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What changed in American Healthcare REIT, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of American Healthcare REIT, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+465 added−548 removedSource: 10-K (2025-02-28) vs 10-K (2024-03-22)

Top changes in American Healthcare REIT, Inc.'s 2024 10-K

465 paragraphs added · 548 removed · 350 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

74 edited+33 added−47 removed79 unchanged
Biggest changeThese shares are listed on the NYSE under the trading symbol “AHR” and began trading on February 7, 2024. • On February 14, 2024, we, through our operating partnership, entered into an amendment, or the 2024 Credit Agreement, to our existing credit agreement, to increase the aggregate maximum borrowing capacity to up to $1,150,000,000 and extend the maturity date of the senior unsecured revolving credit facility portion of the 2024 Credit Agreement to February 14, 2028.
Biggest changeThese shares are listed on the NYSE under the trading symbol “AHR” and began trading on February 7, 2024. • On February 14, 2024, we, through our operating partnership, entered into an amendment, or the 2024 Credit Agreement, to our existing credit agreement, to increase the aggregate maximum borrowing capacity from $1,050,000,000 to up to $1,150,000,000 and extend the maturity date of the senior unsecured revolving credit facility portion of the 2024 Credit Agreement from January 19, 2026 to February 14, 2028. • On September 20, 2024, we completed the September 2024 Offering through which we issued 20,010,000 shares of common stock, $0.01 par value per share, for a total of $471,236,000 in gross offering proceeds. • On September 20, 2024, using the net proceeds from the September 2024 Offering, we exercised our option to purchase the 24.0% minority membership interest in Trilogy REIT Holdings, LLC that was owned by our joint venture partner for a total all-cash purchase price of $258,001,000.
Financing Policies We have used, and intend to continue to use, secured and unsecured debt as a means of providing additional funds for the acquisition of properties and real estate-related investments.
Financing Policies We have used, and intend to continue to use, unsecured and secured debt as a means of providing additional funds for the acquisition of properties and real estate-related investments.
Company American Healthcare REIT, Inc., a Maryland corporation, is a self-managed real estate investment trust, or REIT, that acquires, owns and operates a diversified portfolio of clinical healthcare real estate properties, focusing primarily on outpatient medical buildings, senior housing, skilled nursing facilities, or SNFs, and other healthcare-related facilities.
Company American Healthcare REIT, Inc., a Maryland corporation, is a self-managed real estate investment trust, or REIT, that acquires, owns and operates a diversified portfolio of clinical healthcare real estate properties, focusing primarily on senior housing, skilled nursing facilities, or SNFs, outpatient medical, or OM, buildings and other healthcare-related facilities.
Such assets are commonly leased under a single master lease covering multiple facilities in order to diversify a master tenant’s sources of rent and mitigate risk. As of December 31, 2023, we have one wholly-owned hospital and one hospital in which we own an approximately 90.6% interest within our triple-net leased properties segment.
Such assets are commonly leased under a single master lease covering multiple facilities in order to diversify a master tenant’s sources of rent and mitigate risk. As of December 31, 2024, we have one wholly-owned hospital and one hospital in which we own an approximately 90.6% interest within our triple-net leased properties segment.
For a further discussion of our segment reporting for the years ended December 31, 2023, 2022 and 2021, see Item 2, Properties, Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Note 18, Segment Reporting, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K. 14 Table of Contents
For a further discussion of our segment reporting for the years ended December 31, 2024, 2023 and 2022, see Item 2, Properties, Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Note 18, Segment Reporting, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K. 14 Table of Contents
Such amounts include the exercise in full of the underwriters’ overallotment option to purchase up to an additional 8,400,000 shares of common stock. These shares are listed on New York Stock Exchange, or NYSE, under the trading symbol “AHR” and began trading on February 7, 2024.
Such amounts include the exercise in full of the underwriters’ overallotment option to purchase up to an additional 8,400,000 shares of Common Stock. We listed these shares of Common Stock on the New York Stock Exchange, or NYSE, under the trading symbol “AHR” and began trading on February 7, 2024.
In particular, the Nominating and Corporate Governance Committee shall, as it deems appropriate, recommend changes to our company’s ESG practices as necessary to comply with existing legal requirements or emerging trends and best practices. The Nominating and Corporate Governance Committee also shall periodically receive reports from management regarding our company’s ESG strategy, initiatives and policies.
In particular, the Nominating and Corporate Governance Committee shall, as it deems appropriate, recommend changes to our company’s corporate responsibility practices as necessary to comply with existing legal requirements or emerging trends and best practices. The Nominating and Corporate Governance Committee also shall periodically receive reports from management regarding our corporate responsibility strategy, initiatives and policies.
See Note 13, Equity, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a further discussion of our public offerings.
See Note 13, Equity — Common Stock, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a further discussion of our public offerings.
Failure to obtain a license, CON or other certification, or revocation, suspension or restriction of such required license, CON or other certification, could adversely impact our properties’ operations and their ability to generate revenue from services provided. State CON laws are not uniform throughout the United States and are subject to change.
Failure to 10 Table of Contents obtain a license, CON or other certification, or revocation, suspension or restriction of such required license, CON or other certification, could adversely impact our properties’ operations and their ability to generate revenue from services provided. State CON laws are not uniform throughout the United States and are subject to change.
We have built a fully-integrated management platform, with approximately 110 employees, that operates clinical healthcare properties throughout the United States, the United Kingdom and the Isle of Man .
We have built a fully-integrated management platform, with approximately 114 employees, that operates clinical healthcare properties throughout the United States, the United Kingdom and the Isle of Man .
The number and mix of properties and real estate-related investments we will acquire will depend upon real estate and market conditions and other circumstances existing at the time we are acquiring our properties and making our investments and the amount of debt financing available. 5 Table of Contents Real Estate Investments We generally seek investments that produce current income.
The number and mix of properties and real estate-related investments we will acquire will depend upon real estate and market conditions and other circumstances existing at the time we are acquiring our properties and making our investments and the amount of debt financing available. Real Estate Investments We generally seek investments that produce current income.
In such an event, our TRS will 6 Table of Contents engage a third party in the business of operating healthcare-related facilities to manage the property. Through our TRS, we bear operational risks and liabilities associated with the operation of such healthcare-related facilities unlike our triple-net leased properties.
In such an event, our TRS will engage a third party in the business of operating healthcare-related facilities to manage the property. Through our TRS, we bear operational risks and liabilities associated with the operation of such healthcare-related facilities unlike our triple-net leased properties.
In addition, copies of our filings with the SEC may be obtained from the SEC’s website, http://www.sec.gov . Access to these filings is free of charge.
In addition, copies of our filings with the SEC may be obtained from the SEC’s website, https://www.SEC.gov. Access to these filings is free of charge.
We lease such properties to tenants under triple-net or absolute-net leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures. As of December 31, 2023, we owned 15 SNFs within our triple-net leased properties segment that we lease to third parties.
We lease such properties to tenants under triple-net or absolute-net leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures. As of December 31, 2024, we owned seven SNFs within our triple-net leased properties segment that we lease to third parties.
When interest rates are high or financing is otherwise unavailable on a timely basis, we may purchase certain assets for cash with the intention of obtaining 8 Table of Contents debt financing at a later time.
When interest rates are high or financing is otherwise unavailable on a timely basis, we may purchase certain assets for cash with the intention of obtaining debt financing at a later time.
However, there can be no assurance we would not be required to alter one or more of our systems and data security 10 Table of Contents procedures to be in compliance with these laws.
However, there can be no assurance we would not be required to alter one or more of our systems and data security procedures to be in compliance with these laws.
We provide our employees, consultants and executive officers with competitive compensation and, where applicable, opportunities for equity ownership through our Second Amended and Restated 2015 Incentive Plan, or the AHR Incentive Plan.
We provide our employees, consultants and executive officers with competitive compensation and, where applicable, opportunities for equity ownership through our Second Amended and Restated 2015 Incentive Plan, or the AHR Incentive Plan, and Employee Stock Purchase Plan.
We expect our real estate investments to include: • outpatient medical buildings; • integrated senior health campuses; • senior housing; • SNFs; and • healthcare-related facilities operated utilizing a RIDEA structure.
We expect our real estate investments to include: • integrated senior health campuses; • senior housing; • OM buildings; • SNFs; and • healthcare-related facilities operated utilizing a RIDEA structure.
We seek to invest in properties that are associated with strong health systems and operators, provide exceptional care, have dominant market share and/or are critical to the healthcare delivery system in the communities that they serve. • Quality.
We seek to invest in properties that are associated with strong health systems and operators, provide exceptional care, have dominant market share and/or are critical to the healthcare delivery system in the communities that they serve. • Predictable Capital Needs.
Integrated Senior Health Campuses Integrated senior health campuses are a valuable component of our portfolio because of their ability to provide a continuum of care as residents require increasing levels of care. As of December 31, 2023, we owned and/or operated 125 integrated senior health campuses.
Integrated Senior Health Campuses Integrated senior health campuses are a valuable component of our portfolio because of their ability to provide a continuum of care as residents require increasing levels of care. As of December 31, 2024, we owned and/or operated 126 integrated senior health campuses.
Hanson, the non-executive Chairman of our board of directors, or our board, Danny Prosky, our Chief Executive Officer, President and director, and Mathieu B. Streiff, one of our directors; Platform Healthcare Investor TII, LLC; Flaherty Trust; and a wholly-owned subsidiary of Griffin Capital Company, LLC.
Hanson, the non-executive Chairman of our board of directors, or our board, Danny Prosky, our Chief Executive Officer, President and director, and Mathieu B. Streiff, one of our non-executive directors; (ii) Platform Healthcare Investor T-II, LLC; (iii) Flaherty Trust; and (iv) a wholly owned subsidiary of Griffin Capital Company, LLC, or Griffin Capital.
In determining whether to invest in a particular joint venture, we will evaluate the real estate that such joint venture owns or is being formed to own under the same criteria described elsewhere in this Annual Report on Form 10-K for the selection of our other properties. However, we will not participate in tenant-in-common syndications or transactions.
In determining whether to invest in a particular joint venture, we will evaluate the real estate that such joint venture owns or is being formed to own under the same criteria described elsewhere in this Annual Report on Form 10-K for the selection of our other properties.
As of both December 31, 2023 and 2022, we owned approximately 95.0% of the operating partnership units, or OP units, in our operating partnership, and the remaining 5.0% limited OP units were owned by AHI Group Holdings, LLC, which is owned and controlled by Jeffrey T.
As of December 31, 2023, we owned 95.0% of the operating partnership units, or OP units, in our operating partnership, and the remaining 5.0% OP units were owned by the following limited partners: (i) AHI Group Holdings, LLC, which is owned and controlled by Jeffrey T.
We did not establish any limit on the amount of net proceeds from the initial offering or 9 Table of Contents borrowings that may be used to fund distributions, except that, in accordance with our organizational documents and Maryland law, we may not make distributions that would: (i) cause us to be unable to pay our debts as they become due in the usual course of business; or (ii) cause our total assets to be less than the sum of our total liabilities plus senior liquidation preferences.
We did not establish any limit on the amount of net proceeds from the initial offering or borrowings that may be used to fund distributions, except that, in accordance with our organizational documents and Maryland law, we may not make distributions that would: (i) cause us to be unable to pay our debts as they become due in the usual course of business; or (ii) cause our total assets to be less than the sum of our total liabilities plus senior liquidation preferences. 9 Table of Contents To the extent that any distributions to our stockholders are paid out of our current or accumulated earnings and profits, such distributions are taxable as ordinary income.
Our portfolio may include properties in various stages of development other than those producing current income. These stages include unimproved land both with and without entitlements and permits, property to be redeveloped and repositioned, newly constructed properties and properties in lease-up or other stabilization stages, all of which have limited or no relevant operating histories and current income.
These stages include unimproved land both with and without entitlements and permits, property to be redeveloped and repositioned, newly constructed properties and properties in lease-up or other stabilization stages, all of which have limited or no relevant operating histories and current income.
Such joint ventures may be leveraged with debt financing or unleveraged. We have entered into, and may continue to enter into, joint ventures to further diversify our investments or to access investments which meet our investment criteria that would otherwise be unavailable to us.
We have entered into, and may continue to enter into, joint ventures to further diversify our investments or to access investments which meet our investment criteria that would otherwise be unavailable to us.
The benefits of refinancing may include increased cash flows resulting from reduced debt service requirements, an increase in distributions from proceeds of the refinancing and an increase in diversification and assets owned if all or a portion of the refinancing proceeds are reinvested.
The benefits of refinancing may include increased cash flows resulting from reduced debt service requirements, an increase in distributions from proceeds of the refinancing and an increase in diversification and assets owned if all or a portion of the refinancing proceeds are reinvested. Dispositions We have disposed, and may continue to dispose, of assets.
In addition, as of March 22, 2024, we also owned a real estate-related debt investment purchased for $60,429,000. Our principal executive offices are located at 18191 Von Karman Avenue, Suite 300, Irvine, California 92612, and our telephone number is (949) 270-9200. We maintain a web site at www.americanhealthcarereit.com, at which there is additional information about us.
In addition, as of February 25, 2025, we also owned a real estate-related debt investment purchased for $60,429,000. 4 Table of Contents Our principal executive offices are located at 18191 Von Karman Avenue, Suite 300, Irvine, California 92612, and our telephone number is (949) 270-9200. We maintain a website at www.AmericanHealthcareREIT.com , at which there is additional information about us.
We seek to acquire properties that are suitable for their intended use with a quality of construction that is capable of sustaining the property’s long-term investment potential, assuming funding of budgeted maintenance, repairs and capital improvements. • Location.
For each of our investments, regardless of property type, we seek to invest in properties with the following attributes: • Quality. We seek to acquire properties that are suitable for their intended use with a quality of construction that is capable of sustaining the property’s long-term investment potential, assuming funding of budgeted maintenance, repairs and capital improvements. • Location.
We also have originated and acquired, and may continue to originate or acquire, secured loans and other real estate-related investments on an infrequent and opportunistic basis. We generally seek investments that produce current income; however, we have selectively developed, are currently developing (through Trilogy), and may continue to selectively develop, real estate properties.
We have also originated and acquired secured loans and may acquire other real estate-related investments in the future on an infrequent and opportunistic basis. We generally seek investments that produce current income; however, we have selectively developed, and may continue to selectively develop, healthcare real estate properties.
Our obligation to close a transaction involving the purchase of real estate is generally conditioned upon the delivery and verification of certain documents, including, where appropriate: (i) plans and specifications; (ii) environmental reports (generally a minimum of a Phase I investigation); (iii) building condition reports; (iv) surveys; (v) evidence of marketable title subject to such liens and encumbrances; (vi) audited financial statements covering recent operations of real properties having operating histories unless such statements are not required to be filed with the SEC and delivered to stockholders; (vii) title insurance policies; and (viii) the availability of property and liability insurance policies.
We seek to structure any such sale-leaseback transaction such that the lease will be characterized as a “true lease” and we will be treated as the owner of the property for U.S. federal income tax purposes. 6 Table of Contents Our obligation to close a transaction involving the purchase of real estate is generally conditioned upon the delivery and verification of certain documents, including, where appropriate: (i) plans and specifications; (ii) environmental reports (generally a minimum of a Phase I investigation); (iii) building condition reports; (iv) surveys; (v) evidence of marketable title subject to such liens and encumbrances; (vi) audited financial statements covering recent operations of real properties having operating histories unless such statements are not required to be filed with the SEC and delivered to stockholders; (vii) title insurance policies; and (viii) the availability of property and liability insurance policies.
We believe that we have been organized and operated, and we intend to continue to operate, in conformity with the requirements for qualification and taxation as a REIT under the Code.
We have elected to be taxed as a REIT for U.S. federal income tax purposes. We believe that we have been organized and operated, and we intend to continue to operate, in conformity with the requirements for qualification and taxation as a REIT under the Code.
In evaluating prospective loan investments, we consider factors, including, but not limited to: (i) the ratio of the investment amount to the underlying property’s value; (ii) current and projected cash flows of the property; (iii) the degree of liquidity of the investment; (iv) the quality, experience and creditworthiness of the borrower; and (v) in the case of mezzanine loans, the ability to acquire the underlying real property. 7 Table of Contents Our criteria for making or investing in loans are substantially the same as those involved in our investment in properties.
In evaluating prospective loan investments, we consider factors, including, but not limited to: (i) the ratio of the investment amount to the underlying property’s value; (ii) current and projected cash flows of the property; (iii) the degree of liquidity of the investment; (iv) the quality, experience and creditworthiness of the borrower; and (v) in the case of mezzanine loans, the ability to acquire the underlying real property.
Operating Partnership We conduct substantially all of our operations through our operating partnership, and we are the sole general partner of our operating partnership.
Operating Partnership We conduct substantially all of our operations through American Healthcare REIT Holdings, LP, or our operating partnership, and we are the sole general partner of our operating partnership.
Senior Housing Operating Properties Our SHOP segment has the potential for embedded growth through the ongoing recovery from the COVID-19 pandemic and demand growth from an aging U.S. population. As of December 31, 2023, we owned and operated an aggregate 55 senior housing and skilled nursing facilities in our SHOP segment.
Senior Housing Operating Properties We believe our SHOP segment has the potential for demand growth from an aging U.S. population. As of December 31, 2024, we owned and operated 84 senior housing and skilled nursing facilities in our SHOP segment.
Our real estate investments may also include: • hospitals; • long-term acute care facilities; • surgery centers; • memory care facilities; • specialty medical and diagnostic service facilities; • laboratories and research facilities; • pharmaceutical and medical supply manufacturing facilities; and • offices leased to tenants in healthcare-related industries, including life sciences.
Our real estate investments may also include: • long-term acute care facilities; • surgery centers; • memory care facilities; • specialty medical and diagnostic service facilities; • hospitals; • laboratories and research facilities; and • pharmaceutical and medical supply manufacturing facilities.
We do not intend to make loans to other persons, to underwrite securities of other issuers or to engage in the purchase and sale of any types of investments other than those relating to real estate.
Our criteria for making or investing in loans are substantially the same as those involved in our investment in properties. We do not intend to make loans to other persons, to underwrite securities of other issuers or to engage in the purchase and sale of any types of investments other than those relating to real estate.
Dispositions We have disposed, and may continue to dispose, of assets. We will determine whether a particular property or real estate-related investment should be sold or otherwise disposed of after consideration of the relevant factors, including prevailing economic conditions, with a view toward maximizing our investment objectives.
We will determine whether a particular property or real estate-related investment should be sold or otherwise disposed of after consideration of the relevant factors, including prevailing economic conditions, with a view toward maximizing our investment objectives. We intend to hold each property or real estate-related investment we acquire for an extended period.
We seek to obtain financing on the most favorable terms available to us and refinance assets during the term of a loan only in limited circumstances, such as when a decline in interest rates makes it beneficial to prepay an existing loan, when an existing loan matures or if an attractive investment becomes available and the proceeds from the refinancing can be used to purchase such investment.
We have also used, and may continue to use, derivative financial instruments such as fixed interest rate swaps and caps to add stability to interest expense and to manage our exposure to interest rate movements. 8 Table of Contents We seek to obtain financing on the most favorable terms available to us and refinance assets during the term of a loan only in limited circumstances, such as when a decline in interest rates makes it beneficial to prepay an existing loan, when an existing loan matures or if an attractive investment becomes available and the proceeds from the refinancing can be used to purchase such investment.
Joint Ventures We have entered into, and we may continue to enter into, joint ventures, general partnerships and other arrangements with one or more institutions or individuals, including real estate developers, operators, owners, investors and others, for the purpose of acquiring real estate. Our investment in Trilogy is an example of a joint venture into which we have entered.
Joint Ventures We have entered into, and we may continue to enter into, joint ventures, general partnerships and other arrangements with one or more institutions or individuals, including real estate developers, operators, owners, investors and others, for the purpose of acquiring real estate. Such joint ventures may be leveraged with debt financing or unleveraged.
Mortgage participation investments are investments in partial interests of mortgages of the type described above that are made and administered by third-party mortgage lenders. We may also make seller financing loans in connection with the disposition of our properties.
A bridge loan is short-term financing for an individual or business, until the next stage of financing can be obtained. Mortgage participation investments are investments in partial interests of mortgages of the type described above that are made and administered by third-party mortgage lenders. We may also make seller financing loans in connection with the disposition of our properties.
Government Regulations Our properties are subject to various federal, state and local regulatory requirements, and changes in these laws and regulations, or their interpretation by agencies, occur frequently.
For additional information on the risks associated with our business, please see Item 1A, Risk Factors. Government Regulations Our properties are subject to various federal, state and local regulatory requirements, and changes in these laws and regulations, or their interpretation by agencies, occur frequently.
All numbers of common shares and per share data, as well as the OP units, in this Annual Report on Form 10-K have been retroactively adjusted for all periods presented to give effect to the Reverse Splits. 3 Table of Contents On February 9, 2024, pursuant to a Registration Statement filed with the United States Securities and Exchange Commission, or SEC, on Form S-11 (File No. 333-267464), as amended, we closed our underwritten public offering, or the 2024 Offering, through which we issued 64,400,000 shares of common stock, $0.01 par value per share, for a total of $772,800,000 in gross offering proceeds.
Public Offerings and Listing On February 9, 2024, pursuant to a Registration Statement filed with the United States Securities and Exchange Commission, or SEC, on Form S-11 (File No. 333-267464), as amended, we closed our underwritten public offering, or the February 2024 Offering, through which we issued 64,400,000 shares of Common Stock, for a total of $772,800,000 in gross offering proceeds.
Conversely, we generally seek to limit our investments in areas that have limited potential for growth. • Predictable Capital Needs. We seek to acquire properties where the future expected capital needs can be reasonably projected in a manner that would enable us to meet our objectives. • Cash Flows.
We seek to acquire properties where the future expected capital needs can be reasonably projected in a manner that would enable us to meet our objectives. • Cash Flows. We seek to acquire properties where the current and projected cash flows, including the potential for appreciation in value, would enable us to maximize long-term stockholder value.
We are not specifically limited in the number or size of properties we may acquire or on the percentage of our assets that we may invest in a single property or investment.
We evaluate cash flows as well as expected growth and the potential for appreciation. We are not limited as to the geographic areas where we may acquire properties. We are not specifically limited in the number or size of properties we may acquire or on the percentage of our assets that we may invest in a single property or investment.
Because of this, we have implemented a number of programs to foster not only their professional growth, but also their growth as global citizens. All of our employees are provided with a comprehensive benefits and wellness package, which may include high-quality medical, dental, and vision insurance, life insurance, 401(k) matching, long-term incentive plans, educational grants, fitness programs and other benefits.
All of our employees are provided with a comprehensive benefits and wellness package, which may include high-quality medical, dental, and vision insurance, life insurance, 401(k) matching, long-term incentive plans, educational grants, fitness programs, employee stock purchase plan, and other benefits.
Investment Strategy We have acquired, and may continue to acquire, properties either directly or jointly with third parties and may also consider disposing of, non-core properties from time to time outright or in joint ventures .
Investment Strategy We have acquired, and may continue to acquire, properties either directly or jointly with third parties and may also consider disposing of non-core properties from time to time . We also have originated and acquired, and may continue to acquire, secured loans and other real estate-related investments on an infrequent and opportunistic basis.
We anticipate that our assets generally will be held in our wholly and majority-owned subsidiaries, each formed to hold a particular asset. We monitor our operations and our assets on an ongoing basis in order to ensure that neither we, nor any of our subsidiaries, meet the definition of “investment company” under Section 3(a)(1) of the Investment Company Act.
We monitor our operations and our assets on an ongoing basis in order to ensure that neither we, nor any of our subsidiaries, meet the definition of “investment company” under Section 3(a)(1) of the Investment Company Act. Among other things, we monitor the proportion of our portfolio that is placed in investments in securities.
See Note 1, Organization and Description of Business, and Note 4, Business Combinations — 2021 Business Combinations, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a further discussion of the Merger and the AHI Acquisition.
See Note 13, Equity — Equity Compensation Plans, to the Consolidated Financial Statements that are part of this Annual Report on Form 10-K, for a further discussion.
Real Estate-Related Investments In addition to our acquisition of properties, we have invested on an infrequent and opportunistic basis, and may continue to invest, in real estate-related investments, including loans and securities investments. Investments in Real Estate Mortgages We have invested, and we may continue to invest, in first and second mortgage loans, mezzanine loans and bridge loans.
However, we will not participate in tenant-in-common syndications or transactions. 7 Table of Contents Real Estate-Related Investments In addition to our acquisition of properties, we have invested on an infrequent and opportunistic basis, and may continue to invest, in real estate-related investments, including loans and securities investments.
We primarily engage in the business of investing in real estate assets; however, our portfolio does include, to a much lesser extent, other real estate-related investments. We have also acquired, and may continue to acquire, real estate assets through investments in joint venture entities, including joint venture entities in which we may not own a controlling interest.
We primarily engage in the business of investing in real estate assets; however, our portfolio does include, to a much lesser extent, other real estate-related investments.
Privacy and Security Laws and Regulations There are various federal and state privacy laws and regulations that provide for consumer protection of personal health information, particularly electronic security and privacy.
For additional information on the risks associated with our healthcare industry, please see Item 1A, Risk Factors. Privacy and Security Laws and Regulations There are various federal and state privacy laws and regulations that provide for consumer protection of personal health information, particularly electronic security and privacy.
We commonly structure SNFs under a master lease with multiple facilities in order to diversify our master tenant’s sources of rent and mitigate risk. We typically focus on SNF investments in states that require a CON in order to develop new SNFs, which we believe reduces the risk of over-supply.
We commonly structure SNFs under a master lease with multiple facilities in order to diversify our master tenant’s sources of rent and mitigate risk.
Social Our People A s of December 31, 2023, we had approximately 110 employees, including 68 in Accounting and Finance, 15 in Asset Management, eight in Investments, four in Information Technology and three in Legal. We believe our employees are our greatest asset, and we pride ourselves on the diversity they bring to our company.
Our People A s of December 31, 2024, we had approximately 114 employees, including 71 in Accounting and Finance, 15 in Asset Management, eight in Investments, four in Information Technology and four in Legal.
Predominantly all of our integrated senior health campuses are operated utilizing a RIDEA structure, allowing us to participate in the upside from any improved operational performance while bearing the risk of any decline in operating performance. 13 Table of Contents Outpatient Medical We value the stable and reliable cash flows our OM buildings provide our company, which we believe are particularly valuable during market disruptions and recessionary periods.
Predominantly all of our integrated senior health campuses are operated utilizing a RIDEA structure, allowing us to participate in the upside from any improved operational performance while bearing the risk of any decline in operating performance.
However, we will not make or invest in any loans that are subordinate to any mortgage or equity interest of any of our directors or affiliates. We also may invest in participations in mortgage loans. Second mortgage loans are secured by second deeds of trust on real property that is already subject to prior mortgage indebtedness.
Investments in Real Estate Mortgages We have invested, and we may continue to invest, in first and second mortgage loans, mezzanine loans and bridge loans. However, we will not make or invest in any loans that are subordinate to any mortgage or equity interest of any of our directors or affiliates. We also may invest in participations in mortgage loans.
We believe, based in part on third-party due diligence reports which are generally obtained at the time we acquire the properties, that all of our properties comply in all material respects with current regulations. However, if we were required to make significant expenditures under applicable regulations, we could be materially and adversely affected.
If we fail to comply with these various requirements, we may incur governmental fines or private damage awards. We believe, based in part on third-party due diligence reports which are generally obtained at the time we acquire the properties, that all of our properties comply in all material respects with current regulations.
If we exercise this purchase option, we will own 100% of Trilogy REIT Holdings, LLC, which will in turn cause us to indirectly own approximately 97.5% of Trilogy. • On February 9, 2024, we completed our underwritten public offering through which we issued 64,400,000 shares of common stock, $0.01 par value per share, for a total of $772,800,000 in gross offering proceeds.
Key Developments • On February 9, 2024, we completed the February 2024 Offering through which we issued 64,400,000 shares of common stock, $0.01 par value per share, for a total of $772,800,000 in gross offering proceeds.
See Part II, Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Distributions, for a further discussion of distributions approved by our board. Competition We compete with many other entities engaged in real estate investment activities for acquisitions and dispositions of OM buildings, SNFs, senior housing and other healthcare-related facilities.
See Part II, Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Distributions, for a further discussion of distributions approved by our board.
We seek to acquire properties that are located in established or otherwise appropriate markets, with access and visibility suitable to meet the needs of their occupants. In addition to United States properties, we also may seek to acquire international properties that meet our investment criteria. • Market; Supply and Demand.
We seek to acquire properties that are located in established or otherwise appropriate markets, with access and visibility suitable to meet the needs of their occupants. • Market; Supply and Demand. We focus on local or regional markets that have potential for stable and growing property level cash flows in the long term.
Business Objectives and Growth Strategies Our business objectives are to grow our earnings and cash flows, maintain financial flexibility, increase the value of our portfolio, make regular cash distributions to our stockholders and generate attractive risk-adjusted returns through the following growth strategies: • external growth through disciplined and targeted acquisitions to expand our diversified portfolio; • continue to develop integrated senior health campuses through experienced development partners (i.e., Trilogy); 4 Table of Contents • provide sustained stability through consistent outpatient medical building performance with the opportunity for revenue growth driven by occupancy gains and improving lease spreads; and • actively position our balance sheet for growth.
Business Objectives and Growth Strategies Our business objectives are to grow our earnings and cash flows, maintain financial flexibility, increase the value of our portfolio, make regular cash distributions to our stockholders and generate attractive risk-adjusted returns through the following growth strategies: • external growth through disciplined and targeted acquisitions to expand our diversified portfolio; • continue to selectively develop and expand integrated senior health campuses with experienced development partners; • continue to generate strong organic growth in our long-term care portfolio comprised of integrated senior health campuses and SHOP, as a result of historically low levels of new supply and ever increasing demand from an aging population; and • actively position our balance sheet for growth.
This ESG policy, which we intend to update regularly as applicable, is briefly summarized below and will be posted on our website, www.AmericanHealthcareREIT.com, and will contain more detailed information once available. Information contained on, or accessible through, our website is not incorporated by reference into and does not constitute a part of this Annual Report on Form 10-K.
Information contained on, or accessible through, our website is not incorporated by reference into and does not constitute a part of this Annual Report on Form 10-K.
We intend to hold each property or real estate-related investment we acquire for an extended period. However, circumstances might arise which could result in a shortened holding period for certain investments.
However, circumstances might arise which could result in a shortened holding period for certain investments.
We focus on local or regional markets that have potential for stable and growing property level cash flows in the long term. These determinations are based in part on an evaluation of local and regional economic, demographic and regulatory factors affecting the property.
These determinations are based in part on an evaluation of local and regional economic, demographic and regulatory factors affecting the property. For instance, we favor markets that indicate a growing population and employment base and markets that exhibit potential limitations on additions to supply, such as barriers to new construction.
A mezzanine loan is a loan made in respect of certain real property but is secured by a lien on the ownership interests of the entity that, directly or indirectly, owns the real property. A bridge loan is short-term financing for an individual or business, until the next stage of financing can be obtained.
Second mortgage loans are secured by second deeds of trust on real property that is already subject to prior mortgage indebtedness. A mezzanine loan is a loan made in respect of certain real property but is secured by a lien on the ownership interests of the entity that, directly or indirectly, owns the real property.
Among other things, we monitor the proportion of our portfolio that is placed in investments in securities. Information About Industry Segments We segregate our operations into reporting segments in order to assess the performance of our business in the same way that management reviews our performance and makes operating decisions.
Information About Industry Segments We segregate our operations into reporting segments in order to assess the performance of our business in the same way that management reviews our performance and makes operating decisions. As of December 31, 2024, we operated through four reportable business segments: integrated senior health campuses, OM, SHOP and triple-net leased properties.
We also operate healthcare-related facilities utilizing the structure permitted by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure (the provisions of the Internal Revenue Code of 1986, as amended, or the Code, authorizing the RIDEA structure were enacted as part of the Housing and Economic Recovery Act of 2008).
We own and operate our integrated senior health campuses and senior housing operating properties, or SHOP, utilizing the structure permitted by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure.
To achieve this, we are developing a comprehensive ESG strategy and related ESG policy , to which we intend to adhere. The Nominating and Corporate Governance Committee has been delegated the authority to provide oversight and guidance to our board regarding ESG trends and best practices.
Our board’s Nominating and Corporate Governance Committee has been delegated the authority to provide oversight and guidance to our board regarding environmental, social and corporate governance trends and best practices in connection with our corporate responsibility to society and the environment.
As of December 31, 2023, we owned 11 senior housing facilities within our triple-net leased properties segment that we lease to third parties.
We typically focus on SNF investments in states that require a CON in order to develop new SNFs, which we believe reduces the risk of over-supply. 13 Table of Contents As of December 31, 2024, we owned 11 senior housing facilities within our triple-net leased properties segment that we lease to third parties.
We generally seek investments that produce current income; however, we have selectively developed, and may continue to selectively develop, healthcare real estate properties. We have elected to be taxed as a REIT for U.S. federal income tax purposes.
We generally seek investments that produce current income; however, we have selectively developed, are currently developing (through Trilogy), and may continue to selectively develop, real estate properties. Our portfolio may include properties in various stages of development other than those producing current income.
For instance, we favor markets that indicate a growing population and employment base and markets that exhibit potential limitations on additions to supply, such as barriers to new construction. Barriers to new construction include lack of available land, stringent zoning restrictions and states where certificates of need are required.
Barriers to new construction include lack of available 5 Table of Contents land, stringent zoning restrictions and states where certificates of need are required. Conversely, we generally seek to limit our investments in areas that have limited potential for growth. • Strong Local Health Systems and Operating Partners.
The 2024 Credit Agreement replaced our existing credit agreement that had an aggregate maximum principal amount of up to $1,050,000,000. • As of March 22, 2024, we owned and/or operated 318 buildings and integrated senior health campuses, or approximately 19,451,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of $4,566,829,000.
In addition, we acquired $138,839,000 of senior housing facilities during 2024, which are included in our SHOP segment. • During 2024, we disposed of properties within each of our segments for an aggregate contract sales price of $155,545,000. • As of February 25, 2025, we owned and/or operated 313 buildings and integrated senior health campuses, or approximately 19,090,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of $4,519,012,000.
See Note 13, Equity — Equity Compensation Plans — AHR Incentive Plan, to the Consolidated Financial Statements that are part of this Annual Report on Form 10-K, for a further discussion. We also believe that one of the keys to our success is our ability to benefit from a wide range of opinions and experiences.
We also believe that one of the keys to our success is our ability to benefit from a wide range of opinions and experiences. As of December 31, 2024, 72.8% of our employees were minorities and 57.0% were female.
Governance W e believe maintaining a rigorous corporate governance framework is essential to the success of our organization, and we seek to adhere to policies and procedures that ensure transparency, accountability, oversight and risk minimization across all levels of our company.
Corporate Governance We are committed to conducting business with the highest degree of ethics and integrity to protect the long-term interests of our stakeholders. W e believe that our approach to corporate governance supports transparency, accountability, oversight and risk minimization across our business.
Removed
Our healthcare facilities operated under a RIDEA structure include our senior housing operating properties, or SHOP, and our integrated senior health campuses. We have originated and acquired secured loans and may also originate and acquire other real estate-related investments on an infrequent and opportunistic basis.
Added
On August 19, 2024 and October 18, 2024, Platform Healthcare Investor T-II, LLC and Flaherty Trust, respectively, redeemed all of their OP units in exchange for 1,216,571 shares and 211,306 shares, respectively, of our Common Stock on a one-for-one basis and, as a result, are no longer limited partners of our operating partnership.
Removed
On October 1, 2021, Griffin-American Healthcare REIT III, Inc., or GAHR III, merged with and into a wholly-owned subsidiary, or Merger Sub, of Griffin-American Healthcare REIT IV, Inc., or GAHR IV, with Merger Sub being the surviving company, which we refer to as the REIT Merger, and our operating partnership, Griffin-American Healthcare REIT IV Holdings, LP, merged with and into Griffin-American Healthcare REIT III Holdings, LP, or the Surviving Partnership, with the Surviving Partnership being the surviving entity, which we refer to as the Partnership Merger and, together with the REIT Merger, the Merger.
Added
On December 6, 2024, Griffin Capital redeemed a portion of its OP units in exchange 69,882 shares of our Common Stock on a one-for-one basis. As of December 31, 2024, we owned 98.7% of the OP units in our operating partnership, and the remaining 1.3% of the OP units were owned by the remaining limited partners.
Removed
Following the Merger on October 1, 2021, our company was renamed American Healthcare REIT, Inc. and the Surviving Partnership was renamed American Healthcare REIT Holdings, LP, or our operating partnership.
Added
Following the closing of the February 2024 Offering and until August 5, 2024, we presented our Common Stock, Class T common stock and Class I common stock, as separate classes of common stock within our consolidated balance sheets and consolidated statements of equity.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSignificant sales of shares of our common stock, or the perception that significant sales of such shares could occur, may cause the price of shares of our common stock to decline significantly. • Future offerings of debt securities, which would be senior to our common stock, or equity securities, which would dilute our existing stockholders and may be senior to our common stock, may adversely affect our stockholders. • We may be unable to raise additional capital on favorable terms, or at all, needed to grow our business. • Prior to our recent NYSE listing, we had no operating history as a publicly traded company and may not be able to successfully operate as a publicly traded company. 16 Table of Contents Risks Related to Our Business and Financial Results We are dependent on tenants for our revenue, and lease terminations could reduce our ability to make distributions to our stockholders.
Biggest changeRisks Related to Our Common Stock • The market price and trading volume of shares of our common stock may be volatile. • Our ability to pay dividends in the future may be limited by agreements relating to our indebtedness and other factors. • Future offerings of debt securities, which would be senior to our common stock, or equity securities, which would dilute our existing stockholders and may be senior to our common stock, may adversely affect our stockholders. • We may be unable to raise additional capital on favorable terms, or at all, needed to grow our business.
Investments in and acquisitions of OM buildings, senior housing, SNFs and other healthcare-related facilities entail risks associated with real estate investments generally, including risks that the investment will not achieve expected returns, that the cost estimates for necessary property improvements will prove inaccurate or that the tenant or operator will fail to meet performance expectations.
Investments in and acquisitions of senior housing, SNFs, OM buildings and other healthcare-related facilities entail risks associated with real estate investments generally, including risks that the investment will not achieve expected returns, that the cost estimates for necessary property improvements will prove inaccurate or that the tenant or operator will fail to meet performance expectations.
Our real estate investments may be concentrated in OM buildings, senior housing, SNFs or other healthcare-related facilities, making us more vulnerable to negative factors affecting these classes than if our investments were diversified beyond the healthcare industry. As a REIT, we invest primarily in real estate.
Our real estate investments may be concentrated in senior housing, SNFs, OM buildings or other healthcare-related facilities, making us more vulnerable to negative factors affecting these classes than if our investments were diversified beyond the healthcare industry. As a REIT, we invest primarily in real estate.
These matters could materially and adversely affect us and could be more pronounced than if we diversified our investments outside of real estate or if our portfolio did not include a substantial concentration in OM buildings, senior housing, SNFs or healthcare-related facilities. Our buildings that are subject to ground leases could restrict our use of such facilities.
These matters could materially and adversely affect us and could be more pronounced than if we diversified our investments outside of real estate or if our portfolio did not include a substantial concentration in senior housing, SNFs, OM buildings or healthcare-related facilities. Our buildings that are subject to ground leases could restrict our use of such facilities.
The repeal of CON laws could allow competitors to freely operate in previously closed markets. Any such increased competition could materially and adversely affect a tenant’s ability to make rent payments to us or for an operator to operate a facility held in a RIDEA structure efficiently, either of which could have a material adverse effect on us.
The repeal of such CON laws could allow competitors to freely operate in previously closed markets. Any such increased competition could materially and adversely affect a tenant’s ability to make rent payments to us or for an operator to operate a facility held in a RIDEA structure efficiently, either of which could have a material adverse effect on us.
As a result, tenants and operators of our OM buildings, senior housing, SNFs and other healthcare-related facilities operating in these states may be liable for punitive damage awards that are either not covered or are in excess of their insurance policy limits.
As a result, tenants and operators of our senior housing, SNFs, OM buildings and other healthcare-related facilities operating in these states may be liable for punitive damage awards that are either not covered or are in excess of their insurance policy limits.
Risks Related to Our Corporate Structure and Organization Our charter imposes a limit on the percentage of shares of our common stock or capital stock that any person may own, and such limit may discourage a takeover or business combination that may have benefited our stockholders.
Risks Related to Our Corporate Structure and Organization Our charter imposes a limit on the percentage of shares of our common stock or capital stock that any person may own, and such limit may discourage a takeover or business combination that may have benefited our stockholders.
Risks Related to Our Business and Financial Results • We are dependent on tenants for our revenue, and lease terminations could reduce our ability to make distributions to our stockholders. • The financial deterioration, insolvency or bankruptcy of one or more of our major tenants, operators, borrowers or other obligors could have a material adverse effect on us. • We have experienced net losses in the past and we may experience additional losses in the future. • Our prior performance may not be an accurate predictor of our ability to achieve our business objectives or of our future results. • Our success is dependent on the performance and continued contributions of certain of our key personnel, and, in the event they are no longer employed by us, we could be materially and adversely affected. • All of our integrated senior health campuses are managed by Trilogy Management Services, LLC, or the Trilogy Manager, and account for a significant portion of our revenues and operating income.
Risks Related to Our Business and Financial Results • The financial deterioration, insolvency or bankruptcy of one or more of our major tenants, operators, borrowers or other obligors could have a material adverse effect on us. • We are dependent on tenants for our revenue, and lease defaults or terminations could reduce our ability to make distributions to our stockholders. • We have experienced net losses in the past and we may experience additional losses in the future. • Our prior performance may not be an accurate predictor of our ability to achieve our business objectives or of our future results. • Our success is dependent on the performance and continued contributions of certain of our key personnel, and, in the event they are no longer employed by us, we could be materially and adversely affected. • All of our integrated senior health campuses are managed by Trilogy Management Services, LLC, or the Trilogy Manager, and account for a significant portion of our revenues and operating income.
Additionally, we are subject to transition risk from international, governmental and societal responses to climate change that may materially and adversely affect us or our operators, including through shifts in fuel sources leading to short- or long-term increases in energy costs and new and more stringent building codes pertaining to energy efficiency, reduced emissions or weather resistance that may be more costly to comply with, any of which could increase our building costs and our and our operators’ capital expenditures, maintenance and operating costs.
Additionally, we are subject to transition risk from international, governmental and societal responses to climate change that may materially and adversely affect us, our tenants or our operators, including through shifts in fuel sources leading to short- or long-term increases in energy costs and new and more stringent building codes pertaining to energy efficiency, reduced emissions or weather resistance that may be more costly to comply with, any of which could increase our building costs and our and our operators’ capital expenditures, maintenance and operating costs.
We intend to evaluate distributions throughout 2024, and it is possible that stockholders may not receive distributions equivalent to those previously paid by us for various reasons, including: (i) we may not have enough cash to pay such distributions due to changes in our cash requirements, indebtedness, capital spending plans, operating cash flows or financial position; (ii) decisions on whether, when and in what amounts to make any future distributions will remain at all times entirely at the discretion of the board, which reserves the right to change our distribution practices at any time and for any reason; (iii) our board may elect to retain cash for investment purposes, working capital reserves or other purposes, or to maintain or improve our credit ratings; and (iv) the amount of distributions that our Subsidiaries may distribute to us may be subject to restrictions imposed by state law, state regulators and/or the terms of any current or future indebtedness that these subsidiaries may incur.
We intend to evaluate distributions throughout 2025, and it is possible that stockholders may not receive distributions equivalent to those previously paid by us for various reasons, including: (i) we may not have enough cash to pay such distributions due to changes in our cash requirements, indebtedness, capital spending plans, operating cash flows or financial position; (ii) decisions on whether, when and in what amounts to make any future distributions will remain at all times entirely at the discretion of the board, which reserves the right to change our distribution practices at any time and for any reason; (iii) our board may elect to retain cash for investment purposes, working capital reserves or other purposes, or to maintain or improve our credit ratings; and (iv) the amount of distributions that our subsidiaries may distribute to us may be subject to restrictions imposed by state law, state regulators and/or the terms of any current or future indebtedness that these subsidiaries may incur.
Moreover, the state and federal governmental healthcare payment programs are subject to state and federal legislative actions, and changes in reimbursement models may reduce our tenants’ and operators’ revenues and adversely affect our tenants’ ability to make rent payments to us or our operators’ ability to operate facilities held in RIDEA structures efficiently, either of which could have a material adverse effect on us.
Moreover, the state and federal governmental healthcare payment programs are subject to state and federal legislative and administrative actions, and changes in reimbursement models may reduce our tenants’ and operators’ revenues and adversely affect our tenants’ ability to make rent payments to us or our operators’ ability to operate facilities held in RIDEA structures efficiently, either of which could have a material adverse effect on us.
Risks Related to Investments in Real Estate • Uncertain market conditions could lead our real estate investments to decrease in value or may cause us to sell our properties at a loss in the future. • Most of our costs, such as operating and general and administrative expenses, interest expense and real estate acquisition and construction costs, are subject to inflation and may not be recoverable. • Our high concentrations of properties in particular geographic areas magnify the effects of negative conditions affecting those geographic areas. • Our real estate investments may be concentrated in OM buildings, senior housing, SNFs or other healthcare-related facilities, making us more vulnerable to negative factors affecting these classes than if our investments were diversified beyond the healthcare industry. • Our business, tenants, residents and operators may face litigation and experience rising liability and insurance costs, which may materially and adversely affect us.
Risks Related to Investments in Real Estate • Changing market conditions could lead our real estate investments to decrease in value or may cause us to sell our properties at a loss in the future. • Most of our costs, such as operating and general and administrative expenses, interest expense and real estate acquisition and construction costs, are subject to inflation and may not be recoverable. • Our high concentrations of properties in particular geographic areas magnify the effects of negative conditions affecting those geographic areas. • Our real estate investments may be concentrated in senior housing, SNFs, OM buildings or other healthcare-related facilities, making us more vulnerable to negative factors affecting these classes than if our investments were diversified beyond the healthcare industry. • Our business, tenants, residents and operators may face litigation and experience rising liability and insurance costs, which may materially and adversely affect us.
A significant amount of debt subjects us to many risks that, if realized, would materially and adversely affect us, including the risk that: • our cash flow from operating activities could become insufficient to make required payments of principal and interest on our debt, which would likely result in (i) acceleration of the debt (and any other debt containing a cross-default or cross-acceleration provision), increasing the likelihood of further distress if refinancing is not available on favorable terms or at all, (ii) our inability to borrow undrawn amounts under other existing financing arrangements, even if we have timely made all required payments under such arrangements, further compromising our liquidity and/or (iii) the loss of some or all of our assets that are pledged as collateral in connection with our financing arrangements; 37 Table of Contents • our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that such debt will increase our investment returns in an amount sufficient to offset the associated risks relating to leverage; • we may be required to dedicate a substantial portion of our cash flow from operating activities to payments on our debt, thereby reducing funds available for operations, future business opportunities, stockholder distributions and/or other purposes; and • to the extent the maturity of certain debt occurs prior to the maturity of a related asset pledged or transferred as collateral for such debt, we may not be able to refinance that debt on favorable terms or at all, which may reduce available liquidity and/or cause significant losses to us.
A significant amount of debt subjects us to many risks that, if realized, would materially and adversely affect us, including the risk that: • our cash flow from operating activities could become insufficient to make required payments of principal and interest on our debt, which would likely result in (i) acceleration of the debt (and any other debt containing a cross-default or cross-acceleration provision), increasing the likelihood of further distress if refinancing is not available on favorable terms or at all, (ii) our inability to borrow undrawn amounts under other existing financing arrangements, even if we have timely made all required payments under such arrangements, further compromising our liquidity and/or (iii) the loss of some or all of our assets that are pledged as collateral in connection with our financing arrangements; • our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that such debt will increase our investment returns in an amount sufficient to offset the associated risks relating to leverage; • we may be required to dedicate a substantial portion of our cash flow from operating activities to payments on our debt, thereby reducing funds available for operations, future business opportunities, stockholder distributions and/or other purposes; and • to the extent the maturity of certain debt occurs prior to the maturity of a related asset pledged or transferred as collateral for such debt, we may not be able to refinance that debt on favorable terms or at all, which may reduce available liquidity and/or cause significant losses to us.
We face significant competition from other entities engaged in real estate investment activities for acquisitions and dispositions of OM buildings, senior housing, SNFs and other healthcare-related facilities, some of whom may have greater resources, lower costs of capital and higher risk tolerances than we do.
We face significant competition from other entities engaged in real estate investment activities for acquisitions or dispositions of senior housing, SNFs, OM buildings and other healthcare-related facilities, some of whom may have greater resources, lower costs of capital and higher risk tolerances than we do.
If we do not have access to sufficient funding in the future, we may also not be able to pay our expenses or make distributions to our stockholders. A breach of information technology systems on which we rely could materially and adversely impact us.
If we do not have access to sufficient funding in the future, we may also not be able to pay our expenses or make distributions to our stockholders. A breach of, or failure in, information technology systems on which we rely could materially and adversely impact us.
We face significant competition for the acquisition and disposition of OM buildings, senior housing, SNFs and other healthcare-related facilities, which may impede our ability to take, and increase the cost of, such actions, which may materially and adversely affect us.
We face significant competition for the acquisition or disposition of senior housing, SNFs, OM buildings and other healthcare-related facilities, which may impede our ability to take, and increase the cost of, such actions, which may materially and adversely affect us.
However, we cannot assure our stockholders that the IRS will not take the position that specific sale-leaseback transactions that we treated as leases be re-characterized as financing arrangements or loans for U.S. federal income tax purposes.
However, we cannot assure our stockholders that the IRS will not take the position that specific sale-leaseback transactions that we treated as leases should be re-characterized as financing arrangements or loans for U.S. federal income tax purposes.
Furthermore, rent paid by a lessee of a “qualified health care property” that is a “related party tenant” of ours will not be qualifying income for purposes of the two gross income tests applicable to REITs.
Furthermore, rent paid by a lessee of a “qualified health care property” that is a “related party tenant” of ours generally will not be qualifying income for purposes of the two gross income tests applicable to REITs.
In addition, our operating partnership is required to indemnify us and our officers, directors, employees and designees to the extent permitted by 40 Table of Contents applicable law from and against any and all claims arising from operations of our operating partnership, unless it is established that: (i) the act or omission was material to the matter giving rise to the proceeding and either was committed in bad faith or was the result of active and deliberate dishonesty; (ii) the indemnified party received an improper personal benefit, in money, property or services; or (iii) in the case of a criminal proceeding, the indemnified person had reasonable cause to believe that the act or omission was unlawful.
In addition, our operating partnership is required to indemnify us and our officers, directors, employees and designees to the extent permitted by applicable law from and against any and all claims arising from operations of our operating partnership, unless it is established that: (i) the act or omission was material to the matter giving rise to the proceeding and either was committed in bad faith or was the result of active and deliberate dishonesty; (ii) the indemnified party received an improper personal benefit, in money, property or services; or (iii) in the case of a criminal proceeding, the indemnified person had reasonable cause to believe that the act or omission was unlawful.
While we have enhanced our information technology systems in response to the general cybersecurity threat environment in recent years, we are not aware of any specific cybersecurity threat, including as a result of any previous cybersecurity or information security incident or breach, that has had a material effect on us, including our business strategy, results of operation or financial condition.
While we have enhanced our information technology systems in response to the general cybersecurity threat environment in recent years, we are not aware of any specific cybersecurity threat, including as a result of any previous cybersecurity or information security incident or breach, that has had a material effect on us, including our business strategy, results of operations or financial condition.
In addition, if it is determined that GAHR III lost, in any year prior to the REIT Merger, its qualification as a REIT without being entitled to any relief under the statutory provisions to preserve REIT status, we, as a “successor” to GAHR III under the REIT rules, will not be able to qualify as a REIT to the extent we are unable to avail ourselves of any relief under the statutory provisions to preserve REIT status.
In addition, if it is determined that GAHR III lost, in any year prior to the merger described above, its qualification as a REIT without being entitled to any relief under the statutory provisions to preserve REIT status, we, as a “successor” to GAHR III under the REIT rules, will not be able to qualify as a REIT to the extent we are unable to avail ourselves of any relief under the statutory provisions to preserve REIT status.
These federal and foreign laws include: • the Federal Anti-Kickback Statute, a criminal law which prohibits, among other things, the offer, payment, solicitation or receipt of any form of remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in return for, or to induce, the referral of an individual for, or the purchase, order or recommendation of, any item or service for which payment may be made under a federal healthcare program such as Medicare and Medicaid; • the Federal Physician Self-Referral Prohibition, which, subject to specific exceptions, restricts physicians from making referrals for specifically designated health services for which payment may be made under federal healthcare programs to an entity with which the physician, or an immediate family member, has a financial relationship; 31 Table of Contents • the False Claims Act, which prohibits any person from knowingly presenting, or causing to be presented, false or fraudulent claims for payment or approval that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government, including claims paid by the Medicare and Medicaid programs; • the Civil Monetary Penalties Law, which authorizes the U.S.
These federal and foreign laws include: • the Federal Anti-Kickback Statute, a criminal law which prohibits, among other things, the offer, payment, solicitation or receipt of any form of remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in return for, or to induce, the referral of an individual for, or the purchase, order or recommendation of, any item or service for which payment may be made under a federal healthcare program such as Medicare and Medicaid; • the Federal Physician Self-Referral Prohibition, which, subject to specific exceptions, restricts physicians from making referrals for certain designated health services for which payment may be made under Medicare to an entity with which the physician, or an immediate family member, has a financial relationship; • the False Claims Act, which prohibits any person from knowingly presenting, or causing to be presented, false or fraudulent claims for payment or approval that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government, including claims paid by the Medicare and Medicaid programs; • the Civil Monetary Penalties Law, which authorizes the U.S.
As of December 31, 2023, the majority of our existing leases were either triple-net leases or leases that allow us to recover certain operating expenses and certain capital expenditures. Our remaining leases are generally modified gross, or base year, leases, which only provide for recoveries of operating expenses above the operating expenses from the initial year within each lease.
As of December 31, 2024, the majority of our existing leases were either triple-net leases or leases that allow us to recover certain operating expenses and certain capital expenditures. Our remaining leases are generally modified gross, or base year, leases, which only provide for recoveries of operating expenses above the operating expenses from the initial year within each lease.
One of our growth strategies is to develop new and expand existing clinical healthcare real estate; we may do this directly or indirectly through joint ventures, including through Trilogy. Expanding and, in particular, developing properties exposes us to increased risks beyond those associated with investing in stabilized, cash flowing real estate.
One of our growth strategies is to develop new and expand existing clinical healthcare real estate; we may do this directly or indirectly through joint ventures. Expanding and, in particular, developing properties exposes us to increased risks beyond those associated with investing in stabilized, cash flowing real estate.
Historically, we have experienced net losses (calculated in accordance with GAAP), and we may not be profitable or realize growth in the value of our investments. Many of our losses can be attributed to general and administrative expenses, depreciation and amortization, as well as acquisition expenses incurred in connection with purchasing properties or making other investments.
Historically, we have experienced net losses (calculated in accordance with GAAP), and we may not be profitable or realize growth in the value of our investments. Many of our losses can be attributed to depreciation and amortization, interest expense, general and administrative expenses, as well as acquisition expenses incurred in connection with purchasing properties or making other investments.
Severe weather events, natural disasters and the effects of climate change and regulatory and societal responses thereto could materially and adversely affect us. Natural disasters and severe weather events, including earthquakes, fires, storms, tornados, floods, hurricanes, snow and freezing temperatures could cause significant damage to our properties and the surrounding environment or area.
Severe weather events, natural disasters and the effects of climate change and regulatory and societal responses thereto could materially and adversely affect us. Natural disasters and severe weather events, including earthquakes, wildfires, storms, tornados, floods, hurricanes, snow and freezing temperatures could cause significant damage to our properties and the surrounding environment or area.
In addition, lenders may have recourse to assets other than those specifically securing the repayment of indebtedness. For tax purposes, a foreclosure on any of our properties will be treated as a disposition of the property, which could cause us to recognize taxable income on foreclosure, without receiving corresponding cash proceeds.
In addition, lenders may have recourse to assets other than those specifically securing the repayment of indebtedness. For tax purposes, a foreclosure on any of our properties will be treated as a disposition of the property, which could cause us to 34 Table of Contents recognize taxable income on foreclosure, without receiving corresponding cash proceeds.
To qualify as a REIT, we must satisfy two gross income tests, under which specified percentages of our gross income must be derived from certain sources, such as “rents from real property.” Rent paid by TRSs pursuant to the lease of our “qualified health care properties” will constitute a substantial portion of our gross income.
To qualify as a REIT, we must satisfy two gross income tests, under which specified percentages of our gross income must be derived from certain sources, such as “rents from real property.” Rent paid to us by TRSs pursuant to the lease of our “qualified health care properties” under the RIDEA structure will constitute a substantial portion of our gross income.
In addition to the risks listed in this “Risk Factors” section, a number of factors could negatively affect the share price of our common stock or result in fluctuations in the price or trading volume of shares of our common stock, including: • the annual yield from distributions on shares of our common stock as compared to yields on other financial instruments; • equity issuances by us, or future sales of substantial amounts of shares of our common stock by our existing or future stockholders or the perception that such issuances or future sales may occur; • increases in market interest rates or a decrease in our distributions to stockholders that lead purchasers of shares of our common stock to demand a higher yield; 44 Table of Contents • changes in market valuations of similar companies; • fluctuations in stock market prices and volumes; • additions or departures of key management personnel; • our operating performance and the performance of other similar companies; • actual or anticipated differences in our quarterly operating results; • changes in expectations of future financial performance or changes in estimates of securities analysts; • publication of research reports about us or our industry by securities analysts; • failure to qualify as a REIT; • adverse market reaction to any indebtedness we incur in the future; • strategic decisions by us or our competitors, such as acquisitions, divestments, spin offs, joint ventures, strategic investments or changes in business strategy; • the passage of legislation or other regulatory developments that adversely affect us or our industry; • speculation in the press or investment community; • changes in our earnings; • failure to satisfy the listing requirements of NYSE; • failure to comply with the requirements of the Sarbanes-Oxley Act of 2002; • actions by institutional stockholders; • changes in accounting principles; and • general market conditions, including factors unrelated to our performance.
We cannot assure our stockholders that the market price of shares of our common stock will not fluctuate or decline significantly in the future. 41 Table of Contents In addition to the risks listed in this “Risk Factors” section, a number of factors could negatively affect the share price of our common stock or result in fluctuations in the price or trading volume of shares of our common stock, including: • the annual yield from distributions on shares of our common stock as compared to yields on other financial instruments; • equity issuances by us, or future sales of substantial amounts of shares of our common stock by our existing or future stockholders or the perception that such issuances or future sales may occur; • increases in market interest rates or a decrease in our distributions to stockholders that lead purchasers of shares of our common stock to demand a higher yield; • changes in market valuations of similar companies; • fluctuations in stock market prices and volumes; • additions or departures of key management personnel; • our operating performance and the performance of other similar companies; • actual or anticipated differences in our quarterly operating results; • changes in expectations of future financial performance or changes in estimates of securities analysts; • publication of research reports about us or our industry by securities analysts; • failure to qualify as a REIT; • adverse market reaction to any indebtedness we incur in the future; • strategic decisions by us or our competitors, such as acquisitions, divestments, spin offs, joint ventures, strategic investments or changes in business strategy; • the passage of legislation or other regulatory developments that adversely affect us or our industry; • speculation in the press or investment community; • failure to satisfy the listing requirements of NYSE; • failure to comply with the requirements of the Sarbanes-Oxley Act of 2002; • actions by institutional stockholders; • changes in accounting principles; and • general market conditions, including factors unrelated to our performance.
Prosky or one of our other executives or key executive officers are no longer employed by us, for any reason, it could have a material adverse effect on us, and we may not be able to attract and hire equally capable individuals to replace them.
Prosky or one of our other executives or key executive officers are no longer employed by 17 Table of Contents us, for any reason, it could have a material adverse effect on us, and we may not be able to attract and hire equally capable individuals to replace them.
As such, operational risks include, and our resulting revenues therefore depend on, the availability and cost of general and professional liability insurance coverage or increases in insurance policy deductibles. Inaccuracies in our underwriting assumptions and/or delays in the selection, acquisition, expansion or development of real properties may materially and adversely affect us.
As such, operational risks include, and our resulting revenues therefore depend on, the availability and cost of general and professional liability insurance coverage or increases in insurance policy deductibles. 23 Table of Contents Inaccuracies in our underwriting assumptions and/or delays in the selection, acquisition, expansion or development of real properties may materially and adversely affect us.
However, it is possible that during higher inflationary periods, the impact of inflation will not be adequately offset by the 22 Table of Contents resetting of rents from our renewal and re-leasing activities, our annual rent escalations or the tenants’ pro rata payment of the increase in operating expenses.
However, it is possible that during higher inflationary periods, the impact of inflation will not be adequately offset by the resetting of rents from our renewal and re-leasing activities, our annual rent escalations or the tenants’ pro rata payment of the increase in operating expenses.
Additionally, we operate 20 integrated senior health campuses that were leased to Trilogy by third parties. These ground leases contain certain restrictions. These restrictions include limits on our use of the facilities and ability to lease, sell or obtain mortgage financing secured by the facilities.
Additionally, we own and operate 17 integrated senior health campuses that were leased to Trilogy by third parties. These ground leases contain certain restrictions. These restrictions include limits on our use of the facilities and ability to lease, sell or obtain mortgage financing secured by the facilities.
Additionally, if any purchaser defaults under a financing arrangement with us, it could negatively impact our ability to make distributions to our stockholders. 25 Table of Contents Representations and warranties made by us in connection with sales of our properties may subject us to liability that could materially and adversely affect us.
Additionally, if any purchaser defaults under a financing arrangement with us, it could negatively impact our ability to make distributions to our stockholders. Representations and warranties made by us in connection with sales of our properties may subject us to liability that could materially and adversely affect us.
We cannot predict the impact of state CON laws or similar laws on our development or expansion of facilities or the operations of our tenants or operators. In addition, in certain areas, state CON laws materially limit the ability of competitors to enter into the markets served by our facilities, thereby limiting competition.
We cannot predict the impact of state CON laws or similar laws on our development or expansion of facilities or the operations of our tenants or operators. 28 Table of Contents In addition, in certain areas, state CON laws materially limit the ability of competitors to enter into the markets served by our facilities, thereby limiting competition.
As of December 31, 2023, we own fee simple interests in all of our land, buildings and campuses, except for the following properties that are located on land that is subject to ground leases: (a) 19 OM buildings; (b) five integrated senior health campuses; and (c) one SNF, in each case, for which we own fee simple interests in the building and other improvements on such properties.
As of December 31, 2024, we own fee simple interests in all of our land, buildings and campuses, except for the following properties that are located on land that is subject to ground leases: (a) 18 OM buildings; (b) five integrated senior health campuses; and (c) one SNF, in each case, for which we own fee simple interests in the building and other improvements on such properties.
Additionally, in the event of 27 Table of Contents default by a mortgagor, these restrictions, among other things, may impede our ability to foreclose on or sell the mortgaged property or to obtain proceeds sufficient to repay all amounts due to us on the mortgage loan.
Additionally, in the event of default by a mortgagor, these restrictions, among other things, may impede our ability to foreclose on or sell the mortgaged property or to obtain proceeds sufficient to repay all amounts due to us on the mortgage loan.
During the interest-only period, the amount of each scheduled payment will be less than that of a traditional amortizing mortgage loan. The principal balance of the mortgage loan will not be reduced (except in the case of prepayments) because there are no scheduled monthly payments of principal during this period.
During the interest-only period, the amount of each scheduled payment will be less than that of a traditional amortizing mortgage loan. The principal balance of 35 Table of Contents the mortgage loan will not be reduced (except in the case of prepayments) because there are no scheduled monthly payments of principal during this period.
If we incorrectly classified a property as a “qualified health care property” and leased it to a TRS, any rental income therefrom would likely not be qualifying income for purposes of the two gross income tests applicable to REITs.
If we incorrectly classified a property as a “qualified health care property” and leased it to a TRS under the RIDEA structure, any rental income therefrom would likely not be qualifying income for purposes of the two gross income tests applicable to REITs.
We anticipate that, if we do acquire properties that are under development, we will be obligated to pay a substantial earnest money deposit at the time of contracting to acquire such properties, and that we will be required to close the purchase of the property upon completion of the development of the property.
We anticipate that, if we do acquire properties that are under development, we will be obligated to pay a substantial earnest money deposit at the time of contracting to acquire such 24 Table of Contents properties, and that we will be required to close the purchase of the property upon completion of the development of the property.
As of December 31, 2023, we have investments in the United Kingdom, or the UK, and the Isle of Man that represent 1.4% of our portfolio, based on our aggregate purchase price of real estate investments. If we are unable to successfully manage the risks associated with international expansion and operations, we may be adversely affected.
As of December 31, 2024, we have investments in the United Kingdom, or the UK, and the Isle of Man that represent 1.3% of our portfolio, based on our aggregate purchase price of real estate investments. If we are unable to successfully manage the risks associated with international expansion and operations, we may be adversely affected.
There can be no assurance that our current 24 Table of Contents or any future development or expansion projects will be completed in accordance with our budgeted expectations, that they will achieve our underwritten returns or result in yields on cost similar to those achieved on past investments, that they will be stabilized in accordance with our expectations or at all or that, if stabilization is achieved, such stabilization will be maintained.
There can be no assurance that our current or any future development or expansion projects will be completed in accordance with our budgeted expectations, that they will achieve our underwritten returns or result in yields on cost similar to those achieved on past investments, that they will be stabilized in accordance with our expectations or at all or that, if stabilization is achieved, such stabilization will be maintained.
Therefore, any investments we make outside the United States will subject us to foreign currency risk due to potential fluctuations in exchange rates between foreign currencies and the U.S. dollar, and there can be no 26 Table of Contents assurance that any attempt to mitigate foreign currency risk through hedging transactions or otherwise will be successful.
Therefore, any investments we make outside the United States will subject us to foreign currency risk due to potential fluctuations in exchange rates between foreign currencies and the U.S. dollar, and there can be no assurance that any attempt to mitigate foreign currency risk through hedging transactions or otherwise will be successful.
If we serve as a managing member, general partner or controlling party with respect to investments or joint ventures, we may be subject to risks and liabilities that we would not otherwise face. In certain circumstances, we may serve as managing member, general partner or controlling party with respect to investments and joint ventures.
Risks Related to Joint Ventures When we serve as a managing member, general partner or controlling party with respect to investments or joint ventures, we may be subject to risks and liabilities that we would not otherwise face. In certain circumstances, we may serve as a managing member, general partner or controlling party with respect to investments and joint ventures.
The duties of the general partner to our operating partnership and its partners may come into conflict with the duties of our directors and officers to us and our stockholders. Under Delaware law, a general partner of a Delaware limited partnership owes its limited partners the duties of good faith and fair dealing.
The duties of the general partner to our operating partnership and its partners may come into 37 Table of Contents conflict with the duties of our directors and officers to us and our stockholders. Under Delaware law, a general partner of a Delaware limited partnership owes its limited partners the duties of good faith and fair dealing.
In that event, our 42 Table of Contents stockholders would be treated as if they earned that income and paid the tax on it directly. However, our stockholders that are tax-exempt, such as charities or qualified pension plans, would have no benefit from their deemed payment of such tax liability.
In that event, our stockholders may be treated as if they earned that income and paid the tax on it directly. However, our stockholders that are tax-exempt, such as charities or qualified pension plans, would have no benefit from their deemed payment of such tax liability.
In the event that any such sale-leaseback transaction is re-characterized as a financing transaction for U.S. federal income tax purposes, deductions for depreciation and cost recovery relating to such real estate investment would be disallowed or significantly reduced.
In the event that any such sale-leaseback transaction is re-characterized as a financing transaction for U.S. federal income tax purposes, deductions for depreciation and cost recovery 40 Table of Contents relating to such real estate investment would be disallowed or significantly reduced.
The Health & Care Professions Council, the regulator of health, psychological and care professionals in the UK, requires a qualification to demonstrate standards of proficiency and also set standards, hold a register, quality assure education and investigate complaints.
The Health & Care Professions Council, the regulator of health, psychological and care professionals in the UK, requires a qualification to 33 Table of Contents demonstrate standards of proficiency and also set standards, hold a register, quality assure education and investigate complaints.
With the elimination of the individual mandate enforcement mechanism, several states brought suit seeking to invalidate the entire Healthcare Reform Act. On June 17, 2021, the U.S. Supreme Court dismissed this lawsuit without specifically ruling on the constitutionality of the law.
With the elimination of the individual mandate enforcement mechanism, several states brought suit seeking to invalidate the entire Healthcare Reform Act. On June 17, 2021, the U.S. Supreme Court dismissed this lawsuit without specifically ruling on the constitutionality of the law. However, challenges to the Healthcare Reform Act may continue.
Also, we are or may become subject to new laws and market expectations with respect to disclosure requirements, and this may result in additional investments and implementation of new practices and reporting processes, all entailing additional compliance costs and risk.
Also, we are or may become subject to regulatory uncertainty, as well as new laws and market expectations with respect to disclosure requirements, and this may result in additional investments and implementation of new practices and reporting processes, all entailing additional compliance costs and risk.
A shortage of nurses or other trained personnel or general inflationary pressures may force the Trilogy Manager to enhance its pay and benefits package to compete effectively for such personnel, the cost of which we would bear in proportion to our joint venture interest, but it may not be able to offset these added costs by increasing the rates charged to residents.
A shortage of nurses or other trained personnel or general inflationary pressures may force the Trilogy Manager to enhance its pay and benefits package to compete effectively for such personnel, the cost of which we would bear, but it may not be able to offset these added costs by increasing the rates charged to residents.
We could encounter unanticipated difficulties and expenditures relating to any acquired properties, including contingent liabilities, and acquired properties might require significant management attention that would otherwise be devoted to our ongoing business. Such expenditures may negatively affect our results of operations.
Some of our acquisitions may not prove to be successful. We could encounter unanticipated difficulties and expenditures relating to any acquired properties, including contingent liabilities, and acquired properties might require significant management attention that would otherwise be devoted to our ongoing business. Such expenditures may negatively affect our results of operations.
Terrorist attacks, acts of violence or war, political protests and unrest or public health crises (including the COVID-19 pandemic) have negatively affected, and may continue to negatively affect, our operations and our stockholders’ investments.
Terrorist attacks, acts of violence or war, political protests and unrest or public health crises (including the COVID-19 pandemic) have negatively affected, and may in the future affect, our operations and our stockholders’ investments.
A reduction in our access to debt capital, an increase in the cost thereof or our acceptance of restrictive covenants could limit our ability to achieve our business objectives and pursue our growth strategies. Additionally, interest rates have significantly increased, and may continue to significantly increase, our interest costs.
A reduction in our access to debt capital, an increase in the cost thereof or our acceptance of restrictive covenants could limit our ability to achieve our business objectives and pursue our growth strategies. Additionally, rising interest rates have significantly increased our interest costs in recent years.
However, a TRS that leases “qualified health care properties” from us will not be treated as a “related party tenant” with respect to our “qualified health care properties” that are managed by an EIK.
However, a TRS that leases “qualified health care properties” from us will not be treated as a “related party tenant” with respect to our “qualified health care properties” that are managed by an eligible independent contractor, or EIK.
In the event that our management agreement with the Trilogy Manager is terminated or not renewed, we may be unable to replace the Trilogy Manager with another suitable operator, or, if we were successful in locating such an operator, we cannot guarantee that it would manage the integrated senior health campuses efficiently and effectively or that any such transition would be completed timely, which may have a material adverse effect on us.
Any one or a combination of these risks could have a material adverse effect on us. 19 Table of Contents In the event that our management agreement with the Trilogy Manager is terminated or not renewed, we may be unable to replace the Trilogy Manager with another suitable operator, or, if we were successful in locating such an operator, we cannot guarantee that it would manage the integrated senior health campuses efficiently and effectively or that any such transition would be completed timely, which may have a material adverse effect on us.
We are currently required to perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our 47 Table of Contents internal control over financial reporting, and we will be required to have our independent registered public accounting firm attest to the same, as required by Section 404 of the Sarbanes-Oxley Act of 2002.
We are required to perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, and we are also required to have our independent registered public accounting firm attest to the same, as required by Section 404 of the Sarbanes-Oxley Act of 2002.
Consequently, we may not be able to recover the carrying amount of our properties, which may require us to recognize an impairment charge or record a loss on sale in our financial results; • reduced values of our properties may limit our ability to obtain or maintain debt financing secured by our properties and may reduce the availability of unsecured loans; • constricted access to credit may result in tenant defaults or non-renewals under leases; • layoffs may lead to a lower demand for medical services and cause vacancies to increase and a lack of future population and job growth may make it difficult to maintain or increase occupancy levels; • disruptions in the financial markets, deterioration in economic conditions or a public health crisis, such as the COVID-19 pandemic, have resulted in the past, and may result in the future, in lower occupancy in our facilities, increased vacancy rates for commercial real estate due to generally lower demand for rentable space, as well as an oversupply of rentable space; • governmental actions and initiatives, including risks associated with the impact of a prolonged government shutdown or budgetary reductions or impasses; and 18 Table of Contents • increased insurance premiums, real estate taxes or utilities or other expenses, such as inflation costs, will decrease our financial results and may reduce funds available for distribution to our stockholders or, to the extent such increases are passed through to tenants, may lead to tenant defaults.
Consequently, we may not be able to recover the carrying amount of our properties, which may require us to recognize an impairment charge or record a loss on sale in our financial results; • reduced values of our properties may limit our ability to obtain or maintain debt financing secured by our properties and may reduce the availability of unsecured loans; • constricted access to credit may result in tenant defaults or non-renewals under leases; • layoffs may lead to a lower demand for medical services and cause vacancies to increase and a lack of future population and job growth may make it difficult to maintain or increase occupancy levels; • disruptions in the financial markets, deterioration in economic conditions or a public health crisis, such as the COVID-19 pandemic, have resulted in the past, and may result in the future, in lower occupancy in our facilities, increased vacancy rates for commercial real estate due to generally lower demand for rentable space, as well as an oversupply of rentable space; • governmental actions and initiatives, including risks associated with the impact of a prolonged government shutdown or budgetary reductions or impasses; • regulatory and legal uncertainty arising from governmental actions and associated legal challenges, laws that may differ or conflict with those in other jurisdictions, and lack of clarity or shifting governmental priorities regarding the enforcement of rules and regulations; and • increased insurance premiums, deductibles and other fees, real estate taxes or utilities or other expenses, such as inflation of costs or supplies, will decrease our financial results and may reduce funds available for distribution to our stockholders or, to the extent such increases are passed through to tenants, may lead to tenant defaults.
Many of our healthcare facilities and their tenants and operators require a license or CON. Failure to obtain a license or CON, or the loss of a required license or CON, would prevent a facility from operating in the manner intended by the tenant or operator.
Many of our healthcare facilities and their tenants and operators require a license or certificate of need, or CON, in order to operate in certain states. Failure to obtain a license or CON, or the loss of a required license or CON, would prevent a facility from operating in the manner intended by the tenant or operator.
Additional changes to the tax laws are likely to continue to occur, and we cannot assure our stockholders that any such changes will not adversely affect our taxation and our ability to continue to qualify as a REIT or the taxation of a stockholder.
Additional changes to the tax laws, and administration of those laws by the IRS, are likely 39 Table of Contents to continue to occur, and we cannot assure our stockholders that any such changes will not adversely affect our taxation and our ability to continue to qualify as a REIT or the taxation of a stockholder.
Ineffective internal control over financial reporting and disclosure controls could also cause investors to lose confidence in our reported financial information. Any of these matters could cause a significant decline in the market price of our common stock.
Ineffective internal control over financial reporting and disclosure controls could also cause investors to lose confidence in our reported financial information. Any of these matters could cause a significant decline in the market price of our common stock. Item 1B. Unresolved Staff Comments. Not applicable.
As a result, the value of the facility may be reduced, which could materially and adversely affect us. 29 Table of Contents Reimbursement rates from third-party payors, including Medicare and Medicaid, that do not rise as quickly, or at all, compared to the rate of inflation, could adversely affect our tenants’ operations and ability to make rental payments to us or our profitability from operating facilities held in RIDEA structures.
Reimbursement rates from third-party payors, including Medicare and Medicaid, that do not rise as quickly, or at all, compared to the rate of inflation, and which may become unavailable or reduced, could adversely affect our tenants’ operations and ability to make rental payments to us or our profitability from operating facilities held in RIDEA structures.
These integrated senior health campuses accounted for approximately 43.6% of our portfolio (based on aggregate contract purchase price) as of December 31, 2023 and contributed approximately 51.0% of our annualized base rent/annualized net operating income, or NOI, as of such date.
These integrated senior health campuses accounted for approximately 44.6% of our portfolio (based on aggregate contract purchase price) as of December 31, 2024 and contributed approximately 54.1% of our annualized base rent/annualized net operating income, or NOI, as of such date.
These CON laws could also restrict our ability to expand in new markets. In certain circumstances, loss of state licensure or certification or closure of a facility could ultimately result in loss of authority to operate the facility or provide services at the facility and require new CON authorization licensure and/or authorization or potential authorization from CMS to re-institute operations.
In certain circumstances, loss of state licensure or certification or closure of a facility could ultimately result in loss of authority to operate the facility or provide services at the facility and require new CON authorization, licensure and/or authorization or potential authorization from CMS to re-institute operations.
The financial deterioration, insolvency or bankruptcy of one or more of our major tenants, operators, borrowers or other obligors could have a material adverse effect on us.
Risks Related to Our Business and Financial Results The financial deterioration, insolvency or bankruptcy of one or more of our major tenants, operators, borrowers or other obligors could have a material adverse effect on us.
Publicity about the operator’s financial troubles and bankruptcy or insolvency proceedings may also negatively impact their and our reputations, decreasing customer demand and revenues. Any or all of these risks could have a material adverse effect on us. We have experienced net losses in the past and we may experience additional losses in the future.
Publicity about the operator’s financial troubles and bankruptcy or insolvency proceedings may also negatively impact their and our reputations, decreasing customer demand and revenues. Any or all of these risks could have a material adverse effect on us.
Our review of rent coverages may not adequately assess the risk of an investment, and, if our calculations are not accurate, we may be unaware that we have tenants that may be unable to make payments under their leases.
Our review of rent coverages may not adequately assess the risk of an investment, and, if our calculations are not accurate, we may be unaware that we have tenants that may be unable to make payments under their leases. If our assessment is inaccurate, our revenues could be materially and adversely affected.
If the market in which the asset is located fails to recover according to the borrower’s projections, or if the borrower fails to improve the quality of the asset’s management and/or the value of the asset, the borrower may not receive a sufficient return on the asset to satisfy the bridge loan, and we bear the risk that we may not recover some or all of our initial expenditure. 28 Table of Contents In addition, borrowers usually use the proceeds of a conventional mortgage to repay a bridge loan.
If the market in which the asset is located fails to recover according to the borrower’s projections, or if the borrower fails to improve the quality of the asset’s management and/or the value of the asset, the borrower may not receive a sufficient return on the asset to satisfy the bridge loan, and we bear the risk that we may not recover some or all of our initial expenditure.
Operators of competing properties may provide superior services than those provided by our operators, which could reduce the competitiveness of our properties, which could have a material adverse effect on us.
These types of support are not available to our properties. Operators of competing properties may provide superior services than those provided by our operators, which could reduce the competitiveness of our properties, which could have a material adverse effect on us.
We have elected to be taxed as a REIT under the Code commencing with our taxable year ended December 31, 2016.
We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the Code, commencing with our taxable year ended December 31, 2016.
If we cannot obtain funding on favorable terms, our ability to acquire, and make necessary capital improvements to, properties may be impaired or delayed, which could have a material adverse effect on us.
If we cannot obtain debt or equity funding on favorable terms, our ability to acquire, and make necessary capital improvements to, properties may be impaired or delayed, which could have a material adverse effect on us. Our identified sources of debt or equity funding may not be available to us on favorable terms or at all.
The healthcare industry is currently experiencing: • changes in the demand for and methods of delivering healthcare services; • changes in third-party reimbursement policies; • significant unused capacity in certain areas, which has created substantial competition for patients among healthcare providers in those areas; • increased expenses for uninsured patients; • increased competition among healthcare providers; • increased liability insurance expenses; • continued pressure by private and governmental payors to reduce payments to providers of services; • increased scrutiny of billing, referral and other practices by federal and state authorities; • changes in federal and state healthcare program payment models; • increased emphasis on compliance with privacy and security requirements related to personal health information; and • increased instability in the Health Insurance Exchange market and lack of access to insurance plans participating in the exchange. 32 Table of Contents Additionally, in connection with the COVID-19 pandemic, many governmental entities relaxed certain licensure and other regulatory requirements relating to telemedicine, allowing more patients to virtually access care without having to visit a healthcare facility.
The healthcare industry is currently experiencing: • changes in the demand for and methods of delivering healthcare services; • changes in third-party reimbursement policies; 31 Table of Contents • significant unused capacity in certain areas, which has created substantial competition for patients among healthcare providers in those areas; • increased expenses for uninsured patients; • increased competition among healthcare providers; • increased liability insurance expenses; • continued pressure by private and governmental payors to reduce payments to providers of services; • increased scrutiny of billing, referral and other practices by federal and state authorities; • changes in federal and state healthcare program payment models; • increased emphasis on compliance with privacy and security requirements related to personal health information; and • increased instability in the Health Insurance Exchange market and lack of access to insurance plans participating in the exchange.
These changes may adversely affect our status as a REIT. Further, bank accounts in a foreign currency which are not considered cash or cash equivalents may adversely affect our status as a REIT. Acquired properties may expose us to unknown liability.
These changes may adversely affect our status as a REIT. Further, bank accounts in a foreign currency which are not considered cash or cash equivalents may adversely affect our status as a REIT.
For example, due to challenging economic conditions in the past, distributions to stockholders were reduced. Therefore, to be successful in this market, we must, among other things: • successfully manage our assets; • attract, integrate, motivate and retain qualified personnel to manage our day-to-day operations; and • respond to competition both for investment opportunities and potential investors’ investment in us.
Therefore, to be successful in this market, we must, among other things: • successfully manage our assets; • attract, integrate, motivate and retain qualified personnel to manage our day-to-day operations; and • respond to competition both for investment opportunities and potential investors’ investment in us.
If we pay higher prices per property or receive lower prices for dispositions of our OM buildings, senior housing, SNFs or other healthcare-related facilities as a result of such competition, we may be materially and adversely affected.
If we pay higher prices per property or receive lower prices for dispositions of our senior housing, SNFs, OM buildings or other healthcare-related facilities as a result of such competition, we may be materially and adversely affected. 18 Table of Contents Our investments in, and acquisitions of, senior housing, SNFs, OM buildings and other healthcare-related facilities may be unsuccessful or fail to meet our expectations.
During 2023, we entered into interest rate swap contracts to hedge $750,000,000 of our variable-rate credit facilities. As of December 31, 2023, our outstanding debt aggregated to $2,551,036,000, of which 31.8% was unhedged variable-rate debt. The rise in interest rates has also increased our interest expense on future fixed-rate borrowings.
As of December 31, 2024, we have entered into interest rate swap contracts to hedge an aggregate $550,000,000 of our variable-rate credit facilities. As of December 31, 2024, our outstanding debt aggregated to $1.7 billion, of which 8.2% was unhedged variable-rate debt. The rise in interest rates has also increased our interest expense on future fixed-rate borrowings.
In both cases, this would result in dilution of our stockholders’ equity investment in us. 46 Table of Contents In addition, subject to any limitations set forth under Maryland law, our board may amend our charter to increase or decrease the number of authorized shares of stock, the number of shares of any class or series of stock designated or reclassify any unissued shares into other classes or series of stock without the necessity of obtaining stockholder approval.
In addition, subject to any limitations set forth under Maryland law, our board may amend our charter to increase or decrease the number of authorized shares of stock, the number of shares of any class or series of stock designated or reclassify any unissued shares into other classes or series of stock without the necessity of obtaining stockholder approval.
However, challenges to the Healthcare Reform Act may continue. If all or a portion of the Healthcare Reform Act, including the individual mandate, is eventually ruled unconstitutional, our tenants and operators may have more patients and residents who do not have insurance coverage, which may adversely impact the tenants’ and operators’ collections and revenues.
If any portion of the Healthcare Reform Act is eventually ruled unconstitutional, our tenants and operators may have more patients and residents who do not have insurance coverage, which may adversely impact the tenants’ and operators’ collections and revenues.
We believe that we have been, and, through the time of the REIT Merger, GAHR III was, organized and operated, and we intend to continue to operate in conformity with the requirements for qualification and taxation as a REIT under the Code.
We believe that we have been, and, through the time of the merger of Griffin-American Healthcare REIT III, Inc., or GAHR III, into us, on October 1, 2021, GAHR III was organized and operated, and we intend to continue to operate in conformity with the requirements for qualification and taxation as a REIT under the Code.
A downturn in the commercial real estate industry generally could significantly adversely affect the value of our properties. A downturn in the healthcare industry could negatively affect our lessees’ ability to make lease payments to us and our operators’ ability to manage our properties efficiently and effectively.
A downturn in the healthcare industry could negatively affect our lessees’ ability to make lease payments to us and our operators’ ability to manage our properties efficiently and effectively.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

12 edited+8 added−5 removed3 unchanged
Biggest changeIn addition to our internal cybersecurity capabilities, we also periodically engage assessors, consultants, auditors or other third parties to provide consultation and advice to assist with assessing, identifying and managing cybersecurity risks. Our management team identifies and assesses information security risks using industry practices, including those informed by the National Institute of Standards and Technology.
Biggest changeThese efforts are reinforced by routine disaster recovery tabletop exercises and restore testing, ensuring that our organization is prepared for any potential disruptions. In addition to our internal cybersecurity capabilities, we also periodically engage assessors, consultants, auditors and other third parties to provide consultation and advice to assist with assessing, identifying and managing cybersecurity risks.
We also employ systems and processes designed to oversee, identify and reduce the potential impact of a security incident at a third-party vendor, service provider or otherwise implicating the third-party technology and systems we use. Additionally, we maintain cybersecurity insurance providing coverage for certain costs related to cybersecurity-related incidents that impact our cybersecurity and information technology infrastructure.
We also employ systems and processes designed to oversee, identify and reduce the potential impact of a security incident at a third-party vendor, service provider or otherwise implicating the third-party technology and systems we use. Lastly, we maintain cybersecurity insurance providing coverage for certain costs related to cybersecurity-related incidents that impact our cybersecurity and information technology infrastructure.
The Audit Committee's responsibilities include reviewing cybersecurity strategies with management, assessing processes and controls pertaining to the management of our information technology operations and their effectiveness and seeking to confirm that management's response to potential cybersecurity incidents is timely and effective.
The Audit Committee's responsibilities include reviewing cybersecurity strategies with management, assessing processes and controls pertaining to the management of our information technology operations and their effectiveness and making sure that management's response to potential cybersecurity incidents is timely and effective.
Additional information on cybersecurity risks we face can be found in Part I, Item 1A "Risk Factors" of this Annual Report on Form 10-K under the heading "A breach of information technology systems on which we rely could materially and adversely impact us," which should be read in conjunction with the foregoing information. 49 Table of Contents
Additional information on cybersecurity risks we face can be found in Part I, Item 1A, Risk Factors, of this Annual Report on Form 10-K under the heading “A breach of, or failure in, information technology systems on which we rely could materially and adversely impact us,” which should be read in conjunction with the foregoing information.
While we are not aware of any cybersecurity incidents that have materially affected us to date, there can be no guarantee that we will not be the subject of future attacks, threats or incidents that may have a material impact on our business strategy, results of operations or financial condition.
As of December 31, 2024, we are not aware of any cybersecurity threats or incidents that have materially affected us; however, there can be no guarantee that we will not be the subject of future attacks, threats or incidents that may have a material impact on our business strategy, results of operations or financial condition.
Our Chief Operating Officer also leads our Cybersecurity Incident Management Team, which is comprised of a cross-functional team including Internal Audit, Legal, Information Technology, Risk Management and Accounting leaders. These individuals meet regularly and are informed about and monitor the prevention, mitigation, detection and remediation of cybersecurity incidents.
Our Chief Operating Officer leads the Cybersecurity Incident Management Team, a cross-functional team that comprises Internal Audit, Legal, Information Technology, Risk Management and Accounting leaders. These individuals meet regularly and receive reports of, and monitor, the prevention, mitigation, detection and remediation of cybersecurity incidents.
This team comprises individuals with relevant educational and technical experience, including a dedicated IT Systems & Security Administrator, with responsibility for various aspects of cybersecurity within our organizations. This team works closely with the Legal department to oversee compliance and regulatory and contractual security requirements.
The Information Technology team comprises individuals with relevant educational and technical experience, including a dedicated IT Systems & Security Administrator. It works closely with the Legal department to oversee compliance and regulatory and contractual security requirements.
This review may cover a variety of relevant topics, potentially including recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends and information security considerations related to our operators, managers and third parties.
This review may cover a variety of relevant topics, potentially including recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends and information security considerations related to our operators, managers and other third-party partners. The scope and focus of each review are determined based on current priorities and emerging issues in cybersecurity.
The scope and focus of each review are determined based on current priorities and emerging issues in cybersecurity. 48 Table of Contents Management and Cybersecurity Working Group Reporting to the Chief Operating Officer, our Vice President of Information Technology, with extensive cybersecurity knowledge and skills from over 15 years of relevant work experience at our company and elsewhere, leads the team responsible for developing and implementing our information security program across our business.
Governance Reporting to the Chief Operating Officer, our Vice President of Information Technology, who has extensive cybersecurity knowledge and skills from over 16 years of relevant work experience at our company and elsewhere, leads our Information Technology team, which is responsible for developing and implementing our information security program across our business.
Additionally, we conduct regular evaluation of our cybersecurity program, encompassing internal reviews and third-party assessments to ensure its effectiveness and resilience. Governance Our board retains ultimate oversight of cybersecurity risk, which it manages through our enterprise risk management program. Our board has delegated primary responsibility of overseeing cybersecurity risks to the Audit Committee.
The incident response plan also specifies the use of third-party experts for legal advice, consulting and cyber incident response. Our board has the ultimate oversight of cybersecurity risk, which it manages through our enterprise risk management program. Our board has delegated primary responsibility of overseeing cybersecurity risks to the Audit Committee.
Incident Response The Cybersecurity Incident Management Team maintains and oversees an incident response plan that applies in the event of a cybersecurity threat or incident to provide a standardized framework for responding to cybersecurity incidents.
Our Chief Operating Officer is also responsible for reporting on cybersecurity and information technology to the Audit Committee. We maintain and periodically review and update an incident response plan that applies in the event of a cybersecurity threat or incident to provide a standardized framework for responding to cybersecurity incidents.
We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats. Our cybersecurity program includes several safeguards such as access controls, multi-factor authentication, continuous monitoring and alerting systems for internal and external threats and external vulnerability testing.
Item 1C. Cybersecurity. Risk Management and Strategy We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats.
Removed
Item 1C. Cybersecurity. Our information technology networks, those of our operators and managers and those of third parties on whom we rely are important enablers to our ability to perform day-to-day operations of our business. Our business operations depend on the secure collection, storage, transmission and other processing of proprietary, confidential or sensitive data.
Added
Our risk management strategy begins with identifying areas of risk through risk assessment and an annual review of our practices and policies against the National Institute of Standards and Technology, or NIST, Cybersecurity Framework. This framework encompasses six major focus areas and 106 subcategories.
Removed
Our Chief Operating Officer is responsible for reporting on cybersecurity and information technology to the Audit Committee. Information Security Program Our Vice President of Information Technology and his information security team provide regular reports to the Chief Operating Officer and other relevant teams on various cybersecurity threats, assessments and findings.
Added
The results of each assessment are thoroughly analyzed to strengthen our security posture and maintain a comprehensive cybersecurity program. In connection with these focus areas, we have implemented a variety of technical, physical and administrative controls to proactively prevent, detect and mitigate cybersecurity threats.
Removed
To ensure that cybersecurity is an organization-wide effort, we provide mandatory cybersecurity training at least annually for all employees with network access, including training designed to simulate and help prevent phishing and other social engineering attacks.
Added
These measures are designed to limit the impact of potential breaches by employing advanced logging and monitoring, robust access controls, multifactor authentication, firewalls, anti-malware and antivirus solutions, endpoint detection and response systems, network inspection tools, intrusion prevention mechanisms, content filtering and comprehensive patch and vulnerability management.
Removed
The incident response plan also specifies the use of third-party experts for legal advice, consulting and cyber incident response. Material Cybersecurity Risks, Threats and Incidents While we employ several measures to prevent, detect and mitigate cybersecurity threats, there is no guarantee such efforts will be successful.
Added
Endpoints are routinely reviewed and scanned, with our Information Technology team addressing any identified issues to ensure ongoing protection. 44 Table of Contents We also engage external vendors to conduct external vulnerability scanning and assess our policies and practices. To safeguard critical systems, we maintain encrypted, immutable backups and conduct regular testing to confirm their confidentiality, integrity and availability.
Removed
We also rely on information technology and other third-party vendors to support our business, including securely processing personal, confidential, financial, sensitive or proprietary and other types of information. Despite our efforts to improve our ability, and the ability of relevant third parties', to protect against cyber threats, we may not be able to protect all information, systems, products and services.
Added
For instance, we engage third-party consultants to perform annual walkthroughs and design testing of information technology, or IT, general controls on behalf of our Internal Audit team, as well as to test IT control effectiveness throughout the year. We have developed processes to identify and manage cybersecurity risks from our service providers.
Added
We assess our operators and managers through due diligence surveys, interviews and risk evaluations. We take cybersecurity and data privacy considerations into account when we source, select and engage with our third-party service providers.
Added
Moreover, we document our third-party vendors and suppliers in a centralized registry and review their cybersecurity practices through diligence meetings and SOC2 report evaluations for security, availability of data, processing integrity, confidentiality and privacy controls. These measures help ensure that our partners adhere to best practices and maintain safeguards for our data.
Added
In addition, we engage third-party consultants to test our IT control effectiveness throughout the year, and any known exceptions and test results are communicated to management and the Audit Committee on a quarterly basis. 45 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

9 edited+0 added−1 removed5 unchanged
Biggest changeFt. of Expiring Leases % of GLA Represented by Expiring Leases Annual Base Rent of Expiring Leases(1) % of Total Annual Base Rent Represented by Expiring Leases 2024 113 532 9.8 % $ 12,814 8.0 % 2025 75 577 10.7 15,782 10.0 2026 45 211 3.9 4,947 3.1 2027 57 402 7.4 11,036 6.9 2028 59 523 9.7 15,099 9.4 2029 43 423 7.8 12,160 7.6 2030 36 447 8.3 14,766 9.2 2031 18 295 5.5 7,380 4.6 2032 24 595 11.0 17,180 10.7 2033 21 644 11.9 18,193 11.4 Thereafter 35 760 14.0 30,566 19.1 Total 526 5,409 100 % $ 159,923 100 % ___________ (1) Amount is based on the total annual contractual base rent expiring in the applicable year, based on leases as of December 31, 2023. 51 Table of Contents Geographic Diversification/Concentration Table The following table lists our property locations and provides certain information regarding our portfolio’s geographic diversification/concentration as of December 31, 2023 (square feet and dollars in thousands): State Number of Buildings/ Campuses GLA (Sq Ft) % of GLA Annualized Base Rent/NOI(1) % of Annualized Base Rent/NOI Alabama 5 290 1.5 % $ 4,550 1.3 % Arkansas 1 51 0.3 534 0.2 Arizona 1 34 0.2 873 0.3 California 8 314 1.7 3,474 1.0 Colorado 6 287 1.5 6,793 2.0 Connecticut 3 109 0.6 2,291 0.7 District of Columbia 1 134 0.7 4,983 1.4 Florida 1 11 0.1 632 0.2 Georgia 11 420 2.1 9,636 2.7 Iowa 1 38 0.2 598 0.2 Illinois 10 330 1.8 5,668 1.6 Indiana 75 5,242 27.9 122,062 35.3 Kansas 2 116 0.6 3,085 0.9 Kentucky 17 1,504 8.0 (1,970) (0.6) Louisiana 7 257 1.4 1,741 0.5 Massachusetts 7 513 2.7 13,330 3.9 Maryland 1 77 0.4 1,732 0.5 Michigan 28 1,588 8.4 36,065 10.4 Minnesota 1 46 0.2 1,091 0.3 Missouri 12 769 4.1 16,942 4.9 Mississippi 2 76 0.4 890 0.3 North Carolina 8 330 1.8 7,165 2.1 Nebraska 2 282 1.5 691 0.2 New Jersey 4 161 0.9 3,848 1.1 Nevada 1 191 1.0 4,974 1.4 New York 1 91 0.5 3,038 0.9 Ohio 32 2,468 13.1 32,060 9.3 Oregon 1 62 0.3 1,740 0.5 Pennsylvania 8 556 3.0 11,001 3.2 South Carolina 1 59 0.3 1,716 0.5 Tennessee 1 46 0.2 617 0.2 Texas 22 1,454 7.7 24,032 7.0 Utah 1 66 0.4 450 0.1 Virginia 2 284 1.5 4,643 1.3 Washington 2 77 0.4 2,171 0.6 Wisconsin 4 334 1.8 7,555 2.2 Total Domestic 290 18,667 99.2 $ 340,701 98.6 Isle of Man and UK 6 155 0.8 4,840 1.4 Total 296 18,822 100 % $ 345,541 100 % 52 Table of Contents ___________ (1) Amount is based on contractual base rent from leases as of December 31, 2023, with the exception of our SHOP and integrated senior health campuses, which amount is based on annualized NOI due to the characteristics of the RIDEA structure.
Biggest changeFt. of Expiring Leases % of GLA Represented by Expiring Leases Annual Base Rent of Expiring Leases(1) % of Total Annual Base Rent Represented by Expiring Leases 2025 101 571 11.9 % $ 14,576 10.0 % 2026 46 214 4.5 4,939 3.4 2027 69 462 9.6 12,698 8.8 2028 58 512 10.7 15,143 10.4 2029 63 530 11.0 15,214 10.5 2030 47 538 11.2 17,499 12.1 2031 22 190 4.0 5,538 3.8 2032 24 393 8.2 9,879 6.8 2033 14 199 4.2 6,452 4.4 2034 12 226 4.7 5,778 4.0 Thereafter 30 956 20.0 37,487 25.8 Total 486 4,791 100 % $ 145,203 100 % ___________ (1) Amount is based on the total annual contractual base rent expiring in the applicable year, based on leases as of December 31, 2024. 47 Table of Contents Geographic Diversification/Concentration Table The following table lists our property locations and provides certain information regarding our portfolio’s geographic diversification/concentration as of December 31, 2024 (square feet and dollars in thousands): State Number of Buildings/ Campuses GLA (Sq Ft) % of GLA Annualized Base Rent/NOI(1) % of Annualized Base Rent/NOI Alabama 4 260 1.4 % $ 4,323 1.1 % Arkansas 1 51 0.3 601 0.2 Arizona 1 34 0.2 899 0.2 California 7 301 1.6 2,986 0.8 Colorado 6 287 1.5 6,994 1.8 Connecticut 3 107 0.6 2,415 0.6 District of Columbia 1 134 0.7 5,107 1.3 Florida 1 11 0.1 651 0.2 Georgia 11 457 2.4 10,602 2.7 Iowa 1 38 0.2 613 0.2 Illinois 10 330 1.7 5,693 1.5 Indiana 76 5,300 27.7 138,228 35.6 Kansas 2 116 0.6 3,009 0.8 Kentucky 17 1,504 7.9 658 0.2 Louisiana 7 257 1.3 3,073 0.8 Massachusetts 7 513 2.7 12,191 3.1 Maryland 1 77 0.4 1,818 0.5 Michigan 28 1,594 8.3 37,310 9.6 Minnesota 1 46 0.2 932 0.2 Missouri 4 384 2.0 8,450 2.2 Mississippi 2 76 0.4 1,246 0.3 North Carolina 8 330 1.7 7,551 1.9 Nebraska 2 282 1.5 3,600 0.9 New Jersey 4 162 0.8 4,069 1.0 Nevada 1 191 1.0 4,592 1.2 New York 1 91 0.5 3,107 0.8 Ohio 30 2,361 12.3 45,686 11.8 Oregon 25 667 3.5 7,859 2.0 Pennsylvania 8 556 2.9 16,208 4.2 South Carolina 1 59 0.3 1,695 0.4 Tennessee 1 46 0.2 755 0.2 Texas 22 1,454 7.6 22,498 5.8 Utah 1 66 0.3 836 0.2 Virginia 2 282 1.4 6,392 1.5 Washington 7 242 1.3 7,341 1.9 Wisconsin 4 334 1.7 3,729 1.0 Total Domestic 308 19,000 99.2 $ 383,717 98.7 Isle of Man and UK 6 155 0.8 4,944 1.3 Total 314 19,155 100 % $ 388,661 100 % 48 Table of Contents ___________ (1) Amount is based on contractual base rent from leases as of December 31, 2024, with the exception of our SHOP and integrated senior health campuses, which amount is based on annualized NOI due to the characteristics of the RIDEA structure.
For additional information regarding our real estate investments, see Schedule III, Real Estate and Accumulated Depreciation, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K. 50 Table of Contents Lease Expirations Substantially all of our leases with residents at our SHOP and integrated senior health campuses are for a term of one year or less.
For additional information regarding our real estate investments, see Schedule III, Real Estate and Accumulated Depreciation, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K. 46 Table of Contents Lease Expirations Substantially all of our leases with residents at our SHOP and integrated senior health campuses are for a term of one year or less.
We own fee simple interests in all of our land, buildings and campuses, except for the following properties that are located on land that is subject to ground leases: (a) 19 OM buildings; (b) five integrated senior health campuses; and (c) one SNF, in each case, for which we own fee simple interests in the building and other improvements on such properties.
We own fee simple interests in all of our land, buildings and campuses, except for the following properties that are located on land that is subject to ground leases: (a) 18 OM buildings; (b) five integrated senior health campuses; and (c) one SNF, in each case, for which we own fee simple interests in the building and other improvements on such properties.
The following table presents the sensitivity of our annual base rent due to lease expirations for the next 10 years and thereafter at our properties as of December 31, 2023, excluding our SHOP and integrated senior health campuses (square feet and dollars in thousands): Year Number of Expiring Leases Total Sq.
The following table presents the sensitivity of our annual base rent due to lease expirations for the next 10 years and thereafter at our properties as of December 31, 2024, excluding our SHOP and integrated senior health campuses (square feet and dollars in thousands): Year Number of Expiring Leases Total Sq.
Item 2. Properties. As of December 31, 2023, our principal executive offices are located at 18191 Von Karman Avenue, Suite 300, Irvine, California 92612. We believe our existing leased facilities are in good condition and suitable for the conduct of our business.
Item 2. Properties. As of December 31, 2024, our principal executive offices are located at 18191 Von Karman Avenue, Suite 300, Irvine, California 92612. We believe our existing leased facilities are in good condition and suitable for the conduct of our business.
The following information generally applies to our properties: • we believe all of our properties are adequately covered by insurance and are suitable for their intended purposes; • we have no plans for any material renovations, improvements or development with respect to any of our properties, except in accordance with planned budgets and within our Trilogy Portfolio; • our properties are located in markets where we are subject to competition for attracting new tenants and residents, as well as retaining current tenants and residents; and • depreciation is provided on a straight-line basis over the estimated useful lives of the buildings and capital improvements, up to 39 years, over the shorter of the lease term or useful lives of the tenant improvements, up to 34 years, and over the estimated useful life of furniture, fixtures and equipment, up to 28 years.
The following information generally applies to our properties: • we believe all of our properties are adequately covered by insurance and are suitable for their intended purposes; • we have no plans for any material renovations, improvements or development with respect to any of our properties, except in accordance with planned budgets and within our integrated senior health campuses segment; • our properties are located in markets where we are subject to competition for attracting new tenants and residents, as well as retaining current tenants and residents; and • depreciation is provided on a straight-line basis over the estimated useful lives of the buildings and capital improvements, up to 39 years, over the shorter of the lease term or useful lives of the tenant improvements, up to 34 years, and over the estimated useful life of furniture, fixtures and equipment, up to 28 years.
Additionally, we operate 20 integrated senior health campuses that were leased to Trilogy by third parties.
Additionally, we own and operate 17 integrated senior health campuses that were leased to Trilogy by third parties.
We own and/or operate 100% of our properties as of December 31, 2023, with the exception of our investments through Trilogy, or Trilogy Portfolio, Lakeview IN Medical Plaza, Southlake TX Hospital, Pinnacle Beaumont ALF, Pinnacle Warrenton ALF and Louisiana Senior Housing Portfolio.
Real Estate Investments As of December 31, 2024, we operated through four reportable business segments: integrated senior health campuses, OM, SHOP and triple-net leased properties. We own and/or operate 100% of our properties as of December 31, 2024, with the exception of our investments in Southlake TX Hospital, Pinnacle Beaumont ALF, Pinnacle Warrenton ALF and Louisiana Senior Housing Portfolio.
The following table presents certain additional information about our real estate investments as of December 31, 2023 (square feet and dollars in thousands): Reportable Segment Number of Buildings/ Campuses GLA (Sq Ft) % of GLA Aggregate Contract Purchase Price Annualized Base Rent/NOI(1) % of Annualized Base Rent/NOI Leased Percentage(2) Integrated senior health campuses 125 9,234 49.1 % $ 1,948,122 $ 176,314 51.0 % 85.5 % OM 88 4,448 23.6 1,253,089 99,206 28.7 89.2 % SHOP 55 3,716 19.7 802,367 30,495 8.8 81.2 % Triple-net leased properties 28 1,424 7.6 469,965 39,526 11.5 100 % Total/weighted average(3) 296 18,822 100 % $ 4,473,543 $ 345,541 100 % 91.3 % ___________ (1) With the exception of our SHOP and integrated senior health campuses, amount is based on annualized contractual base rent from leases as of December 31, 2023.
The following table presents certain additional information about our real estate investments as of December 31, 2024 (square feet and dollars in thousands): Reportable Segment Number of Buildings/ Campuses GLA (Sq Ft) % of GLA Aggregate Contract Purchase Price Annualized Base Rent/NOI(1) % of Annualized Base Rent/NOI Leased %(2) Integrated senior health campuses 126 9,323 48.6 % $ 2,020,596 $ 210,112 54.1 % 88.0 % OM 84 4,262 22.3 1,205,145 96,173 24.7 87.9 % SHOP 84 4,531 23.7 934,306 52,288 13.5 85.4 % Triple-net leased properties 20 1,039 5.4 373,165 30,088 7.7 100 % Total/weighted average(3) 314 19,155 100 % $ 4,533,212 $ 388,661 100 % 90.3 % ___________ (1) With the exception of our SHOP and integrated senior health campuses, amount is based on annualized contractual base rent from leases as of December 31, 2024.
Removed
Real Estate Investments As of December 31, 2023, we operated through four reportable business segments: integrated senior health campuses, OM, triple-net leased properties and SHOP.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 3. Legal Proceedings. For a discussion of our legal proceedings, see Note 11, Commitments and Contingencies — Litigation, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures. Not applicable. 53 Table of Contents PART II
Biggest changeItem 3. Legal Proceedings. For a discussion of our legal proceedings, see Note 11, Commitments and Contingencies — Litigation, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures. Not applicable. 49 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 4. Mine Safety Disclosures 53 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 54 Item 6. [Reserved] 55 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 56 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 73
Biggest changeItem 4. Mine Safety Disclosures 49 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 50 Item 6. [Reserved] 51 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 52 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 67

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+10 added−6 removed4 unchanged
Biggest changeOn November 14, 2022, our board suspended our DRIP offering beginning with distributions declared, if any, for the quarter ending December 31, 2022. As a result of the suspension of our DRIP, unless and until our board reinstates our DRIP offering, stockholders who are current participants in our DRIP were or will be paid distributions in cash.
Biggest changeIn November 2022, our board suspended our distribution reinvestment plan, or DRIP, offering beginning with distributions declared for the quarter ending December 31, 2022. In February 2025, our board approved the termination of our DRIP.
Distributions Our board shall authorize distributions, if any, on a quarterly basis, in such amounts as our board shall determine, and each quarterly record date for the purposes of such distributions shall be determined and authorized by our board in the last month of each calendar quarter until such time as our board changes our distribution policy.
Our board shall authorize distributions, if any, on a quarterly basis, in such amounts as our board shall determine, and each quarterly record date for the purposes of such distributions shall be determined and authorized by our board in the last month of each calendar quarter until such time as our board changes our distribution policy.
Since the first quarter of 2023, our board has authorized a quarterly distribution equal to $0.25 per share to holders of our common stock, which we expect will continue to be paid in the future, though we cannot guarantee that our distributions will continue at the current value.
Since the first quarter of 2023, our board has authorized a quarterly distribution equal to $0.25 per share to holders of our common stock, which we expect will continue to be paid in the future, though we cannot guarantee that our distributions will continue at the current value or at all.
On February 9, 2024, we closed the 2024 Offering, through which we issued 64,400,000 shares, including the underwriters’ overallotment of 8,400,000 shares, of a new class of common stock, $0.01 par value per share, at an initial price to the public of $12.00 per share.
On February 9, 2024, we closed the February 2024 Offering, through which we issued 64,400,000 shares, including the underwriters’ overallotment of 8,400,000 shares, of a new class of Common Stock, $0.01 par value per share, at an initial price to the public of $12.00 per share, for a total of $772,800,000 in gross offering proceeds.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock began trading on the NYSE under the ticker symbol “AHR” on February 7, 2024. As of March 15, 2024, we had approximately 131,597,967 aggregate shares of our common stock outstanding, held by approximately 48,187 stockholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our Common Stock began trading on the NYSE under the ticker symbol “AHR” on February 7, 2024. As of February 19, 2025, we had approximately 157,565,295 aggregate shares of our Common Stock outstanding, held by approximately 6,364 stockholders of record.
Recent Sales of Unregistered Securities None. 54 Table of Contents Purchase of Equity Securities by the Issuer and Affiliated Purchasers In October 2023, we repurchased 9,683 shares of our common stock, for an aggregate of $304,000, at a repurchase price of $31.40 per share in order to satisfy minimum statutory withholding tax obligations associated with the vesting of restricted stock awards issued pursuant to the AHR Incentive Plan.
The issuance of shares of Common Stock was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. 50 Table of Contents Purchase of Equity Securities by the Issuer and Affiliated Purchasers In October 2024, we acquired 22,488 shares of our Common Stock, for an aggregate of $567,000 at a weighted average price of $25.23 per share in order to satisfy employee tax withholding requirements associated with the vesting of restricted stock awards issued pursuant to the AHR Incentive Plan.
Removed
Prior to the 2024 Offering, to assist the members of FINRA and their associated persons, pursuant to FINRA Rule 2231, we generally disclosed an estimated per share NAV of our shares based on a valuation performed at least annually.
Added
On September 20, 2024, we closed the September 2024 Offering, through which we issued 20,010,000 shares, including the underwriter’s overallotment of 2,610,000 shares, $0.01 par value per share, at a price of $23.55 per share, for a total of $471,236,000 in gross offering proceeds. On November 18, 2024, we commenced the ATM Offering.
Removed
On March 15, 2023, based on the estimated value of our assets less the estimated value of our liabilities, divided by the number of shares outstanding on a fully diluted basis, calculated as of December 31, 2022, our board authorized and established an estimated per share NAV of $31.40.
Added
As of December 31, 2024, we sold an aggregate of 4,285,531 shares of Common Stock under the ATM Offering for gross proceeds of $120,220,000 at an average gross price of $28.05 per share. Distributions We qualify, and elect to be taxed, as a REIT under the Code, and we intend to continue to qualify to be taxed as a REIT.
Removed
When determining the estimated per share NAV, there are currently no SEC, federal and state rules that establish requirements specifying the methodology to employ in determining an estimated per share NAV; provided, however, that the determination of the estimated per share NAV must be conducted by, or with the material assistance or confirmation of, a third-party valuation expert or service and must be derived from a methodology that conforms to standard industry practice.
Added
To maintain our qualification as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute to our stockholders a minimum of 90.0% of our annual taxable income, excluding net capital gains.
Removed
In determining the estimated per share NAV of our shares as of December 31, 2022, our board considered information and analysis, including valuation materials that were provided by an independent third-party valuation firm, and the estimated per share NAV recommendation made by the audit committee of our board, which committee is comprised entirely of independent directors.
Added
See Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Distributions, for a further discussion of our distributions. Recent Sales of Unregistered Securities On October 18, 2024, Flaherty Trust redeemed all of its OP units in exchange for 211,306 shares of our Common Stock on a one-for-one basis.
Removed
Please see our Current Report on Form 8-K, filed with the SEC on March 17, 2023, for additional information regarding the methodology used to determine the updated estimated per share NAV, the information and valuation materials considered by our board in determining the updated estimated per share NAV and our independent third-party valuation firm.
Added
The issuance of shares of Common Stock was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. On December 6, 2024, Griffin Capital redeemed a portion of its OP units in exchange for 69,882 shares of our Common Stock on a one-for-one basis.
Removed
Securities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 11, Executive Compensation — AHR Incentive Plan, and Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, for a discussion of our equity compensation plan information.
Added
The value of the shares withheld is based on the closing price of our Common Stock on the day prior to the vesting date, or if such date is not a trading day, the immediately preceding trading day. In November and December 2024, we did not acquire any shares of our Common Stock.
Added
Performance Graph The following performance graph and table below compare the cumulative total return (including dividends) of shares of our Common Stock for the period from the listing of our shares on the NYSE on February 7, 2024 through December 31, 2024, with the cumulative returns of the Russell 2000 and the FTSE NAREIT All Equity REITs index, or FNER, over the same period of time.
Added
The data are based on the closing prices for the periods presented. The graph assumes that $100 was invested on February 7, 2024 and assumes the reinvestment of any dividends. The shareholder return shown on the graph below is not indicative of future performance.
Added
The information in this paragraph and the following performance graph are deemed “furnished”, not “filed”, with the SEC and is not to be incorporated by reference into any of our filings, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing, except as shall be expressly set forth by specific reference in such filing.
Added
Ticker/Index 2/7/2024 12/31/2024 AHR $ 100.00 $ 226.64 Russell 2000 $ 100.00 $ 115.85 FNER $ 100.00 $ 110.71

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

101 edited+25 added−51 removed45 unchanged
Biggest changeProperty operating expenses and property operating expenses as a percentage of resident fees and services revenue and grant income, as well as rental expenses and rental expenses as a percentage of real estate revenues, by reportable segment consisted of the following for the periods then ended (dollars in thousands): Years Ended December 31, 2023 2022 2021 Property Operating Expenses Integrated senior health campuses $ 1,335,817 89.7 % $ 1,133,480 88.6 % $ 943,743 90.8 % SHOP 166,493 89.1 % 148,046 93.5 % 86,450 85.4 % Total property operating expenses $ 1,502,310 89.6 % $ 1,281,526 89.1 % $ 1,030,193 90.3 % Rental Expenses OM $ 54,457 37.3 % $ 56,390 37.9 % $ 36,375 37.4 % Triple-net leased properties 3,018 6.8 % 3,294 5.8 % 2,350 5.3 % Total rental expenses $ 57,475 30.2 % $ 59,684 29.1 % $ 38,725 27.4 % For the year ended December 31, 2023, the increase in total property operating expenses for our integrated senior health campuses segment, as compared to the year ended December 31, 2022, was predominately due to (i) increased occupancy at the facilities within such segment; (ii) an increase of $97,515,000 attributable to our acquisition of the 50.0% controlling interest in RHS; and (iii) an increase of $43,202,000 within Trilogy’s ancillary business unit due to higher labor costs associated with the expansion of services offered and inflation impacting the costs.
Biggest changeProperty operating expenses and property operating expenses as a percentage of resident fees and services revenue and grant income, as well as rental expenses and rental expenses as a percentage of real estate revenue, by reportable segment consisted of the following for the periods presented below (dollars in thousands): Year Ended December 31, 2024 2023 Property Operating Expenses Integrated senior health campuses $ 1,430,539 88.3 % $ 1,335,817 89.7 % SHOP 223,354 84.6 % 166,493 89.1 % Total property operating expenses $ 1,653,893 87.8 % $ 1,502,310 89.6 % Rental Expenses OM $ 50,885 37.8 % $ 54,457 37.3 % Triple-net leased properties 2,354 4.5 % 3,018 6.8 % Total rental expenses $ 53,239 28.5 % $ 57,475 30.2 % For the year ended December 31, 2024, as compared to the year ended December 31, 2023, the increase in total property operating expenses for our integrated senior health campuses segment was predominately due to: (i) increased resident occupancy at the facilities within such segment; and (ii) an increase of $26,601,000 within Trilogy’s ancillary business units due to higher labor costs associated with the expansion of services offered and inflation’s impact on labor costs and other operating expenses. 58 Table of Contents For the year ended December 31, 2024, as compared to the year ended December 31, 2023, total property operating expenses for our SHOP segment increased primarily due to: (i) an increase of $38,646,000 due to the acquisition of 14 senior housing properties in Oregon in February 2024; (ii) an increase of $15,102,000 due to the transitioning of the senior housing facilities in our Michigan ALF Portfolio from triple-net leased properties to a managed portfolio utilizing a RIDEA structure in November 2023; (iii) an increase of $4,536,000 due to the acquisition of five senior housing properties in Washington in September 2024; (iv) an increase of $1,071,000 due to the acquisition of one senior housing property in Georgia in October 2024; and (v) increased resident occupancy at the facilities within such segment.
Business Acquisition Expenses For the year ended December 31, 2023, we recorded business acquisition expenses of $5,795,000 primarily due to: (i) $2,315,000 in aggregate transaction costs related to the transition of SNFs within the Central Wisconsin Senior Care Portfolio and the transition of senior housing facilities within the Michigan ALF Portfolio from triple-net leased properties to RIDEA structures in 2023; (ii) $2,105,000 of costs incurred in the pursuit of real estate and real estate-related investment opportunities; and (iii) $1,260,000 in aggregate acquisition costs for properties operated under a RIDEA structure and included in our SHOP segment.
For the year ended December 31, 2023, we recorded business acquisition expenses of $5,795,000 primarily due to: (i) $2,315,000 in aggregate transaction costs related to the transition of SNFs within the Central Wisconsin Senior Care Portfolio and the transition of senior housing facilities within the Michigan ALF Portfolio from triple-net leased properties to RIDEA structures in 2023; (ii) $2,105,000 of costs incurred in the pursuit of real estate and real estate-related investment opportunities; and (iii) $1,260,000 in aggregate acquisition costs for properties operated under a RIDEA structure and included in our SHOP segment.
Gain on Re-measurement of Previously Held Equity Interest For the year ended December 31, 2023, we recognized a $726,000 gain on re-measurement of the fair value of our previously held equity interest in Memory Care Partners, LLC.
For the year ended December 31, 2023, we recognized a $726,000 gain on re-measurement of the fair value of our previously held equity interest in Memory Care Partners, LLC.
In the event that there is a shortfall in net cash available due to factors including, without limitation, the timing of such distributions or the timing of the collection of receivables, we may seek to obtain capital to make distributions by means of secured and unsecured debt financing through one or more unaffiliated third parties.
In the event that there is a shortfall in net cash available due to factors including, without limitation, the timing of such distributions or the timing of the collection of receivables, we may seek to obtain capital to make distributions by means of unsecured and secured debt financing through one or more unaffiliated third parties.
As of April 2023, the federal government’s coronavirus public health emergency declaration expired, and certain relief measures have been wound down, and others are being phased out.
As of April 2023, the federal government’s coronavirus public health emergency declaration expired, and certain relief measures have been wound down, and others are phased out.
Acquisitions and Dispositions in 2023, 2022 and 2021 For a discussion of our acquisitions and dispositions of investments in 2023, 2022 and 2021, see Note 2, Summary of Significant Accounting Policies — Properties Held for Sale, Note 3, Real Estate Investments, Net, and Note 4, Business Combinations, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K.
Acquisitions and Dispositions in 2024, 2023 and 2022 For a discussion of our acquisitions and dispositions of investments in 2024, 2023 and 2022, see Note 2, Summary of Significant Accounting Policies — Properties Held for Sale, Note 3, Real Estate Investments, Net, and Note 4, Business Combinations, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K.
As of December 31, 2023, we were in compliance with all such covenants and requirements on our mortgage loans payable and our lines of credit and term loan. If any future covenants are violated, we anticipate seeking a waiver or amending the debt covenants with the lenders when and if such event should occur.
As of December 31, 2024, we were in compliance with all such covenants and requirements on our mortgage loans payable and our lines of credit and term loan. If any future covenants are violated, we anticipate seeking a waiver or amending the debt covenants with the lenders when and if such event should occur.
Gain or Loss on Dispositions of Real Estate Investments For the year ended December 31, 2023, we recognized an aggregate net gain on dispositions of our real estate investments of $32,472,000 primarily related to the sale of six SHOP within our Central Florida Senior Housing Portfolio and 16 OM buildings.
For the year ended December 31, 2023, we recognized an aggregate net gain on dispositions of our real estate investments of $32,472,000 primarily related to the sale of six SHOP within our Central Florida Senior Housing Portfolio and 16 OM buildings.
Property Operating Expenses and Rental Expenses Integrated senior health campuses and SHOP typically have a higher percentage of direct operating expenses to revenue than OM buildings and triple-net leased properties due to the nature of RIDEA-type facilities where we conduct day-to-day operations.
Property Operating Expenses and Rental Expenses Integrated senior health campuses and SHOP typically have a higher percentage of direct operating expenses to revenue and grant income than OM buildings and triple-net leased properties due to the nature of RIDEA-type facilities where we conduct day-to-day operations.
A discussion of our significant accounting policies is included within Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K. There have been no significant changes to our critical accounting estimates during 2023.
A discussion of our significant accounting policies is included within Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K. There have been no significant changes to our critical accounting estimates during 2024.
For a further discussion of these and other factors that could impact our future results or performance, see Part I, Item 1A, Risk Factors, of this Annual Report on Form 10-K. Inflation For the years ended December 31, 2023, 2022 and 2021 inflation has affected our operations.
For a further discussion of these and other factors that could impact our future results or performance, see Part I, Item 1A, Risk Factors, of this Annual Report on Form 10-K. Inflation During the years ended December 31, 2024, 2023 and 2022, inflation has affected our operations.
We believe inflation has impacted our operations such that we have experienced, and continue to experience, increases in the cost of labor, services, energy and supplies, and therefore continued inflationary pressures on our integrated senior health campuses and SHOP could continue to impact our profitability in future periods.
We believe inflation has impacted our operations such that we have experienced, and continue to experience, increases in the cost of labor, services, 55 Table of Contents energy and supplies, and therefore continued inflationary pressures on our integrated senior health campuses and SHOP could continue to impact our profitability in future periods.
We have built a fully-integrated management platform, with approximately 110 employees, that operates clinical healthcare properties throughout the United States, the United Kingdom and the Isle of Man.
We have built a fully-integrated management platform, with approximately 114 employees, that operates clinical healthcare properties throughout the United States, the United Kingdom and the Isle of Man .
Forward-Looking Statements Certain statements contained in this report, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the Private Securities Litigation Reform Act of 1995 (collectively with the Securities Act and Exchange Act, or the Acts).
Forward-Looking Statements Certain statements contained in this report, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the Private Securities Litigation Reform Act of 1995 (collectively with the “Securities Act and Exchange Act, or the Acts”).
The weighted average effective interest rate on our outstanding debt factoring in our interest rate swaps was 5.72% per annum. See Note 8, Mortgage Loans Payable, Net, and Note 9, Lines of Credit and Term Loan, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a further discussion.
The weighted average effective interest rate on our outstanding debt factoring in our interest rate swaps was 4.41% per annum. See Note 8, Mortgage Loans Payable, Net, and Note 9, Lines of Credit and Term Loan, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a further discussion.
For the years ended December 31, 2023, 2022 and 2021, resident fees and services revenue primarily consisted of rental fees related to resident leases, extended health care fees and other ancillary services, and real estate revenue primarily consisted of base rent and expense recoveries.
For the years ended December 31, 2024 and 2023, resident fees and services revenue primarily consisted of rental fees related to resident leases, extended health care fees and other ancillary services, and real estate revenue primarily consisted of base rent and expense recoveries.
Results of Operations Comparison of the Years Ended December 31, 2023, 2022 and 2021 Our operating results are primarily comprised of income derived from our portfolio of properties and expenses in connection with the acquisition and operation of such properties.
Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 Our operating results are primarily comprised of income derived from our portfolio of properties and expenses in connection with the acquisition and operation of such properties.
Such amounts include the exercise in full of the underwriters’ overallotment option to purchase up to an additional 8,400,000 shares of common stock. These shares are listed on the New York Stock Exchange under the trading symbol “AHR” and began trading on February 7, 2024.
Such amounts include the exercise in full of the underwriters’ overallotment option to purchase up to an additional 8,400,000 shares of Common Stock. We listed these shares of Common Stock on the New York Stock Exchange, or NYSE, under the trading symbol “AHR” and began trading on February 7, 2024.
The increase in cash used to pay distributions to common stockholders was primarily due to our board’s suspension of our DRIP offering beginning with distributions declared for the quarter ending December 31, 2022.
The increase in cash used to pay distributions to common stockholders was primarily due to our board’s suspension of our distribution reinvestment plan, or DRIP, offering beginning with distributions declared for the quarter ending December 31, 2022.
The capital plan for each investment is adjusted through ongoing, regular reviews of our portfolio or as necessary to respond to unanticipated additional capital needs. As of December 31, 2023, we had $17,818,000 of restricted cash in loan impounds and reserve accounts to fund a portion of such capital expenditures.
The capital plan for each investment is adjusted through ongoing, regular reviews of our portfolio or as necessary to respond to unanticipated additional capital needs. As of December 31, 2024, we had $14,804,000 of restricted cash in loan impounds and reserve accounts to fund a portion of such capital expenditures.
Hanson, the non-executive Chairman of our board of directors, or our board, Danny Prosky, our Chief Executive Officer, President and director, and Mathieu B. Streiff, one of our directors; Platform Healthcare Investor TII, LLC; Flaherty Trust; and a wholly-owned subsidiary of Griffin Capital Company, LLC.
Hanson, the non-executive Chairman of our board of directors, or our board, Danny Prosky, our Chief Executive Officer, President and director, and Mathieu B. Streiff, one of our non-executive directors; (ii) Platform Healthcare Investor T-II, LLC; (iii) Flaherty Trust; and (iv) a wholly owned subsidiary of Griffin Capital Company, LLC, or Griffin Capital.
As of both December 31, 2023 and 2022, we owned approximately 95.0% of the operating partnership units, or OP units, in our operating partnership, and the remaining 5.0% limited OP units were owned by the AHI Group Holdings, LLC, which is owned and controlled by Jeffrey T.
As of December 31, 2023, we owned 95.0% of the operating partnership units, or OP units, in our operating partnership, and the remaining 5.0% OP units were owned by the following limited partners: (i) AHI Group Holdings, LLC, which is owned and controlled by Jeffrey T.
For the next 12 months, our principal liquidity needs are to: (1) fund property operating expenses and general and administrative expenses; (2) meet our debt service requirements (including principal and interest); (3) fund development activities and capital expenditures; and (4) make distributions to our stockholders, as required for us to continue to qualify as a REIT.
For the next 12 months, our principal liquidity needs are to: (i) fund property operating expenses and general and administrative expenses; (ii) meet our debt service requirements (including principal and interest); (iii) fund development activities and capital expenditures; and (iv) make distributions to our stockholders, as required for us to continue to qualify as a REIT.
Such statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation: changes in economic conditions generally and the real estate market specifically; legislative and regulatory changes, including changes to laws governing the taxation of real estate investment trusts, or REITs; the availability of capital; our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due; our ability to maintain our qualification as a REIT for U.S. federal income tax purposes; changes in interest rates, including uncertainties about whether and when interest rates will continue to increase, and foreign currency risk; competition in the real estate industry; changes in accounting principles generally accepted in the United States of America, or GAAP, policies and guidelines applicable to REITs; the success of our investment strategy; cybersecurity incidents and information technology failures, including unauthorized access to our computer systems and/or our vendors’ computer systems and our third-party management companies’ computer systems and/or their vendors’ computer systems; our ability to retain our executive officers and key employees; and unexpected labor costs and inflationary pressures.
Such statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation: changes in economic conditions generally and the real estate market specifically; legislative and regulatory changes, including changes to laws governing the taxation of real estate investment trusts, or REITs, and regulations or proposed regulations governing the operations and sales of health care properties; the availability of capital; our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due; our ability to maintain our qualification as a REIT for U.S. federal income tax purposes; changes in interest rates and foreign currency risk; competition in the real estate industry; changes in accounting principles generally accepted in the United States of America, or GAAP, policies and guidelines applicable to REITs; the success of our investment strategy; cybersecurity incidents and information technology failures, including unauthorized access to our computer systems and/or our vendors’ computer systems and our third-party management companies’ computer systems and/or their vendors’ computer systems; our ability to retain our executive officers and key employees; unexpected labor costs and inflationary pressures; and those risks identified in Item 1A, Risk Factors in this Annual Report on Form 10-K.
However, if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, we may have applied a different accounting treatment, resulting in a different presentation of our financial statements.
However, if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, we may have applied a different accounting treatment, resulting in a material adverse impact to our consolidated financial condition and results of operations or a different presentation of our financial statements.
On February 9, 2024, pursuant to a Registration Statement filed with the SEC on Form S-11 (File No. 333-267464), as amended, we closed our underwritten public offering through which we issued 64,400,000 shares of common stock, $0.01 par value per share, for a total of $772,800,000 in gross offering proceeds.
Public Offerings and Listing On February 9, 2024, pursuant to a Registration Statement filed with the SEC, on Form S-11 (File No. 333-267464), as amended, we closed our underwritten public offering, or the February 2024 Offering, through which we issued 64,400,000 shares of Common Stock, for a total of $772,800,000 in gross offering proceeds.
Goodwill Goodwill represents the excess of consideration paid over the fair value of underlying identifiable net assets of a business acquired. This allocation is based upon our determination of the value of the acquired assets and assumed liabilities, which requires judgment and some of the estimates involve complex calculations.
Goodwill Goodwill represents the excess of consideration paid over the fair value of underlying identifiable net assets of a business acquired. This allocation is based upon our determination of the value of the acquired assets and assumed liabilities, which requires judgment and some of the estimates involve complex calculations. These allocation assessments have a direct impact on our financial statements.
The amount of revenues generated by our RIDEA properties depends principally on our ability to maintain resident occupancy rates of currently leased space and to lease available space at the then existing rental rates. We also receive grant income.
The amount of revenues generated by our RIDEA properties depends principally on our ability to maintain resident occupancy rates. The amount of revenues generated by our non-RIDEA properties is dependent on our ability to maintain tenant occupancy rates of currently leased space and to lease available space at the then existing rental rates. We also received grant income during 2023.
See Note 9, Lines of Credit and Term Loan, and Note 21, Subsequent Events — 2024 Credit Facility, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a further discussion.
Lines of Credit and Term Loan For a discussion of our lines of credit and term loan, see Note 9, Lines of Credit and Term Loan, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this report is filed with the SEC.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this report is filed with the United States Securities and Exchange Commission, or SEC.
Such consolidated financial statements and information have been prepared to reflect our financial position as of December 31, 2023 and 2022, together with our results of operations and cash flows for the years ended December 31, 2023, 2022 and 2021.
Such consolidated financial statements and information have been prepared to reflect our financial position as of December 31, 2024 and 2023, together with our results of operations and cash flows for the years ended December 31, 2024, 2023 and 2022. This section discusses the results of operations and cash flows for fiscal year 2024 compared to fiscal year 2023.
Additional drivers behind the changes in our consolidated results of operations are discussed in more detail below.
Additional information behind the changes in our consolidated results of operations is discussed in more detail below.
Such statements include, but are not limited to: (i) statements about our plans, strategies, initiatives and prospects, including any future capital-raising initiatives and planned or future acquisitions or dispositions of properties and other assets, including our option to purchase the minority membership interest in Trilogy REIT Holdings; and (ii) statements about our future results of operations, capital expenditures and liquidity.
Such statements include, but are not limited to: (i) statements about our plans, strategies, initiatives and prospects, including any future capital-raising initiatives and planned or future acquisitions or dispositions of properties and other assets; and (ii) statements about our future results of operations, capital expenditures and liquidity.
Impairments For the year ended December 31, 2023, we recognized aggregate impairment charges of $13,899,000 for two of our SHOP within the Northern California Senior Housing Portfolio and for one of our OM buildings within the Homewood AL Portfolio.
For the year ended December 31, 2023, as we continued to evaluate additional non-strategic properties for sale, we recognized aggregate impairment charges of $13,899,000 for two of our SHOP within the Northern California Senior Housing Portfolio and for one of our OM buildings within the Homewood AL Portfolio.
While impairment charges are excluded from the calculation of FFO as described above, investors are cautioned that impairments are based on estimated future undiscounted cash flows. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations.
While impairment charges are excluded from the calculation of FFO as described above, investors are cautioned that impairments are based on estimated future undiscounted cash flows. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations. Our FFO calculation complies with NAREIT’s policy described above. Historical accounting for real estate involves the use of GAAP.
Debt Service Requirements A significant liquidity need is the payment of principal and interest on our outstanding indebtedness. As of December 31, 2023, we had $1,326,313,000 of fixed-rate and variable-rate mortgage loans payable outstanding secured by our properties. As of December 31, 2023, we had $1,224,723,000 outstanding and $225,277,000 remained available under our lines of credit.
Debt Service Requirements A significant liquidity need is the payment of principal and interest on our outstanding indebtedness. As of December 31, 2024, we had $1,004,724,000 of fixed-rate and variable-rate mortgage loans payable outstanding secured by our properties. As of December 31, 2024, we had $689,032,000 outstanding and $860,968,000 remained available under our lines of credit.
We believe that we have been organized and operated, and we intend to continue to operate, in conformity with the requirements for qualification and taxation as a REIT under the Code.
We have elected to be taxed as a REIT for U.S. federal income tax purposes. We believe that we have been organized and operated, and we intend to continue to operate, in conformity with the requirements for qualification and taxation as a REIT under the Code.
Operating Partnership We conduct substantially all of our operations through our operating partnership, and we are the sole general partner of our operating partnership.
Operating Partnership We conduct substantially all of our operations through American Healthcare REIT Holdings, LP, or our operating partnership, and we are the sole general partner of our operating partnership.
The annual rate of inflation in the United States was 3.2% in February 2024, as measured by the Consumer Price Index.
The annual rate of inflation in the United States was 3.0% in January 2025, as measured by the Consumer Price Index.
Revenue Recognition A significant portion of resident fees and services revenue represents healthcare service revenue that is reported at the amount that we expect to be entitled to in exchange for providing patient care.
We recognize an impairment loss to the extent the carrying value of goodwill exceeds the implied value in the current period. Revenue Recognition A significant portion of resident fees and services revenue represents healthcare service revenue that is reported at the amount that we expect to be entitled to in exchange for providing patient care.
Liquidity and Capital Resources Our principal sources of liquidity are cash flows from operations, borrowings under our lines of credit and proceeds from dispositions of real estate investments.
Liquidity and Capital Resources Our principal sources of liquidity are cash flows from operations, net proceeds from the issuances of equity securities, including through our ATM Offering, borrowings under our lines of credit and proceeds from the dispositions of real estate investments.
See Note 18, Segment Reporting, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a further discussion of such goodwill impairment.
See Note 3, Real Estate Investments, Net — Impairment of Real Estate Investments , to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a further discussion of impairments of such real estate investments.
The following tables reflect distributions we paid for the years ended December 31, 2023, 2022 and 2021, along with the amount of distributions reinvested pursuant to our DRIP offering, as applicable, and the sources of distributions as compared to cash flows from operations or funds from operations attributable to controlling interest, or FFO, a non-GAAP financial measure (dollars in thousands): Years Ended December 31, 2023 2022 2021 Distributions paid in cash $ 76,284 $ 51,122 $ 22,788 Distributions reinvested — 36,812 7,666 $ 76,284 $ 87,934 $ 30,454 Sources of distributions: Cash flows from operations $ 76,284 100 % $ 87,934 100 % $ 17,913 58.8 % Proceeds from borrowings — — — — 12,541 41.2 $ 76,284 100 % $ 87,934 100 % $ 30,454 100 % Years Ended December 31, 2023 2022 2021 Distributions paid in cash $ 76,284 $ 51,122 $ 22,788 Distributions reinvested — 36,812 7,666 $ 76,284 $ 87,934 $ 30,454 Sources of distributions: FFO attributable to controlling interest $ 65,567 86.0 % $ 87,934 100 % $ 30,454 100 % Proceeds from borrowings 10,717 14.0 — — — — $ 76,284 100 % $ 87,934 100 % $ 30,454 100 % As of December 31, 2023, any distributions of amounts in excess of our current and accumulated earnings and profits have resulted in a return of capital to our stockholders, and some portion of a distribution to our stockholders may have been paid from borrowings.
The following tables reflect distributions we paid for the periods presented below, along with the amount of distributions reinvested pursuant to our DRIP offering, as applicable, and the sources of distributions as compared to cash flows from operations or funds from operations attributable to controlling interest, or FFO, a non-GAAP financial measure (dollars in thousands): Year Ended December 31, 2024 2023 Distributions paid in cash $ 120,895 $ 76,284 Distributions reinvested — — $ 120,895 $ 76,284 Sources of distributions: Cash flows from operations $ 120,895 100 % $ 76,284 100 % Proceeds from borrowings — — — — $ 120,895 100 % $ 76,284 100 % Year Ended December 31, 2024 2023 Distributions paid in cash $ 120,895 $ 76,284 Distributions reinvested — — $ 120,895 $ 76,284 Sources of distributions: FFO attributable to controlling interest $ 120,895 100 % $ 65,567 86.0 % Proceeds from borrowings — — 10,717 14.0 $ 120,895 100 % $ 76,284 100 % 63 Table of Contents As of December 31, 2024, any distributions of amounts in excess of our current and accumulated earnings and profits have resulted in a return of capital to our stockholders, and some portion of a distribution to our stockholders may have been paid from borrowings.
See Note 3, Real Estate Investments, Net and Note 4, Business Combinations, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a further discussion of our acquisitions and dispositions during 2023, 2022 and 2021. 60 Table of Contents As of December 31, 2023, 2022 and 2021, we owned and/or operated the following types of properties (dollars in thousands): December 31, 2023 2022 2021 Number of Buildings/ Campuses Aggregate Contract Purchase Price Leased % (1) Number of Buildings/ Campuses Aggregate Contract Purchase Price Leased % (1) Number of Buildings/ Campuses Aggregate Contract Purchase Price Leased % (1) Integrated senior health campuses 125 $ 1,948,122 85.5 % 120 $ 1,898,591 84.2 % 122 $ 1,787,686 77.5 % OM 88 1,253,089 89.2 % 104 1,369,596 89.0 % 105 1,378,995 92.0 % SHOP 55 802,367 81.2 % 51 787,797 77.0 % 47 706,871 72.5 % Triple-net leased properties 28 469,965 100 % 39 568,265 100 % 39 568,265 100 % Total/weighted average(2) 296 $ 4,473,543 91.3 % 314 $ 4,624,249 92.2 % 313 $ 4,441,817 94.3 % ___________ (1) Leased percentage includes all third-party leased space at our non-RIDEA properties (including master leases), except for our SHOP and integrated senior health campuses where leased percentage represents resident occupancy on the available units/beds therein.
See Note 2, Summary of Significant Accounting Policies — Properties Held for Sale, Note 3, Real Estate Investments, Net, and Note 4, Business Combinations, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a further discussion of our acquisitions and dispositions during 2024 and 2023. 56 Table of Contents As of December 31, 2024 and 2023, we owned and/or operated the following types of properties (dollars in thousands): December 31, 2024 2023 Number of Buildings/ Campuses Aggregate Contract Purchase Price Leased % (1) Number of Buildings/ Campuses Aggregate Contract Purchase Price Leased % (1) Integrated senior health campuses 126 $ 2,020,596 88.0 % 125 $ 1,948,122 85.5 % OM 84 1,205,145 87.9 % 88 1,253,089 89.2 % SHOP 84 934,306 85.4 % 55 802,367 81.2 % Triple-net leased properties 20 373,165 100 % 28 469,965 100 % Total/weighted average(2) 314 $ 4,533,212 90.3 % 296 $ 4,473,543 91.3 % ___________ (1) Leased percentage includes all third-party leased space at our non-RIDEA properties (including master leases), except for our SHOP and integrated senior health campuses where leased percentage represents resident occupancy on the available units/beds therein.
The most significant drivers behind changes in our consolidated results of operations for the year ended 2023 compared to the corresponding period in 2022 were primarily due to the adverse effects of inflation, which resulted in increases in the cost of labor, services, energy and supplies; our acquisitions and dispositions of investments subsequent to December 31, 2022; and the transitions of the operations of certain senior housing and skilled nursing facilities from triple-net leased properties to RIDEA structures.
The most significant drivers behind changes in our consolidated results of operations for the year ended December 31, 2024, as compared to the year ended December 31, 2023, were primarily due to: the increase in resident occupancies and billing rates, partially offset by the adverse effect of inflation, which resulted in increases in the cost of labor, services, energy and supplies; our acquisitions and dispositions of investments subsequent to December 31, 2023; and the transition of the operations of certain leased senior housing and skilled nursing facilities from triple-net leased properties to a managed portfolio utilizing a RIDEA structure.
The decrease in cash used to repurchase our common stock was primarily due to our board’s suspension of our share repurchase plan beginning with share repurchase requests for the quarter ending December 31, 2022.
The decrease in cash used to repurchase our common stock was primarily due to our board’s suspension of our share repurchase plan beginning with share repurchase requests for the quarter ending December 31, 2022. In February 2025, our board approved the termination of our DRIP and our share purchase plan terminated pursuant to its own terms.
Our combined SHOP and integrated senior health campuses were 84.4% leased as of December 31, 2023. Substantially all of our leases with residents at such properties are for a term of one year or less.
As of December 31, 2024, our remaining weighted average lease term was 6.8 years, excluding our SHOP and integrated senior health campuses. Our combined SHOP and integrated senior health campuses were 87.2% leased as of December 31, 2024. Substantially all of our leases with residents at such properties are for a term of one year or less.
Financing Mortgage Loans Payable, Net For a discussion of our mortgage loans payable, see Note 8, Mortgage Loans Payable, Net, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K. 69 Table of Contents Lines of Credit and Term Loan For a discussion of our lines of credit and term loan, see Note 9, Lines of Credit and Term Loan, and Note 21, Subsequent Events — 2024 Credit Facility, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K.
Financing Mortgage Loans Payable, Net For a discussion of our mortgage loans payable, see Note 8, Mortgage Loans Payable, Net, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K.
Funds from Operations and Normalized Funds from Operations Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a measure known as funds from operations, a non-GAAP financial measure, which we believe to be an appropriate supplemental performance measure to reflect the operating performance of a REIT.
Related Party Transactions For a discussion of related party transactions, see Note 14, Related Party Transactions, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K. 64 Table of Contents Funds from Operations and Normalized Funds from Operations Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a measure known as funds from operations, a non-GAAP financial measure, which we believe to be an appropriate supplemental performance measure to reflect the operating performance of a REIT.
Our critical accounting estimates include (1) real estate investments purchase price allocation, (2) impairment of long-lived assets, (3) goodwill, (4) revenue recognition and (5) resident receivable allowances.
We believe that our judgments and estimates are consistently applied and produce financial information that fairly present our financial condition and results of operations. Our critical accounting estimates include (1) real estate investments purchase price allocation, (2) impairment of long-lived assets, (3) goodwill, (4) revenue recognition and (5) resident receivable allowances.
Our FFO calculation complies with NAREIT’s policy described above. 70 Table of Contents Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP.
Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP.
Such amounts were partially offset by a $13,714,000 payment to acquire the 50.0% controlling interest in RHS in August 2022. See Note 3, Real Estate Investments, Net and Note 4, Business Combinations, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a further discussion of our acquisitions and dispositions.
See Note 3, Real Estate Investments, Net and Note 4, Business Combinations, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a further discussion of our acquisitions and dispositions.
Overview and Background American Healthcare REIT, Inc., a Maryland corporation, is a self-managed REIT that acquires, owns and operates a diversified portfolio of clinical healthcare real estate properties, focusing primarily on outpatient medical buildings, senior housing, skilled nursing facilities, or SNFs, and other healthcare-related facilities.
Additional information concerning us and our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC. 52 Table of Contents Overview and Background American Healthcare REIT, Inc., a Maryland corporation, is a self-managed REIT that acquires, owns and operates a diversified portfolio of clinical healthcare real estate properties, focusing primarily on outpatient medical, or OM, buildings, senior housing, skilled nursing facilities, or SNFs, and other healthcare-related facilities.
See Note 13, Equity, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a further discussion of our public offerings. 57 Table of Contents Our Real Estate Investments Portfolio During the quarter ended December 31, 2023, we modified how we evaluate our business and make resource allocations, and therefore determined that we operate through four reportable business segments: integrated senior health campuses, outpatient medical, or OM, (which was formerly known as medical office buildings, or MOBs), triple-net leased properties and SHOP.
See Note 13, Equity — Common Stock, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a further discussion of our public offerings. Our Real Estate Investments Portfolio We currently operate through four reportable business segments: integrated senior health campuses, OM, triple-net leased properties and SHOP.
We believe this practice will improve operating performance in our integrated senior health campuses and SHOP, as well as increase rent coverage and the stability of our real estate revenue in our triple-net leased properties over time. 59 Table of Contents For properties that are not operated under a RIDEA structure, there are provisions in the majority of our tenant leases that help us mitigate the impact of inflation.
We believe this practice will improve operating performance in our integrated senior health campuses and SHOP, as well as increase rent coverage and the stability of our real estate revenue in our triple-net leased properties over time.
Such amounts were partially offset by a decrease in total property operating expenses for the year ended December 31, 2023, as compared to the year ended December 31, 2022, of $22,047,000 due to real estate dispositions within our SHOP segment during the three months ended December 31, 2022 and during the year ended December 31, 2023.
Such increases in total property operating expenses for our SHOP segment were partially offset by a decrease of $14,285,000 due to real estate dispositions within our SHOP segment in 2023 and 2024.
Depreciation and Amortization For the years ended December 31, 2023, 2022 and 2021, depreciation and amortization were $182,604,000, $167,957,000 and $133,191,000, respectively, which primarily consisted of depreciation on our operating properties of $147,587,000, $141,257,000 and $109,036,000, respectively, and amortization of our identified intangible assets of $32,323,000, $23,934,000 and $21,111,000, respectively.
Depreciation and Amortization For the years ended December 31, 2024 and 2023, depreciation and amortization were $179,192,000 and $182,604,000, respectively, which primarily consisted of depreciation on our operating properties of $151,340,000 and $147,587,000, respectively, and amortization of our identified intangible assets of $25,186,000 and $32,323,000, respectively.
Cash Flows The following table sets forth changes in cash flows (in thousands): Years Ended December 31, 2023 2022 2021 Cash, cash equivalents and restricted cash — beginning of period $ 111,906 $ 125,486 $ 152,190 Net cash provided by operating activities 98,535 147,768 17,913 Net cash provided by (used in) investing activities 9,396 (118,578) (138,652) Net cash (used in) provided by financing activities (129,062) (42,924) 94,109 Effect of foreign currency translation on cash, cash equivalents and restricted cash 7 154 (74) Cash, cash equivalents and restricted cash — end of period $ 90,782 $ 111,906 $ 125,486 The following summary discussion of our changes in our cash flows is based on our accompanying consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below. 67 Table of Contents Operating Activities For the years ended December 31, 2023, 2022 and 2021, cash flows provided by operating activities were primarily related to property operations, offset by payments of general and administrative expenses and interest payments on our outstanding indebtedness.
Cash Flows The following table sets forth changes in cash flows (in thousands): Year Ended December 31, 2024 2023 Cash, cash equivalents and restricted cash — beginning of period $ 90,782 $ 111,906 Net cash provided by operating activities 176,087 98,535 Net cash (used in) provided by investing activities (8,734) 9,396 Net cash used in financing activities (134,743) (129,062) Effect of foreign currency translation on cash, cash equivalents and restricted cash (91) 7 Cash, cash equivalents and restricted cash — end of period $ 123,301 $ 90,782 The following summary discussion of our changes in our cash flows is based on our accompanying consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.
In the future, the SEC, NAREIT or another regulatory body may decide to standardize the allowable adjustments across the REIT industry and we would have to adjust our calculation and characterization of FFO or Normalized FFO. 71 Table of Contents The following is a reconciliation of net income or loss, which is the most directly comparable GAAP financial measure, to FFO and Normalized FFO for the periods presented below (in thousands except for share and per share amounts): Years Ended December 31, 2023 2022 2021 Net loss $ (76,887) $ (73,383) $ (53,269) Depreciation and amortization related to real estate — consolidated properties 182,452 167,860 133,191 Depreciation and amortization related to real estate — unconsolidated entities 401 1,102 3,116 Impairment of real estate investments — consolidated properties 13,899 54,579 3,335 (Gain) loss on dispositions of real estate investments, net — consolidated properties (32,472) (5,481) 100 Net loss (income) attributable to noncontrolling interests 5,418 (7,919) 5,475 Gain on re-measurement of previously held equity interests (726) (19,567) — Depreciation, amortization, impairments, net gain/loss on dispositions and gain on re-measurements — noncontrolling interests (26,518) (22,614) (22,270) NAREIT FFO attributable to controlling interest $ 65,567 $ 94,577 $ 69,678 Business acquisition expenses $ 5,795 $ 4,388 $ 13,022 Amortization of above- and below-market leases 9,744 2,596 953 Amortization of closing costs — debt security investments 278 237 201 Change in deferred rent 1,149 (3,355) (20) Non-cash impact of changes to equity instruments 5,621 3,909 1,008 Capitalized interest (163) (150) (628) Loss on debt extinguishments 345 5,166 2,655 Loss (gain) in fair value of derivative financial instruments 926 (500) (8,200) Foreign currency (gain) loss (2,307) 5,206 564 Impairment of intangible assets and goodwill 10,520 23,277 — Adjustments for unconsolidated entities (321) 113 573 Adjustments for noncontrolling interests (4,786) (3,530) (1,653) Normalized FFO attributable to controlling interest $ 92,368 $ 131,934 $ 78,153 Weighted average Class T and Class I common shares outstanding — basic and diluted 66,047,114 65,807,868 50,081,140 Net loss per Class T and Class I common share attributable to controlling interest — basic and diluted $ (1.08) $ (1.24) $ (0.95) NAREIT FFO per Class T and Class I common share attributable to controlling interest — basic and diluted $ 0.99 $ 1.44 $ 1.39 Normalized FFO per Class T and Class I common share attributable to controlling interest — basic and diluted $ 1.40 $ 2.00 $ 1.56 Net Operating Income Net operating income, or NOI, is a non-GAAP financial measure that is defined as net income (loss), computed in accordance with GAAP, generated from properties before general and administrative expenses, business acquisition expenses, depreciation and amortization, interest expense, gain or loss on dispositions, impairment of real estate investments, impairment of intangible assets and goodwill, income or loss from unconsolidated entities, gain on re-measurement of previously held equity interests, foreign currency gain or loss, other income and income tax benefit or expense.
In the future, the SEC, NAREIT or another regulatory body may decide to standardize the allowable adjustments across the REIT industry and we would have to adjust our calculation and characterization of FFO or Normalized FFO. 65 Table of Contents The following is a reconciliation of net income or loss, which is the most directly comparable GAAP financial measure, to FFO and Normalized FFO for the periods presented below (in thousands): Year Ended December 31, 2024 2023 Net loss $ (35,600) $ (76,887) Depreciation and amortization related to real estate — consolidated properties 179,040 182,452 Depreciation and amortization related to real estate — unconsolidated entities 1,186 401 Impairment of real estate investments — consolidated properties 45,755 13,899 Gain on dispositions of real estate investments, net — consolidated properties (5,213) (32,472) Net (income) loss attributable to noncontrolling interests (2,212) 5,418 Gain on re-measurement of previously held equity interest — (726) Depreciation, amortization, impairments, net gain/loss on dispositions and gain on re-measurements — noncontrolling interests (17,851) (26,518) NAREIT FFO attributable to controlling interest $ 165,105 $ 65,567 Business acquisition expenses $ 7,141 $ 5,795 Amortization of above- and below-market leases 1,692 9,744 Amortization of closing costs — debt security investment 324 278 Change in deferred rent (2,411) 1,149 Non-cash impact of changes to equity instruments 9,367 5,621 Capitalized interest (334) (163) Loss on debt and derivative extinguishments 5,382 345 (Gain) loss in fair value of derivative financial instruments (1,030) 926 Foreign currency loss (gain) 774 (2,307) Impairment of intangible assets — 10,520 Adjustments for unconsolidated entities (320) (321) Adjustments for noncontrolling interests (768) (4,786) Normalized FFO attributable to controlling interest $ 184,922 $ 92,368 Net Operating Income Net operating income, or NOI, is a non-GAAP financial measure that is defined as net income (loss), computed in accordance with GAAP, generated from properties before general and administrative expenses, business acquisition expenses, depreciation and amortization, interest expense, gain or loss in fair value of derivative financial instruments, gain or loss on dispositions of real estate investments, impairment of real estate investments, impairment of intangible assets and goodwill, income or loss from unconsolidated entities, gain on re-measurement of previously held equity interests, foreign currency gain or loss, other income or expense and income tax benefit or expense.
We segregate our operations into reporting segments in order to assess the performance of our business in the same way that management reviews our performance and makes operating decisions.
We segregate our operations into reporting segments in order to assess the performance of our business in the same way that management reviews our performance and makes operating decisions. As of December 31, 2024, we operated through four reportable business segments: integrated senior health campuses, OM, SHOP and triple-net leased properties.
For the year ended December 31, 2021, we recognized an aggregate net loss on dispositions of our real estate investments of $100,000 related to the sale of one OM building, one SNF and two integrated senior health campuses.
Gain or Loss on Dispositions of Real Estate Investments For the year ended December 31, 2024, we recognized an aggregate net gain on dispositions of our real estate investments of $5,213,000 primarily related to the sale of four OM buildings, one integrated senior health campus, eight triple-net leased properties and one land easement disposal on one of our OM properties.
Investing Activities For the year ended December 31, 2023, as compared to the year ended December 31, 2022, the change from net cash used in investing activities to net cash provided by investing activities was primarily due to a $136,235,000 increase in proceeds from dispositions of real estate investments and a $27,847,000 decrease in cash paid to acquire real estate investments.
Investing Activities For the year ended December 31, 2024, as compared to the year ended December 31, 2023, the change from net cash provided by investing activities to net cash used in investing activities was primarily due to a $43,260,000 decrease in proceeds from dispositions of real estate investments and a $14,970,000 increase in cash paid to acquire real estate investments, partially offset by a $16,765,000 change from net issuance of real estate notes receivable to net principal repayments on real estate notes receivable, a $12,357,000 decrease in investments in unconsolidated entities and a $7,851,000 decrease in developments and capital expenditures.
Such increases were offset by the $64,382,000 change from net payments on mortgage loans payable to net borrowings under mortgage loans payable and $20,230,000 decrease in repurchases of common stock. During 2023, we repaid our lines of credits primarily from operating cash flows, net proceeds from dispositions and proceeds from long-term mortgage loans payable financed at lower interest rates.
During 2023, we repaid our lines of credits primarily from operating cash flows, net proceeds from dispositions and proceeds from long-term mortgage loans payable financed at lower interest rates.
In addition, we are party to an agreement, as amended, regarding a senior secured revolving credit facility with an aggregate maximum principal amount of $400,000,000, or the 2019 Trilogy Credit Facility.
In addition, we are party to an agreement, as amended, regarding a senior secured revolving credit facility with an aggregate maximum principal amount of $400,000,000, or the Trilogy Credit Facility. See Note 9, Lines of Credit and Term Loan, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a further discussion.
When step one of the impairment test is utilized, we compare the fair value of the reporting unit with its carrying amount. We recognize an impairment loss to the extent the carrying value of goodwill exceeds the implied value in the current period.
We take a qualitative approach, as applicable, to consider whether an impairment of goodwill exists prior to quantitatively determining the fair value of the reporting unit in step one of the impairment test. When step one of the impairment test is utilized, we compare the fair value of the reporting unit with its carrying amount.
Investors are also cautioned that NOI should only be used to assess our operational performance in periods in which we have not incurred or accrued any business acquisition expenses. 72 Table of Contents We believe that NOI is an appropriate supplemental performance measure to reflect the performance of our operating assets because NOI excludes certain items that are not associated with the operations of the properties.
NOI should be reviewed in conjunction with other measurements as an indication of our performance. We believe that NOI is an appropriate supplemental performance measure to reflect the performance of our operating assets because NOI excludes certain items that are not associated with the operations of the properties.
In addition, for the year ended December 31, 2022, we experienced a decrease in rental revenue for our OM segment of $782,000, primarily due to a one-time lease termination fee recognized in June 2021 for Stockbridge GA OM III. 62 Table of Contents Grant Income For the years ended December 31, 2023, 2022 and 2021, we recognized $7,475,000, $25,675,000 and $16,951,000, respectively, of grant income at our integrated senior health campuses and SHOP primarily related to government grants received through Coronavirus Aid, Relief, and Economic Security Act economic stimulus programs.
For the year ended December 31, 2023, we recognized an aggregate $7,475,000 of grant income at our integrated senior health campuses and SHOP primarily related to government grants received through Coronavirus Aid, Relief, and Economic Security Act economic stimulus programs.
These allocation assessments have a direct impact 58 Table of Contents on our financial statements. Our goodwill has an indeterminate life and is not amortized but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired.
Our goodwill has an indeterminate life and is not amortized but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Such evaluation could involve estimated future cash flows, which is highly subjective, and is based in part on assumptions regarding future events.
These provisions include negotiated rental increases, which historically range from 2% to 3% per year, reimbursement billings for operating expense pass-through charges and real estate tax and insurance reimbursements. However, due to the long-term nature of existing leases, among other factors, the leases may not reset frequently enough to cover inflation.
For properties that are not operated under a RIDEA structure, there are provisions in the majority of our tenant leases that help us mitigate the impact of inflation. These provisions include negotiated rental increases, which historically range from 2% to 3% per year, reimbursement billings for operating expense pass-through charges and real estate tax and insurance reimbursements.
For information on our share repurchase plan, see Note 13, Equity — Share Repurchase Plan, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K.
For information on our share repurchase plan, see Note 13, Equity — Share Repurchase Plan, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K. 61 Table of Contents Credit Facilities As of December 31, 2024, we are party to a credit agreement, as amended, with an aggregate maximum principal amount up to $1,150,000,000, or the 2024 Credit Facility.
Real Estate Revenue For the year ended December 31, 2023, we experienced a decrease in real estate revenue within our triple-net leased properties segment of $12,294,000, as compared to the year ended December 31, 2022, primarily due to: (i) the transitioning of SNFs within the Central Wisconsin Senior Care Portfolio to a RIDEA structure in March 2023 and recording the full amortization of $8,073,000 of above-market leases; and (ii) the transitioning of senior housing facilities within Michigan ALF Portfolio to a RIDEA structure in November 2023 and recording the full amortization of $2,756,000 of above-market leases.
For the year ended December 31, 2024, as compared to the year ended December 31, 2023, the decrease in depreciation and amortization of $3,412,000 was primarily due to the full amortization of an aggregate $6,635,000 of in-place leases related to the transition of the SNFs within our Central Wisconsin Senior Care Portfolio to a managed portfolio utilizing a RIDEA structure in March 2023 and the transition of the senior housing — leased facilities in our Michigan ALF Portfolio to a managed portfolio utilizing a RIDEA structure in November 2023.
For the year ended December 31, 2023, total property operating expenses for our SHOP segment primarily increased, as compared to the year ended December 31, 2022, due to: (i) an increase of $20,707,000 due to the acquisition of a portfolio of seven senior housing facilities within our SHOP segment in Texas in December 2022; (ii) an increase of $12,979,000 due to the transitioning of SNFs within the Central Wisconsin Senior Care Portfolio from triple-net leased properties to a RIDEA structure in March 2023; (iii) an increase of $3,847,000 due to the transitioning of senior housing facilities within the Michigan ALF Portfolio from triple-net leased properties to a RIDEA structure in November 2023; (iv) higher operating expenses as a result of increased occupancy; and (v) higher labor costs due to an increase in employee wages.
Additionally, $5,165,000 of the increase in total property operating expenses for our SHOP segment for the year ended December 31, 2024, as compared to the year ended December 31, 2023, was primarily due to transitioning the SNFs in our Central Wisconsin Senior Care Portfolio from triple-net leased properties to a managed portfolio utilizing a RIDEA structure in March 2023.
In the event that an asset group fails its recoverability test and our carrying value exceeds our estimated fair value, the subjectivity of assumptions used could result in the misstatement of the adjusted carrying value of our real estate assets and net income (loss).
In the event that a real estate investment fails its recoverability test and our carrying value exceeds our estimated fair value, we would record an impairment loss to the extent the carrying value exceeds the estimated fair value of our real estate investment.
The subjectivity of assumptions used in the future cash flow analysis, including capitalization and growth rates, where applicable, could result in an incorrect assessment of the recoverability of the carrying value of our real estate assets.
The subjectivity of assumptions used in the future cash flow 54 Table of Contents analysis, including capitalization and growth rates (for estimated future revenues and expenses), period of time we intend to hold and operate the property, general economic conditions and trends, or other available market data such as comparable sales, as applicable, could result in an incorrect assessment of the recoverability of the carrying value of our real estate assets.
Such amounts were partially offset by a decrease in total resident fees and services revenue of $11,888,000 due to dispositions within our integrated senior health campuses segment during the third and fourth quarters of 2022.
Such increases in resident fees and services revenue in our SHOP segment were partially offset by a decrease of $12,599,000 due to real estate dispositions within our SHOP segment in 2023 and 2024.
Scheduled Lease Expirations Excluding our SHOP and integrated senior health campuses, as of December 31, 2023, our properties were 91.3% leased and, during 2024, 9.8% of the leased GLA is scheduled to expire. Our leasing strategy focuses on negotiating renewals for leases scheduled to expire during the next 12 months.
See Item 7A, Quantitative and Qualitative Disclosures About Market Risk — Interest Rate Risk, for a further discussion. Scheduled Lease Expirations Excluding our SHOP and integrated senior health campuses, as of December 31, 2024, our properties were 90.3% leased and, during 2025, 11.9% of the leased GLA is scheduled to expire.
We also operate healthcare-related facilities utilizing the structure permitted by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure (the provisions of the Internal Revenue Code of 1986, as amended, or the Code, authorizing the RIDEA structure were enacted as part of the Housing and Economic Recovery Act of 2008).
We own and operate our integrated senior health campuses and senior housing operating properties, or SHOP, utilizing the structure permitted by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure.
For our SHOP segment, we increased resident fees and services revenue by $29,371,000 for the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to: (i) our acquisition of a portfolio of seven senior housing facilities in Texas within our SHOP segment in December 2022, which increased revenue by $25,375,000; (ii) an increase of $12,714,000 due to the transitioning of SNFs within the Central Wisconsin Senior Care Portfolio to a RIDEA structure in March 2023; and (iii) an increase of $2,817,000 due to the transitioning of senior housing facilities within the Michigan ALF Portfolio to a RIDEA structure in November 2023.
Additionally, $6,026,000 of the increase in resident fees and services revenue for our SHOP segment for the year ended December 31, 2024, as compared to the year ended December 31, 2023, was primarily due to transitioning SNFs in our Central Wisconsin Senior Care Portfolio from triple-net leased properties to a managed portfolio utilizing a RIDEA structure in March 2023.
Such amounts were partially offset by a decrease of $1,979,000 in depreciable assets in our portfolio as a result of a real estate disposition within our OM segment during the year ended December 31, 2022. 64 Table of Contents Interest Expense Interest expense, including gain or loss in fair value of derivative financial instruments, consisted of the following for the periods then ended (in thousands): Years Ended December 31, 2023 2022 2021 Interest expense: Lines of credit and term loan and derivative financial instruments $ 96,417 $ 52,351 $ 33,966 Mortgage loans payable 55,584 41,417 36,253 Amortization of deferred financing costs: Lines of credit and term loan 3,060 3,000 4,261 Mortgage loans payable 2,284 1,988 1,652 Amortization of debt discount/premium, net 3,549 827 773 Loss (gain) in fair value of derivative financial instruments 926 (500) (8,200) Loss on extinguishment of debt 345 5,166 2,655 Interest on finance lease liabilities 353 261 — Interest expense on financing obligations and other liabilities 1,599 946 1,377 Total $ 164,117 $ 105,456 $ 72,737 The increase in total interest expense for the year ended December 31, 2023, as compared to the year ended December 31, 2022, was primarily due to: (i) an increase in debt balances during 2023; (ii) a higher weighted average effective interest rate on our variable debt, which was 7.50% and 6.44% as of December 31, 2023 and 2022, respectively; (iii) a $2,722,000 increase in amortization of debt discount/premium, net; and (iv) a $1,426,000 change from gain to loss in fair value of our derivative financial instruments.
Such amounts were partially offset by the write-off of the remaining customer relationship intangible assets totaling $1,831,000, which were associated with a closed pharmacy within our integrated senior health campuses segment. 59 Table of Contents Interest Expense Interest expense, including gain or loss in fair value of derivative financial instruments, consisted of the following for the periods presented below (in thousands): Year Ended December 31, 2024 2023 Interest expense: Lines of credit and term loan and derivative financial instruments $ 53,788 $ 96,417 Mortgage loans payable 54,891 55,584 Amortization of deferred financing costs: Lines of credit and term loan 2,934 3,060 Mortgage loans payable 2,561 2,284 Amortization of debt discount/premium, net 4,944 3,549 (Gain) loss in fair value of derivative financial instruments (1,030) 926 Loss on debt and derivative extinguishments 5,382 345 Interest on finance lease liabilities 567 353 Interest expense on financing obligations and other liabilities 2,663 1,599 Total $ 126,700 $ 164,117 The decrease in total interest expense for the year ended December 31, 2024, as compared to the year ended December 31, 2023, was primarily due to: (i) the payoff of $176,145,000 of variable-rate mortgage loans payable and paydown of $545,010,000 on our variable-rate lines of credit in February 2024 from the net proceeds received from the February 2024 Offering; (ii) the paydown of $194,000,000 on our variable-rate lines of credit in September 2024 from the net proceeds received from the September 2024 Offering; and (iii) the payoff of our remaining variable-rate mortgage loans payable and paydown of our variable-rate lines of credit in the fourth quarter of 2024 from the net proceeds received from the ATM Offering.
In general, cash flows from operating activities are affected by the timing of cash receipts and payments, as well as the substantial increase in net operating income for properties within our integrated senior health campuses segment since 2021 due to improved resident occupancy and expense management. See the “Results of Operations” section above for a further discussion.
In general, cash flows from operating activities are affected by the timing of cash receipts and payments, and have increased since 2022 primarily due to improved resident occupancy and expense management at our properties operated under a RIDEA structure.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeSee Note 10, Derivative Financial Instruments, and Note 15, Fair Value Measurements, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a further discussion on our interest rate swaps. 73 Table of Contents As of December 31, 2023, the table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes, excluding the effect of our interest rate swap (dollars in thousands): Expected Maturity Date 2024 2025 2026 2027 2028 Thereafter Total Fair Value Assets Debt security held-to-maturity $ — $ 93,433 $ — $ — $ — $ — $ 93,433 $ 93,304 Weighted average interest rate on maturing fixed-rate debt security — % 4.24 % — % — % — % — % 4.24 % — Liabilities Fixed-rate debt — principal payments $ 48,168 $ 136,701 $ 156,379 $ 49,998 $ 16,234 $ 582,845 $ 990,325 $ 846,985 Weighted average interest rate on maturing fixed-rate debt 3.56 % 4.30 % 3.00 % 3.43 % 3.25 % 3.59 % 3.58 % — Variable-rate debt — principal payments $ 263,277 $ 339,975 $ 379,953 $ 550,177 $ 187 $ 27,142 $ 1,560,711 $ 1,564,165 Weighted average interest rate on maturing variable-rate debt (based on rates in effect as of December 31, 2023) 8.11 % 8.16 % 7.15 % 7.05 % 7.61 % 7.60 % 7.50 % — Debt Security Investment, Net As of December 31, 2023, the net carrying value of our debt security investment was $86,935,000.
Biggest changeFor information on our interest rate swaps, see Note 10, Derivative Financial Instruments, and Note 15, Fair Value Measurements, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for further discussion. 67 Table of Contents As of December 31, 2024, the table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes, excluding the effect of our interest rate swaps (dollars in thousands): Expected Maturity Date 2025 2026 2027 2028 2029 Thereafter Total Fair Value Assets Debt security held-to-maturity $ 93,433 $ — $ — $ — $ — $ — $ 93,433 $ 93,369 Weighted average interest rate on maturing fixed-rate debt security 4.24 % — % — % — % — % — % 4.24 % — Liabilities Fixed-rate debt — principal payments $ 32,327 $ 159,437 $ 57,791 $ 139,961 $ 16,948 $ 598,260 $ 1,004,724 $ 858,102 Weighted average interest rate on maturing fixed-rate debt 3.53 % 3.03 % 3.50 % 4.39 % 3.29 % 3.70 % 3.67 % — Variable-rate debt — principal payments $ 32 $ — $ 550,000 $ 139,000 $ — $ — $ 689,032 $ 688,945 Weighted average interest rate on maturing variable-rate debt (based on rates in effect as of December 31, 2024) 7.30 % — % 5.66 % 5.71 % — % — % 5.67 % — Debt Security Investment, Net As of December 31, 2024, the net carrying value of our debt security investment was $91,264,000.
There were no material changes in our market risk exposures, or in the methods we use to manage market risk, between the years ended December 31, 2023 and 2022. Interest Rate Risk We are exposed to the effects of interest rate changes primarily as a result of long-term debt used to acquire and develop properties and other investments.
There were no material changes in our market risk exposures, or in the methods we use to manage market risk, between the years ended December 31, 2024 and 2023. Interest Rate Risk We are exposed to the effects of interest rate changes primarily as a result of long-term debt used to acquire and develop properties and other investments.
See Note 15, Fair Value Measurements, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a discussion of the fair value of our investment in a held-to-maturity debt security. The effective interest rate on our debt security investment was 4.24% per annum as of December 31, 2023.
See Note 15, Fair Value Measurements, to the Consolidated Financial Statements that are a part of this Annual Report on Form 10-K, for a discussion of the fair value of our investment in a held-to-maturity debt security. The effective interest rate on our debt security investment was 4.24% per annum as of December 31, 2024.
As of December 31, 2023, our interest rate swaps are recorded in other assets and other liabilities in our accompanying consolidated balance sheet at their aggregate fair value of $1,463,000 and ($2,389,000), respectively. We do not enter into derivative transactions for speculative purposes. As of December 31, 2022, we did not have any derivative financial instruments.
As of December 31, 2024, our interest rate swaps are recorded in other assets and other liabilities in our accompanying consolidated balance sheet at their aggregate fair value of $1,013,000 and ($909,000), respectively. We do not enter into derivative transactions for speculative purposes.
As of December 31, 2023, a 0.50% increase in the market rates of interest would have increased our overall annualized interest expense on all of our other variable-rate mortgage loans payable and lines of credit by $5,124,000, or 3.48% of total annualized interest expense on our mortgage loans payable and lines of credit and term loan.
As of December 31, 2024, a 0.50% increase in the market rates of interest would have increased our overall annualized interest expense on our lines of credit by $705,000, or 0.94% of total annualized interest expense on our mortgage loans payable and lines of credit and term loan.
In addition, as of December 31, 2023, we had $1,224,723,000 ($1,223,967,000, net of deferred financing fees) outstanding under our lines of credit and term loan, at a weighted-average interest rate of 7.36% per annum. As of December 31, 2023, the weighted average effective interest rate on our outstanding debt, factoring in our fixed-rate interest rate swaps, was 5.72% per annum.
In addition, as of December 31, 2024, we had $689,032,000 ($688,534,000, net of deferred financing fees) outstanding under our lines of credit and term loan, at a weighted-average interest rate of 5.67% per annum. As of December 31, 2024, the weighted average effective interest rate on our outstanding debt, factoring in our fixed-rate interest rate swaps, was 4.41% per annum.
Mortgage Loans Payable, Net and Lines of Credit and Term Loan Mortgage loans payable were $1,326,313,000 ($1,302,396,000, net of discount/premium and deferred financing costs) as of December 31, 2023.
Mortgage Loans Payable, Net and Lines of Credit and Term Loan Mortgage loans payable were $1,004,724,000 ($982,071,000, net of discount/premium and deferred financing costs) as of December 31, 2024.
As of December 31, 2023, we had 76 fixed-rate mortgage loans payable and 13 variable-rate mortgage loans payable with effective interest rates ranging from 2.21% to 8.46% per annum and a weighted average effective interest rate of 4.72%.
As of December 31, 2024, we had 89 fixed-rate mortgage loans payable and zero variable-rate mortgage loans payable with effective interest rates ranging from 2.21% to 5.99% per annum and a weighted average effective interest rate of 3.67%.

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