American Healthcare REIT Q3 earnings fall to $0.14/share
As of September 30, 2026, AHR owned and/or operated 366 buildings and ISHC totaling approximately 25,437,000 square feet.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
American Healthcare REIT, Inc. (AHR) reported third-quarter 2026 revenue of $742.1 million, compared with $572.9 million in the 2025 quarter, as resident fees and services rose to $701.1 million from $532.1 million. Net income attributable to controlling interest was $31.2 million, versus $55.9 million, and diluted earnings per share were $0.14, versus $0.33. The 2025 quarter included a $14.6 million gain on remeasurement of a previously held equity interest and a $21.1 million income tax benefit; 2026 recorded $0.7 million of income tax expense.
For the nine months ended September 30, 2026, revenue was $2,067.2 million versus $1,656.0 million, net income attributable to controlling interest was $85.5 million versus $59.0 million, and operating cash flow was $366.6 million versus $239.3 million. AHR acquired 32 senior housing properties using cash for an aggregate contract purchase price of $1,982.7 million. Common-stock offerings generated $2,299.1 million in proceeds, and 45,512,633 shares were issued in offerings during the period. Net real estate investments were $5,949.1 million at September 30, 2026, versus $4,183.4 million at December 31, 2025.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter revenue: $742.1 million, versus $572.9 million in 2025.
- Moderate pointNine-month operating cash flow: $366.6 million, versus $239.3 million in 2025.
- Minor pointNine-month revenue: $2,067.2 million, versus $1,656.0 million in 2025.
- Minor pointNine-month controlling-interest net income: $85.5 million, versus $59.0 million in 2025.
Negative
- Moderate pointThird-quarter controlling-interest net income: $31.2 million, versus $55.9 million in 2025.
Filing Explained
The filing reports 45,512,633 common shares issued in offerings during the nine months; common shares outstanding increased from 185,911,442 at
Key Figures
Key Terms
RIDEA structure technical
variable interest entity financial
held-to-maturity financial
effective interest method financial
Level 2 measurements financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue did AHR report in the third quarter of 2026?
How many senior housing properties did AHR acquire in 2026?
What were AHR's debt investments at September 30, 2026?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended |
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or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to |
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Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
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(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
As of November 2, 2026, American Healthcare REIT, Inc. had
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
(A Maryland Corporation)
TABLE OF CONTENTS
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PART I — FINANCIAL INFORMATION |
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Item 1. |
Financial Statements (Unaudited) |
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Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025 |
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Condensed Consolidated Statements of Operations and Comprehensive Income for the Three and Nine Months Ended September 30, 2026 and 2025 |
4 |
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Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2026 and 2025 |
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Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2026 and 2025 |
7 |
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Notes to Condensed Consolidated Financial Statements |
9 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
49 |
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Item 4. |
Controls and Procedures |
50 |
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PART II — OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
51 |
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Item 1A. |
Risk Factors |
51 |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
51 |
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Item 3. |
Defaults Upon Senior Securities |
51 |
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Item 4. |
Mine Safety Disclosures |
51 |
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Item 5. |
Other Information |
51 |
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Item 6. |
Exhibits |
52 |
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Signatures |
54 |
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2
Table of Contents
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
AMERICAN HEALTHCARE REIT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2026 and December 31, 2025
(In thousands, except share and per share amounts) (Unaudited)
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September 30, |
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December 31, |
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ASSETS |
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Real estate investments, net |
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$ |
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$ |
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Debt investments, net |
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Cash and cash equivalents |
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Restricted cash |
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Accounts and other receivables, net |
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Identified intangible assets, net |
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Goodwill |
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Operating lease right-of-use assets, net |
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Other assets, net |
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Total assets |
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$ |
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$ |
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LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY |
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Liabilities: |
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Mortgage loans payable, net(1) |
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$ |
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$ |
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Lines of credit and term loan, net(1) |
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Accounts payable and accrued liabilities(1) |
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Identified intangible liabilities, net |
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Financing obligations(1) |
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Operating lease liabilities(1) |
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Security deposits, prepaid rent and other liabilities(1) |
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Total liabilities |
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Commitments and contingencies (Note 10) |
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Redeemable noncontrolling interests (Note 11) |
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Equity: |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
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Total stockholders’ equity |
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Noncontrolling interests |
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Total equity |
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Total liabilities, redeemable noncontrolling interests and equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the Three and Nine Months Ended September 30, 2026 and 2025
(In thousands, except share and per share amounts) (Unaudited)
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Three Months Ended |
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Nine Months Ended |
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2026 |
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2025 |
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2026 |
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2025 |
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Revenues: |
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Resident fees and services |
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$ |
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$ |
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$ |
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$ |
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Real estate revenue |
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Total revenues |
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Expenses: |
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Property operating expenses |
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Rental expenses |
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General and administrative |
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Transaction, transition and restructuring costs |
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Depreciation and amortization |
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Total expenses |
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Other income (expense): |
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Interest expense: |
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Interest expense, net |
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( |
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( |
) |
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( |
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( |
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(Loss) gain in fair value of derivative financial instruments |
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( |
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( |
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Gain (loss) on dispositions of real estate investments, net |
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( |
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Impairment of real estate investments |
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( |
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( |
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( |
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Income (loss) from unconsolidated entities |
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( |
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Gain on re-measurement of previously held equity interest |
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Foreign currency (loss) gain |
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( |
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( |
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( |
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Other income, net |
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Total net other expense |
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( |
) |
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( |
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( |
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( |
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Income before income taxes |
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Income tax (expense) benefit |
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( |
) |
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( |
) |
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Net income |
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Net income attributable to noncontrolling interests |
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( |
) |
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( |
) |
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( |
) |
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( |
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Net income attributable to controlling interest |
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$ |
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$ |
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$ |
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$ |
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Net income per common share attributable to controlling |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average number of common shares outstanding: |
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Basic |
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Diluted |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss): |
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Foreign currency translation adjustments |
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( |
) |
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( |
) |
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Total other comprehensive income (loss) |
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( |
) |
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( |
) |
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Comprehensive income |
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Comprehensive income attributable to noncontrolling |
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( |
) |
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( |
) |
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( |
) |
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( |
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Comprehensive income attributable to controlling interest |
|
$ |
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$ |
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$ |
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$ |
|
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Three and Nine Months Ended September 30, 2026 and 2025
(In thousands, except share and per share amounts) (Unaudited)
|
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Three Months Ended September 30, 2026 |
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Stockholders’ Equity |
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Common Stock |
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Number |
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Amount |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Noncontrolling |
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Total Equity |
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||||||||
BALANCE — June 30, 2026 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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$ |
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$ |
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||||||
Issuance of common stock in offerings |
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— |
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— |
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— |
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|||||
Offering costs — common stock |
|
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
|
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— |
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( |
) |
|
Issuance of common stock related to equity compensation plans |
|
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— |
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|
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|
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— |
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— |
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— |
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|
||||
Vested restricted common stock and stock units(1) |
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( |
) |
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( |
) |
|
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— |
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— |
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( |
) |
|
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— |
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( |
) |
|
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Amortization related to equity compensation plans |
|
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— |
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— |
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— |
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— |
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— |
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|||
Distributions to noncontrolling interests |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
|
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( |
) |
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Adjustment to value of redeemable noncontrolling interests |
|
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— |
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|
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— |
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( |
) |
|
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— |
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— |
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( |
) |
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— |
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( |
) |
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Distributions declared ($ |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
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— |
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( |
) |
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Net income |
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— |
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— |
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— |
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— |
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(2) |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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— |
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|||
BALANCE — September 30, 2026 |
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|
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$ |
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$ |
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|
$ |
( |
) |
|
$ |
( |
) |
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$ |
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$ |
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$ |
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||||||
|
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Three Months Ended September 30, 2025 |
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Stockholders’ Equity |
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Common Stock |
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|||||||||||
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Number |
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Amount |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Noncontrolling |
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Total Equity |
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|
||||||||
BALANCE — June 30, 2025 |
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|
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|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
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$ |
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$ |
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||||||
Issuance of common stock in offerings |
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— |
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— |
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— |
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|
|||||
Offering costs — common stock |
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— |
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|
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— |
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( |
) |
|
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— |
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— |
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( |
) |
|
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— |
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( |
) |
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Issuance of common stock related to equity compensation plans |
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— |
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— |
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— |
|
|
|
|
|
|
— |
|
|
|
|
|
||||
Amortization related to equity compensation plans |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|||
Distributions to noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
Distributions declared ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
(2) |
||||
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
BALANCE — September 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
||||||
5
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY — (Continued)
For the Three and Nine Months Ended September 30, 2026 and 2025
(In thousands, except share and per share amounts) (Unaudited)
|
|
Nine Months Ended September 30, 2026 |
|||||||||||||||||||||||||||||||
|
|
Stockholders’ Equity |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
Number |
|
|
Amount |
|
|
Additional |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total |
|
|
Noncontrolling |
|
|
Total Equity |
|
|
||||||||
BALANCE — December 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
||||||
Issuance of common stock in offerings |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|||||
Offering costs — common stock |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Issuance of common stock related to equity compensation plans |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
||||
Vested restricted common stock and stock units(1) |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
||
Amortization related to equity compensation plans |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|||
Contribution from noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
||
Distributions to noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
Adjustment to value of redeemable noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Distributions declared ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
(2) |
||||
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
BALANCE — September 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
||||||
|
|
Nine Months Ended September 30, 2025 |
|||||||||||||||||||||||||||||||
|
|
Stockholders’ Equity |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
Number |
|
|
Amount |
|
|
Additional |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total |
|
|
Noncontrolling |
|
|
Total Equity |
|
|
||||||||
BALANCE — December 31, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
||||||
Issuance of common stock in offerings |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|||||
Offering costs — common stock |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Issuance of common stock related to equity compensation plans |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
||||
Vested restricted common stock and stock units(1) |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
||
Amortization related to equity compensation plans |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|||
Distributions to noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
Adjustment to value of redeemable noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|||
Distributions declared ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
(2) |
||||
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||
BALANCE — September 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2026 and 2025
(In thousands) (Unaudited)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Other amortization |
|
|
|
|
|
|
||
Deferred rent |
|
|
( |
) |
|
|
( |
) |
Stock-based compensation |
|
|
|
|
|
|
||
(Gain) loss on dispositions of real estate investments, net |
|
|
( |
) |
|
|
|
|
Impairment of real estate investments |
|
|
|
|
|
|
||
(Income) loss from unconsolidated entities |
|
|
( |
) |
|
|
|
|
Distributions of earnings from unconsolidated entities |
|
|
|
|
|
|
||
Deferred income tax benefit |
|
|
( |
) |
|
|
( |
) |
Gain on re-measurement of previously held equity interest |
|
|
— |
|
|
|
( |
) |
Foreign currency loss (gain) |
|
|
|
|
|
( |
) |
|
Loss on extinguishments of debt |
|
|
|
|
|
|
||
Change in fair value of derivative financial instruments |
|
|
( |
) |
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts and other receivables |
|
|
( |
) |
|
|
|
|
Other assets |
|
|
|
|
|
( |
) |
|
Accounts payable and accrued liabilities |
|
|
|
|
|
|
||
Operating lease liabilities |
|
|
( |
) |
|
|
( |
) |
Security deposits, prepaid rent and other liabilities |
|
|
|
|
|
|
||
Net cash provided by operating activities |
|
|
|
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
||
Acquisitions of real estate investments |
|
|
( |
) |
|
|
( |
) |
Developments and capital expenditures |
|
|
( |
) |
|
|
( |
) |
Proceeds from dispositions of real estate investments |
|
|
|
|
|
|
||
Investments in unconsolidated entities |
|
|
( |
) |
|
|
( |
) |
Originations of notes receivable |
|
|
( |
) |
|
|
( |
) |
Principal repayments on notes receivable |
|
|
|
|
|
|
||
Deferred origination costs on notes receivable |
|
|
( |
) |
|
|
— |
|
Real estate and other deposits |
|
|
( |
) |
|
|
( |
) |
Proceeds from insurance recoveries |
|
|
|
|
|
|
||
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
||
Borrowings under mortgage loans payable |
|
|
|
|
|
|
||
Payments on mortgage loans payable |
|
|
( |
) |
|
|
( |
) |
Borrowings under the lines of credit and term loan |
|
|
|
|
|
|
||
Payments on the lines of credit and term loan |
|
|
( |
) |
|
|
( |
) |
Payments on financing and other obligations |
|
|
( |
) |
|
|
( |
) |
Deferred financing costs |
|
|
( |
) |
|
|
( |
) |
Debt extinguishment costs |
|
|
|
|
|
( |
) |
|
Proceeds from issuance of common stock in offerings |
|
|
|
|
|
|
||
Proceeds from issuance of common stock pursuant to employee stock purchase plan |
|
|
|
|
|
|
||
Payment of offering costs |
|
|
( |
) |
|
|
( |
) |
Distributions paid |
|
|
( |
) |
|
|
( |
) |
Payments to taxing authorities in connection with common stock directly withheld from |
|
|
( |
) |
|
|
( |
) |
7
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)
For the Nine Months Ended September 30, 2026 and 2025
(In thousands) (Unaudited)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Contribution from noncontrolling interest |
|
$ |
|
|
$ |
|
||
Distributions to noncontrolling interests |
|
|
( |
) |
|
|
( |
) |
Security deposits, net |
|
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
|
||
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
|
|
|
|
|
||
EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH, CASH EQUIVALENTS |
|
|
( |
) |
|
|
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period |
|
|
|
|
|
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
|
|
|
||||
Beginning of period: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
End of period: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
|
|
|
|
|
|
||
Cash paid for: |
|
|
|
|
|
|
||
Interest |
|
$ |
|
|
$ |
|
||
Income taxes |
|
$ |
|
|
$ |
|
||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING |
|
|
|
|
|
|
||
Accrued developments and capital expenditures |
|
$ |
|
|
$ |
|
||
Distributions declared but not paid |
|
$ |
|
|
$ |
|
||
Settlement of notes receivable upon acquisition of unconsolidated entity |
|
$ |
|
|
$ |
|
||
Tenant improvement overage |
|
$ |
|
|
$ |
|
||
Accrued offering costs |
|
$ |
|
|
$ |
|
||
Redeemable noncontrolling interests |
|
$ |
|
|
$ |
— |
|
|
The following represents the net increase (decrease) in certain assets and liabilities in |
|
|
|
|
|
|
||
Accounts and other receivables |
|
$ |
( |
) |
|
$ |
|
|
Other assets, net |
|
$ |
( |
) |
|
$ |
( |
) |
Accounts payable and accrued liabilities |
|
$ |
|
|
$ |
|
||
Financing obligations |
|
$ |
( |
) |
|
$ |
|
|
Security deposits and other liabilities |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
For the Three and Nine Months Ended September 30, 2026 and 2025
The use of the words “we,” “us” or “our” refers to American Healthcare REIT, Inc. and its subsidiaries, including American Healthcare REIT Holdings, LP, except where otherwise noted.
1. Organization and Description of Business
Overview and Background
American Healthcare REIT, Inc., a Maryland corporation, is a self-managed real estate investment trust, or REIT, that acquires, owns and operates a diversified portfolio of clinical healthcare real estate properties, focusing primarily on senior housing, skilled nursing facilities, outpatient medical, or OM, buildings and other healthcare-related facilities. We have built a fully integrated management platform that operates clinical healthcare properties throughout the United States, and in the United Kingdom, or UK, and the Isle of Man. We own and operate our integrated senior health campuses, or ISHC, and senior housing operating properties, or SHOP, utilizing the structure permitted by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure. We have also originated and acquired secured loans and may originate and acquire other real estate-related investments in the future on an infrequent and opportunistic basis. We generally seek investments that produce current income; however, we have selectively developed, and may continue to selectively develop, healthcare real estate properties. We have elected to be taxed as a REIT for U.S. federal income tax purposes. We believe that we have been organized and operated, and we intend to continue to operate, in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code of 1986, or the Code.
Operating Partnership
We conduct substantially all of our operations through American Healthcare REIT Holdings, LP, or our operating partnership, and we are the sole general partner of our operating partnership. As of September 30, 2026 and December 31, 2025, we owned
Investment Portfolio
We currently operate through
2. Summary of Significant Accounting Policies
The summary of significant accounting policies presented below is designed to assist in understanding our accompanying condensed consolidated financial statements. Such condensed consolidated financial statements and the accompanying notes thereto are the representations of our management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, or GAAP, in all material respects, and have been consistently applied in preparing our accompanying condensed consolidated financial statements.
Basis of Presentation
Our accompanying condensed consolidated financial statements include our accounts and those of our operating partnership, the wholly-owned subsidiaries of our operating partnership and all non-wholly owned subsidiaries in which we have control, as well as any VIEs in which we are the primary beneficiary. The portion of equity in any subsidiary that is not wholly owned by us is presented in our accompanying condensed consolidated financial statements as a noncontrolling interest. We evaluate our ability to control an entity, and whether the entity is a VIE and we are the primary beneficiary, by considering substantive terms of the arrangement and identifying which enterprise has the power to direct the activities of the entity that most significantly impacts the entity’s economic performance.
9
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
We operate and intend to continue to operate in an umbrella partnership REIT structure in which our operating partnership, wholly-owned subsidiaries of our operating partnership and all non-wholly owned subsidiaries of which we have control will own substantially all of the interests in properties acquired on our behalf. We are the sole general partner of our operating partnership and as of September 30, 2026 and December 31, 2025, we owned a
The accounts of our operating partnership are consolidated in our accompanying condensed consolidated financial statements because we are the sole general partner of our operating partnership and have unilateral control over its management and major operating decisions (even if additional limited partners are admitted to our operating partnership). All intercompany accounts and transactions are eliminated in consolidation.
Interim Unaudited Financial Data
Our accompanying condensed consolidated financial statements have been prepared by us in accordance with GAAP in conjunction with the rules and regulations of the U.S. Securities and Exchange Commission, or SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to the SEC’s rules and regulations. Accordingly, our accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. Our accompanying condensed consolidated financial statements reflect all adjustments which are, in our view, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim period. Interim results of operations are not necessarily indicative of the results to be expected for the full year; such full-year results may be less favorable.
In preparing our accompanying condensed consolidated financial statements, management has evaluated subsequent events through the financial statement issuance date. We believe that although the disclosures contained herein are adequate to prevent the information presented from being misleading, our accompanying condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on February 27, 2026.
Use of Estimates
The preparation of our accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities, at the date of our condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include, but are not limited to, the initial and recurring valuation of certain assets acquired and liabilities assumed through property acquisitions including through business combinations, goodwill and its impairment, revenues, allowance for credit losses, impairment of long-lived and intangible assets and contingencies. These estimates are made and evaluated on an on-going basis using information that is currently available, as well as various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates, perhaps in material adverse ways, and those estimates could be different under different assumptions or conditions.
Revenue Recognition — Resident Fees and Services Revenue
Disaggregation of Resident Fees and Services Revenue
Resident fees and services revenue includes fees for basic housing, as well as fees for assisted living care or skilled nursing care. We record revenue when services are rendered at amounts billable to individual residents. Residency agreements are generally for a term of 30 days, with resident fees billed monthly in advance. For residents under reimbursement arrangements with third-party payors, including Medicaid, Medicare, Medicare Advantage and private insurers, revenue is recorded based on contractually agreed-upon amounts or rates on a daily, per resident basis or as services are performed.
The following tables disaggregate our resident fees and services revenue by line of business, according to whether such revenue is recognized at a point in time or over time, for the periods presented below (in thousands):
|
|
Three Months Ended September 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
|
ISHC |
|
|
SHOP |
|
|
Total |
|
|
ISHC |
|
|
SHOP |
|
|
Total |
|
||||||
Over time |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Point in time |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total resident fees and services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
10
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
|
|
Nine Months Ended September 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
|
ISHC |
|
|
SHOP |
|
|
Total |
|
|
ISHC |
|
|
SHOP |
|
|
Total |
|
||||||
Over time |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Point in time |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total resident fees and services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
The following tables disaggregate our resident fees and services revenue by payor class for the periods presented below (in thousands):
|
|
Three Months Ended September 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
|
ISHC |
|
|
SHOP |
|
|
Total |
|
|
ISHC |
|
|
SHOP |
|
|
Total |
|
||||||
Private and other payors |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Medicare |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Medicaid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Medicare Advantage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total resident fees and services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
Nine Months Ended September 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
|
ISHC |
|
|
SHOP |
|
|
Total |
|
|
ISHC |
|
|
SHOP |
|
|
Total |
|
||||||
Private and other payors |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Medicare |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Medicaid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Medicare Advantage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total resident fees and services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Accounts Receivable, Net — Resident Fees and Services Revenue
The beginning and ending balances of accounts receivable, net — resident fees and services are as follows (in thousands):
|
|
Medicare |
|
|
Private and |
|
|
Medicaid |
|
|
Medicare |
|
|
Total |
|
|||||
Beginning balance — January 1, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Ending balance — September 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Increase (decrease) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Deferred Revenue — Resident Fees and Services Revenue
Deferred revenue is included in security deposits, prepaid rent and other liabilities in our accompanying condensed consolidated balance sheets.
|
|
Total |
|
|
Beginning balance — January 1, 2026 |
|
$ |
|
|
Ending balance — September 30, 2026 |
|
|
|
|
Increase |
|
$ |
|
|
11
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Resident and Tenant Receivables and Allowances
Resident receivables, which are related to resident fees and services revenue, are carried net of an allowance for credit losses. An allowance is maintained for estimated losses resulting from the inability of residents and payors to meet the contractual obligations under their lease or service agreements. Substantially all of such allowances are recorded as direct reductions of resident fees and services revenue as contractual adjustments provided to third-party payors or implicit price concessions in our accompanying condensed consolidated statements of operations and comprehensive income. Our determination of the adequacy of these allowances is based primarily upon evaluations of historical loss experience, the residents’ financial condition, security deposits, cash collection patterns by payor and by state, current economic conditions, future expectations in estimating credit losses and other relevant factors. Tenant receivables, which are related to real estate revenue, and unbilled deferred rent receivables are reduced for amounts where collectability is not probable, which are recognized as direct reductions of real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive income.
The following is a summary of our adjustments to allowances for the periods presented below (in thousands):
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Beginning balance |
|
$ |
|
|
$ |
|
||
Additional allowances |
|
|
|
|
|
|
||
Write-offs |
|
|
( |
) |
|
|
( |
) |
Recoveries collected or adjustments |
|
|
( |
) |
|
|
( |
) |
Ending balance |
|
$ |
|
|
$ |
|
||
Debt Investments, Net
Debt investments, net consists of notes receivable collateralized by interests in real property or partnership interests in entities that own real property. We record such notes at amortized cost. Interest income on our notes receivable is recognized on an accrual basis over the life of the investment using the effective interest method and is included in resident fees and services revenue or real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive income. Direct origination costs are deferred and amortized over the term of the note receivable as an adjustment to the yield on the note receivable. We evaluate our notes receivable held for investment for expected credit losses at each balance sheet date in accordance with Accounting Standards Codification, or ASC, 326, Financial Instruments - Credit Losses, considering, among other factors, the credit quality of the borrower and the value of the underlying collateral. An allowance for credit losses is recorded to the extent our evaluation indicates expected credit losses over the remaining life of the note.
Debt investments, net also consists of our marketable debt security investment, which is classified as held-to-maturity because we have the positive intent and ability to hold the security to maturity, and we have not recorded any unrealized holding gains or losses on such investment. Our held-to-maturity security is recorded at amortized cost and adjusted for the amortization of premiums or discounts through maturity.
Accounts Payable and Accrued Liabilities
As of September 30, 2026 and December 31, 2025, accounts payable and accrued liabilities primarily include reimbursement of payroll-related costs to the managers of our ISHC and SHOP of $
Recently Issued Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, or ASU 2024-03. Further, in January 2025, the FASB issued ASU 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, or ASU 2025-01. ASU 2024-03 requires new financial statement disclosure to be provided in the notes to the financial statements in a tabular presentation related to the disaggregation of certain expense captions presented on the face of the income statement within continuing operations that include expense categories such as: (i) purchases of inventory; (ii) employee
12
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
compensation; (iii) depreciation; and (iv) intangible asset amortization. ASU 2024-03 and ASU 2025-01 are effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted. The requirements will be applied prospectively with the option for retrospective application. We are currently evaluating this guidance to determine the impact on our consolidated financial statement disclosures beginning with our Annual Report on Form 10-K for the year ending December 31, 2027.
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity, or ASU 2025-03. ASU 2025-03 amends the guidance in Topic 805 and Topic 810 to improve the determination of the accounting acquirer in business combinations involving VIEs. Under the new guidance, entities are required to apply the general principles in Topic 805 to identify the accounting acquirer when the legal acquiree is a VIE that meets the definition of a business, and the transaction is primarily effected by exchanging equity interests. ASU 2025-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted and should be applied prospectively to any acquisition transaction that occurs after the adoption date. We are currently evaluating this guidance to determine the impact on our consolidated financial statement disclosures beginning with our Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2027.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow Scope Improvements, or ASU 2025-11, to update the guidance in ASC Topic 270, Interim Reporting, by improving navigability of the required interim disclosures, clarifying when that guidance is applicable and adding a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods beginning after December 15, 2027. Early adoption is permitted and may be applied retrospectively or prospectively. We are currently evaluating this guidance to determine the impact on our consolidated financial statement disclosures beginning with our Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2028.
3. Real Estate Investments
Our real estate investments, net consisted of the following as of September 30, 2026 and December 31, 2025 (in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
Building, improvements and construction in process |
|
$ |
|
|
$ |
|
||
Land and improvements |
|
|
|
|
|
|
||
Furniture, fixtures and equipment |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Less: accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Total |
|
$ |
|
|
$ |
|
||
Depreciation expense for the three months ended September 30, 2026 and 2025 was $
The following is a summary of our capital expenditures by reportable segment for the periods presented below (in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||
ISHC |
|
$ |
|
|
$ |
|
||
OM |
|
|
|
|
|
|
||
SHOP |
|
|
|
|
|
|
||
Triple-Net Leased Properties |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
13
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Acquisitions of Real Estate Investments
For the nine months ended September 30, 2026, using cash, we acquired
Location |
|
Number of |
|
Type |
|
Date |
|
Contract |
|
|
Blue Springs, Kansas City and Raymore, MO |
|
|
SHOP |
|
02/09/26 |
|
$ |
|
||
San Rafael, CA |
|
|
SHOP |
|
02/25/26 |
|
|
|
||
Lenexa and Olathe, KS |
|
|
SHOP |
|
03/18/26 |
|
|
|
||
Dahlonega, GA; and Boiling Springs, Lexington and |
|
|
SHOP |
|
04/01/26 |
|
|
|
||
Plymouth, MN |
|
|
SHOP |
|
06/12/26 |
|
|
|
||
Bedford and Hingham, MA; Basking Ridge, NJ; and Bala |
|
|
SHOP |
|
07/17/26 |
|
|
|
||
Roseville and San Jose, CA |
|
|
SHOP |
|
07/29/26 |
|
|
|
||
Westport, CT; Lewes, DE; and Chester Springs, PA |
|
|
SHOP |
|
07/30/26 |
|
|
|
||
Sugar Hill, GA |
|
|
SHOP |
|
08/04/26 |
|
|
|
||
Redondo Beach, Redwood City and Sierra Madre, CA; White |
|
|
SHOP |
|
08/31/26 |
|
|
|
||
Glastonbury, CT |
|
|
SHOP |
|
09/01/26 |
|
|
|
||
Total |
|
|
|
|
|
|
$ |
|
||
We accounted for such acquisitions of land and real estate investments completed during the nine months ended September 30, 2026 as asset acquisitions.
|
|
2026 |
|
|
Building and improvements |
|
$ |
|
|
In-place leases |
|
|
|
|
Land |
|
|
|
|
Operating lease right-of-use asset |
|
|
|
|
Furniture, fixtures and equipment |
|
|
|
|
Certificates of need |
|
|
|
|
Total assets acquired |
|
|
|
|
Operating lease liability |
|
|
( |
) |
Total liabilities assumed |
|
|
( |
) |
Net assets acquired |
|
$ |
|
|
14
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Dispositions
For the nine months ended September 30, 2026, we sold
Location |
|
Number of |
|
Type |
|
Date |
|
Contract |
|
|
Middletown, OH |
|
|
OM |
|
04/01/26 |
|
$ |
|
||
West Des Moines, IA |
|
|
Triple-Net |
|
04/16/26 |
|
|
|
||
Total |
|
|
|
|
|
|
$ |
|
||
On June 1, 2026, we sold
Impairment of Real Estate Investments
For the three months ended September 30, 2026, we did
For the three and nine months ended September 30, 2025, we recognized an aggregate impairment charge of $
4. Debt Investments
As of September 30, 2026 and December 31, 2025, we had $
|
|
|
|
|
|
|
|
Balance |
|
|||||
|
|
Origination |
|
Maturity |
|
Contractual |
|
September 30, |
|
|
December 31, |
|
||
Debt security investment(1) |
|
|
|
|
$ |
|
|
$ |
|
|||||
Notes receivable: |
|
|
|
|
|
|
|
|
|
|
|
|
||
Notes secured by mortgages(2) |
|
|
|
|
|
|
|
|
|
|||||
Notes secured by partnership |
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Unamortized direct origination and |
|
|
|
|
|
|
|
|
|
|
|
|
||
Total debt investments, net |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||
15
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
The following table shows the changes in the carrying amount of debt investments, net for the periods presented below (in thousands):
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Beginning balance |
|
$ |
|
|
$ |
|
||
Additions: |
|
|
|
|
|
|
||
Originations of notes receivable |
|
|
|
|
|
|
||
Accretion on debt security investment |
|
|
|
|
|
|
||
Direct origination costs |
|
|
|
|
|
|
||
Deductions: |
|
|
|
|
|
|
||
Foreign currency translation adjustments |
|
|
( |
) |
|
|
|
|
Amortization of direct origination and closing costs |
|
|
( |
) |
|
|
( |
) |
Ending balance |
|
$ |
|
|
$ |
|
||
Amortization expense on direct origination and closing costs for the three months ended September 30, 2026 and 2025 was $
16
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
5. Identified Intangible Assets and Liabilities
Identified intangible assets, net and identified intangible liabilities, net consisted of the following as of September 30, 2026 and December 31, 2025 (dollars in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
Amortized intangible assets: |
|
|
|
|
|
|
||
In-place leases, net of accumulated amortization of $ |
|
$ |
|
|
$ |
|
||
Above-market leases, net of accumulated amortization of $ |
|
|
|
|
|
|
||
Unamortized intangible assets: |
|
|
|
|
|
|
||
Certificates of need |
|
|
|
|
|
|
||
Trade names |
|
|
|
|
|
|
||
Total identified intangible assets, net |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Amortized intangible liabilities: |
|
|
|
|
|
|
||
Below-market leases, net of accumulated amortization of $ |
|
$ |
|
|
$ |
|
||
Total identified intangible liabilities, net |
|
$ |
|
|
$ |
|
||
Amortization expense on identified intangible assets for the three months ended September 30, 2026 and 2025 was $
Amortization expense on below-market leases for the three months ended September 30, 2026 and 2025 was $
17
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
The aggregate weighted average remaining life of the identified intangible assets was
|
|
Amortization Expense |
|
|||||
Year |
|
Intangible |
|
|
Intangible |
|
||
2026 |
|
$ |
|
|
$ |
( |
) |
|
2027 |
|
|
|
|
|
( |
) |
|
2028 |
|
|
|
|
|
( |
) |
|
2029 |
|
|
|
|
|
( |
) |
|
2030 |
|
|
|
|
|
( |
) |
|
Thereafter |
|
|
|
|
|
( |
) |
|
Total |
|
$ |
|
|
$ |
( |
) |
|
6. Other Assets
Other assets, net consisted of the following as of September 30, 2026 and December 31, 2025 (dollars in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
Deferred rent receivables |
|
$ |
|
|
$ |
|
||
Prepaid expenses and other assets |
|
|
|
|
|
|
||
Deferred tax assets, net |
|
|
|
|
|
|
||
Inventory — finished goods |
|
|
|
|
|
|
||
Lease commissions, net of accumulated amortization of $ |
|
|
|
|
|
|
||
Real estate deposits |
|
|
|
|
|
|
||
Deferred financing costs, net of accumulated amortization of $ |
|
|
|
|
|
|
||
Investments in unconsolidated entities |
|
|
|
|
|
|
||
Lease inducement, net of accumulated amortization of $ |
|
|
|
|
|
|
||
Derivative financial instruments |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Deferred financing costs included in other assets were related to the 2025 Trilogy Credit Facility, as defined in Note 8, Lines of Credit and Term Loan, as well as the senior unsecured revolving credit facility portions of the 2024 Credit Facility and 2026 Credit Facility, each as defined in Note 8, Lines of Credit and Term Loan. In April 2026, in connection with the amendment of the 2024 Credit Facility with the 2026 Credit Facility, we incurred a loss on extinguishment of $
18
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
7. Mortgage Loans Payable
Mortgage loans payable, net consisted of the following as of September 30, 2026 and December 31, 2025 (dollars in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
Fixed-rate debt ( |
|
$ |
|
|
$ |
|
||
Less: deferred financing costs, net |
|
|
( |
) |
|
|
( |
) |
Less: discount |
|
|
( |
) |
|
|
( |
) |
Mortgage loans payable, net |
|
$ |
|
|
$ |
|
||
Based on interest rates in effect as of both September 30, 2026 and December 31, 2025, effective interest rates on mortgage loans payable ranged from
The following table reflects the changes in the carrying amount of mortgage loans payable, net for the periods presented below (in thousands):
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Beginning balance |
|
$ |
|
|
$ |
|
||
Additions: |
|
|
|
|
|
|
||
Borrowings under mortgage loans payable |
|
|
|
|
|
|
||
Amortization of deferred financing costs |
|
|
|
|
|
|
||
Amortization of discount/premium on mortgage loans payable, net |
|
|
|
|
|
|
||
Deductions: |
|
|
|
|
|
|
||
Scheduled principal payments on mortgage loans payable |
|
|
( |
) |
|
|
( |
) |
Early payoff of mortgage loans payable |
|
|
|
|
|
( |
) |
|
Payoff of mortgage loans payable due to dispositions of real estate investments |
|
|
|
|
|
( |
) |
|
Deferred financing costs |
|
|
|
|
|
( |
) |
|
Ending balance |
|
$ |
|
|
$ |
|
||
Amortization of deferred financing costs and amortization of discount/premium on mortgage loans payable is included in interest expense in our accompanying condensed consolidated statements of operations and comprehensive income. For both the three and nine months ended September 30, 2026, we did
As of September 30, 2026, the principal payments due on our mortgage loans payable for the remaining three months ending December 31, 2026 and for each of the next four years ending December 31, and thereafter were as follows (in thousands):
Year |
|
Amount |
|
|
2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
|
19
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
8. Lines of Credit and Term Loan
2024 Credit Facility
We, through our operating partnership, as borrower, and certain of our subsidiaries, or the subsidiary guarantors, collectively, with us, as guarantors, were party to an amended loan agreement, or the 2024 Credit Agreement, with Bank of America, N.A., or Bank of America, KeyBank National Association, or KeyBank, Citizens Bank, National Association, or Citizens Bank, and a syndicate of other banks, as lenders, for a credit facility with an aggregate maximum principal amount up to $
Under the terms of the 2024 Credit Agreement, the Revolving Loans would have matured on February 14, 2028, and could have been extended for
At our option, the 2024 Credit Facility bore interest at varying rates based upon (i) the Daily Simple Secured Overnight Financing Rate, or Daily Simple SOFR, plus the Applicable Rate for Daily SOFR Rate Loans or (ii) the Term Secured Overnight Financing Rate, or Term SOFR, plus the Applicable Rate for Term SOFR Rate Loans. If, under the terms of the 2024 Credit Agreement, there was an inability to determine the Daily SOFR or the Term SOFR, then the 2024 Credit Facility would have borne interest at a rate per annum equal to the Base Rate plus the Applicable Rate for Base Rate Loans. The loans could have been repaid in whole or in part without prepayment premium or penalty, subject to certain conditions.
We were required to pay a fee on the unused portion of the lenders’ commitments under the 2024 Credit Agreement computed at (a)
The 2024 Credit Agreement required us to add additional subsidiaries as guarantors in the event the value of the assets owned by the subsidiary guarantors fell below a certain threshold as set forth in the 2024 Credit Agreement. In the event of default, Bank of America had the right to terminate the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions under the 2024 Credit Agreement and to accelerate the payment on any unpaid principal amount of all outstanding loans and all interest accrued and unpaid thereon.
As of December 31, 2025, our aggregate borrowing capacity under the 2024 Credit Facility was $
On April 1, 2026, we entered into an agreement to further amend the 2024 Credit Agreement. See the “2026 Credit Facility” section below for further discussion.
2025 Trilogy Credit Facility
On October 31, 2025, we, through Trilogy RER, LLC, entered into a loan agreement, or the 2025 Trilogy Credit Agreement, with KeyBank, as lender named therein, with respect to a senior secured revolving credit facility that has an aggregate maximum principal amount of $
The 2025 Trilogy Credit Facility matures on October 31, 2028. At our option, the 2025 Trilogy Credit Facility bears interest at per annum rates equal to (a) Daily Simple SOFR, plus the Applicable Margin for SOFR Rate Loans and (b) for Base Rate Loans, the Applicable Margin plus a fluctuating rate per annum equal to the highest of: (i) Federal Funds Effective Rate in effect on such day
20
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
plus
As of both September 30, 2026 and December 31, 2025, our aggregate borrowing capacity under the 2025 Trilogy Credit Facility was $
2026 Credit Facility
On April 1, 2026, we, through our operating partnership, as borrower, and certain of our subsidiaries, or the subsidiary guarantors, and our company, collectively as guarantors, entered into a second amendment to the 2024 Credit Agreement, or the 2026 Credit Agreement, with Bank of America, as administrative agent and letters of credit issuer; Citizens Bank, Fifth Third Bank, National Association, and KeyBank as syndication agents for the revolving facility and the term loan facility and letters of credit issuers; and a syndicate of other banks, as lenders, to amend certain terms of the 2024 Credit Facility. Unless defined herein, all capitalized terms are as defined in the 2024 Credit Agreement as conformed through the 2026 Credit Agreement.
The 2026 Credit Agreement provides for an amended revolving facility and term loan facility, or the 2026 Credit Facility, with: (i) Revolving Loans that mature on April 1, 2030, with two extension options to extend the maturity, first, until October 1, 2030, and, second, until April 1, 2031, in each case, subject to the satisfaction of certain conditions, including payment of an extension fee; and (ii) a Term Loan with a maturity date of January 19, 2027 that remains unchanged, and may not be extended. The principal amount of the Term Loan under the 2026 Credit Facility remains unchanged at $
The 2026 Credit Facility bears interest at varying rates based upon, at our option, (i) the Daily Simple SOFR, plus the Applicable Rate for Daily SOFR Rate Loans or (ii) the Term SOFR, plus the Applicable Rate for Term SOFR Rate Loans. If, under the terms of the 2026 Credit Agreement, there is an inability to determine the Daily SOFR or the Term SOFR, then the 2026 Credit Facility will bear interest at a rate per annum equal to the Base Rate plus the Applicable Rate for Base Rate Loans. The loans may be repaid in whole or in part without prepayment premium or penalty, subject to certain conditions.
Under the 2026 Credit Agreement, we are required to pay a facility fee as determined in the Consolidated Leverage Ratio Based Pricing Grid or the Debt Ratings Based Pricing Grid, as applicable depending on how the Applicable Rate is then determined, multiplied by the actual daily amount of the Aggregate Revolving Commitments, or, if the Aggregate Revolving Commitments have terminated, the Outstanding Amount of all Revolving Loans and L/C Obligations, regardless of usage.
The 2026 Credit Agreement requires us to add additional subsidiaries as guarantors in the event the value of the assets owned by the subsidiary guarantors falls below a certain threshold as set forth in the 2026 Credit Agreement. In the event of default, Bank of America has the right to terminate the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions under the 2026 Credit Agreement, and to accelerate the payment on any unpaid principal amount of all outstanding loans and all interest accrued and unpaid thereon.
As of September 30, 2026, our aggregate borrowing capacity under the 2026 Credit Facility was $
21
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
9. Derivative Financial Instruments
We use derivative financial instruments to manage interest rate risk associated with variable-rate debt. We recorded such derivative financial instruments in our accompanying condensed consolidated balance sheets as either an asset or a liability, as applicable, measured at fair value.
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value |
|
||||||
Instrument |
Notional |
|
Index |
Interest Rate |
Effective Date |
Maturity Date |
September 30, |
|
|
December 31, |
|
|||||||||
Swap |
|
$ |
|
|
Daily SOFR |
|
|
02/01/2023 |
|
01/19/2026 |
|
$ |
|
|
$ |
( |
) |
|||
Swap |
|
$ |
|
|
Daily SOFR |
|
|
08/08/2023 |
|
01/19/2026 |
|
|
|
|
|
( |
) |
|||
Swap |
|
$ |
|
|
Daily SOFR |
|
|
01/20/2026 |
|
01/19/2027 |
|
|
|
|
|
( |
) |
|||
Swap |
|
$ |
|
|
Daily SOFR |
|
|
01/20/2026 |
|
01/19/2027 |
|
|
|
|
|
( |
) |
|||
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
( |
) |
||||||
As of both September 30, 2026 and December 31, 2025, none of our derivative financial instruments were designated as hedges. Derivative financial instruments not designated as hedges are not speculative and are used to manage our exposure to interest rate movements, but do not meet the strict hedge accounting requirements. For the three months ended September 30, 2026 and 2025, we recorded a net (loss) gain in the fair value of derivative financial instruments of $(
See Note 13, Fair Value Measurements, for further discussion of the fair value of our derivative financial instruments.
On October 1, 2026, we, through our operating partnership, entered into an interest rate swap transaction with a notional amount of $
10. Commitments and Contingencies
Litigation
We are not presently subject to any material litigation nor, to our knowledge, is any material litigation threatened against us, which, if determined unfavorably to us, would have a material adverse effect on our consolidated financial position, results of operations or cash flows.
Environmental Matters
We follow a policy of monitoring our properties for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist at our properties, we are not currently aware of any environmental liability with respect to our properties that would have a material adverse effect on our consolidated financial position, results of operations or cash flows. Further, we are not aware of any material environmental liability or any unasserted claim or assessment with respect to an environmental liability that we believe would require additional disclosure or the recording of a loss contingency.
Other
Our other commitments and contingencies include the usual obligations of real estate owners and operators in the normal course of business, which include calls and puts to sell or acquire properties and indemnification obligations in connection with the acquisition and disposition of real estate investments. In certain circumstances, regardless of whether we are a named party in a lawsuit, investigation, claim or other legal or regulatory proceeding, we may be contractually obligated to indemnify, defend and hold harmless our tenants, operators, managers or other third parties against, or may otherwise be responsible for, such actions, legal or regulatory proceedings or claims. In other circumstances, certain of our tenants, operators, managers or other third parties may be obligated to indemnify, defend and hold us harmless in whole or in part with respect to certain actions, legal or regulatory proceedings
22
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
or claims. In addition, as of September 30, 2026, we were under contract to acquire
11. Redeemable Noncontrolling Interests
On September 1, 2026, we, through our operating partnership, formed two joint ventures with affiliates of the seller to acquire each of the senior housing communities located in Redwood City, California and Sierra Madre, California, respectively. Our ownership of each joint venture is approximately
We record the carrying amount of redeemable noncontrolling interests at the greater of: (i) the initial carrying amount, increased or decreased for the noncontrolling interests’ share of net income or loss and distributions or (ii) the redemption value.
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Beginning balance |
|
$ |
|
|
$ |
|
||
Additions |
|
|
|
|
|
|
||
Adjustment to redemption value |
|
|
|
|
|
( |
) |
|
Net loss attributable to redeemable noncontrolling interests |
|
|
( |
) |
|
|
( |
) |
Ending balance |
|
$ |
|
|
$ |
|
||
12. Equity
Preferred Stock
Pursuant to our charter, we are authorized to issue
Common Stock
Pursuant to our charter, as amended, we are authorized to issue
ATM Offerings
On August 8, 2025, we established an at-the-market, or ATM, equity offering program, or the 2025 ATM Offering, pursuant to which we offered to sell shares of our common stock for a maximum gross sales price of up to $
Our ATM offering programs allow us to enter into forward sale agreements which give us the ability to lock in a share price on the sale of common stock at or shortly after the time the forward sale agreement becomes effective, while postponing the receipt of proceeds from the sale of shares until a future date. We evaluated our forward sale agreements in accordance with ASC Subtopic 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity, and concluded that they meet the conditions to be classified within equity as of September 30, 2026. Shares issuable under a forward sale agreement are reflected in the diluted earnings per share calculations for the applicable periods using the treasury stock method.
23
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Through September 30, 2026, we have entered into forward sale agreements pursuant to our ATM offering programs with maturities extending through October 9, 2027. For the three and nine months ended September 30, 2026, we settled a total of
Follow-on Public Offerings
On November 24, 2025 and November 26, 2025, we completed a follow-on public offering, or the November 2025 Offering, for the sale of
On May 22, 2026 and May 28, 2026, we completed an additional follow-on public offering, or the May 2026 Offering, for the sale of
On August 12, 2026 and August 24, 2026, we completed an additional follow-on public offering, or the August 2026 Offering, for the sale of
Equity Compensation Plans
AHR Incentive Plan
Pursuant to our Second Amended and Restated 2015 Incentive Plan, or the AHR Incentive Plan, our board of directors (with respect to options and restricted shares of common stock granted to independent directors) or our compensation committee (with respect to any other award) may grant options, restricted shares of common stock, stock purchase rights, stock appreciation rights or other awards to our independent directors, officers, employees and consultants. The AHR Incentive Plan terminates on June 15, 2033, and the maximum number of shares of our common stock that may be issued pursuant to such plan is
Restricted common stock
Pursuant to the AHR Incentive Plan, we may grant shares of our restricted common stock, or RSAs, as defined in the AHR Incentive Plan, to our independent directors in connection with their initial election or re-election to our board or in consideration of their past services rendered, as well as to certain executive officers and key employees. Our RSAs generally have a vesting period between one to
24
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Restricted stock units
Pursuant to the AHR Incentive Plan, we may grant to our executive officers and certain employees performance-based restricted stock units, or PBUs, and/or time-based restricted stock units, or TBUs, which represent the right to receive shares of our common stock upon vesting. PBUs and TBUs are collectively referred to as RSUs. RSUs granted to executive officers and employees generally have a vesting period of up to
The total fair value of the RSAs and RSUs granted pursuant to the AHR Incentive Plan during the nine months ended September 30, 2026 and 2025 was $
|
|
Number of |
|
|
|
Weighted |
|
|
Number of |
|
|
|
Weighted |
|
||||
Balance — December 31, 2025 |
|
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
||||
Vested |
|
|
( |
) |
(1) |
|
$ |
|
|
|
( |
) |
(1) |
|
$ |
|
||
Forfeited/cancelled |
|
|
( |
) |
|
|
$ |
|
|
|
( |
) |
|
|
$ |
|
||
Balance — September 30, 2026 |
|
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
||||
Employee Stock Purchase Plan
Pursuant to our 2024 Employee Stock Purchase Plan, or the ESPP, eligible employees may purchase shares of our common stock at a purchase price equal to the lesser of
Manager Equity Plan
We adopted the 2025 Manager Equity Plan, or the Manager Plan, to align the incentives of our external third-party RIDEA managers with the overall success of our business by issuing equity-based incentives to such RIDEA managers. Pursuant to the Manager Plan, we may issue shares of our common stock to the RIDEA managers, which they may in turn issue to their directors, officers, employees, advisors or consultants. The maximum number of shares of our common stock that may be issued pursuant to the Manager Plan is
25
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
We did
|
|
Number of |
|
|
Weighted |
|
||
Balance — December 31, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Vested |
|
|
( |
) |
|
$ |
|
|
Balance — September 30, 2026 |
|
|
|
|
$ |
|
||
13. Fair Value Measurements
Assets and Liabilities Reported at Fair Value
The table below presents our assets and liabilities measured at fair value on a recurring basis as of September 30, 2026, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):
|
|
Quoted Prices in |
|
|
Significant Other |
|
|
Significant |
|
|
Total |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative financial instruments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total assets at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The table below presents our assets and liabilities measured at fair value on a recurring basis as of December 31, 2025, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):
|
|
Quoted Prices in |
|
|
Significant Other |
|
|
Significant |
|
|
Total |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative financial instruments |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Total liabilities at fair value |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
There were no transfers into and out of fair value measurement levels during the nine months ended September 30, 2026 and 2025.
Derivative Financial Instruments
We entered into interest rate swaps to manage interest rate risk associated with variable-rate debt. The valuation of these instruments was determined using widely accepted valuation techniques including a discounted cash flow analysis on the expected cash flows of each derivative. Such valuation reflected the contractual terms of the derivatives, including the period to maturity, and used observable market-based inputs, including interest rate curves, as well as option volatility. The fair values of our interest rate
26
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
swaps were determined by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts were based on an expectation of future interest rates derived from observable market interest rate curves.
We incorporated credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.
Although we determined that the majority of the inputs used to value our derivative financial instruments fell within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with these instruments utilized Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparty. However, as of September 30, 2026, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of our derivatives. As a result, we determined that our derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy.
Financial Instruments Disclosed at Fair Value
Our accompanying condensed consolidated balance sheets include the following financial instruments: notes receivable, debt security investment, cash and cash equivalents, restricted cash, accounts and other receivables, accounts payable and accrued liabilities, mortgage loans payable and borrowings under our lines of credit and term loan.
We consider the carrying values of cash and cash equivalents, restricted cash, accounts and other receivables, notes receivable and accounts payable and accrued liabilities to approximate the fair value for these financial instruments based upon an evaluation of the underlying characteristics of the instruments and market data, in light of the short period of time between origination of the instruments and their expected realization. The fair values of such financial instruments are classified in Level 2 of the fair value hierarchy.
The fair value of our debt security investment is estimated using a discounted cash flow analysis using interest rates available to us for investments with similar terms and maturities. The fair values of our mortgage loans payable and our lines of credit and term loan are estimated using discounted cash flow analyses using borrowing rates available to us for debt instruments with similar terms and maturities. We have determined that the valuations of our debt security investment, mortgage loans payable and lines of credit and term loan are classified in Level 2 within the fair value hierarchy.
|
|
September 30, |
|
|
December 31, |
|
||||||||||
|
|
Carrying |
|
|
Fair |
|
|
Carrying |
|
|
Fair |
|
||||
Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt security investment |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Financial Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage loans payable |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Lines of credit and term loan |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
14. Income Taxes
As a REIT, we generally will not be subject to U.S. federal income tax on taxable income that we distribute to our stockholders. We have elected to treat certain of our consolidated subsidiaries as taxable REIT subsidiaries, or TRS, pursuant to the Code. TRS may participate in services that would otherwise be considered impermissible for REITs and are subject to federal and state income tax at regular corporate tax rates.
Current Income Tax
Federal and state income taxes are generally a function of the level of income recognized by our TRS. Foreign income taxes are generally a function of our income on our real estate located in the UK and Isle of Man.
27
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Deferred Taxes
Deferred income tax is generally a function of the period’s temporary differences (primarily basis differences between tax and financial reporting for real estate assets and equity investments) and generation of tax net operating loss that may be realized in future periods depending on sufficient taxable income.
We recognize the effects of an uncertain tax position on the financial statements, when it is more likely than not, based on the technical merits of the tax position, that such a position will be sustained upon examination by the relevant tax authorities. If the tax benefit meets the “more likely than not” threshold, the measurement of the tax benefit will be based on our estimate of the ultimate tax benefit to be sustained if audited by the taxing authority. As of both September 30, 2026 and December 31, 2025, we did not have any tax benefits or liabilities for uncertain tax positions that we believe should be recognized in our accompanying condensed consolidated financial statements.
We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A valuation allowance is established if we believe it is more likely than not that all or a portion of the deferred tax assets are not realizable. As of both September 30, 2026 and December 31, 2025, our valuation allowance partially reserved our net deferred tax assets, due to historical losses and inherent uncertainty of future income. We will continue to monitor industry and economic conditions, and our ability to generate taxable income based on our business plan and available tax planning strategies, which would allow us to utilize the tax benefits of the net deferred tax assets and thereby allow us to reverse all, or a portion of, our valuation allowance in the future.
15. Leases
Lessor
We have operating leases with tenants that expire at various dates through 2050. For the three months ended September 30, 2026 and 2025, we recognized $
Year |
|
Amount |
|
|
2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
|
Lessee
We lease certain land, buildings, campuses, office equipment and automobiles. We have lease agreements with lease and non-lease components, which are generally accounted for separately. Most leases include one or more options to renew, with renewal terms that generally can extend at various dates through 2107, excluding extension options. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property.
The depreciable life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain of our lease agreements include rental payments that are adjusted periodically based on the United States Bureau of Labor Statistics’ Consumer Price Index and may also include other variable lease costs (i.e., common area maintenance, property taxes and insurance). Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
28
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
The components of lease costs were as follows (in thousands):
|
|
|
|
Three Months Ended September 30, |
|
|||||
Lease Cost |
|
Classification |
|
2026 |
|
|
2025 |
|
||
Operating lease cost(1) |
|
Property operating expenses, rental |
|
$ |
|
|
$ |
|
||
Finance lease cost: |
|
|
|
|
|
|
|
|
||
Amortization of leased assets |
|
Depreciation and amortization |
|
|
|
|
|
|
||
Interest on lease liabilities |
|
Interest expense |
|
|
|
|
|
|
||
Sublease income |
|
Resident fees and services revenue |
|
|
( |
) |
|
|
( |
) |
Total lease cost |
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
Nine Months Ended September 30, |
|
|||||
Lease Cost |
|
Classification |
|
2026 |
|
|
2025 |
|
||
Operating lease cost(1) |
|
Property operating expenses, rental |
|
$ |
|
|
$ |
|
||
Finance lease cost: |
|
|
|
|
|
|
|
|
||
Amortization of leased assets |
|
Depreciation and amortization |
|
|
|
|
|
|
||
Interest on lease liabilities |
|
Interest expense |
|
|
|
|
|
|
||
Sublease income |
|
Resident fees and services revenue |
|
|
( |
) |
|
|
( |
) |
Total lease cost |
|
|
|
$ |
|
|
$ |
|
||
Additional information related to our leases for the periods presented below was as follows (dollars in thousands):
Lease Term and Discount Rate |
|
September 30, |
|
December 31, |
Weighted average remaining lease term (in years): |
|
|
|
|
Operating leases |
|
|
||
Finance leases |
|
|
||
Weighted average discount rate: |
|
|
|
|
Operating leases |
|
|
||
Finance leases |
|
|
|
|
Nine Months Ended September 30, |
|
|||||
Supplemental Disclosure of Cash Flows Information |
|
2026 |
|
|
2025 |
|
||
Operating cash outflows related to finance leases |
|
$ |
|
|
$ |
|
||
Financing cash outflows related to finance leases |
|
$ |
|
|
$ |
|
||
Right-of-use assets obtained in exchange for operating lease liabilities |
|
$ |
|
|
$ |
|
||
29
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Operating Leases
As of September 30, 2026, the following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments for the remaining three months ending December 31, 2026 and for each of the next four years ending December 31 and thereafter, as well as the reconciliation of those cash flows to operating lease liabilities on our accompanying condensed consolidated balance sheet (in thousands):
Year |
|
Amount |
|
|
2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total undiscounted operating lease payments |
|
|
|
|
Less: interest |
|
|
( |
) |
Present value of operating lease liabilities |
|
$ |
|
|
Finance Leases and Financing Obligations
As of September 30, 2026, the following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments for the remaining three months ending December 31, 2026 and for each of the next four years ending December 31 and thereafter, as well as a reconciliation of those cash flows to finance lease liabilities and financing obligations (in thousands):
Year |
|
Amount |
|
|
2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total undiscounted payments |
|
|
|
|
Less: interest |
|
|
( |
) |
Present value of finance lease liabilities and financing obligations |
|
$ |
|
|
16. Segment Reporting
Our chief operating decision maker, or CODM, who is our Chief Executive Officer, evaluates our business and makes resource allocations based on four operating segments: ISHC, SHOP, OM and Triple-Net Leased Properties. These operating segments are also our reportable segments.
Our ISHC segment includes properties that each provide a range of independent living, assisted living, memory care, skilled nursing services and certain ancillary businesses. Our SHOP segment includes senior housing, which may provide assisted living, independent living or memory care services, that are owned and operated utilizing a RIDEA structure. In addition, our SHOP segment includes notes receivable secured by partnership interests. Our OM segment includes buildings that are typically leased to multiple tenants under separate leases, thus requiring active management and responsibility for many of the associated operating expenses (much of which are, or can effectively be, passed through to the tenants). Our Triple-Net Leased Properties segment includes senior housing, skilled nursing facilities and hospital investments, which are single-tenant properties for which we lease the properties to unaffiliated tenants under triple-net and generally master leases that transfer the obligation for all property operating costs (including maintenance, repairs, taxes, insurance and capital expenditures) to the tenant. In addition, our Triple-Net Leased Properties segment includes our debt security investment and notes receivable secured by mortgages. During the first quarter of 2026, we reclassified two senior housing properties from our SHOP reportable segment to our ISHC reportable segment to align the properties that are managed by Trilogy Management Services, LLC within ISHC. Our reportable segments and the measure of segment profit or loss reviewed by our CODM were unchanged. As of and for the three and nine months ended September 30, 2026, prior-period segment information presented in this Quarterly Report on Form 10-Q has been recast to conform to the current-period presentation. The reclassification had no impact on previously reported consolidated amounts.
30
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Interest expense, depreciation and amortization and other expenses not attributable to individual properties are not allocated to individual segments for purposes of assessing segment performance. Non-segment assets primarily consist of corporate assets, including cash and cash equivalents, deferred financing costs, operating lease right-of-use asset and other assets not attributable to individual properties.
Summary information for our reportable segments, including a summary of segment operating expenses, during the three and nine months ended September 30, 2026 and 2025 was as follows (in thousands):
|
|
ISHC |
|
|
SHOP |
|
|
OM |
|
|
Triple-Net |
|
|
Three Months Ended |
|
|||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Resident fees and services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Real estate revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Less(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Controllable expenses(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Non-controllable expenses(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Facility rental expense(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other segment items(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Segment net operating income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||||
Transaction, transition and restructuring costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Loss in fair value of derivative financial instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Income from unconsolidated entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||||
31
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
|
|
ISHC |
|
|
SHOP |
|
|
OM |
|
|
Triple-Net |
|
|
Three Months Ended |
|
|||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Resident fees and services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Real estate revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Less(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Controllable expenses(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Non-controllable expenses(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Facility rental expense(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other segment items(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Segment net operating income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||||
Transaction, transition and restructuring costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Gain in fair value of derivative financial instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gain on dispositions of real estate investments, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Impairment of real estate investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Income from unconsolidated entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gain on re-measurement of previously held equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||||
32
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
|
|
ISHC |
|
|
SHOP |
|
|
OM |
|
|
Triple-Net |
|
|
Nine Months Ended |
|
|||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Resident fees and services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Real estate revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Less(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Controllable expenses(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Non-controllable expenses(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Facility rental expense(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other segment items(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Segment net operating income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||||
Transaction, transition and restructuring costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Gain in fair value of derivative financial instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gain on dispositions of real estate investments, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Impairment of real estate investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Income from unconsolidated entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||||
33
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
|
|
ISHC |
|
|
SHOP |
|
|
OM |
|
|
Triple-Net |
|
|
Nine Months Ended |
|
|||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Resident fees and services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Real estate revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Less(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Controllable expenses(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Non-controllable expenses(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Facility rental expense(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other segment items(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Segment net operating income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||||
Transaction, transition and restructuring costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Loss in fair value of derivative financial instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Loss on dispositions of real estate investments, net |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Impairment of real estate investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Loss from unconsolidated entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Gain on re-measurement of previously held equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency gain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||||
34
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Total assets by reportable segment as of September 30, 2026 and December 31, 2025 were as follows (in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
SHOP |
|
$ |
|
|
$ |
|
||
ISHC |
|
|
|
|
|
|
||
OM |
|
|
|
|
|
|
||
Triple-Net Leased Properties |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
As of both September 30, 2026 and December 31, 2025, goodwill of $
Our portfolio of properties and other investments are located in the United States, the UK and Isle of Man. Revenues and assets are attributed to the country in which the property is physically located.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
International |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following is a summary of real estate investments, net by geographic regions as of September 30, 2026 and December 31, 2025 (in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
Real estate investments, net: |
|
|
|
|
|
|
||
United States |
|
$ |
|
|
$ |
|
||
International |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
17. Concentration of Credit Risk
Financial instruments that potentially subject us to a concentration of credit risk are primarily our debt investments, cash and cash equivalents, restricted cash and accounts and other receivables. We are exposed to credit risk with respect to our debt investments, but we believe collection of the outstanding amounts is probable. Cash and cash equivalents are generally invested in investment-grade, short-term instruments with a maturity of three months or less when purchased. We have cash and cash equivalents in financial institutions that are insured by the Federal Deposit Insurance Corporation, or FDIC. As of September 30, 2026 and December 31, 2025, we had cash and cash equivalents in excess of FDIC insured limits. We believe this risk is not significant. Concentration of credit risk with respect to accounts receivable from tenants and residents is limited. We perform credit evaluations of prospective tenants and security deposits are obtained at the time of property acquisition and upon lease execution.
Based on leases in effect as of September 30, 2026, properties in
Based on leases in effect as of September 30, 2026, our ISHC, SHOP, OM and Triple-Net Leased Properties accounted for
35
Table of Contents
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
As of September 30, 2026,
18. Earnings Per Share
The following table presents the amounts used in computing our basic and diluted earnings per share (in thousands, except share and per share amounts):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to controlling interest — basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Adjustment for net (loss) income allocated to participating |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Net income attributable to controlling interest — diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator for basic earnings per share — weighted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nonvested restricted common stock and stock units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
ESPP |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward sale agreements |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator for diluted earnings per share — adjusted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to controlling interest |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to controlling interest |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Basic earnings per share for all periods presented is computed by dividing net income applicable to common stock by the weighted average number of shares of our common stock outstanding during the period. Diluted earnings per share are computed based on the weighted average number of shares of our common stock and all dilutive securities, if any. TBUs, RSAs and limited OP units, as well as common stock issued pursuant to the ESPP, the Manager Plan and forward sale agreements, give rise to potentially dilutive shares of our common stock.
The following securities were excluded from the computation of diluted earnings per share because such securities were anti-dilutive during the periods presented below:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Nonvested TBUs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nonvested RSAs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Limited OP units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward sale agreements |
|
|
|
|
|
|
|
|
|
|
|
|
||||
For the three and nine months ended September 30, 2026 and 2025,
36
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The use of the words “we,” “us” or “our” refers to American Healthcare REIT, Inc. and its subsidiaries, including American Healthcare REIT Holdings, LP, except where otherwise noted.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to promote understanding of our results of operations and financial condition. Such discussion is provided as a supplement to, and should be read in conjunction with our accompanying condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the United States Securities and Exchange Commission, or SEC, on February 27, 2026, or the 2025 Annual Report on Form 10-K. Such condensed consolidated financial statements and information have been prepared to reflect our financial position as of September 30, 2026 and December 31, 2025, together with our results of operations for the three and nine months ended September 30, 2026 and 2025 and cash flows for the nine months ended September 30, 2026 and 2025. Our results of operations and financial condition, as reflected in the accompanying condensed consolidated financial statements and related notes, are subject to management’s evaluation and interpretation of business conditions, changing capital market conditions, and other factors that could affect the on-going operations and occupancy of our tenants and residents.
Forward-Looking Statements
Certain statements contained in this report, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the Private Securities Litigation Reform Act of 1995 (collectively with the Securities Act and Exchange Act, or the “Acts”). We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in the Acts. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “can,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” “possible,” “initiatives,” “focus,” “seek,” “objective,” “goal,” “strategy,” “plan,” “potential,” “potentially,” “preparing,” “projected,” “future,” “long-term,” “once,” “should,” “could,” “would,” “might,” “uncertainty,” or other similar words.
Any such forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of, and assumptions made by, our management and involve uncertainties that could significantly affect our financial results. Such statements include, but are not limited to: (i) statements about our plans, strategies, initiatives and prospects, including any future capital-raising initiatives and planned or future acquisitions or dispositions of properties and other assets; and (ii) statements about our future results of operations, capital expenditures and liquidity. Such statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation: changes in economic conditions generally and the real estate market specifically; legislative and regulatory changes, including changes to laws governing the taxation of real estate investment trusts, or REITs, and regulations or proposed regulations governing the operations and sales of healthcare properties; the availability of capital; our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due; our ability to maintain our qualification as a REIT for U.S. federal income tax purposes; changes in interest rates; competition in the real estate industry; changes in accounting principles generally accepted in the United States of America, or GAAP, policies and guidelines applicable to REITs; the success of our investment strategy; cybersecurity incidents and information technology failures, including unauthorized access to our computer systems and/or our vendors’ computer systems and our third-party management companies’ computer systems and/or their vendors’ computer systems; our ability to retain our executive officers and key employees; our ability to settle outstanding forward sale agreements; unexpected labor costs and inflationary pressures; changing macroeconomic, domestic legal and fiscal policies; geopolitical conditions; and those risks identified in Item 1A, Risk Factors in our 2025 Annual Report on Form 10-K, this Quarterly Report on Form 10-Q, and any future filings we make with the SEC. These risks and uncertainties should be considered in evaluating forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the date on which such statements are made, and undue reliance should not be placed on such statements. We undertake no obligation to update any such statements that may become untrue because of subsequent events. Additional information concerning us and our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
37
Table of Contents
Overview and Background
American Healthcare REIT, Inc., a Maryland corporation, is a self-managed REIT that acquires, owns and operates a diversified portfolio of clinical healthcare real estate properties, focusing primarily on senior housing, skilled nursing facilities, outpatient medical, or OM, buildings and other healthcare-related facilities. We have built a fully integrated management platform that operates clinical healthcare properties throughout the United States, and in the United Kingdom and the Isle of Man. We own and operate our integrated senior health campuses, or ISHC, and senior housing operating properties, or SHOP, utilizing the structure permitted by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure. We have also originated and acquired secured loans and may originate and acquire other real estate-related investments in the future on an infrequent and opportunistic basis. We generally seek investments that produce current income; however, we have selectively developed, and may continue to selectively develop, healthcare real estate properties. We have elected to be taxed as a REIT for U.S. federal income tax purposes. We believe that we have been organized and operated, and we intend to continue to operate, in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code of 1986, or the Code.
Operating Partnership
We conduct substantially all of our operations through American Healthcare REIT Holdings, LP, or our operating partnership, and we are the sole general partner of our operating partnership. As of September 30, 2026 and December 31, 2025, we owned 99.2% and 99.0%, respectively, of the operating partnership units, or OP units, in our operating partnership, and the remaining 0.8% and 1.0%, respectively, of the OP units were owned by the following limited partners: (i) AHI Group Holdings, LLC, which is owned and controlled by Jeffrey T. Hanson, our Chairman of the Board of Directors and Chief Executive Officer, Danny Prosky, one of our non-executive directors, and Mathieu B. Streiff, one of our independent directors; and (ii) a wholly-owned subsidiary of Griffin Capital Company, LLC.
Investment Portfolio
We currently operate through four reportable business segments: ISHC, SHOP, OM and triple-net leased properties, or Triple-Net Leased Properties. As of September 30, 2026, we owned and/or operated 366 buildings and ISHC, which represent in total approximately 25,437,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of $7,426,645,000. In addition, as of September 30, 2026, we originated an aggregate $146,343,000 in notes receivable and had a real estate-related debt security investment purchased for $60,429,000.
Critical Accounting Estimates
Our accompanying condensed consolidated financial statements are prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying footnotes. These estimates are made and evaluated on an on-going basis using information that is currently available, as well as various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates, perhaps in material adverse ways, and those estimates could be different under different assumptions or conditions. The complete listing of our Critical Accounting Estimates was previously disclosed in our 2025 Annual Report on Form 10-K, and there have been no material changes to our Critical Accounting Estimates as disclosed therein, except as included within Note 2, Summary of Significant Accounting Policies, to our accompanying condensed consolidated financial statements.
Interim Unaudited Financial Data
For a discussion of interim unaudited financial data, see Note 2, Summary of Significant Accounting Policies — Interim Unaudited Financial Data, to our accompanying condensed consolidated financial statements. Our accompanying condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our 2025 Annual Report on Form 10-K.
Acquisitions and Dispositions in 2026
For a discussion of our acquisitions and dispositions of investments in 2026, see Note 3, Real Estate Investments, to our accompanying condensed consolidated financial statements.
38
Table of Contents
Factors Which May Influence Results of Operations
Other than the effects of inflation and scheduled lease expirations discussed below, as well as other national economic conditions affecting real estate generally, and as otherwise disclosed in our risk factors, we are not aware of any material trends or uncertainties that may reasonably be expected to have a material impact, favorable or unfavorable, on revenues or income from the acquisition, disposition, management and operation of our properties. For a further discussion of these and other factors that could impact our future results or performance, see “Forward-Looking Statements” above and Part II, Item 1A, Risk Factors, of this Quarterly Report on Form 10-Q and those Risk Factors previously disclosed in our 2025 Annual Report on Form 10-K, as filed with the SEC on February 27, 2026.
Inflation
During the nine months ended September 30, 2026 and 2025, inflation has affected our operations. The annual rate of inflation in the United States was 3.7% in September 2026 and 3.0% in September 2025, as measured by the Consumer Price Index. We believe inflation has impacted our operations such that we have experienced, and continue to experience, increases in the cost of labor, services, energy and supplies, and therefore continued inflationary pressures on our ISHC and SHOP could continue to impact our profitability in future periods. To offset the impact of inflation on the cost of labor and services, our RIDEA managers may have billed higher than average annual rent and care fee increases for existing residents in 2025 and 2026, as compared to prior years, while adjusting market rates as frequently as needed based on competitor pricing and market conditions. We believe this practice will improve operating performance in our ISHC and SHOP, as well as increase rent coverage and the stability of our real estate revenue in our Triple-Net Leased Properties over time.
For properties that are not operated under a RIDEA structure, there are provisions in the majority of our tenant leases that help us mitigate the impact of inflation. These provisions include negotiated rental increases, which historically range from 2% to 3% per year, reimbursement billings for operating expense pass-through charges and real estate tax and insurance reimbursements. However, due to the long-term nature of existing leases, among other factors, the leases may not reset frequently enough to cover inflation.
In addition, inflation has also caused an increase in the cost of our variable-rate debt due to historically rising interest rates. See Item 3, Quantitative and Qualitative Disclosures About Market Risk — Interest Rate Risk, of this Quarterly Report on Form 10-Q for further discussion.
Scheduled Lease Expirations
Excluding our ISHC and SHOP, as of September 30, 2026, our properties were 90.3% leased, and, during the remainder of 2026, 1.3% of the leased GLA is scheduled to expire. Our leasing strategy focuses on negotiating renewals for leases scheduled to expire during the next 12 months. In the future, if we are unable to negotiate renewals, we will try to identify new tenants or collaborate with existing tenants who are seeking additional space to occupy. As of September 30, 2026, our remaining weighted average lease term was 6.5 years, excluding our ISHC and SHOP.
Our combined ISHC and SHOP were 90.8% leased as of September 30, 2026. Substantially all of our leases with residents at such properties are for a term of one year or less.
Results of Operations
Comparison of Three and Nine Months Ended September 30, 2026 and 2025
Our operating results are primarily comprised of income derived from our portfolio of properties and expenses in connection with the acquisition and operation of such properties. Our primary sources of revenue include rent generated by our leased, non-RIDEA properties and resident fees and services revenue from our RIDEA properties. Our primary expenses include property operating expenses and rental expenses. In general, we expect such revenues and expenses related to our portfolio of RIDEA properties to increase in the future due to an overall increase in occupancies, resident fees and pricing of care services provided.
We segregate our operations into reporting segments in order to assess the performance of our business in the same way that management reviews our performance and makes operating decisions. As of September 30, 2026, we operated through four reportable business segments: ISHC, SHOP, OM and Triple-Net Leased Properties. During the first quarter of 2026, we reclassified two senior housing properties from our SHOP segment to our ISHC segment to align the properties that are managed by Trilogy Management Services, LLC within ISHC. Prior-period segment results discussed below have been recast to conform to the current-period presentation, and the reclassification did not affect consolidated results.
39
Table of Contents
The most significant drivers behind changes in our consolidated results of operations for the three and nine months ended September 30, 2026 compared to the corresponding periods in 2025 were primarily due to: our increase in resident occupancies and billing rates; the adverse impact of inflation, which resulted in increases in the cost of labor, services, energy and supplies; and our acquisitions and dispositions of investments. Additional information behind the changes in our consolidated results of operations is discussed in more detail below. See Note 3, Real Estate Investments, to our accompanying condensed consolidated financial statements for further discussion of our acquisitions and dispositions during 2026. As of September 30, 2026 and 2025, we owned and/or operated the following types of properties (dollars in thousands):
|
|
September 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
|
Number of |
|
|
Aggregate |
|
|
Leased |
|
|
Number of |
|
|
Aggregate |
|
|
Leased |
|
||||||
ISHC |
|
|
149 |
|
|
$ |
2,519,189 |
|
|
|
91.3 |
% |
|
|
135 |
|
|
$ |
2,271,077 |
|
|
|
90.2 |
% |
SHOP |
|
|
126 |
|
|
|
3,460,424 |
|
|
|
90.2 |
% |
|
|
85 |
|
|
|
1,025,408 |
|
|
|
88.6 |
% |
OM |
|
|
73 |
|
|
|
1,085,567 |
|
|
|
87.7 |
% |
|
|
76 |
|
|
|
1,113,327 |
|
|
|
86.5 |
% |
Triple-Net Leased Properties |
|
|
18 |
|
|
|
361,465 |
|
|
|
100 |
% |
|
|
19 |
|
|
|
368,665 |
|
|
|
100 |
% |
Total/weighted average(2) |
|
|
366 |
|
|
$ |
7,426,645 |
|
|
|
90.3 |
% |
|
|
315 |
|
|
$ |
4,778,477 |
|
|
|
89.3 |
% |
Revenues
Our primary sources of revenue include resident fees and services revenue generated by our RIDEA properties and rent from our leased, non-RIDEA properties. For the three and nine months ended September 30, 2026 and 2025, resident fees and services revenue primarily consisted of rental fees related to resident leases, extended healthcare fees and other ancillary services, and real estate revenue primarily consisted of base rent related to tenant leases and expense recoveries. The amount of revenues generated by our RIDEA properties depends principally on our ability to maintain resident occupancy rates, adjust resident rent and care fees to market billing rates and optimize the quality of our payor mix. The amount of revenues generated by our non-RIDEA properties is dependent on our ability to maintain tenant occupancy rates of currently leased space and to lease available space at the then existing rental rates. Revenues by reportable segment consisted of the following for the periods presented below (in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Resident Fees and Services Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
ISHC |
|
$ |
534,189 |
|
|
$ |
455,452 |
|
|
$ |
1,549,810 |
|
|
$ |
1,313,494 |
|
SHOP |
|
|
166,904 |
|
|
|
76,606 |
|
|
|
395,569 |
|
|
|
217,025 |
|
Total resident fees and services revenue |
|
|
701,093 |
|
|
|
532,058 |
|
|
|
1,945,379 |
|
|
|
1,530,519 |
|
Real Estate Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
OM |
|
|
30,666 |
|
|
|
31,181 |
|
|
|
91,493 |
|
|
|
95,629 |
|
Triple-Net Leased Properties |
|
|
10,390 |
|
|
|
9,698 |
|
|
|
30,301 |
|
|
|
29,895 |
|
Total real estate revenue |
|
|
41,056 |
|
|
|
40,879 |
|
|
|
121,794 |
|
|
|
125,524 |
|
Total revenues |
|
$ |
742,149 |
|
|
$ |
572,937 |
|
|
$ |
2,067,173 |
|
|
$ |
1,656,043 |
|
For our ISHC segment, resident fees and services revenue increased by $78,737,000 and $236,316,000, respectively, for the three and nine months ended September 30, 2026, as compared to the three and nine months ended September 30, 2025, primarily due to: (i) increased resident occupancy, a more favorable payor mix and higher resident fees as a result of an increase in billing rates and levels of care service; (ii) an increase of $5,077,000 and $45,484,000, respectively, due to the acquisition in July 2025 of nine senior housing properties located in Ohio, Michigan and Kentucky; and (iii) an increase of $34,977,000 and $104,693,000, respectively, due to the acquisition in December 2025 of 14 senior housing properties located in Ohio, Indiana, New Mexico and North Carolina. In addition, for both the three and nine months ended September 30, 2026, revenue for our ISHC segment included $8,815,000 for certain Ohio Medicaid quality incentive payments received pursuant to Ohio House Bill 479, or HB 479, and related to rate periods prior to 2026. HB 479 was enacted in June 2026 and appropriated funding for nursing facility quality incentive payments.
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Table of Contents
For our SHOP segment, resident fees and services revenue increased by $90,298,000 and $178,544,000, respectively, for the three and nine months ended September 30, 2026, as compared to the three and nine months ended September 30, 2025, primarily due to: (i) an increase of $1,070,000 and $9,343,000, respectively, due to the acquisition of three senior housing properties in Minnesota and Idaho in the third quarter of 2025; (ii) an increase of $23,850,000 and $69,559,000, respectively, due to the acquisition of 10 senior housing properties in California, Minnesota, Pennsylvania, Utah and Wisconsin in the fourth quarter of 2025; (iii) an increase of $10,680,000 and $25,625,000, respectively, due to the acquisition of seven senior housing properties in California, Kansas and Missouri in the first quarter of 2026; (iv) an increase of $7,591,000 and $13,557,000, respectively, due to the acquisition of seven senior housing properties in Georgia, Minnesota and South Carolina in the second quarter of 2026; (v) an increase of $39,958,000 due to the acquisition of 18 senior housing properties in California, Massachusetts, New Jersey, Pennsylvania, Connecticut, Delaware, Georgia, New York and Virginia in the third quarter of 2026; and (vi) increased resident occupancy and higher resident fees as a result of an increase in billing rates.
Property Operating Expenses and Rental Expenses
Our ISHC and SHOP segments typically have a higher percentage of direct operating expenses to revenue than each of our OM and Triple-Net Leased Properties segments due to the nature of RIDEA-type facilities where we conduct day-to-day operations. Property operating expenses and property operating expenses as a percentage of resident fees and services revenue, as well as rental expenses and rental expenses as a percentage of real estate revenue, by reportable segment consisted of the following for the periods presented below (dollars in thousands):
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
||||||||||||||
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
||||||||
Property Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ISHC |
|
$ |
444,142 |
|
83.1% |
|
$ |
393,284 |
|
86.4% |
|
$ |
1,309,845 |
|
84.5% |
|
$ |
1,137,401 |
|
86.6% |
SHOP |
|
|
120,593 |
|
72.3% |
|
|
61,246 |
|
79.9% |
|
|
291,899 |
|
73.8% |
|
|
175,837 |
|
81.0% |
Total property operating |
|
$ |
564,735 |
|
80.6% |
|
$ |
454,530 |
|
85.4% |
|
$ |
1,601,744 |
|
82.3% |
|
$ |
1,313,238 |
|
85.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OM |
|
$ |
12,093 |
|
39.4% |
|
$ |
12,053 |
|
38.7% |
|
$ |
35,710 |
|
39.0% |
|
$ |
36,930 |
|
38.6% |
Triple-Net Leased Properties |
|
|
424 |
|
4.1% |
|
|
539 |
|
5.6% |
|
|
2,080 |
|
6.9% |
|
|
2,295 |
|
7.7% |
SHOP |
|
|
102 |
|
— |
|
|
— |
|
— |
|
|
102 |
|
— |
|
|
— |
|
— |
Total rental expenses |
|
$ |
12,619 |
|
30.7% |
|
$ |
12,592 |
|
30.8% |
|
$ |
37,892 |
|
31.1% |
|
$ |
39,225 |
|
31.2% |
For our ISHC segment, total property operating expenses increased by $50,858,000 and $172,444,000, respectively, for the three and nine months ended September 30, 2026, as compared to the three and nine months ended September 30, 2025, primarily due to: (i) increased resident occupancy and levels of care services at the facilities within such segment, thereby increasing labor costs and other operating expenses; (ii) an increase of $2,763,000 and $36,080,000, respectively, due to the acquisition in July 2025 of nine senior housing properties located in Ohio, Michigan and Kentucky; and (iii) an increase of $30,915,000 and $93,382,000, respectively, due to the acquisition in December 2025 of 14 senior housing properties located in Ohio, Indiana, New Mexico and North Carolina.
For our SHOP segment, total property operating expenses increased by $59,347,000 and $116,062,000, respectively, for the three and nine months ended September 30, 2026, as compared to the three and nine months ended September 30, 2025, primarily due to: (i) an increase of $761,000 and $6,789,000, respectively, due to the acquisitions of three senior housing properties in Minnesota and Idaho in the third quarter of 2025; (ii) an increase of $16,138,000 and $46,103,000, respectively, due to the acquisition of 10 senior housing properties in California, Minnesota, Pennsylvania, Utah and Wisconsin in the fourth quarter of 2025; (iii) an increase of $8,077,000 and $19,100,000, respectively, due to the acquisition of seven senior housing properties in California, Kansas and Missouri in the first quarter of 2026; (iv) an increase of $5,581,000 and $9,817,000, respectively, due to the acquisition of seven senior housing properties in Georgia, Minnesota and South Carolina in the second quarter of 2026; (v) an increase of $26,759,000 due to the acquisition of 18 senior housing properties in California, Massachusetts, New Jersey, Pennsylvania, Connecticut, Delaware, Georgia, New York and Virginia in the third quarter of 2026; and (vi) increased occupancy at the facilities within such segment, which resulted in increasing labor costs from additional staffing and other operating expenses.
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Table of Contents
General and Administrative
For the three and nine months ended September 30, 2026, as compared to the three and nine months ended September 30, 2025, general and administrative expenses increased $7,474,000 and $16,872,000, respectively, primarily due to an increase in stock compensation expense of $5,855,000 and $10,739,000, respectively, and an increase in salaries and benefits expense of $1,376,000 and $5,353,000, respectively. For both the three and nine months ended September 30, 2026, stock compensation expense includes $4,594,000 related to the accelerated vesting and modification of certain outstanding equity awards in connection with our previously disclosed Chief Executive Officer and Chief Financial Officer transitions during the third quarter of 2026, net of forfeitures.
Depreciation and Amortization
For the three months ended September 30, 2026 and 2025, depreciation and amortization was $90,869,000 and $49,181,000, respectively, which primarily consisted of depreciation on our operating properties of $53,785,000 and $39,644,000, respectively, and amortization of our identified intangible assets of $36,347,000 and $8,799,000, respectively. For the nine months ended September 30, 2026 and 2025, depreciation and amortization was $230,056,000 and $132,236,000, respectively, which primarily consisted of depreciation on our operating properties of $145,142,000 and $113,505,000, respectively, and amortization of our identified intangible assets of $82,702,000 and $16,538,000, respectively.
For the three and nine months ended September 30, 2026, as compared to the three and nine months ended September 30, 2025, depreciation and amortization increased by $41,688,000 and $97,820,000, respectively, primarily attributable to an increase of $27,519,000 and $66,192,000, respectively, in the amortization of in-place lease intangible assets due to property acquisitions since 2025.
Interest Expense
Interest expense, including gain or loss in fair value of derivative financial instruments, consisted of the following for the periods presented below (in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage loans payable |
|
$ |
9,437 |
|
|
$ |
10,453 |
|
|
$ |
29,629 |
|
|
$ |
31,629 |
|
Lines of credit and term loan and derivative financial |
|
|
7,200 |
|
|
|
8,390 |
|
|
|
21,535 |
|
|
|
27,195 |
|
Amortization of deferred financing costs: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage loans payable |
|
|
410 |
|
|
|
469 |
|
|
|
1,330 |
|
|
|
1,339 |
|
Lines of credit and term loan |
|
|
521 |
|
|
|
305 |
|
|
|
1,361 |
|
|
|
1,235 |
|
Amortization of debt discount/premium, net |
|
|
499 |
|
|
|
499 |
|
|
|
1,500 |
|
|
|
1,519 |
|
Loss (gain) in fair value of derivative financial instruments |
|
|
106 |
|
|
|
(166 |
) |
|
|
(1,778 |
) |
|
|
1,213 |
|
(Gain) loss on debt extinguishments |
|
|
— |
|
|
|
(22 |
) |
|
|
147 |
|
|
|
1,784 |
|
Interest on finance lease liabilities |
|
|
2 |
|
|
|
3 |
|
|
|
6 |
|
|
|
10 |
|
Interest expense on financing obligations and other liabilities |
|
|
538 |
|
|
|
696 |
|
|
|
1,876 |
|
|
|
2,101 |
|
Capitalized interest |
|
|
(834 |
) |
|
|
(401 |
) |
|
|
(2,189 |
) |
|
|
(843 |
) |
Total |
|
$ |
17,879 |
|
|
$ |
20,226 |
|
|
$ |
53,417 |
|
|
$ |
67,182 |
|
The decrease in total interest expense for the three and nine months ended September 30, 2026, as compared to the three and nine months ended September 30, 2025, was primarily due to the $2,206,000 and $7,660,000, respectively, decrease in interest expense related to a decrease in debt balances during 2025 and 2026. Such decrease was primarily a result of the paydown of our variable-rate lines of credit and payoff of certain mortgage loans payable using net proceeds raised from our equity offerings during 2025 and cash flow from operations. The decrease in total interest expense for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, was also driven by: (i) a $2,991,000 change from loss to gain in fair value of derivative financial instruments; (ii) a $1,637,000 decrease in loss on debt extinguishments; and (iii) a $1,346,000 increase in capitalized interest.
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Table of Contents
Impairment of Real Estate Investments
For the three months ended September 30, 2026, we did not recognize any impairment charges on real estate investments. For the nine months ended September 30, 2026, as we continued to evaluate our properties based on their historical operating performance and our expected holding period, we recognized an aggregate impairment charge of $2,137,000 for two OM buildings. For the three and nine months ended September 30, 2025, we recognized an aggregate impairment charge of $3,768,000 and $38,133,000, respectively, for one and seven OM buildings, respectively. See Note 3, Real Estate Investments — Impairment of Real Estate Investments, to our accompanying condensed consolidated financial statements for further discussion.
Liquidity and Capital Resources
Our principal sources of liquidity are cash flows from operations, net proceeds from the issuances of shares through our equity offerings, including through the 2026 ATM Offering and the August 2026 Offering (as defined and described in Note 12, Equity — Common Stock, to our accompanying condensed consolidated financial statements), and borrowings under our lines of credit (see the “Credit Facilities” section below). For the next 12 months, our principal liquidity needs are to: (i) fund property operating expenses and general and administrative expenses; (ii) meet our debt service requirements (including principal and interest); (iii) fund the acquisition of real estate investments, development activities and capital expenditures; and (iv) make distributions to our stockholders, as required for us to continue to qualify as a REIT. We believe that the sources of liquidity described above will be sufficient to satisfy our cash requirements for the next 12 months and the longer term thereafter. We do not have any material off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources.
Material Cash Requirements
Capital Improvement Expenditures
A capital plan for each investment is established upon acquisition that contemplates the estimated capital needs of that investment, including costs of refurbishment, tenant improvements or other major capital expenditures. The capital plan also sets forth the anticipated sources of the necessary capital, which may include operating cash generated by the investment, capital reserves, a line of credit or other loan established with respect to the investment, other borrowings or additional equity investments from us and joint venture partners. The capital plan for each investment is adjusted through on-going, regular reviews of our portfolio or as necessary to respond to unanticipated additional capital needs. As of September 30, 2026, we had $11,681,000 of restricted cash in loan impounds and reserve accounts to fund a portion of such capital expenditures. Based on the budget for the properties we owned as of September 30, 2026, we estimate that expenditures for capital and tenant improvements as of such date will be approximately $18,788,000 for the remaining three months of 2026, although actual expenditures are predominantly discretionary and are dependent on many factors which are not presently known.
Contractual Obligations
The following table provides information with respect to: (i) the maturity and scheduled principal repayment of our secured mortgage loans payable and lines of credit and term loan; (ii) interest payments on our mortgage loans payable and lines of credit and term loan, excluding the effect of our interest rate swaps; (iii) operating lease obligations; and (iv) financing and other obligations as of September 30, 2026 (in thousands):
|
|
Payments Due by Period |
|
|||||||||||||||||
|
|
2026 |
|
|
2027-2028 |
|
|
2029-2030 |
|
|
Thereafter |
|
|
Total |
|
|||||
Principal payments — fixed-rate debt |
|
$ |
4,888 |
|
|
$ |
195,922 |
|
|
$ |
61,695 |
|
|
$ |
568,262 |
|
|
$ |
830,767 |
|
Interest payments — fixed-rate debt |
|
|
8,032 |
|
|
|
55,169 |
|
|
|
45,341 |
|
|
|
298,626 |
|
|
|
407,168 |
|
Principal payments — variable-rate debt |
|
|
— |
|
|
|
550,000 |
|
|
|
— |
|
|
|
— |
|
|
|
550,000 |
|
Interest payments — variable-rate debt (based on rates in |
|
|
7,337 |
|
|
|
1,436 |
|
|
|
— |
|
|
|
— |
|
|
|
8,773 |
|
Operating lease obligations |
|
|
7,433 |
|
|
|
59,785 |
|
|
|
56,553 |
|
|
|
111,372 |
|
|
|
235,143 |
|
Financing and other obligations |
|
|
744 |
|
|
|
5,311 |
|
|
|
19,460 |
|
|
|
— |
|
|
|
25,515 |
|
Total |
|
$ |
28,434 |
|
|
$ |
867,623 |
|
|
$ |
183,049 |
|
|
$ |
978,260 |
|
|
$ |
2,057,366 |
|
As of September 30, 2026, we were under contract to acquire two additional real estate properties for an aggregate purchase price of $301,000,000 that we are obligated to purchase subject to various seller performance contingencies. We expect to fund these purchases, if completed, with proceeds from our equity offerings.
Distributions
For information on distributions, see the “Distributions” section below.
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Table of Contents
Credit Facilities
As of September 30, 2026, we are party to a credit agreement, as amended, with an aggregate maximum principal amount up to $1,350,000,000, which may be increased by an aggregate incremental amount (see Note 8, Lines of Credit and Term Loan, for further discussion), or the 2026 Credit Facility. In addition, we are party to an agreement regarding a senior secured revolving credit facility with an aggregate maximum principal amount of $50,000,000, or the 2025 Trilogy Credit Facility. See Note 8, Lines of Credit and Term Loan, to our accompanying condensed consolidated financial statements for further discussion.
As of September 30, 2026, our aggregate borrowing capacity under the 2026 Credit Facility and the 2025 Trilogy Credit Facility was $1,400,000,000. As of September 30, 2026, our aggregate borrowings outstanding under such credit facilities were $550,000,000, and we had $850,000,000 available on such facilities, excluding the $25,000,000 standby letters of credit available pursuant to the 2026 Credit Facility.
Cash Flows
The following table sets forth changes in cash flows (in thousands):
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Cash, cash equivalents and restricted cash — beginning of period |
|
$ |
151,753 |
|
|
$ |
123,301 |
|
Net cash provided by operating activities |
|
|
366,579 |
|
|
|
239,276 |
|
Net cash used in investing activities |
|
|
(2,225,883 |
) |
|
|
(373,319 |
) |
Net cash provided by financing activities |
|
|
1,966,263 |
|
|
|
195,039 |
|
Effect of foreign currency translation on cash, cash equivalents and restricted cash |
|
|
(40 |
) |
|
|
66 |
|
Cash, cash equivalents and restricted cash — end of period |
|
$ |
258,672 |
|
|
$ |
184,363 |
|
The following summary discussion of our changes in our cash flows is based on our accompanying condensed consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.
Operating Activities
For the nine months ended September 30, 2026 and 2025, cash flows from operating activities were primarily related to property operations, offset by payments of general and administrative expenses and interest payments on our outstanding indebtedness. In general, cash flows from operating activities are affected by the timing of cash receipts and payments, and have increased since 2025 primarily due to improved resident occupancy, an increase in billing rates and expense management at our properties operated under a RIDEA structure, the increase in the size of our real estate investments portfolio since 2025 thereby increasing our net operating income, as well as a decrease in interest paid on our outstanding indebtedness as a result of mortgage loan payoffs and paydowns on our lines of credit using net proceeds from our equity offerings in 2025. See the “Results of Operations” section above for further discussion.
Investing Activities
For the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, the increase in net cash used in investing activities was primarily due to a $1,587,109,000 increase in cash paid to acquire real estate investments, a $140,488,000 increase in originations of notes receivable, a $70,939,000 increase in developments and capital expenditures, as well as a $39,274,000 decrease in proceeds from dispositions of real estate investments.
Financing Activities
For the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, the increase in net cash provided by financing activities was primarily due to a $1,819,546,000 increase in gross equity offering proceeds, partially offset by a $22,548,000 increase in distributions paid, a $13,712,000 increase in the payment of equity offering costs and a $13,598,000 increase in payments to taxing authorities in connection with common stock directly withheld from employees.
Distributions
Our board of directors, or our board, shall authorize distributions, if any, on a quarterly basis, in such amounts as our board shall determine, and each quarterly record date for the purposes of such distributions shall be determined and authorized by our board in the last month of each calendar quarter until such time as our board changes our distribution policy. Our board has authorized a quarterly distribution equal to $0.25 per share to holders of our common stock, which we expect will continue to be paid in the future, though
44
Table of Contents
we cannot guarantee that our distributions will continue at the current value or at all. Such quarterly distributions were equal to an annualized distribution rate of $1.00 per share and paid in cash, only from legally available funds.
The amount of the quarterly distributions paid to our common stockholders was determined by our board and was dependent on a number of factors, including funds available for payment of distributions, our financial condition, capital expenditure requirements and annual distribution requirements needed to maintain our qualification as a REIT under the Code. As of September 30, 2026, any distributions of amounts in excess of our current and accumulated earnings and profits have resulted in a return of capital to our stockholders, and some portion of a distribution to our stockholders may have been paid from borrowings.
Financing
Mortgage Loans Payable, Net
For a discussion of our mortgage loans payable, see Note 7, Mortgage Loans Payable, to our accompanying condensed consolidated financial statements.
Lines of Credit and Term Loan
For a discussion of our lines of credit and term loan, see Note 8, Lines of Credit and Term Loan, to our accompanying condensed consolidated financial statements.
REIT Requirements
In order to maintain our qualification as a REIT for U.S. federal income tax purposes, we are required to distribute to our stockholders a minimum of 90.0% of our REIT taxable income. Existing Internal Revenue Service, or IRS, guidance includes a safe harbor pursuant to which publicly offered REITs can satisfy the distribution requirement by distributing a combination of cash and stock to stockholders. In general, to qualify under the safe harbor, each stockholder must elect to receive either cash or stock, and the aggregate cash component of the distribution to stockholders must represent at least 20.0% of the total distribution. In the event that there is a shortfall in net cash available due to factors including, without limitation, the timing of such distributions or the timing of the collection of receivables, we may seek to obtain capital to make distributions by means of unsecured and secured debt financing through one or more unaffiliated third parties. We may also make distributions with cash from capital transactions including, without limitation, the sale of one or more of our properties.
Commitments and Contingencies
For a discussion of our commitments and contingencies, see Note 10, Commitments and Contingencies, to our accompanying condensed consolidated financial statements.
Debt Service Requirements
A significant liquidity need is the payment of principal and interest on our outstanding indebtedness. As of September 30, 2026, we had $830,767,000 of fixed-rate mortgage loans payable outstanding secured by our properties. As of September 30, 2026, we had $550,000,000 outstanding, and $850,000,000 remained available under our lines of credit. The weighted average effective interest rate on our outstanding debt, factoring in our interest rate swaps, was 4.26% per annum as of September 30, 2026. See Note 7, Mortgage Loans Payable, and Note 8, Lines of Credit and Term Loan, to our accompanying condensed consolidated financial statements.
We are required by the terms of certain loan documents to meet various financial and non-financial covenants, such as leverage ratios, net worth ratios, debt service coverage ratios and fixed charge coverage ratios. As of September 30, 2026, we were in compliance with all such covenants and requirements on our mortgage loans payable and our lines of credit and term loan. If any future covenants are violated, we anticipate seeking a waiver or amending the debt covenants with the lenders when and if such event should occur. However, there can be no assurances that management will be able to effectively achieve such plans.
Funds from Operations and Normalized Funds from Operations
Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a measure known as funds from operations, or FFO, a non-GAAP financial measure, which we believe to be an appropriate supplemental performance measure to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental performance measure, and our management uses FFO to evaluate our performance over time. FFO is not equivalent to our net income (loss) as determined under GAAP.
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Table of Contents
Our FFO calculation complies with NAREIT’s policy, under which we define FFO as net income (loss) computed in accordance with GAAP, excluding gains or losses from sales of certain real estate assets, gains or losses upon consolidation of a previously held equity interest, and impairment writedowns of certain real estate assets and investments, plus depreciation and amortization related to real estate, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO.
Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate-related depreciation and amortization and impairments, provides a further understanding of our operating performance to investors, industry analysts and our management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses and interest costs, which may not be immediately apparent from net income (loss).
We define normalized FFO attributable to controlling interest, or Normalized FFO, as FFO further adjusted for the following items included in the determination of GAAP net income (loss): transaction, transition and restructuring costs; amounts relating to changes in deferred rent and amortization of above- and below-market leases; the non-cash impact of changes to our equity instruments; non-cash or non-recurring income or expense; the non-cash effect of income tax benefits or expenses; capitalized interest; impairment of intangible assets and goodwill; amortization of direct origination and closing costs on debt investments; mark-to-market adjustments included in net income (loss); gains or losses included in net income (loss) from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan; and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect Normalized FFO on the same basis.
However, FFO and Normalized FFO should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income (loss) as an indicator of our operating performance, GAAP cash flows from operations as an indicator of our liquidity or indicative of funds available to fund our cash needs, including our ability to make distributions to our stockholders. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP FFO and Normalized FFO measures and the adjustments to GAAP in calculating FFO and Normalized FFO. Presentation of this information is intended to provide useful information to investors, industry analysts and management as they compare the operating performance used by the REIT industry, although it should be noted that not all REITs calculate FFO and normalized FFO the same way, so comparisons with other REITs may not be meaningful. FFO and Normalized FFO should be reviewed in conjunction with other measurements as an indication of our performance. None of the SEC, NAREIT, or any other regulatory body has passed judgment on the acceptability of the adjustments that we use to calculate FFO or Normalized FFO.
46
Table of Contents
The following is a reconciliation of net income or loss, which is the most directly comparable GAAP financial measure, to FFO and Normalized FFO for the periods presented below (in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net income |
|
$ |
31,515 |
|
|
$ |
56,639 |
|
|
$ |
86,506 |
|
|
$ |
59,878 |
|
Depreciation and amortization related to real estate — |
|
|
90,800 |
|
|
|
49,115 |
|
|
|
229,849 |
|
|
|
131,980 |
|
Depreciation and amortization related to real estate — |
|
|
43 |
|
|
|
15 |
|
|
|
71 |
|
|
|
1,018 |
|
Impairment of real estate investments — consolidated properties |
|
|
— |
|
|
|
3,768 |
|
|
|
2,137 |
|
|
|
38,133 |
|
(Gain) loss on dispositions of real estate investments, net — |
|
|
— |
|
|
|
(691 |
) |
|
|
(5,647 |
) |
|
|
2,344 |
|
Gain on re-measurement of previously held equity interest |
|
|
— |
|
|
|
(14,580 |
) |
|
|
— |
|
|
|
(14,580 |
) |
Net income attributable to noncontrolling interests |
|
|
(302 |
) |
|
|
(712 |
) |
|
|
(974 |
) |
|
|
(847 |
) |
Depreciation, amortization, impairments, net gain/loss on |
|
|
(1,449 |
) |
|
|
(521 |
) |
|
|
(3,005 |
) |
|
|
(2,216 |
) |
NAREIT FFO attributable to controlling interest |
|
$ |
120,607 |
|
|
$ |
93,033 |
|
|
$ |
308,937 |
|
|
$ |
215,710 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Transaction, transition and restructuring costs |
|
$ |
5,113 |
|
|
$ |
50 |
|
|
$ |
9,870 |
|
|
$ |
1,808 |
|
Amortization of above- and below-market leases |
|
|
281 |
|
|
|
295 |
|
|
|
911 |
|
|
|
1,063 |
|
Amortization of direct origination and closing costs — |
|
|
739 |
|
|
|
11 |
|
|
|
763 |
|
|
|
60 |
|
Change in deferred rent |
|
|
(184 |
) |
|
|
(485 |
) |
|
|
(1,120 |
) |
|
|
(1,877 |
) |
Non-cash impact of changes to equity instruments(1) |
|
|
9,284 |
|
|
|
3,429 |
|
|
|
19,909 |
|
|
|
9,170 |
|
Non-cash income tax benefit |
|
|
(294 |
) |
|
|
(21,401 |
) |
|
|
(1,241 |
) |
|
|
(21,401 |
) |
Capitalized interest |
|
|
(834 |
) |
|
|
(401 |
) |
|
|
(2,189 |
) |
|
|
(843 |
) |
(Gain) loss on debt extinguishments |
|
|
— |
|
|
|
(22 |
) |
|
|
147 |
|
|
|
1,784 |
|
Loss (gain) in fair value of derivative financial instruments |
|
|
106 |
|
|
|
(166 |
) |
|
|
(1,778 |
) |
|
|
1,213 |
|
Foreign currency loss (gain) |
|
|
619 |
|
|
|
977 |
|
|
|
1,363 |
|
|
|
(3,181 |
) |
Other non-recurring income(2) |
|
|
(8,815 |
) |
|
|
— |
|
|
|
(8,815 |
) |
|
|
— |
|
Adjustments for unconsolidated entities |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
4 |
|
Adjustments for noncontrolling interests |
|
|
(62 |
) |
|
|
211 |
|
|
|
(192 |
) |
|
|
139 |
|
Normalized FFO attributable to controlling interest |
|
$ |
126,559 |
|
|
$ |
75,530 |
|
|
$ |
326,563 |
|
|
$ |
203,649 |
|
Net Operating Income
Net operating income, or 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, transaction, transition and restructuring costs, depreciation and amortization, interest expense, gain or loss in fair value of derivative financial instruments, gain or loss on dispositions of real estate investments, impairment of real estate investments, impairment of intangible assets and goodwill, income or loss from unconsolidated entities, gain on re-measurement of previously held equity interests, foreign currency gain or loss, other income or expense and income tax benefit or expense.
47
Table of Contents
NOI is not equivalent to our net income (loss) as determined under GAAP and may not be a useful measure in measuring operational income or cash flows. Furthermore, NOI should not be considered as an alternative to net income (loss) as an indication of our operating performance or as an alternative to cash flows from operations as an indication of our liquidity. NOI should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income (loss). NOI should be reviewed in conjunction with other measurements as an indication of our performance.
We believe that NOI is an appropriate supplemental performance measure to reflect the performance of our operating assets because NOI excludes certain items that are not associated with the operations of our properties. We believe that NOI is a widely accepted measure of comparative operating performance in the real estate community and is useful to investors in understanding the profitability and operating performance of our property portfolio. However, our use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount.
To facilitate understanding of this financial measure, the following is a reconciliation of net income or loss, which is the most directly comparable GAAP financial measure, to NOI for the periods presented below (in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net income |
|
$ |
31,515 |
|
|
$ |
56,639 |
|
|
$ |
86,506 |
|
|
$ |
59,878 |
|
General and administrative |
|
|
21,582 |
|
|
|
14,108 |
|
|
|
59,078 |
|
|
|
42,206 |
|
Transaction, transition and restructuring costs |
|
|
5,113 |
|
|
|
50 |
|
|
|
9,870 |
|
|
|
1,808 |
|
Depreciation and amortization |
|
|
90,869 |
|
|
|
49,181 |
|
|
|
230,056 |
|
|
|
132,236 |
|
Interest expense, net |
|
|
17,773 |
|
|
|
20,392 |
|
|
|
55,195 |
|
|
|
65,969 |
|
Loss (gain) in fair value of derivative financial |
|
|
106 |
|
|
|
(166 |
) |
|
|
(1,778 |
) |
|
|
1,213 |
|
(Gain) loss on dispositions of real estate investments, net |
|
|
— |
|
|
|
(691 |
) |
|
|
(5,647 |
) |
|
|
2,344 |
|
Impairment of real estate investments |
|
|
— |
|
|
|
3,768 |
|
|
|
2,137 |
|
|
|
38,133 |
|
(Income) loss from unconsolidated entities |
|
|
(49 |
) |
|
|
(462 |
) |
|
|
(1,733 |
) |
|
|
2,624 |
|
Gain on re-measurement of previously held equity interest |
|
|
— |
|
|
|
(14,580 |
) |
|
|
— |
|
|
|
(14,580 |
) |
Foreign currency loss (gain) |
|
|
619 |
|
|
|
977 |
|
|
|
1,363 |
|
|
|
(3,181 |
) |
Other income, net |
|
|
(3,473 |
) |
|
|
(2,309 |
) |
|
|
(7,722 |
) |
|
|
(5,314 |
) |
Income tax expense (benefit) |
|
|
740 |
|
|
|
(21,092 |
) |
|
|
212 |
|
|
|
(19,756 |
) |
Net operating income |
|
$ |
164,795 |
|
|
$ |
105,815 |
|
|
$ |
427,537 |
|
|
$ |
303,580 |
|
48
Table of Contents
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Market risk includes risks that arise from changes in interest rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. In pursuing our business plan, we expect that the primary market risk to which we will be exposed is interest rate risk. There were no material changes in our market risk exposures, or in the methods we use to manage market risk, from those that were provided for in our 2025 Annual Report on Form 10-K, except that we are now exposed to interest rate risk on our fixed-rate notes receivable as noted below.
Interest Rate Risk
We are exposed to the effects of interest rate changes primarily as a result of long-term debt used to acquire and develop properties and other investments. We are also exposed to the effects of changes in interest rates as a result of our investments in real estate notes receivable. Our interest rate risk is monitored using a variety of techniques. Our interest rate risk management objectives are to limit the impact of interest rate increases on earnings, prepayment penalties and cash flows and to lower overall borrowing costs while taking into account variable interest rate risk. To achieve our objectives, we may borrow or lend at fixed or variable rates.
We have entered into, and may continue to enter into, derivative financial instruments, such as interest rate swaps and interest rate caps, in order to mitigate our interest rate risk on a related financial instrument. We have not elected, and may continue not to elect, to apply hedge accounting treatment to these derivatives; therefore, changes in the fair value of interest rate derivative financial instruments were recorded as a component of interest expense in gain or loss in fair value of derivative financial instruments in our accompanying condensed consolidated statements of operations and comprehensive income. As of September 30, 2026, our interest rate swaps are recorded in other assets in our accompanying condensed consolidated balance sheet at their aggregate fair value of $849,000. We do not enter into derivative transactions for speculative purposes. For information on our interest rate swaps, see Note 9, Derivative Financial Instruments, and Note 13, Fair Value Measurements, to our accompanying condensed consolidated financial statements for further discussion.
As of September 30, 2026, the table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes, excluding the effect of our interest rate swaps (dollars in thousands):
|
|
Expected Maturity Date |
|
|||||||||||||||||||||||||||||
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
2029 |
|
|
2030 |
|
|
Thereafter |
|
|
Total |
|
|
Fair Value |
|
||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fixed-rate notes |
|
$ |
— |
|
|
$ |
85,569 |
|
|
$ |
60,129 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
145,698 |
|
|
$ |
145,698 |
|
Weighted average |
|
—% |
|
|
8.09% |
|
|
5.98% |
|
|
—% |
|
|
—% |
|
|
—% |
|
|
|
7.22 |
% |
|
|
— |
|
||||||
Debt security held- |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
93,433 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
93,433 |
|
|
$ |
93,051 |
|
Weighted average |
|
—% |
|
|
—% |
|
|
4.24% |
|
|
—% |
|
|
—% |
|
|
—% |
|
|
|
4.24 |
% |
|
|
— |
|
||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fixed-rate debt — |
|
$ |
4,888 |
|
|
$ |
56,182 |
|
|
$ |
139,740 |
|
|
$ |
16,963 |
|
|
$ |
44,732 |
|
|
$ |
568,262 |
|
|
$ |
830,767 |
|
|
$ |
682,514 |
|
Weighted average |
|
|
3.52 |
% |
|
|
3.51 |
% |
|
|
4.40 |
% |
|
|
3.36 |
% |
|
|
4.51 |
% |
|
|
3.74 |
% |
|
|
3.87 |
% |
|
|
— |
|
Variable-rate debt |
|
$ |
— |
|
|
$ |
550,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
550,000 |
|
|
$ |
549,871 |
|
Weighted average |
|
—% |
|
|
|
5.22 |
% |
|
—% |
|
|
—% |
|
|
—% |
|
|
—% |
|
|
|
5.22 |
% |
|
|
— |
|
|||||
49
Table of Contents
Debt Investments
As of September 30, 2026, the net carrying value of our debt investments was $240,808,000. As we expect to hold our fixed-rate debt investments to maturity and the amounts due under such debt investments are limited to the outstanding principal balance and any accrued and unpaid interest, we do not expect that fluctuations in interest rates, and the resulting change in fair value of our fixed-rate debt investments, would have a significant impact on our operations. See Note 13, Fair Value Measurements, to our accompanying condensed consolidated financial statements for a discussion of the fair value of our debt investments. The weighted average effective interest rate on our outstanding debt investments was 6.06% per annum as of September 30, 2026.
Mortgage Loans Payable and Lines of Credit and Term Loan
Mortgage loans payable were $830,767,000 ($814,957,000, net of discount/premium and deferred financing costs) as of September 30, 2026. As of September 30, 2026, we had 83 fixed-rate mortgage loans payable with effective interest rates ranging from 2.21% to 5.99% per annum and a weighted average effective interest rate of 3.87%. In addition, as of September 30, 2026, we had $550,000,000 ($549,927,000, net of deferred financing costs) outstanding under our lines of credit and term loan, at a weighted average interest rate of 5.22% per annum.
As of September 30, 2026, the weighted average effective interest rate on our outstanding debt, factoring in our fixed-rate interest rate swaps, was 4.26% per annum. An increase in the variable interest rate on our variable-rate lines of credit and term loan constitutes a market risk. As of September 30, 2026, a 0.50% increase in the market rates of interest would have no impact on our overall annualized interest expense as all variable-rate loan balances as of September 30, 2026 have interest rate swap arrangements in place. See Note 7, Mortgage Loans Payable, and Note 8, Lines of Credit and Term Loan, to our accompanying condensed consolidated financial statements.
Other Market Risk
In addition to changes in interest rates, the value of our future investments is subject to fluctuations based on changes in local and regional economic conditions and changes in the creditworthiness of tenants and residents, which may affect our ability to refinance our debt if necessary.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily are required to apply our judgment in evaluating whether the benefits of the controls and procedures that we adopt outweigh their costs.
As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation as of September 30, 2026 was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of September 30, 2026, were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the fiscal quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
50
Table of Contents
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
For a discussion of our legal proceedings, see Note 10, Commitments and Contingencies — Litigation, to our accompanying condensed consolidated financial statements.
Item 1A. Risk Factors.
There were no material changes from the risk factors previously disclosed in our 2025 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
In July 2026, we acquired 59,945 shares of our common stock, for an aggregate of $3,396,000, at a weighted average price of $56.66 per share in order to satisfy employee tax withholding requirements associated with the vesting of restricted stock awards issued pursuant to the AHR Incentive Plan. The value of the shares withheld is based on the closing price of our common stock on the day prior to the vesting date, or if such date is not a trading day, the immediately preceding trading day. In August and September 2026, we did not acquire any shares of our common stock.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
51
Table of Contents
Item 6. Exhibits.
The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the period ended September 30, 2026 (and are numbered in accordance with Item 601 of Regulation S-K).
3.1 |
Fourth Articles of Amendment and Restatement of Griffin-American Healthcare REIT IV, Inc., dated October 1, 2021 (included as Exhibit 3.1 to our Current Report on Form 8-K (File No. 000-55775) filed October 1, 2021 and incorporated herein by reference) |
|
|
3.2 |
Articles of Amendment (Reverse Stock Split) of American Healthcare REIT, Inc., dated November 15, 2022 (included as Exhibit 3.1 to our Current Report on Form 8-K (File No. 000-55775) filed November 16, 2022 and incorporated herein by reference) |
|
|
3.3 |
Articles of Amendment (Par Value Decrease) of American Healthcare REIT, Inc., dated November 15, 2022 (included as Exhibit 3.2 to our Current Report on Form 8-K (File No. 000-55775) filed November 16, 2022 and incorporated herein by reference) |
|
|
3.4 |
Articles Supplementary (Common Stock Reclassification) of American Healthcare REIT, Inc., dated January 26, 2024 (included as Exhibit 3.1 to our Current Report on Form 8-K (File No. 000-55775) filed January 30, 2024 and incorporated herein by reference) |
|
|
3.5 |
Articles Supplementary (Subtitle 8 Opt-Out) of American Healthcare REIT, Inc., dated February 7, 2024 (included as Exhibit 3.1 to our Current Report on Form 8-K (File No. 001-41951) filed February 12, 2024 and incorporated herein by reference) |
|
|
3.6 |
Second Amended and Restated Bylaws of American Healthcare REIT, Inc. (included as Exhibit 3.1 to our Current Report on Form 8-K (File No. 001-41951) filed February 24, 2025 and incorporated herein by reference) |
|
|
10.1 |
Release of Claims Agreement, dated July 21, 2026, by and among, American Healthcare REIT, Inc., American Healthcare Opps Holdings, LLC and Danny Prosky (included as Exhibit 10.1 to our Current Report on Form 8-K (File No. 001-41951) filed July 22, 2026 and incorporated herein by reference) |
|
|
10.2*+^ |
Purchase Agreement, dated August 10, 2026, by and among, American Healthcare REIT Holdings, LP, Kensington Senior Living, LLC, White Plains Kensington Borrower, LLC, White Plains Kensington, LLC, Kensington SM GP LLC, FSDW Redwood City LLC, The Kensington of Falls Church, LLC, Kensington Redondo Owner LLC, and Kensington Reston Owner, LLC |
|
|
10.3*+^ |
Purchase Agreement, dated August 10, 2026, by and among, American Healthcare REIT Holdings, LP, Kensington Senior Living, LLC and FSP-Kensington, LLC |
|
|
10.4*+^ |
Purchase Agreement, dated August 10, 2026, by and among, American Healthcare REIT Holdings, LP, Kensington Senior Living, LLC and Regency Kensington Bethesda Owner, LLC |
|
|
10.5†+ |
Employment Letter, dated as of September 2, 2026, by and between American Healthcare REIT, Inc. and Aric Chang (included as Exhibit 10.1 to our Current Report on Form 8-K (File No. 001-41951) filed September 2, 2026 and incorporated herein by reference) |
|
|
10.6†^ |
Transition and Separation Agreement and General Release, dated September 2, 2026, by and among, American Healthcare REIT, Inc., American Healthcare Opps Holdings, LLC and Brian S. Peay (included as Exhibit 10.2 to our Current Report on Form 8-K (File No. 001-41951) filed September 2, 2026 and incorporated herein by reference) |
|
|
31.1* |
Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
31.2* |
Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
32.1** |
Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
32.2** |
Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS* |
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document |
|
|
101.SCH* |
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents |
|
|
52
Table of Contents
104* |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* |
Filed herewith. |
** |
Furnished herewith. In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference. |
† |
Management contract or compensatory plan or arrangement. |
+ |
Certain information in this exhibit has been redacted pursuant to item 601(a)(6) of Regulation S-K. |
^ |
Certain information in this exhibit has been redacted pursuant to item 601(a)(5) of Regulation S-K. |
53
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
American Healthcare REIT, Inc. (Registrant) |
|
|
|
|
|
|
|
|
November 6, 2026 |
|
By: |
|
/s/ JEFFREY T. HANSON |
|
|
Date |
|
|
|
|
Jeffrey T. Hanson |
|
|
|
|
|
|
Chief Executive Officer and Chairman of the Board of Directors |
|
|
|
|
|
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
|
November 6, 2026 |
|
By: |
|
/s/ ARIC CHANG |
|
|
Date |
|
|
|
|
Aric Chang |
|
|
|
|
|
|
Chief Financial Officer |
|
|
|
|
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(Principal Financial Officer and Principal Accounting Officer) |
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54