American Healthcare REIT’s (NYSE: AHR) third financial quarter was defined by executing on several key initiatives that have set up the company for future growth. Moreover, leaders unpacked Medicare Advantage contract negotiations and shared plans for staff training among its operating partners, including Trilogy REIT Holdings.

One such initiative involved Irvine, Calif.-based AHR acquiring its joint venture partner’s remaining 24% minority membership interest in Trilogy REIT Holdings for $258 million of cash, becoming Trilogy’s sole owner during 3Q, American Healthcare REIT CEO Danny Prosky said during the company’s 3Q earnings call on Wednesday.

There was a pre-negotiated “base” purchase price of $247 million and $11 million pro-rata distributions owed to the joint venture partner, AHR reported.

Other initiatives involved the acquisition of a senior housing portfolio in Washington for $36.2 million, and another senior housing asset in the Atlanta area for $7.5 million. Subsequent to quarter end, AHR sold one of its outpatient medical buildings for $19.4 million.

American Healthcare is actively looking for more acquisition opportunities to complement its existing portfolio, said Stefan Oh, chief investment officer for American Healthcare REIT.

“Whether it be with Trilogy, single asset deals, smaller portfolios, off market opportunities with our regional partners, or through the relationships we’ve strategically built … all of these potential growth avenues we have built are adding to our pipeline of potential investments,” said Oh.

On dispositions, Oh said AHR is continuously assessing noncore assets for sale, referencing the outpatient building sold after 3Q.

AHR reported normalized funds from operations attributable to common stockholders of 36 cents per diluted share for 3Q, compared to 35 cents per diluted share for 3Q in 2023. Total portfolio same store net operating income grew 17% during 3Q compared to 3Q in 2023, highlighted by its 61.8% and 22.6% from its senior housing properties and integrated senior health campuses (ISHC), respectively. ISHC includes AHR’s skilled nursing assets.

AHR closed at $26.80 on Wednesday, up 89 cents, or 3.43%.

REIT-facilitated information sharing

Gabe Willhite, COO for American Healthcare, said the REIT has hosted operator summits, where all portfolio operators get together and share best practices. As the sole owners of Trilogy now, REIT leaders have started talking with Trilogy management to figure out ways to leverage their platform and help support their other regional operators, those that perhaps don’t have the size and scale as Trilogy, Willhite said.

“Trilogy has proven in the eight years that we’ve owned the company to be the best management team that we’ve worked with certainly or one of the best in our portfolio,” said Willhite. “At the very least, we’ve tried to share their best practices across our portfolio for a long time now.”

AHR is exploring various opportunities to continue refining its operating capabilities across the portfolio, where Trilogy and its best-in-class practices can support its other regional operating partners. This will help build on and level up the current information sharing AHR facilitates among operators.

“Some of the things that Trilogy does very well as a really good operator are proprietary, and I’m not going to get into all the nuts and bolts of what they do better than everybody else but revenue management, marketing and targeting sales, recruitment and retention of employees, are areas that trilogy is outperformed,” said Willhite.

Trilogy is leading the industry in employee retention, he said, back at pre-Covid levels.

In-house employee training, immigration and Medicare Advantage

Overall, American Healthcare has been working toward employee training programs among operators in its portfolio, as the future Trump administration has been vocal about tightening immigration policies, Willhite said.

In terms of skilled occupancy for Trilogy, Prosky said AHR is happy to see percentages between high 80% and low 90%, in order to really focus on a mix of more Medicare patients, more private pay, even with Medicare Advantage which is a growing part of the Trilogy business line.

“The goal isn’t necessarily to be 98% on the skilled side. You always want beds available, available to admit from the hospitals. You don’t want to be in situations where the hospitals want to admit patients and you don’t have room for them,” said Prosky.

Trilogy could push occupancy up if they wanted to, but it would affect case mix and likely be more Medicaid beds than is needed for a healthy mix, he noted.

Prosky touched briefly on assets and Medicare Advantage, particularly Trilogy. The large operator is “very selective” when it comes to MA contracts, he said. Most insurers have to work with Trilogy, as a dominant provider in certain markets.

“If they can’t get specific rates from the insurers, they won’t sign a contract,” Prosky said of Trilogy leaders. “They may accept Medicare Advantage patients from those insurers, but each one is going to have to be negotiated at a higher rate than what the original contract offer was. Fortunately, we can be selective.”