AHR - Earnings call transcript Q4 2024 | American Healthcare REIT, Inc.

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Operator

Good afternoon, and thank you for standing by. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the American Healthcare REIT Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Alan Peterson, Vice President of Investor Relations and Finance.

You may begin your conference.

Alan Peterson

morning. Good joining XXXX Healthcare Earnings for and Fourth for Year Full Conference us you REIT's American Quarter Thank Call. With me Prosky today are Danny

President Brian Wilhite, Chief , Dave Officer; CEO; Oh, Stephane Chief Investment Chief Peay, Operating and Financial Officer. Officer; and

and relating Dave, discussing results, REIT. to guidance American call, position provide and XXXX operational will Stephane Healthcare today's high-level Brian On other financial for Danny, commentary our recent news

these question-and-answer All session. will Following made Please numerous advised are could these conduct results differ that statements. remarks, other call statements. we subject cause uncertainties that historical forward-looking to call include this materially a forward-looking of fact statements in will during this to statements those statements from and actual be than risks are that projected

exercise future relying refer and condition should results, you discussion on filings a interpreting our in to and you the more caution impact operating I of could for detailed SEC our financial prospects. that them. risks Therefore,

speak law. revise today, be specified. as statements as as events otherwise no to obligation or information, All of assume new forward-looking by may otherwise, XXXX or statements, of update February or other required a whether as We forward-looking future only any such dates result except XX,

During we company's useful financial in we operating discuss evaluating performance. measures, the call, believe certain non-GAAP the will which can be

their this in SEC. results in information on These GAAP are measures discussed with accordance in prepared release, with measures our filings financial to a should with financial calculated earnings supplemental GAAP. directly our measures comparable not be of accordance for considered as in the isolation included the package substitute in Reconciliation non-GAAP most or call

section call Investor well as replay audio webcast can at of Relations this website these on conference You our www.americanhealthcarereit.com. an find as the of documents

and Prosky. CEO, With over will our the call Danny turn President to that, I

Danny Prosky

Thank call. everyone. joining and today's good We on Alan, day, you us appreciate you,

through of the We to alongside successes to I've at here. to much shows our We team to out portfolio. celebrate REIT. commemorated AHR of our to grateful care Healthcare forward get our a listed hours countless REIT, mission, as dedication year deliver invested have recently a first day up milestone performance to high-quality committed on of that American anniversary health here the financial achieved on future who in providing our full and day such all our look and across health which us and group care shared high-quality outcomes calls strong I'm a work

over to its during year XX-year we've again to is be by I backdrops supply only housing each career This on fundamental having year this forward partners in industry AHR in added REIT XXXX. team the that industry. XX-plus-year-old population grow care am favorable my individuals look on Through I've average of than expected mission observed that backdrop and on against it average delivering on since and most of the XX,XXX the units proud the each XXXX, healthcare XXX,XXX senior less the continues the delivered long-term once one to I XXXX, for XXXX. in

growing that portfolio, be will confident this our across wave. to am capture I we demand able

dive of NOI into care same-store let's growth, of meaning our rising Now exceptional another quarter of period the long-term operational results In needs XXXX, aging reflected our the results. population. fourth an

campuses, to refer are margins, senior comprised health within of which management also particularly we as Our Trilogy SHOP and our continued integrated our segments expand approach hands-on managed NOI asset to portfolios. has that

achieved rate to enter exceed revenue growth we growth, growth the to to expect the on rate same-store continue in As we the NOI build positioning we expense of us of impressive XXXX. XXXX, that

by continue total grown XXXX, has to earnings fourth year-end, to the and we this growth of quarter XX% segments strategy. our NOI driven to of our expect investment SHOP in the share and organic and as end both grow Trilogy from by NOI of

and Trilogy helped Our senior of We of class XXXX. aging our the of housing have in the gold within segment Trilogy contributed all portfolio, treat standard our the Trilogy our robust the partner portfolio. results in the for business largest as of asset share our believe resulted Their is industry. propel strong residents, that outcomes are our purpose-built largest Services different growth the an which in design capabilities needs to This population. levels of the campuses segment for meets financial Management acuity segment, which health has the to essential

on operating exceeding within care and and rating portfolio-wide. residents recently along quality business commitment our Trilogy's X their I the industry. their overall stars average believe differentiate segment star standards to with CMS and over model, Trilogy's outcomes Trilogy were Trilogy's employees highlighted by service

over On capacity focused care the housing fund pipeline. external leveraging capital In acquisitions long-term accretive and RIDEA remain growth. primarily our through care managed optimistic $XXX to activity million senior we captive development allocation growth execute further in new balance XXXX. sheet we're to front, structured about investments, invested on external in unlocking and cost our through favorable capital and our in XXXX, on we and of segments, value Trilogy investment

returns, segment we we that to year. start continue several are on best and to announced we care. where XXXX, We under projects to currently new the closed announced in is these We acquire believe a will this lease that in grow our contract assets. buyout managed investments risk-adjusted which see SHOP exposure our long-term Trilogy development plans in X Already new Trilogy to

capital strong more pursue cost Our us opportunities well call, in may that position and guidance, to but detail break announced investments sheet the down not which accretive later on does arise. include Brian balance our those beyond our night, will of last

improved at our accretive time. XXXX over debt well organic period opportunities end capital has the growth net allocation X.Xx decreasing of adjusted at This from to to Our activity, internal X.Xx flexibility from sustained and to as of end as provides both XXXX. pursue dramatically EBITDA a of external the

the last these earnings the operations, within refining our share range further dispositions in XXXX funds with portfolio finished program. strengthens portfolio closed expanding our that quarter. increased the to more normalized earnings we we industry. attractive with last optionality our realized ATM per raised grow and our over believe, us achieved NFFO and we equity Everything or within aggregate, efficiently several and of quality opportunistic provides the We In while I via capital from year, set fourth guidance quarter

outlook related that it potential these the business sector, investors the to discuss changes want note health from the Those navigated Medicaid. time over recently potential extended handing policy Before shifts this I questions period team have in an and our results regarding to been in more and to XXXX have of received over detail, care to in we've for primarily policy are of us of years. changes to seeing types that used for

are address them of it happy However, would and welcome We the now, any ever-changing during speculation as be regulatory with as occur to Q&A, would discussion. to questions what

our it Gabe to discuss detail. results over turn I'll more that, to With operational in

Gabriel Willhite

Thanks, Danny.

operational asset full our to approach, and Our on highly in of our management year supply which diversified favorable the and allowed are and exceptional performance demand highlights us hands-on QX portfolio XXXX fundamentals. really strength capitalize what

Trilogy to same-store compared bringing grew full in year to XX.X% the Trilogy in In full XX.X%. year XXXX, surprisingly, This year-over-year and segments quarterly same-store NOI results. NOI to our NOI our XXXX lead same-store growth year full quarter, grew growth and same-store XX.X% SHOP continue NOI Total segment, Trilogy brought year-over-year to fourth our XX% not by in portfolio our XXXX. QX

acuity discussed as settings reimbursements, particularly Medicare segment. to I've independent operations well such gains, to optimize multiple to levers Occupancy growth growth contributed control as growth as care performance. Trilogy pay Now this before, lower high in sources disciplined many drive and assisted has contributed and as rate and living expense private and sustained all in living

We're same-store in and margin QX, the QX just operating our These year initiatives that the return also encouraged our Trilogy achieved out by to XXXX with Trilogy's factors performance marks also margin in shy XX% margins throughout margin playing drove pre-pandemic the XXXX. in in meaningful expansion of levels.

Trilogy's nursing independent noticed was stays, new point admits XX% came care last ahead we living is year. focal achieved quarter which we settings directly care as from a memory conversion of example, For the in rates assisted skilled its of this and fourth living and and

since for length improvements stay require independent skilled are longer of nursing and bodes and Strong occupancy typically typically margin less beds. assisted post-acute staff villas, Trilogy's well living living versus and settings those additional

efficiency Looking pricing days pay to street rate occupancy, its XXXX, I basis key increases the expect XXX to by XX.X%. importantly, and of increase through Trilogy patient to enhance private increasing mix, by demand a points way, leverage continue percentage and to refining improved as year-over-year which, rate optimization

resetting certain versus with due just fourth start modest we noted business, expenses in to fewer there quarter quarter the and of we headwinds Trilogy's in quarter largely first last QX new Trilogy and sequential QX. the of year As days to NOI XXXX versus the consistent the XXXX being compensation-related expect

Despite a XXXX strong in occupancy As driven growth, Trilogy's rate. QX higher beds skilled nursing Trilogy accelerating again, reimbursement sequential XX% year-over-year In daily significantly for NOI over reminder, XXXX. our changes, to gains versus a XXXX, based SHOP be expected QX NOI is same-store segment, QX expense grew are by RevPAR and at on management.

year same-store SHOP growth full of XX.X%. XXXX, NOI achieved For record

we growth. that strategies pricing even XXXX, more become expect to the driver will of we've critical occupancy gains now and NOI further level, mass ahead important occupancy Looking an achieved

basis XXX expansion with in the for points basis has significant full in improving compared leverage the occupancy XXX margin these operating margins The to levels at same led and to over XXXX. NOI periods points year QX same-store

and our seen to Now Which year, start in occupancy occupancy modest segments did skilled colder is result increased heavier between Trilogy seeing industry, flu seasonality setting. some care within in in start our where months historically Trilogy segment, managed this segments. SHOP the and with some our nursing offsets the the And seeing especially SHOP winter the to season operating particularly headwinds. in the in we're our at year as we've year's resulting some

even and have assets, year Regardless, in continue again of expect into double-digit managed group we across particularly enter XXXX summer long-term XXXX, our a remain proud of delivered highly as confident growth operations our the to I'm NOI we regional our robust really spring strong we season. SHOP care XXXX growth and segment. of curated in how in growth warmer in Overall, growth operators teams ramp selling our and after will

the development new next Since but anticipate positive. a A expansion. the managed our of We big pandemic, barriers is will RevPAR driven confidence over outpace XX persistent rising, continue months, just of of supply. of NOI to costs at driving segments financing the the also by remains not costs rising. that least to cost growth in margin export and growth as XX our component construction has considerably increased to onset further result portfolio outlook Our

are starts to strong of the construction needs have our very fundamentals the setting demand, us opposite to we still At our growing consistently could industry the monitoring persist moment, decelerating landscape any happening, portfolio, in meet increase is with supply that the up decade. yet into changes rate next the own to construction see exact the markets, and to

to to propel combined continue Looking limited that years, confident the ahead NOI growth portfolio. X we are with new aging the population our will tailwind, supply X across

turn recent With markets. and it insights that, transaction Stephane over to today's transactions discuss to on I'll his

Stefan K. Oh

Thanks, Kate.

and execute mentioned, of actively to last we durability earnings. Danny as As discussed quarter, quality strategy on continues team strengthening of and our the our our

capital segments risk-adjusted are while the for returns our achieving best sourcing by assets lower through currently We deployment. and from opportunistic growth capital this dispositions targeting

with lease included assets the that of earnings. across a assets we This limited not of future various by nursing lower-quality capitalizing $XXX properties of portfolio triple long-term do approximately did we our sold quarter, net the our want align the for strong million inherently meet that to on In segments vision not for skilled It portfolio. had worth disposition demand the profile facilities of growth. support fourth

team XXXX, market by conditions year improved the of of highlighted potential we meaningful SHOP already same ago. a but period number this in dynamic, volumes investments evaluated This transaction XXXX. a beginning the since having As enter year versus compared deals is have remain our to

new that disciplined return our secured financing, volume deal investment incremental we well take have opportunities a in increased resulted these on advantage strong that pursuing strategy The to our well-capitalized with of combined in meet has with align investments requirements. opportunities we and new seen, not us while buyer our operating criteria. portfolio relationships our positioned approach reliant that maintaining are As identifying

the yesterday properties be total regional We XXXX, cost will first $XX.X that SHOP expected by of in of X operators. Upon acquire under these to million. announced contract are for closing approximately of operated a we our two properties trusted half

We a within completed million. buyout also for segment $XX.X lease week approximately our this Trilogy

ground all breaking and I projects acquisitions, we plan growth quarter, external external these our new XXXX, to bolster campus including In pursuing campuses, avenues addition actively development living for highlighted them. approximately villas, new of $XXX expansions. wing on several Trilogy independent by in to and Last we are million growth, in

quarter new emphasize our allocation off-market that all on want operators recent including and portfolios on single SHOP strategy, is and operational capital demonstrate to funding our Trilogy relationships, accretive that focusing operators Our to regional we developments. opportunities deliver we commitment sourcing underwriting activities our in the XXXX assets mitigate of strategic I with captive return meet in close with partnership our the are fourth execution risk. quality smaller conducting and as and or early this requirements other

invest. investments, we on to offers remain size strong focused from we relative every performance our While ample opportunities dollar significant ensuring from value drive our

guidance. year and to results, financial XXXX Brian discuss it and our quarter full fourth turn XXXX positioning I'll Now to over

Brian Peay

reflect Thanks, per per share. This guidance full year we our that plan and from in Stephane. out as quarter, reported taking we opportunities fourth originally which of activity well of not share earnings laid the were transaction was of diluted These the within strong contemplated. NFFO XXXX business the the of operating normalized funds as while In resulted beginning year $X.XX at executing range. results $X.XX, on operations advantage diluted successful

our As XX.X%. income year same-store net total growth earlier, was operating sector-leading full a referenced Gabe portfolio XXXX

industry Our from for of that pandemic. fact initial midst by was in the recovery impact guidance the of XXXX the influenced the the the was

were earnings able shares proceeds the such nor to complete interest acquisition that sale reduce with guidance the Additionally, of as additional Trilogy purchase to accretive the our opportunities minority not XXXX we leverage the contemplate initial our in of did used ratios.

many will our much easier approach last be pace occupancy segment strong, not but was it still year. Our with the and to in within that at for XXXX necessarily guidance growth setting ways, anticipated managed

following growth for is growth growth for X.X% growth XX% and to properties. positive NOI for of XX% NOI between X.X% segment is to Trilogy, XX% targets, for Our for outpatient X% same-store total segment net triple negative X% our our X% leased of guidance declines SHOP full comprised portfolio of to the to guidance This year XX% the XXXX. medical XX% and same-store

lease a coverage. reset medical outpatient our to and be extension provides so lease triple reflects term Keep it tenants segment that the and one expected and are from of within respect The tenant that guidance for our extends the headwinds net the lease assets for guidance the rent in move-outs, for smallest with for lease the significant. any segment, mind improved net triple lease portfolio, impact not will reflects

XXXX should In our another same-store in we double-digit with that believe XXXX care NOI expectations and operating and earnings growth supply capabilities that landscape will managed has our the segments share fundamentals, never are comprised to long-term along growth. for of per SHOP, strong support of NOI our and growth. demand better, for We year been Trilogy contribute expect

to XXXX. completed or and growth NOI same-store growth share to announced for double-digit as the in investment per XXXX outlook compared our NFFO Collectively, activity translates

of any issuing already leverage have the $X.XX $X.XX in we share lower effects XXXX the our dispositions announced, ratios. although it improvement guidance include XXXX. for are diluted activity of guidance significant fourth growth capital a transaction markets we does quarter per does to NFFO We additional and year the what assets or not beyond fully of of of closed NFFO This full assume to

teams predominantly and as disposition. candidates our across investment operations Our are evaluating for assets medical potential outpatient portfolio, continuously

as effect our well dispositions selling remaining As or be from portfolio asset appetite for particular the by will on pricing continued always, portfolio. driven a the as

lower will per I anticipate recognized share be fully noncore we diluted of and XXXX. approximately earnings, $X.XX number that in XXXX, During

$XXX initiated Now Those development fourth used markets price our activity. our capacity and share. investment debt, quarter, our through of approximately funding. average outstanding we the program weighted In to capital turning million a raised funds XXXX recently ATM pay for down to at were creating announced per $XX.X

than turns growth activity, at EBITDA organic significant at included equity $X.X X.Xx XXXX, raising nearly the XXXX capital reduced end our net X.Xx mentioned, and the by of our XXXX. from adjusted portfolio in debt more end to of of Danny X the As ratio billion in to which markets

of had estate. strong our ability remain that success in past disciplined advantage to environment continue balance and year long-term take planning, Our the we sheet the capital any this We ourselves growth to building health on real us in affords capture care uncover. opportunities we the attractive within positioning to care

the we our to for now ready concludes open questions. Operator, are That prepared remarks. line

Operator

[Operator Instructions]

Your comes the Morgan first question of Ronald with from line Kamdem Stanley.

Ronald Kamdem

the hear the ones, trends into the that exceeded seeing Is that you're based to the same-store I Just February deceleration love that I NOI the because it guidance. is by thought And about a so just bit. X year guys think wondering, in number in I'd and I is sort of in last quick January of leading something Just terms sort to what I'm conservatism? asked that? you I given seeing when you're quite guess. guess reason of was what far. process

Danny Prosky

All right.

I'll This So one. with is that speaking. Danny start

of we're QX. there's lot between a looking question. QX Trilogy, for I I I necessarily think moving a answer example, at your of expecting -- in not I parts lot and there would growth NOI things, see to think So think that say

There are Although be XXXX several that. higher QX much QX obviously will things than XXXX. affecting

see a couple the you've employee think significant the on one, I of has of employees months in for reset of effect and got the number FICA, you first just XX,XXX fact a example, that year.

of kind flat and the We've expected. seen -- is year, to throughout to QX years got that growth we've utilities Mean year this out. the over year always trend a for in, is be the be which in higher tends winter, where QX

it -- recovery, pronounced. years, to as going of But we back where last we had we're you so the few kind beforehand. were think COVID wasn't I

I on during strong you're skilled we and as growth the side COVID as that really far seeing the occupancy. same January think seen before issue saw occupancy We've February.

to in has think I we've seen it dropped with lot as of do where the has been SHOP slightly flu past. a years season,

as that's Trilogy far as I specifically. So think

our of As I a far as pleased. -- only of operations as so course, kind ended, as we of year, don't good. we numbers. it's and this think with happy have we're seen this couple mean hasn't been I far, budget where our see February February far and so months, We're so far far even But what we've we so so year forecast.

to You add, Brian? want

Brian Peay

to just couple XXX basis shop SHOP context, it our here think Listen, in We to put going a Yes. I basis things. occupancy points. into XXX by occupancy thinks by don't of XXXX. grew anybody points another we're grow

So of to definitely be that's part going it.

The RIDEA thing in of that occupancies. our to ahead keep is occupancy -- other peers mind RIDEA is our

same So by time, all lower our it of at but contribute all sort expectations XXXX to things being measures, great those than in 'XX. the was a of for year same-store growth,

Ronald Kamdem

talked looking the great. actually you Great. for like, on pipeline much And of is But which of $XX question sense pipeline. Just deals just that is at, us just sense guys. what the give sort environment amount million product of to the my I was that second looking then get this can a acquisition looks of in that how about you're you're know you you possible at? a

Danny Prosky

been been will at fit looking past Yes. And our the a new months we over we say best operators few with robust. the and very right I very the working closely active I that have that the potential is for pipeline mean, would portfolio. very have be opportunities identifying in now opportunities.

at I definitely was significant I year. size. of seeing mean terms it's that And the grow. time think In more this last we're it than pipeline,

are plenty to opportunities So underwrite of us to participate and I for there out there in. think

Operator

the next Bank America. Farrell comes Your of of from Granath question line with

Farrell Granath

the to occupancy rate when I you're and about that specifically I ask and when previous about seeing and kind really point alluded point know you margin wanted Trilogy, when the expansion. thinking you the in tipping pushing of it of you're thinking tipping in specifically really start of occupancy, start about to can answers,

XQ. seeing that about What looking I numbers going kind would be seeing the forward? you're at it I'm you now, already of think thinking in

Danny Prosky

Yes.

pretty So now up little right look, was AOI we're the very well at component, if today, we're able point where AL pretty with which you And back at it up to pre-COVID occupancy the a Trilogy, is supply. expect you I component, of it think to it's already increases good got you've now going in going going see strong as got where year. to we where a at is looking Keep keep new XXs. rates up mind comfortable it's think that lot, and over are, I levels. in industry. where the at new look It's time, clip. to similar demand we as split increase very high to up. this but above said you've think We're we And drivers, everything We're across that the the far to demand, keep going is it the lots what very gone we

XX% today, On much care side, much right growing seen. around continue on keep post-acute mind, private higher their less short-term Medicare, than a insurance, anyone skilled in But stay, I've room else is pay, that. to Medicaid. the really private just model more is they're which There's the

who coming available bring going to setting. have residents want beds hospital they're are to out in new So to always a of

have want Medicare want So want higher at sure available. to be accept we them -- to make paying We XX%. always have patients. beds don't we able to those we We to want

we that the can think with to continue really I occupancy nursing raise skilled So Trilogy?

don't think so. to we want don't low -- But in XXs. We're necessarily the Yes. comfortable very do I we that

Farrell Granath

anything more scenario a give think have, that on exposure Trilogy on it? And and the could potential more about you on limited a Medicaid what that major cuts bit could you're guess about impacting or in impact also from thinking hearing the your follow-up how remarks be operating exposure. operators? I even worst-case opening see your you're how how Can you about do if the if And again, and across you Medicaid that, color you more specifically little -- Great. in made you in the

Danny Prosky

Yes.

that you're that sell of So portfolio had most one believe on the Missouri. process in this before to didn't is perspective, it started it's the feel just just XX% in portfolio, right the I to at an way about were before we That really and assets, is of smaller, is, that of the was And growth rural, election the Trilogy us course, and because portfolio be. we December. became where quality were I more exposure, focus overall they we we a from want criteria looking reasons portfolio need continue less nursing where we asked our they older But issue. -- met skilled sold back to to Medicaid the the one decided our

looking of ALIO just And Medicare answer is I'd X about really the the what time really, continue Trilogy's expand it's as it's Trilogy. we Medicaid over in of way a the a portion low. It's portfolio, at have left, and is we from parts. shrinking exposure and question But Trilogy. XX% to by So perspective, pretty design the been really

X don't number day it's same different say they'll Who we knows, know the the to going Medicaid. -- can politicians telling and I listen they anybody what's can going I says what's happen one, things. don't same think you the So who happen. don't truth. at to with to predict

be. there'll some think I know there those So is will a don't is, there changes? but chance Yes, what we be

requirements, there the example, who much affecting for for to is if et to are more Medicaid expansion, that believe benefited cetera. I maybe those likely reduce Medicaid be adjustments eligibility, two, Number work

those mentioned to his to down back as pull. a and cuts to see their remarks, that well. And levers Medicaid that's cut up care. think they what trilogy likely happens effect I any less really, and long-term XX% three, going years on reimbursements business. been try they reimbursements for skilled prepared XX have when Mitch I've revenue in We've typically, they being need Medicaid seen in reversed. of lot ends to number around And that this nursing never can Gabe of to be Trilogy, they're

Medicaid. they beds. Medicaid Usually, a There to for more Medicaid a honestly pivot their wing don't accommodation existing they of if double those It's AL, to residents it's to more convert that's determine out to so. do rooms that specifically. And is line X in think they time that's focus -- Medicaid reimbursement can or we where going of they need Medicare easy not if It's really -- to if really make they them very easy a reimbursements care, But more It's a not has business residents. there, occupancy that business because to an very for it's rooms. an bad. of really to isn't them sense, into can on that there's the existing they're come move don't that I just on shrink that. it's them memory Medicare of of and to money, to Trilogy, accommodation focus

Operator

comes Citi. question Joseph from Nick the next Your of with line

Danny Prosky

to forward [indiscernible] looking Nick, seeing

Michael Griffin

on you within the just but just and margin Danny, getting it's Nick. back -- touched the Griffon actually this forward set of you to during on Trilogy looking remarks, I of maybe as portion well. seeing for prepared of Maybe kind maybe kind Thank about the We're occupancy. closer to Trilogy is as but getting think you kind to that know terminal And opportunity expansions. of you your SNF Gabe,

see could more some add reason Do would in should we that if a the see stands villas, IL of probably additional I decent you on the it you capacity right? the future. within get you on these You've room margin expect expansion I got not AL, have I but Where giving to? AL run you're guidance, component. add to margins on realize some that

Danny Prosky

miss years X I chime component This Trilogy's we've Trilogy. if is of Gabe Danny. you're increasing year as think and IL we far since I business. as acquired let in I'll and AL the start the off or But anything. Every yes, been right

that's and AL that continue around I expect going number to you QX, we to where on I is, But were up XX% going as to and to be more having about back have in think, that's would impact think, which I continue IL. a to, to function grow, So and expect mentioned, We're a it up, I margin. positive go one, of, pre-COVID. to the

across to just portfolio, we everywhere, two, exceed growth expect export think continue entire is Number to the margins drive to RevPAR growth going up Trilogy. which to I not

opportunities as opened the are to got up margins. time just not given don't have I as going same-store up show you've assets far margin, But Trilogy, Those a have -- the at improvement that margins recently think bunch think stabilized. beyond campuses As of in you're yet to see stabilize. that same-store overall continue I to

Other we aren't talked necessarily cap we we've already Trilogy is That on -- operate rate out. payment bought opportunities X% about margin our that a leased that that asset about the on we about and asset an own. was at related got lease

there -- just own the There's few underwriting where Trilogy closed those. but risk the a there. There's assets no week. more also not like of -- some is really out, record that buying we of manages does those So but this X

that we'd already those open the to are anyone see the can more So We you're I after And we them. acquire at cap than think logical We go rates know buyer. them else. to operate than acquire we in anything us else those. market. We're continue going attractive better think

else add about you expansion there? want anything Gabe, margin to

Gabriel Willhite

Yes.

I certainly, occupied are. AL them One, And of buildings not of a operating are is and Trilogy, everywhere. all still couple things. their in Just at demand XX% the think of some coming at

to there's Trilogy. room occupancy think side, the certainly So grow I AL on still at

pricing to occupancy, that tremendous got mid-XXs range of you've power of as Once kind well. you get

their consistently the are why that national like the is. things appreciated we care Trilogy families average has the on of ahead One on And that what of demand care driven by is focus for residents is same their their their products, are and outsized focus really about which running properties. considering occupancies is the that

So that been winning a strategy has one.

I good good quality strategy in of also the is that pay outcomes think things them be private nursing more of IL should exists meaning skilled and pay. both side, add-ons. nuanced to setting, on states further year that are unlocked drive AL, all and industry. for value-based the still still Trilogy allow will on rate care care appreciating expanding in couple skilled hasn't A that and the the nursing are private the other pay and every value-based rewarded private those operators more more the

correctly to you've I the to valuable complex all is that there, manage long think and not it's that. reporting continue incredibly is enough can scale it important markets unlock that reported in manage sure is the are them those reimbursements the to see which, you're one why that make necessary Trilogy's that to through care way, by you and the reasons into so that and capturing of just what could that regional seeded they are

could be on final that is good Advantage thing The think I the Medicare side.

going what conviction saying the high we not we're and more deep Medicare reimbursement the So of delivering having in recently that value occupancies, certain that's having saw to a a Advantage is take in below Trilogy product threshold they're rate rate.

delivering. for value a plans More your the have will willingness decide with we for a of program, that little you the deals value a up higher bit to have that that proper rate. recently, show daily stepped sit we're rate us Advantage if out necessary, until of to realized So and Trilogy value Medicare a pay pay to

I what predicting bit think we're we than rate growth higher there. a little currently that's could well. as see

single But think prudent exactly right look, ways every right, truly where Services, all optimize out outperform to are be of can there's I lot if for predict at there, can business. thing a go the my comments, a us initial there time. it back chance So of going this the operator would think don't to Management that guidance them I works be. different our to

Michael Griffin

context. in I'd curious get more that mid-Xs yields in targeting? the Great, Stephane, stabilized your properties to SHOP they're that say pipeline. terms of of insights that, in of be guys. helpful you're And to kind to over acquisition low seems with certainly the It category. are the top in component? switching back maybe the given kicker the to Fair on some going That's maybe

Danny Prosky

what think between right yields that I we're are mid-X% to mean, I I now generally just range. seeing are the somewhere the X% think speaking,

assets. and SHOP the where are our operating think best identify partners return today. with are We assets. And targeting those trying our We risk-adjusted active to very that's partners, definitely we is

assets. can but replacement room mean, of at we're we looking improve, I'm have cost stabilized. Yes. I price. -- assets, We'll moderate also to but stabilized In a terms value-add or consider below certainly, some acquire we're assets some those type below at potentially looking of also at sorry, that market maybe

are of Does mean, existing I portfolio memory portfolio SHOP focused side very a fit look all So fit side. mention our not the to senior do acquire we're wouldn't are forward. but that and be maybe can I the of have to within level probably types we the things today. it looking or well on footprint going that quality going it of really the that living operators? wide we at the to think range does portfolio of geographic good on at our than fit property I'd on that more to of we it's are a long-term are that continue within a say acuity the higher we're is can holds going good assisted properties. IL, well. perform the housing And group for I that assets looking and our do mean, matter portfolio? be we they of care And IL And everything operators we a think to of to really also And build

Operator

Markets. from Your with Michael Capital Carroll the line question of next comes RBC

Michael Carroll

expansions that in you guidance developments how in what's Can you uptick the earnings and you of 'XX? does is should what that in call right we that XXXX, on now? maybe And completed 'XX, many Trilogy plan about guess, dynamic? that did how guess, an I process And some you how starting about provide in you into how time? in details roll quoted over I many the that whole think on

Danny Prosky

Yes.

So had up 'XX. 'XX more we in number opened had few. quite late the a typical and We than

of X project in only sure of then we until that announced think 'XX XXXX. early period this had new X that start course, not I between launched of construction X And end to new X we'll open ones summer the XX-month will even probably we year. in 'XX and and the approved we we XXXX, which I'm

a we last lot open year. So had

projects the have this as campuses, year to another open first and We one Villa new next I opening But as up will few will of have part year. don't expansions. we that far quite think a

So there's of $XX million starts about that were in XXXX.

we the I a bunch campus it of had mentioned, As -- X only and then expansions. new was

We've few as think probably expansions for year a see That out. really year annual to you're and some includes announced going I on far. campuses, just in, basis, new is of quite number well. an villa $XXX go-forward X XXXX the to million on projects so campuses starts going

but light going because an think in, vary, 'XX All including as far was of I so It's new expansions. as it's annual good probably use. million a campuses, I is number year a year, estimated heavy of and each fills was to campuses. kind think new 'XX number construction $XXX new to

Brian Peay

that just that clarification, a in in everything we mentioned When just that's to what spend, million. development Mike. $XXX and million our And small point of put guidance on $XX XXXX just was Danny guidance spending we anticipate

Michael Carroll

Right. Yes.

those is completed? are I to going drag how then Okay. those completed, initial those guess, cash some buildings you -- at And us, it remind stabilizing takes once can you type be assets long are once are Got then double-digit they assuming And there And it. to stabilize? are yields?

Danny Prosky

on the Well, it project. depends

has only XX an or usually campus that be existing adding that's there's up rooms XX quickly. onto if is you very usually only and usually waiting So wing. done a a fill expansion And list. new it. X, expansion An Those on an could for full demand do

with are typically fill fast. those Same the those preleased. So up villas,

the the at And what's we've in campus. deposits comments, capito usually new X years fill happened fill Gabe and mentioned they're residents looked take up fills they strategies faster and as the up up -- use of AL nursing is to new X.X, X as almost skilled So then Trilogy his now to typically a is side skilled In soon as done past, longer, the obviously. IL.

new faster have outside, than little The of the seems last because lack we've What of be to switching supply, the AL seems that even is actually that kind seen up side. the bit. to & be that actually the because of a opened demand, of skill IL few filling

is really those on to getting think a period Trilogy, I months I take be new a compressed. they're typically a see digit, campus used double kind are more an that, big that it One existing to million. that new campus. XX basis but to addition are like time single whereas like be very projects. mid-teens, low think I are So to fill not probably on They're you'll the to XX or right? probably a small, digit, on which and expansion, campus that is villas million, $X think X-year that's new And up an Yields those addition of those high could stabilized a $X.X wing, projects X.X- of something

Michael Carroll

completed? losing that fair? initially once they ground-ups money those And Is are they're Okay.

Danny Prosky

on X, longer open -- time. especially a some longer, states. fill take some days And takes the to going period, Yes, always it's no they up Michigan -- faster residents. other Yes. there's tends of always when there's than Even up, day there's skill to it's type, licensing like which the

to X need it going be you So of be get always period will then up. Medicaid and start there's time license months Medicare could it filling where to a your

going it's -- going to So always up with always open to it's start X to going never -- it's residents.

Operator

line question KeyBanc with next Markets. the comes Austin Your from Wurschmidt of Capital

Austin Wurschmidt

after of NOI of sort sequential all the in impact other Are referenced with Danny through from that in growth the NOI cadence the first you the think I through of some for and any factors included XQ could there XQ quarter? that highlighted. Trilogy considerations guidance of year to seasonal flattish get sort seasonal you

missed. I that Anything

Danny Prosky

delineated bit can such anything about that's business heavy it. show Yes, final nursing can't component I ultimately, that beyond act I in reset in the a costs your mean. is that. there's necessarily increased There's the that utility because of Gabe in is headwind employer there's a the the a labor if No, one skilled first fewer in days of up it think quarter. think then numbers -- taxes. -- the reset I headwind of And on It's weather. in little kind a QX. of some obviously of

Brian Peay

Yes.

having Just loan in is QX, in XX QX versus days XX that material.

Austin Wurschmidt

sense. No, no, makes that

understand to of necessary dip, Trilogy. sequential the -- the then a seems even hit flattish to right slight NOI guidance about trying or if assumed midpoint seems same-store improvement Just growth it for there's the little within like

you how the look of Secondarily, the months when expect to X the you any senior within some over out to happening, Fed of housing to that the XX the X other versus would component over SNF of years? development next staging next opportunities how and ratio with activity XX kind that's wondering to change expansion

Danny Prosky

best Trilogy when campuses close IL. nursing. And of because if I to they go I ], the slow in slow a I'm you years, now, Trilogy, When and years you, I you progression. the is been [ this XX% to to if skilled mean XXX% XX% out, -- was it's a started bought tell and [indiscernible] It's about my maybe recollection -- skilled to to close they're getting believe progression and we and believe of it steady last XX% XX% and going look it's X the it AL XX% beds ago, XX back at were they ,

of a been happened was sold then patients that off. would whole short-term campuses doing or other IL the on skilled that over and the they them to typical fact be after XX AL. model, started. the moving basis basically just time, was Randy have started those of a the be and So kind into what thing ourselves? But Time all CEO to do That's we why AL the don't expanded that XX XX these of Buffet XX with other is might operator, some and Was once realized, lot we're or hey, taking

there campus Typical Usually, so This or AL/IL. did their, then larger. they are be another IL. to new XX XX skills is XXX call even today it, before in maybe about is units XX, going and

AL/IL continued component. exposure, nursing alone it villas skilled even then more. that reduce on that has the to just to reduce does and add increase So and the And the component you

a and time a opens. slow So every new it's movement steady campus

Austin Wurschmidt

decrease the Foreign for between margin helpful even leverage powder. dry that and with NOI That's of was me given expansion differential you issuance Yes. in kind to the fourth greater available ATM difference and helpful. opportunity expand the had X the context suspect really is quarter guys is some Last the two.

and some deleverage if I time. expensive additional may runway new additional at there's think capacity the over debt interest some wondering just investments, even to and you just so but savings drive opportunities still expense Trilogy for time, have the build given same

Danny Prosky

of So HUD $XXX long to has That hot off. At going debt Trilogy it point, the majority they is of stuff user have is at duration is coupon a the a this million X.XX%. while. expense debt, We've data been of there pretty already got a about big for paid quite which be got It's attractive. -- of as on well.

a behind high do is So in really, be low-hanging X% of which paydowns fruit range. us. We might on revolver, debt the have kind the

was than when secured TRG. , me, So attractive at debt it less those expensive a [indiscernible] had fixed it's a we expensive excuse lot lot definitely of

already Ultimately, either first closed close have announced quarter. that for year. weren't it guidance million. mean We've have external with that maintain we're level will growth we're debt-to-EBITDA very -- to I to we around ideally. or contract will the will under to going our hard We And to pleased we're be quite listen, thought down going think judicious. and I really to going we're $XX it that get close this things That's in there, X.Xx.

ATM very additional additional Beyond to that, I we're be and say, leverage any judicious issuance. going about as

Operator

comes the Michael line Stroyeck next question Street. Your with from of Green

Michael Stroyeck

can Maybe What's to to from floor they terms that that in Medicaid from reasonable the event that comments your bit. Trilogy a Trilogy revenue want get coming away in the a pull of could move levers Medicaid back to? going percentage actually of on

Danny Prosky

to to Medicaid move for else. Look, question. I [indiscernible] the business That's are way move mean, And that somewhere you may getting is got I mean, go I it definitely don't Medicaid, bring run maybe because popular. the X business. out to got think and need not you it we're in best you out of that very a their can I hey, you say, be facilities necessarily and could to them our -- if to tough down. don't you of

have definitely get have can to out I just It make think it. they cut to completely. some where the reduce be to there -- Medicaid to of So it we would would to decision massive

I Never it's have. of -- say line and never, the but business. And pretty accommodation a it's good actually think of to a good some states, in

hard they X? know it's if down but necessarily mean, Maybe, predict. -- Gabe, -- So to. don't they want really could I to get I anything to

Gabriel Willhite

skilled talk the macro could Trilogy they've it's a of market-specific And dictate mix care X every of they switch can because business conditions, pivot quality is care, Let's The -- in living memory to the so issues, to by Yes, perspective, break me, even nursing to X. let's bed on so reimbursement to physical from they of plant memory physical pivot down from wing like micro they've and you way, want to built reasons plant it excuse to the through were sometimes. and developing flexibility which total the in. And optionality by building in be issues kind needed. that beds added do these go outside little why AL kind a of demand got of conditions we the from design assisted maximum line got bit -- they

they AL they enough wanted level. to beds answer at and And So want high go if the from the is perspective, to. as a it the well plant a get care into full where quality they could people those right is it's physical

start stay the forever Danny out people on a spot kicked street. to place think you'd is the know a to loss where get I this that balancing as even and on, where got value leader going to said is have what of not Trilogy for they're they've

that Medicare X skilled would lot industry. skilled certainly, significant Medicaid and the in cuts margins and there's in I of industry number profit think I beds I business Medicaid pretty if nursing skilled That don't primarily the comment the the you're think, to industry more in think a a skilled cut at with out, operator of said, decrease the cuts in already. if now, And industry. being on That operates right

But decrease if that not probably out Trilogy Over obviously these for same would to not perspective, dramatically it to the term, in is at long quite access cause [indiscernible]. people all you're have would from we're of going business, looking care the which our business think going states, issues. of also, I

there capture to share. opportunity So is market

from pretty I insulated we're these [indiscernible] think

Unknown Executive

I around right? a the low lot of been quickly. on relied negative mass skilled goes what you've cut goes because if and heavily even We very, you long the very Medicaid you're to says, -- Just going of the at We're reimbursement out rephrase where to if bunch means to the have down this Trilogy need facilities of to in completely. get to of point shutting and a gets going business a that, business Medicaid, It's space that enough rates margin talking margin. other slightly, most because mean, to happens, see be that is we that very to about bunch from stuff

I just any believe a why because cuts just because you there's limit will business it So survive. that's won't that to can't do the Medicaid just potential

Danny Prosky

the to it. So going X ones Trilogy going don't that Medicaid as is skilled how the fine. suffer. business going that's The make really of to It's that rely okay. know they to Gabe longer-term rest be mentioned, is residents Trilogy survive I just on

Michael Stroyeck

business. growth on as maybe move-outs later happening Where to weigh And on known within That's it. outpatient question helpful. Got any could Yes. are in year expect you occupancy this that XXXX do -- maybe trough And your that there portfolio? additional NOI the X well?

Danny Prosky

these it activity, the of but lease outpatient step X COVID. great have for up expanding, space you move were the has signed because a the some is basically Yes. what can hospital kind And medical options I high XX,XXX-foot lease to But says, years, with new health renew of pretty kind our XX,XXX you spaces. kind -- their system is lease, X did the for steady. couple years, at got I've which where of new really few last forward, is medical expiring When I of and every expect step that's last to the of tours. XXs. the leases. other lots lease for but occupancy and of a seeing seen I is during back. why the looks we've "Hey, occupancy the been feet of signing we're There's where doctors is to lot want which of health game in kind We're of today, name held that's the tenancy the remain systems big What outpatient in dominant a that

us and I think Our same-store year of, where to has leasing we -- of kind you of it system we the already then NOI not with have all I leases know in space. and hospital has that we a going same today. more they're do been in that think growth the couple the are to likely pretty about, see know and XXXX. indicated renew we're keeps flat offset that We their where of later new

Unknown Executive

sense standpoint, typically out, at are think talking We're their have they'll I before going that mean some I primatic to they pretty lease out a good got if happen. years from X to a we've tenants they'll these that's typically, expirations. And moving expires. Yes. least that

mean, truly expirations that backfill try space, and those chunky have probably speak we're going that, QX, things we've to lease, to not worked are And you to before additional have in are some I we've we would we April. say in better So time that keeping to know ending mind and point. we to had QX [indiscernible] maybe and back. and renew. -- it's and got that some But at likely known if -- continuing starting late in lease they November, given in and an that are we've happening I time , actual already

continues work those endeavor team to the to backfill. So and

We we Yes. And it tenant, them local of that's really And your the the X then the driving opposed What in real front like the there's to look of G&A. ones we from yes, a we when the are will hospital handles you're a need couple course, "Hey, the system. need love would Oftentimes, at mandate than saying, is is the you talking a your you'll it. decision someone before see And to to years that be of to corporate, they hospital keep the estate months are who more expiration. be cut out, as space. X local from out space.

Operator

Prosky to remarks. closing questions As back for the to there are turn over no further this time. would like I Danny call at

Danny Prosky

us operator. you on I guiding I'm joining our very want we're look year, next at growth earnings FFO guiding all you guidance call are to and the those share towards set, peer per -- growth Thank that NOI the partners that on for the at are a growth to you us at on which you NOI to compare who to, if call. our year, and our Thank sorry, next top our we're metrics. we look AHR I right. growth or near All thank lot look the mean entire today. much, everybody if team operating XX% for we're you at the of guiding

the to country you morning. do corporate help, of Thank at as all it couldn't to due with for for the on for we all around So to And as I just thank that's you. really here thank that. without everybody the so everybody you hard us spend -- want well everybody's a time work Friday taking

Operator

today's participation. you concludes Thank This conference call. for your

may disconnect. now You

American Healthcare REIT (AHR) 28 Feb 252024 Q4 Earnings call transcript