American Healthcare REIT Set To Grow With Demographic Tailwinds And Expansion

Investment Thesis - American Healthcare REIT, Inc. (AHR) focuses on nursing homes and health infrastructure, utilizing both traditional triple-net leases and RIDEA properties for operational upside [1] - AHR is experiencing a return to pre-COVID occupancy rates, currently at 91%, with a solid yield of 6.5% and demographic tailwinds supporting long-term growth [1][5] Estimated Fair Value - The estimated fair value (EFV) of AHR is calculated as EFV = EFY25 FFO (Funds from Operations) of $1.30 multiplied by a P/FFO multiple of 15.0, resulting in a target price of $19.50 [2][3] Market Conditions - The population over 80 is projected to increase by 50% over the next decade, with occupancy rates recovering from an average of 85% during COVID to pre-COVID levels of 87-90% [4] - New construction costs have risen by 36% since 2020, while absorption rates for new beds have reached record highs [5] Financial Performance - AHR operates 298 properties with 17,658 beds across 36 states and the UK, with 54% of its net asset value (NAV) derived from RIDEA properties [8][9] - Same-store net operating income for ISHC grew by 20% year-over-year, while SHOP saw a 30% increase, indicating strong operational performance [9] Strategic Initiatives - AHR plans to acquire the remaining interest in Trilogy, which operates 75% of its ISHC facilities, with a purchase option lasting until September 2025 [9][11] - The company aims to divest approximately $50 million in non-core assets in 2024 to support deleveraging and expansion goals [17] Regulatory Environment - New minimum staffing standards proposed by CMS may require additional staffing in nursing homes, but AHR believes the impact will be minimal due to existing compliance [10][11] Conclusion - AHR is positioned for growth with a strong balance sheet, a current yield of 6.5%, and favorable demographic trends, making it an attractive option for income investors [18]