Is American Healthcare REIT A Newbie Winner?

When a new real estate investment trust (REIT) has its initial public offering there is often a lot of excitement around what the future could hold. 

American Healthcare REIT Inc AHR is an Irvine, CA-based self-managed healthcare REIT that acquires, owns and operates a diversified portfolio of 318 properties across 36 states and the U.K. It has 19.45 million square feet under management and a market cap of $2.38 billion.

Its portfolio includes clinical healthcare properties, primarily medical office buildings, senior housing, skilled nursing facilities, hospitals and other healthcare-related facilities. American Healthcare was formed in 2021 with the merger of Griffin-American Healthcare REIT III, Griffin-American Healthcare REIT IV and American Healthcare Investors. It launched its IPO on January 29, 2024. Early analyst attention around the company has been positive and recent earnings show that this REIT could be one to watch. 

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American Healthcare Investors has performed extremely well in recent months. Since April 15, American Healthcare has produced a total return of 38.11%. Its total return since the IPO is 40.32%. On August 14 it touched a new high of $18.14 before closing at $18.05.

On August 5, American Healthcare reported first-quarter operating results, beating the estimates on Q2 FFO, $0.33 to $0.28, but came up $3.52 million shy of the revenue estimate of $504.58 million. American Healthcare beat the street estimates on FFO and revenue in its previous quarterly report in May.

American Healthcare's first two quarterly dividend payments were $0.25 per share. The annualized $1.00 dividend yields 5.83%. The forward payout ratio is still a bit high at 84.03% so investors should not expect any dividend increases until FFO increases over a few more quarters.

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American Healthcare also has the advantage of being in a recently strong sub-sector. After several years of low occupancy, Senior facilities are returning to pre-COVID levels.

One caveat of note- the present short interest of 8.20% is high. Perhaps investors are anticipating a pullback after such a strong price run-up. The technical indicators such as 14-period RSI and Stochastics suggest the stock may be overbought so looking for an entry point on a pullback or dollar cost averaging into a position may be prudent.

American Healthcare has done well since its IPO and the future is much brighter for healthcare REITs than a few years ago. America has an aging population so occupancy in these facilities should remain strong for many years. One risk is new government regulations on medical properties that could add to capex and increase the payout ratio. But for now, American Healthcare is looking very attractive.

Better Yields Than Some REITs?

The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through REITs.

Arrived Homes, the Jeff Bezos-backed investment platform has launched its Private Credit Fund, which provides access to a pool of short-term loans backed by residential real estate with a target 7% to 9% net annual yield paid to investors monthly. It paid 8.1% in July. The best part? Unlike other private credit funds, this one has a minimum investment of only $100. 

As long-term rates go down and short-term rates stay high, there’s a unique chance to invest in fix & flip loans before yields drop. Check out Benzinga's favorite high-yield offerings.