American Healthcare REIT Eliminates Agency Staffing Costs, Expands Portfolio in First Quarter

Executives for American Healthcare REIT (NYSE: AHR) said that long-term care’s operational environment has normalized, allowing the company to eliminate most of its agency staffing and labor expenses. 

“[Decreased agency use] is a very positive development,” Gabe Willhite, chief operating officer, said during the company’s first quarter earnings call. “And there’s nothing to suggest that this will not continue through 2024 with continued operator focus.”

The California-based real estate investment trust (REIT) launched a public offering in February, and cited slower occupancy growth for 2024 in its previous quarter’s call.


In the first quarter of 2024, American Healthcare posted funds from operations (FFO) of $31.1 million, or 30 cents per share, missing analyst estimates of 31 cents per share.

As far as the impact of the staffing mandate on the sector, Brian Peay, the company’s chief financial officer, said that skilled nursing providers largely oppose the final staffing minimum rule due to its lack of clarity and flexibility regarding care hours.

But the benefit of working with Trilogy Health Services, its main operating partner, is that most Trilogy facilities already meet the requirements, he said. The REIT’s Trilogy facilities include a mix of senior housing beds and skilled nursing beds.


“In addition to having good patient outcomes, high resident satisfaction scores, and industry-leading employee retention, [Trilogy facilities] already staff at a higher level than their peers,” he said. “As it stands today, Trilogy is exceeding the minimum hour requirement by nearly 10% at 3.79 hours per patient day versus the requirement of 3.48.”

He added that the hardest requirement to meet will be that pertaining to the minimum registered nurse (RN) hours.

“Trilogy also exceeds 0.87 hours per patient day versus the minimum of 0.55, and the vast majority of Trilogy campuses are already meeting the 24/7 RN requirements,” he said.

When asked about how the majority of the REIT’s portfolio will be impacted by the staffing mandate, executives said that American Healthcare’s facilities have tended to carry a higher acuity load, which requires more staff.

“When you have higher acuity, it means you have higher staffing,” an executive said during the Q&A portion of the call. “You’re also going to have more Medicare, more private insurance, probably less Medicaid. The problem with this rule is that it’s one-size-fits-all so far. It doesn’t account for those who have lower acuity, longer stay residents who don’t need as much care.”

The REIT presently operates properties encompassing skilled nursing facilities, medical offices, senior housing, and hospitals across 36 states. Its assets hold an approximate value of $4.6 billion.

During the first quarter of 2024, the company successfully completed a public offering, raising substantial funds and listing its common stock on the NYSE. These proceeds were used to significantly reduce outstanding debt, leading to improved leverage by reducing near-term maturities and high-interest rates, executives said. The company also amended its credit facility, extending its maturity date and increasing its borrowing capacity.

“Utilizing proceeds from our public offering in February, we were able to pay down floating-rate indebtedness, bringing our net-debt-to-Adjusted EBITDA ratio down to 6.4x at the end of the first quarter,” Peay said in a press release. “We believe that the organic earnings growth embedded in our previously announced Normalized FFO and Same-Store portfolio guidance for the remainder of the year should result in further improvement to our leverage ratios.”

Although he did not offer specific updates on the skilled nursing portfolio, Willhite said that recent acquisitions have been promising. 

“In February, we acquired a portfolio of 14 [senior housing] properties in Oregon consisting of over 850 beds at an attractive basis significantly below replacement costs,” he said. “We immediately executed a strategy to transition operations to one of our trusted operators, and the early results are promising. We’ve seen this strategy work multiple times now and we deeply believe this is one of those rare moments in time where a confluence of circumstances is creating incredible opportunities as long as you have the expertise and the relationships execute.”

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