American Healthcare REIT(US:AHR)2021-11-15 19:56Company Overview - As of September 30, 2021, American Healthcare REIT owned 87 properties comprising 92 buildings, totaling approximately 4,799,000 square feet of gross leasable area, with an aggregate contract purchase price of $1,080,381,000[182]. - Following the merger with Griffin-American Healthcare REIT III, the combined company has a healthcare real estate portfolio of 311 buildings and campuses across 36 states, with a pro forma leased percentage rate of approximately 94.1% for leased, non-RIDEA assets[186]. - The merger resulted in each share of GAHR III's common stock converting into the right to receive 0.9266 shares of American Healthcare REIT's Class I common stock[185]. - The company operates through four reportable business segments: medical office buildings, senior housing, senior housing - RIDEA, and skilled nursing facilities[182]. Financial Performance - For the three months ended September 30, 2021, total revenues and grant income amounted to $37,210,000, a decrease from $41,331,000 in the same period of 2020[206]. - The company collected 100% of contractual rent from leased, non-RIDEA senior housing and skilled nursing facility tenants as of September 30, 2021[203]. - Senior housing — RIDEA facilities had a leased percentage of 71.1% for the three months ended September 30, 2021, down from 71.6% in the same period of 2020[205]. - Medical office buildings generated real estate revenue of $16,921,000 for the three months ended September 30, 2021, compared to $16,338,000 in 2020[206]. - The skilled nursing facilities reported real estate revenue of $2,996,000 for the three months ended September 30, 2021, slightly up from $2,979,000 in 2020[206]. - For the nine months ended September 30, 2021, net cash provided by operating activities was $16,556,000, a decrease of $13,387,000 compared to $29,943,000 for the same period in 2020[222]. - Distributions paid in cash for the nine months ended September 30, 2021 totaled $21,700,000, an increase from $13,932,000 in 2020[230]. Impact of COVID-19 - The company has been affected by the COVID-19 pandemic, which has had implications for the healthcare industry and real estate market[178]. - The emergence of the Delta variant has slowed the recovery in senior housing and skilled nursing segments, with case counts reaching levels not seen since January 2021[197]. - The ongoing COVID-19 pandemic continues to present challenges, particularly in senior housing and skilled nursing facilities, affecting occupancy and operating expenses[197]. Expenses and Costs - General and administrative expenses increased to $4,304,000 in Q3 2021 from $3,672,000 in Q3 2020, primarily due to higher professional and legal fees[210]. - Business acquisition expenses surged to $3,800,000 in Q3 2021 from $57,000 in Q3 2020, reflecting increased costs related to a merger[211]. - Total rental expenses rose to $6,389,000 (28.9% of revenue) in Q3 2021 compared to $5,905,000 (27.4%) in Q3 2020[209]. - Rental expenses for medical office buildings increased to $6,072,000 (35.9% of real estate revenue) in Q3 2021 from $5,607,000 (34.3%) in Q3 2020[209]. Funds from Operations - Funds from Operations (FFO) for the three months ended September 30, 2021, would have been approximately $5,809,000, compared to $10,662,000 for the same period in 2020, indicating a decline of 45.5%[257]. - For the nine months ended September 30, 2021, FFO was approximately $22,522,000, down from $26,563,000 in 2020, reflecting a decrease of 15.4%[257]. - Modified Funds from Operations (MFFO) for the three months ended September 30, 2021, would have been approximately $7,659,000, compared to $8,200,000 in 2020, a decline of 6.6%[257]. - MFFO for the nine months ended September 30, 2021, was approximately $22,531,000, down from $26,028,000 in 2020, representing a decrease of 13.4%[257]. Debt and Financing - As of October 31, 2021, the combined company's aggregate borrowing capacity under credit facilities was $1,370,000,000, with outstanding borrowings of $1,205,634,000[216]. - The weighted average effective interest rate on outstanding debt as of September 30, 2021 was 3.32% per annum[241]. - The company has not established any limit on the amount of borrowings for individual investments, but overall leverage will not exceed 50.0% of the combined market value of properties[233]. - A 0.50% increase in market interest rates would raise annualized interest expense on variable-rate line of credit and term loans by $983,000, representing 5.63% of total annualized interest expense[275]. Market Risks - The company faces market risk due to potential increases in variable interest rates affecting its line of credit and term loans[275]. - The company is monitoring risks associated with the transition from LIBOR to alternative reference rates, which may affect future borrowing costs[270]. - Inflation has not significantly impacted operations, but future long-term tenant leases may expose the company to inflation risk, despite protective lease provisions[244]. Net Loss and Income - For the three months ended September 30, 2021, the net loss was $5,898,000 compared to a net loss of $5,152,000 for the same period in 2020[259]. - Net operating income (NOI) for the three months ended September 30, 2021, was $16,281,000, down 10% from $18,029,000 in the same period of 2020[264].