American Healthcare REIT plans to increase its investment in skilled nursing operator Trilogy Health Services post-merger, CEO Danny Prosky told Skilled Nursing News.

It’s going to be the real estate investment trust’s (REIT) “primary source of growth” in the SNF market.

Trilogy, the 12th-largest senior living provider in the United States according to 2020 Argentum rankings, is the REIT’s largest investment in long-term care — American owns 73% of Trilogy, Prosky said.

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

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.

“We’re not typically a value-add type of buyer, we’re an income investment, and we’re looking to provide returns to our shareholders,” added Prosky. “Traditionally we’ve done small portfolios, that’s kind of been our sweet spot. Typically, you know, three to 10 assets.”

Initially announced in June, the merger between Griffin-American Healthcare REIT III (GAHR III) and IV (GAHR IV) was completed as of Oct. 4, along with the acquisition of American Healthcare Investors (AHI) to become American Healthcare REIT.

American has grown its Trilogy portfolio over the last six years “pretty significantly,” said Prosky. GAHR III acquired a majority stake in Louisville, Ky.-based Trilogy as part of a $1.125 billion joint venture in 2015.

The Irvine, Calif.-based company currently has an equal mix of skilled nursing, medical office buildings and assisted living following its completed $4.2 billion merger and acquisition, including 7,278 skilled nursing beds.

Prosky said the REIT may consider “other asset classes” within health care as well.

“We try to buy the best assets we can within all those asset classes, based on the quality and yield of the assets,” said Prosky. “We’re obviously gonna get lower [capitalization] rates on [medical office buildings] than we are in assisted living and certainly skilled nursing, but we want to have a mix.”

”Prosky said he “can’t guarantee” that the current asset class breakdown would continue with the combined company, or once the REIT is publicly traded.

American’s size and diversification is built well for its intended IPO next year, Prosky continued; the REIT would be “middle of the pack” compared to other publicly-traded health care investment trusts.