American Healthcare REIT (NYSE: AHR) is leaning further into the long-term care opportunity, as executives touted powerful demographic tailwinds Friday and outlined plans to scale operating partner Trilogy’s model across its broader portfolio following $1.4 billion in year-to-date investments
AHR posted a strong second quarter, driven primarily by its senior housing operating portfolio (SHOP) rather than skilled nursing
Jeff Hanson, Chairman and CEO, expressed bullishness on the growth of the long-term care sector during the company’s second quarter conference call
“The demographic tailwind behind long-term care, as you all know, is powerful and still in early stages, and supply remains profoundly constrained,” he said. “But that tailwind essentially is available to every investor in the sector. What sets us apart is what we’ve built underneath it. Many of our key people are former operators, and that’s by design.”
AHR’s capital allocation is now overwhelmingly focused on SHOP and Trilogy, Hanson said, while the company continues to gradually reduce its outpatient medical exposure.
Named CEO in late July, Hanson said one of his priorities is to leverage Trilogy’s operating platform even more broadly across AHR’s growing network of operating partners, alongside accelerating acquisitions, expanding relationships with existing operators and strengthening the company’s organizational infrastructure.
Hanson, who served as AHR’s CEO for 16 years before Danny Prosky succeeded him four years ago, has returned to lead the Irvine, California-based REIT after Prosky retired following a medical leave of absence that began in early February
During the quarter, AHR’s GAAP net income was $30.6 million, or $0.16 per share, while normalized funds from operations (FFO) reached $0.54 per share. The company raised its full-year 2026 guidance, increasing NFFO to $2.15-$2.19 per share and same-store NOI growth to 11%-13%
Friday, AHR shares closed at $56.74, up $2.05, or 3.75%
Investments
On the acquisition outlook, Hanson said that his company had approximately $800 million of additional investments in the pipeline – not included in guidance – that were expected to close by the end of 2026
“More than half of what we have in the pipeline plus year-to-date closed is actually value-added profile, and the balance is stable,” Hanson said, noting that over half of the assets averaged roughly 82% occupancy, while the rest were stabilized properties in the low-90% occupancy range.
The pipeline consists primarily of high-quality senior housing assets with an average 2019 vintage, Hanson said, adding that these acquisitions have meaningfully upgraded the portfolio, reducing the average age of AHR’s SHOP assets from 29 years to about 21.8 years
Stefan Oh, chief investment officer, said AHR continues to see exceptionally strong acquisition opportunities, with deal flow running well above last year. He attributed the increase to improved operating performance across the senior housing sector, earlier cap rate compression that encouraged more owners to bring assets to market, and the company’s expanding operator relationships, which now generate roughly half of acquisitions through off-market channels
Trilogy’s model
Gabe Wilhite, President and COO of American Healthcare REIT, lauded the performance of Trilogy in which AHR indirectly owns a 100% interest as of June 30, 2026, as he shared details of Medicare Advantage rate growth, skilled nursing occupancy and quality mix
Trilogy’s same-store net operating income (NOI) was up 16.1% year over year and margins reaching a post-pandemic high of 21.1% amid occupancy averaging 90.7%, up 180 basis points year over year.
While skilled nursing occupancy within Trilogy assets declined 70 basis points sequentially due to seasonality, strength in Trilogy’s senior housing operations offset the decline, Wilhite noted. Quality mix improved to 75.5% of resident days, reflecting stronger payer relationships
“Just as we’ve seen in past years with Trilogy, a slight pullback in skilled nursing occupancy this quarter was offset by strength in Trilogy’s senior housing setting. This dynamic has the potential to be a powerful driver of growth through the summer selling season and through the remainder of the year,” Wilhite said
Future upside at Trilogy comes from several areas, including occupancy gains and increasingly sophisticated revenue management, Wilhite said. As occupancy improves, Trilogy can better optimize payer mix by selectively partnering with Medicare Advantage plans that appropriately reimburse higher-acuity care. He noted that same-store Medicare Advantage rate growth for Trilogy reached 8.4% year over year.
“That’s probably higher than what people thought was achievable, and that’s because they’re optimizing the mix,” he said. “[Trilogy] is optimizing for the plans that they partner with – they want to partner with people that are willing to pay them for the level of care that they provide because it costs more to provide that level of care.”
Beyond revenue management, Trilogy provides expertise in sales, marketing, employee experience, capital projects, development and operational best practices that can be shared with AHR’s other regional operators, executives noted
As far as expense management at Trilogy, Wilhite said Trilogy actively prioritized expense control beginning last year, executing exceptionally well through the first half of 2026.
Trilogy also offers AHR the ability to expand because Trilogy controls enough land for at least five years of expansion opportunities at the current pace, according to executives
Approximately 30 campuses have excess land suitable for villa expansions, while additional opportunities exist to add nursing wings and standalone memory care facilities, Wilhite said.
Companies featured in this article:
American Healthcare REIT, Trilogy
