American Healthcare REIT’s (NYSE: AHR) skilled nursing occupancy levels were down due to seasonality although executives remained optimistic and revised guidance for fiscal 2024 upwards, saying that demand across all its four segments was expected to remain strong.

“As we enter the latter half of 2024 demand and growth for health care real estate remains strong, as evidenced by the performance of our diversified health care portfolio during the first half of the year,” said CEO Danny Prosky, during the company’s second quarter earnings call on Tuesday.

American Healthcare’s revenue for the quarter was up 7.9% on a year-over-year basis.

“We continue to observe increased demand from an aging population which we expect will extend at least into the latter part of the decade. This demand and resulting internal growth within our portfolio is surpassing our original conservative estimates, prompting us to increase our guidance,” Prosky said.

In the second quarter of 2024, American Healthcare posted funds from operations (FFO) of 33 cents per share, beating analyst consensus estimates of 28 cents per share.

The company had a revenue of $504.60 million for the quarter, compared to analyst estimates of $506.55 million. 

American Healthcare REIT updated its fiscal 2024 earnings guidance upward. The revised forecast now anticipates a same-store NOI growth range of 12% to 14% for 2024, with normalized funds from operations (NFFO) expected to be between $1.23 and $1.27 per fully diluted share. This is a four-cent increase from previous guidance, driven by stronger-than-anticipated performance and effective management going forward.

“The strength we have seen over the last 18 months within our industry is the most robust I have observed, and the outlook for our company, at least over the next three to five years, looks extremely promising,” Prosky said.

American Healthcare is well positioned to deliver sector leading performance within its managed portfolio, which includes its integrated continuing care retirement communities (CCRCs), executives said, adding that they were really excited about the company’s assisted living exposure, which allowed it to manage the seasonality in its skilled nursing assets.

Trilogy Health Services, its main operating partner, was particularly suited to this role, executives said.

“Trilogy Health Services continued to set the standard for health care operations across all levels of long-term care, particularly assisted living and skilled nursing,” said Gabe Willhite, the company’s chief operating officer. “[Trilogy’s] unique model and regional scale allow resources to be allocated efficiently across our campuses, providing a stable foundation for further margin expansion with continued top line growth and continued expense management, which naturally ultimately leads to sustained NOI growth over the balance of 2024.”

American Healthcare’s diversified portfolio, which spans four main property segments, has experienced increased demand, particularly in assisted living and integrated senior health campuses, he said. AHR’s focus on these high-demand areas reflects positively in their performance metrics. For instance, the occupancy rate for assisted living facilities reached approximately 85% in Q2 2024, returning to pre-COVID levels and outpacing other long-term care sectors.

In the integrated senior health campuses segment, managed by Trilogy, AHR reported a 24.1% year-over-year same-store NOI growth.

Trilogy’s unique model, which integrates purpose-built facilities with high-quality care, has driven this performance. Occupancy rates for these campuses continued to rise, with a spot same-store occupancy rate of 87.4% as of July 2024.

Trilogy’s occupancy levels have picked up, with assisted living, independent living and skilled nursing occupancy being roughly the same, executives said.

“Skilled nursing occupancy in particular remains well above industry average, although we’ve seen some seasonality return to that segment, albeit to a lesser extent than historic norms, and not enough to offset gains in other areas,” he said.

On seasonality within Trilogy’s skilled nursing assets, Willhite said it was difficult to project whether the skilled nursing occupancy levels will sustain strength over the next several quarters, but Trilogy’s model will stand as a buffer. Moreover, the lack of supply in skilled nursing units will also mean ongoing demand and stronger occupancy levels long term.

“What could really disrupt the long-term run rate we’re on in at least two or three years is new supply [and] obviously, we don’t see that coming, especially in skilled nursing, where the number of units in America continues to decline, not increase,” Willhite said.

The California-based the real estate investment trust’s (REIT) launched a public offering in February.

American Healthcare’s shares closed Tuesday at $16.60, up $1.02, or 6.48%.