Trilogy Owner Griffin-American Creating $4.2B Portfolio with Merger, Plans IPO

Griffin-American Healthcare REIT III (GAHR III) and Griffin-American Healthcare REIT IV (GAHR IV) on Thursday announced a merger agreement — as well as the acquisition of American Healthcare Investors — to become American Healthcare REIT, Inc.

In a $1.125 billion joint venture transaction that closed in 2015, GAHR III acquired a majority stake in Louisville, Kentucky-based Trilogy Health Services, one of the largest skilled nursing and senior living operators in the United States.

Through the newly announced transactions, the three companies would become one real estate investment trust with a gross investment value of $4.2 billion in health care real estate assets, the Irvine, Calif. firms said in a statement.

The combined company is hoping to go public by the end of 2022, in what they say would be the largest-ever public offering of a health care REIT.

By combining the Griffin-American REITs, there is an opportunity to unlock a NAV premium by going public, thanks to the entity’s size and scale, the companies said in an investor presentation.

“Listed health care REITs have consistently traded at significantly higher premiums to NAV (average of a 20.4% premium over the past 14 years versus an ‘all REITs’ average of only 0.06% over the same period),” the presentation states, citing Green Street statistics.

American Healthcare REIT will own an approximately 19 million-square-foot portfolio of health care real estate — that includes skilled nursing facilities, medical office buildings, senior housing communities and other real estate-related investments, the companies said.

The combined portfolio will own 7,278 SNF beds, making up 26.5% of asset types, according to the presentation.

By comparison, the portfolio includes 35.1% in senior housing, 33.4% in medical office buildings and 3.2% in hospitals.

Skilled nursing operator Trilogy Health Services is GAHR III’s largest investment, the companies said, providing a “powerful investment opportunity” for the expected wave of demand for this type of service.

In 2020, Trilogy was the 12th-largest senior living provider in the United States, according to Argentum rankings.

Trilogy’s growth across four states, adding 23 facilities to its roster over the course of six years, puts the operator “in a position of strength to capitalize on the impending flood of demand driven by the aging U.S. population,” the companies said.

In a previous report with Skilled Nursing News, Trilogy CEO Leigh Ann Barney said the skilled nursing provider is pursuing selective new departments, including a lab company, while growing ancillary services like therapy and pharmacy, both under the name Synchrony Health Services.

The GAHR III/GAHR IV merger qualifies as a reorganization and is anticipated to close during the fourth financial quarter this year, the companies said in a U.S. Securities and Exchange Commission filing.

“We are excited about the opportunities this transformative tri-party transaction creates for both GAHR III and GAHR IV, their stockholders and American Healthcare REIT’s goal for a planned future listing on a national stock exchange,” Jeff Hanson, chairman and chief executive of GAHR III and GAHR IV, said in a statement. “Merging these complementary portfolios together, along with the sponsor company, will create a portfolio with meaningful scale and diversification.”

The combined REIT would be middle of the pack in terms of size: the 11th-largest listed health care REIT out of 17, and 8th-largest owner of senior housing units of all listed health care REITs based on KeyBanc statistics, the companies said.