American Healthcare Reit, Inc. · NYSE:AHR
American Healthcare Reit — Q1 2024 Earnings Presentation
53 slides from American Healthcare Reit's earnings presentation, May 14, 2024
Slide 1: Investor Presentation June 2024
INVESTOR PRESENTATION JUNE 2024
Slide 2: Disclaimers
DISCLAIMERS FORWARD-LOOKING STATEMENTS Certain statements contained in this presentation, including statements relating to American Healthcare REIT, Inc.’s (the ”Company,” “its,” “we,” “our,” “us,” or “AHR”) expectations regarding its portfolio growth, interest expense savings, balance sheet, net in
Slide 3: Management Participants
MANAGEMENT PARTICIPANTS Danny Prosky Brian Peay Gabe Willhite Alan Peterson President & CEO CFO COO VP, Investor Relations & Finance 3
Slide 4: Recent Highlights
RECENT HIGHLIGHTS
Slide 5: Recent Highlights | Q1 2024 Portfolio Performance
RECENT HIGHLIGHTS | Q1 2024 PORTFOLIO PERFORMANCE +19.9% +33.5% 88.0% 1.25x +13.0% SS OUTPATIENT TRIPLE-NET SS TOTAL SS ISHC / Trilogy SS SHOP MEDICAL LEASED EBITDAR PORTFOLIO NOI GROWTH(1) NOI GROWTH(1) OCCUPANCY COVERAGE NOI GROWTH(1) SAME-STORE Q1 2024 REVENUE GROWTH 7.1% SAME-STORE Q1 2024 NOI G
Slide 6: Recent Highlights (Cont'd)
RECENT HIGHLIGHTS (CONT’D) SAME-STORE OCCUPANCY UPDATE BY PROPERTY SEGMENT (1) (2) Integrated Senior Health Campuses SHOP Outpatient Medical 89.6% 88.0% 88.3% 87.3% 86.2% 86.7% 85.7% 84.6% 78.6% Q1 2023 Q1 2024 May 24, 2024 Q1 2023 Q1 2024 May 24, 2024 Q1 2023 Q1 2024 May 24, 2024 BALANCE SHEET & CA
Slide 7: Relative Healthcare REIT Valuation
RECENT HIGHLIGHTS (CONT’D) Relative Healthcare REIT Valuation Core FFO or Normalized FFO Multiples Consensus ’24 FFO Multiples (1) 25x 24.9x 20x 15x 17.4x 15.5x 10x 12.0x 11.6x 10.5x 5x 0x AHR SBRA OHI VTR CTRE WELL NAV Valuation Percentage Premium / (Discount) to Green Street NAV (2) 100% 85.4% 75%
Slide 8: AHR Overview
AHR OVERVIEW
Slide 9: AHR Key Differentiators
AHR KEY DIFFERENTIATORS Diversified High-Quality Asset Base Diversified healthcare-focused REIT with attractive mix of tenants and operators, considerable portfolio size, scale, and national footprint Senior Housing Focus with Over Half of Portfolio in Operating Portfolio/RIDEA Positioned well for m
Slide 10: Experienced Management Team Committed to Excellence
EXPERIENCED MANAGEMENT TEAM COMMITTED TO EXCELLENCE Commitment to High- Healthcare Real Experienced Capital Proven Track Record Quality Care Standards Estate Experts Allocators & Leadership • Focused on quality outcomes for • Recognized as the sixth largest • Management team has • Executive team has
Slide 11: Portfolio Composition (as of 3/31/2024)
PORTFOLIO COMPOSITION (as of 3/31/2024) Q1 2024 PRO-RATA CASH NOI % BY SEGMENT DIVERSIFICATION BENEFITS Integrated Senior Health Campuses (ISHC) 49.4% Senior Housing Powerful secular trend of increasing Operating Properties (SHOP) healthcare utilization that is expected to 8.3% benefit all healthcar
Slide 12: Portfolio Key Stats (as of 3/31/2024)
PORTFOLIO KEY STATS (as of 3/31/2024) INTEGRATED SENIOR OUTPATIENT SENIOR HOUSING TRIPLE-NET LEASED HEALTH CAMPUSES MEDICAL OPERATING PROPERTIES PROPERTIES 126 83 64 28 Properties Properties Properties Properties 86.2% 88.0% 85.7% 91.0% Same-Store Occupancy (1) Same-Store Occupancy (2) Same-Store Oc
Slide 13: Senior Housing & Care Trends
SENIOR HOUSING & CARE TRENDS
Slide 14: Senior Housing Demand Growing
SENIOR HOUSING DEMAND GROWING FUNDAMENTALS ARE FAVORABLE AS DEMAND INCREASES AND ABSORPTION REMAINS ELEVATED OVER 80 POPULATION IS GROWING(1) 80+ POPULATION GROWTH PROJECTIONS FROM 2020 TO 2030 BY (in millions) STATE IS COMPELLING BROADLY ACROSS KEY AHR STATES(2) 21 19 5.6 MILLION INCREASE 60.0% Top
Slide 15: Multi-Year Tailwind from Limited New Supply
MULTI-YEAR TAILWIND FROM LIMITED NEW SUPPLY Construction Starts as % of Inventory INVENTORY GROWTH AT HISTORICALLY LOW LEVELS WITH (Rolling 4-Quarter) STARTS DOWN DRAMATICALLY 7% 6% Senior living inventory growth across product types is at 5% historically low levels with assisted living inventory gr
Slide 16: Operating Portfolio
OPERATING PORTFOLIO ISHC/TRILOGY AND SHOP
Slide 17: Operating Portfolio Strategy (as of 3/31/2024)
OPERATING PORTFOLIO STRATEGY (as of 3/31/2024) KEY OPERATOR ATTRIBUTES SENIOR HOUSING RIDEA FOCUS THROUGH OPERATING PORTFOLIO COMMITMENT TO EXCELLENCE SUSTAINED SUCCESS DEPENDS ON HIGH- QUALITY OF CARE ISHC / SHOP Trilogy REGIONAL PRESSENCE REGIONAL FOCUS ALLOWS FOR GREATER OPERATOR CONTROL OF CULTU
Slide 18: Integrated Senior Health Campuses / Trilogy | Overview
INTEGRATED SENIOR HEALTH CAMPUSES (as o f 3 / 3 1/ 2 0 2 4) / TRILOGY | OVERVIEW KEY HIGHLIGHTS 1997 4 • ABILITY TO AGE-IN-PLACE WITH FULL CONTINUUM OF CARE o Unique mix of senior housing (AL/IL/MC) YEAR FOUNDED STATES units (~43%) and skilled nursing beds (~57%) on same campus 9.4 • PURPOSE-BUILT F
Slide 19: The Trilogy Concept – A Unique Design for Senior Care
THE TRILOGY CONCEPT – A UNIQUE DESIGN FOR SENIOR CARE Defining Integrated Senior Health Campus MORE NEED-DRIVEN DEMAND/HIGHER ACUITY • One facility that brings together various levels of senior care INDEPENDENT ASSISTED MEMORY SKILLED LIVING LIVING CARE NURSING (IL/AL/MC/SNF) CCRC Operators’ • Allow
Slide 20: Trilogy Keys to Competitive Advantage
TRILOGY KEYS TO COMPETITIVE ADVANTAGE (as of 3/31/2024) TRILOGY THE TRILOGY MOAT COMPETITORS building a lasting business BUILT-IN OPERATOR OF REGIONAL HIGH PRIVATE REFERRAL PHYSICAL CHOICE SCALE PAY MIX SOURCES PLANT Newer, purpose- Proven track Ability to control Lowers reliance on Integrated campu
Slide 21: ISHC/Trilogy – A Model of Structuring for Success
ISHC/Trilogy – A Model TRILOGY INVESTORS ORG CHART of Structuring for Success ALIGNMENT THAT WORKS NorthStar • Operator Incentives Management that Work contract with lower revenue- Healthcare Income, Inc. based fees (NorthStar) • Exclusive rights to investment opportunities 24%1 76%1 Managing Member
Slide 22: Senior Housing Operating Properties (SHOP) | Overview
SENIOR HOUSING OPERATING PROPERTIES (as o f 3 / 3 1/ 2 0 2 4) (SHOP) | OVERVIEW 64 15 • KEY HIGHLIGHTS LARGER FOCUS ON NEEDS-BASED CARE VERSUS PROPERTIES STATES MORE DISCRETIONARY SENIOR HOUSING o ~79% of total SHOP exposure in Assisted 26.9 7 MISSION-DRIVEN • Living and Memory Care Units HANDS-ON A
Slide 23: Regional Focus and Operator Affiliations
REGIONAL FOCUS AND OPERATOR AFFILIATIONS (as of 3/31/2024) TRILOGY MANAGEMENT SERVICES 128 Buildings / Campuses 13,186 Beds / Units Headquarters in Louisville, KY SENIOR SOLUTIONS (SSMG) 19 Buildings 1,596 Beds / Units Headquarters in Atlanta, GA PRIORITY LIFE CARE 15 Buildings 988 Beds / Units Head
Slide 24: Operating Portfolio Positioned for Meaningful Organic Growth
OPERATING PORTFOLIO POSITIONED FOR MEANINGFUL ORGANIC GROWTH WITH FAVORABLE AND CONTINUED OPERATING MOMENTUM IN THE SENIOR HOUSING SECTOR WE ARE POSITIONED TO CAPITALIZE ON SEVERAL POTENTIAL ORGANIC GROWTH OPPORTUNITIES Favorable Structure of Investments (RIDEA) Over half of the Company’s portfolio
Slide 25: Senior Housing Demonstrating Robust Organic Growth
SENIOR HOUSING DEMONSTRATING ROBUST ORGANIC GROWTH OPERATING Operating Portfolio (SHOP & ISHC/Trilogy) has shown sector-leading PORTFOLIO occupancy, occupancy gains and NOI growth. OPERATING PORTFOLIO (AHR SHOP/Trilogy; Healthcare REIT Peers SHOP or Senior Housing- Managed)(1) (2) Same-Store Occupan
Slide 26: Outpatient Medical
soc) DONE es ————— SS —=s
Slide 27: Outpatient Medical (as of 3/31/2024)
OUTPATIENT MEDICAL (as of 3/31/2024) 27.1% 86 ~76% $30.44 of AHR Buildings 88.0% On-Campus, ~90% Same Store 5.2 Year Same-Store Multi-Tenant Total Adjacent or Revenue Per WALT(1) Pro-Rata 4.4M Occupancy Affiliated Square Foot Cash NOI GLA LEASING ACTIVITY HAS SLOWED AFTER A BLISTERING PACE IN 2023 T
Slide 28: Capital Allocation
CAPITAL ALLOCATION
Slide 29: Capital Allocation – Strategic Sources and Uses
CAPITAL ALLOCATION – STRATEGIC SOURCES AND USES PROVEN AND MEASURED CAPITAL ALLOCATION EXPERIENCE TO NAVIGATE AND IDENTIFY THE BEST RISK-ADJUSTED RETURNS Disciplined Sourcing Strong Capital through Allocation Opportunistic Acumen across Dispositions Healthcare Real and Capital Estate Sectors Markets
Slide 30: Multiple Avenues for Accretive External Growth
MULTIPLE AVENUES FOR ACCRETIVE EXTERNAL GROWTH SEVERAL AVENUES FOR GROWTH WITH VARIOUS TRANSACTIONS CONTROLLED BY AHR FOR EXECUTION UPON OPTIMAL TIMING TRILOGY CAPTIVE DEVELOPMENT GROW WITH EXISTING OPPORTUNISTIC SENIOR BUYOUT PIPELINE OPERATORS HOUSING Option contract to buy out Active development
Slide 31: External Growth | Trilogy Purchase Option
EXTERNAL GROWTH | TRILOGY PURCHASE OPTION (1) AHR has a purchase option on its joint venture partner’s equity interest in Trilogy Investors with valuable flexibility on timing and consideration through September 2025 Gain 100% ownership of high-performance asset Highly-flexible timing Defined path f
Slide 32: Development Potential Through Trilogy
DEVELOPMENT POTENTIAL THROUGH TRILOGY +37.3% INCREASE IN BEDS/UNITS SINCE 2015 TRILOGY HAS ROBUST DEVELOPMENT CAPABILITIES • Trilogy has added 29 new campuses since AHR acquired it in 2024 2015 2023 • Demonstrated ability to develop multiple new facilities each Beds / Units Added(1) 2022 year 2021 •
Slide 33: Significant Investments & Opportunities
SIGNIFICANT INVESTMENTS & OPPORTUNITIES EQUITIZED MEZZANINE DEBT IN OREGON PORTFOLIO (2024) • Portfolio acquired on February 1, 2024, through deed-in-lieu/loan assumption of $94.5M / $110,000 per unit • 856 beds on 14 properties • Existing debt carries 4.54% interest rate and January 2028 maturity •
Slide 34: External Growth | Case Study
EXTERNAL GROWTH | CASE STUDY PARTNERED WITH EXISTING OPERATOR TO ACQUIRE DISTRESSED PORTFOLIO SSMG SNAPSHOT • Headquarters: Atlanta, Georgia • 19 properties/1,596 units managed for AHR • 37 total facilities operated TEXAS 7 PORTFOLIO OCCUPANCY AND REVENUE HAVE GROWN RAPIDLY • In December 2022, took
Slide 35: Capital Markets & Balance Sheet
CAPITAL MARKETS & BALANCE SHEET
Slide 36: Balance Sheet Highlights (as of 3/31/2024)
BALANCE SHEET HIGHLIGHTS (as of 3/31/2024) KEY DEBT METRICS (1) $1.75B TOTAL DEBT 4.89% WEIGHTED AVERAGE INTEREST RATE 9.7 YEARS WEIGHTED AVERAGE TERM DEBT MATURITY SCHEDULE (2) Floating Secured Unsecured MILLIONS Rate, Debt, $600 Debt, 31.5% 7.9% 68.5% $500 $400 $300 $200 $100 $0 Fixed Rate, 92.1%
Slide 37: Management & Governance
MANAGEMENT & GOVERNANCE
Slide 38: Cohesive Management Team
COHESIVE MANAGEMENT TEAM EXPERIENCE THROUGH MARKET CYCLES AND WITH LARGEST HEALTHCARE REITS 28 YEARS AVG. EXPERIENCE OF EXECUTIVE TEAM Background & Years in Industry Background & Years in Industry • Former President & COO of Griffin-American Healthcare Kenny Lin • Former EVP, Accounting & Finance of
Slide 39: Experienced Board of Directors with Strong Governance
EXPERIENCED BOARD OF DIRECTORS WITH STRONG GOVERNANCE BOARD OF DIRECTORS COMMITMENT TO Jeff Hanson (Chairman since 2013(1)) GOVERNANCE • Former CEO of prior Griffin-American Healthcare REITs • Over 27 years real estate experience BOARD GOVERNANCE Danny Prosky (Director since 2014(1)) • Former Presid
Slide 40: ESG Initiatives
ESG INITIATIVES ENVIRONMENTAL SOCIAL GOVERNANCE • Completed Materiality Assessment • Proven commitment to a diversified • Seasoned SEC filer since 2014 with independent ESG consultant in workplace: • 2/3 of Board made up of October 2022, setting ESG strategy independent directors • Improved energy,
Slide 41: Appendix
APPENDIX
Slide 42: ISHC/Trilogy Segment Representative Properties
ISHC/TRILOGY SEGMENT REPRESENTATIVE PROPERTIES 9.4 YEARS AVERAGE AGE OF CAMPUSES/FACILITIES 42
Slide 43: Defined Terms
DEFINED TERMS • Adjusted EBITDA: EBITDA excluding the impact of stock-based compensation expense, acquisition and pursuit costs, gain (loss) on sales of real estate, and non-recurring items. • Affiliated: An OM (as defined on the next page) that, as of a specified date, has 25.0% or more of its squa
Slide 44: Defined Terms
DEFINED TERMS • NAREIT FFO or FFO: Funds from operations attributable to controlling interest; a non-GAAP financial measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT (the “White Paper”). The White Paper defines FFO as net income
Slide 45: Defined Terms
DEFINED TERMS • financial statements in accordance with GAAP. However, while such properties are presented in the Company’s financial statements on a consolidated basis, the Company is only entitled to its Pro-Rata share of the net cash flows generated by such properties. As a result, the Company ha
Slide 46: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS NOI is a non-GAAP financial measure that is defined as net income (loss), computed in accordance with GAAP, generated from properties before general and administrative expenses, business acquisition expenses, depreciation and amortization, interest expense, gain or loss on d
Slide 47: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS The following is a reconciliation of NOI (excluding Grant Income) to Cash NOI and Same-Store NOI (relating to Same-Store properties) for the quarterly periods presented below: Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Integrated Senior Health Campuses NOI (excluding Grant Inco
Slide 48: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS The following is a reconciliation of NOI (excluding Grant Income) to Cash NOI and Same-Store NOI (relating to Same-Store properties) for the quarterly periods presented below: Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Triple-Net Leased Properties NOI (excluding Grant Income) $
Slide 49: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS The following is a reconciliation of GAAP revenue to Cash revenue and Same-Store cash revenue (relating to Same-Store properties) for the quarterly periods presented below: Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Integrated Senior Health Campuses GAAP revenue and Grant Incom
Slide 50: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS The following is a reconciliation of GAAP revenue to Cash revenue and Same-Store cash revenue (relating to Same-Store properties) for the quarterly periods presented below: Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Triple-Net Leased Properties GAAP revenue $ 6,113 $ 13,928 $ 1
Slide 51: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS The following is a reconciliation of Net Loss to FFO and Normalized FFO for the quarter ending March 31, 2024: QTD Q1 2023 Q1 2024 Net loss $ (27,615) $ (3,004) Depreciation and amortization related to real estate — consolidated properties 44,632 42,729 Depreciation and amor
Slide 52: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS The following is a reconciliation of Net Loss to Annualized Adjusted EBITDA for the quarter ending March 31, 2024: Q1 2024 Net loss $ (3,004) Adjustments: Loss from unconsolidated entities 1,205 Interest expense (including amortization of deferred financing costs, debt xxxdi
Slide 53: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS (1) The following is a reconciliation of Interest Coverage Ratios and Net Debt for the quarter ending March 31, 2024: Q1 2024 Interest Coverage Ratios Interest Expense $ 36,438 Capitalized Interest 134 Loss on extinguishment of debt (1,280) Non-Cash Interest Expense(2) (3,60
American Healthcare REIT — Q1 2024 Earnings Presentation on 6ix