stance: "Measured aggression"; willingness to move decisively on quality assets but patience on others; prioritizing relationship-based off-market deals over broad market competition.
• Differentiation: Emphasis on "platform" advantages (data, asset management, operator alignment) over simple asset accumulation; belief that "quality real estate is imperative but not sufficient."
• Long-term View: Confident in multi-year runway for growth driven by demographic tailwinds and supply constraints; no intention to slow growth if quality standards are met.

Miscellaneous:

• Forward Sales: $1.3 billion gross proceeds available under unsettled forward sale agreements (24.6 million shares); used to match-fund pipeline.
• CapEx: Maintenance CapEx growth aligns with portfolio expansion; Kingston acquisition included specific maintenance CapEx in deal pricing.
• Credit Facilities: Term loan and swaps maturing in January 2027; new swap entered in October 2026 to hedge floating rate exposure through January 2027.