SEC Filing Summary
Entity and period: The supplied filing is Griffin-American Healthcare REIT IV, Inc.’s Form 10-K for the fiscal year ended December 31, 2019, filed March 19, 2020. This does not match the requested company name, American Healthcare REIT, Inc.; confirm the intended issuer before relying on this summary. The filing reports full-year results, with selected fourth-quarter data.
Business context and portfolio
The company is a non-traded healthcare REIT, externally advised, investing mainly in medical office buildings (MOBs), senior housing, skilled nursing facilities (SNFs), and senior housing operated under a RIDEA structure. At year-end it held 87 buildings totaling approximately 4.522 million square feet, acquired for an aggregate contract price of $1.023 billion. The portfolio was 95.8% leased excluding RIDEA facilities; RIDEA occupancy was 83.2%.
Financial performance and position
| Metric | 2019 | 2018 | Change / context |
|---|---|---|---|
| Total revenue | $120.8 million | $84.5 million | Up 43.0% |
| Net income (loss) | $(18.9) million | $(8.6) million | Loss widened; includes $4.4 million derivative fair-value loss |
| Net loss per share | $(0.24) | $(0.15) | Basic and diluted |
| FFO attributable to controlling interest | $30.1 million | $24.9 million | Non-GAAP; per share fell to $0.38 from $0.45 |
| MFFO attributable to controlling interest | $33.8 million | $24.6 million | Non-GAAP; per share was $0.43 versus $0.45 |
| Net operating income (NOI) | $64.1 million | $42.9 million | Non-GAAP property-level measure |
| Cash from operating activities | $39.5 million | $15.4 million | More than doubled |
| Total assets | $1.068 billion | $896.4 million | |
| Stockholders’ equity | $590.1 million | $557.7 million |
Revenue growth primarily reflected portfolio expansion and a full year of operations at facilities acquired in 2018. MOB revenue was $54.5 million, RIDEA resident fees and services were $46.2 million, SNF revenue was $11.7 million, and senior housing revenue was $8.4 million. Total expenses were $119.5 million, including $45.6 million depreciation and amortization, $20.6 million interest expense (including the derivative loss), and $15.2 million general and administrative costs. NOI was approximately 53.1% of revenue, a calculated ratio based on the filing’s non-GAAP NOI.
For Q4 2019, revenue was $33.4 million and net income attributable to controlling interest was $1.3 million, or $0.02 per share, compared with a $3.7 million attributable loss, or $(0.06) per share, in Q4 2018.
Debt, liquidity, cash flow, and distributions
- Year-end debt comprised $396.8 million outstanding under the revolving credit and term-loan facility and $27.1 million of mortgage principal ($26.1 million net on the balance sheet). Reported leverage was 36.3% of the combined market value of real estate and joint-venture interests; debt covenants were met.
- The credit facility’s total borrowing capacity was increased to $530 million in November 2019; $133.2 million remained available at year-end. Cash and cash equivalents were $15.3 million, with $0.6 million restricted cash. Management said resources should meet foreseeable cash needs and did not anticipate needing other funding within 12 months.
- Weighted-average effective interest rate on debt, including swaps, was 4.00%. The $396.8 million variable-rate facility was scheduled to mature in 2021. Management estimated 2020 debt interest of $14.9 million and principal payments of $8.3 million. A 0.50 percentage-point increase in variable rates was estimated to add $744,000 to annualized interest expense.
- Investing cash outflow was $199.9 million, mainly for $195.2 million of acquisitions and $6.5 million of capital expenditures. Financing cash inflow was $161.7 million, including net credit-facility borrowings and equity proceeds.
- Declared distributions were $0.60 per share, totaling $47.1 million. Of $46.4 million in distributions paid or reinvested, the filing reports 85.1% funded by operating cash flow, 11.6% by offering proceeds, and 3.3% by borrowings. A separate comparison with FFO attributes 64.8% to FFO, 28.1% to offering proceeds, and 7.1% to borrowings. These are different measures and should not be treated as interchangeable. For tax reporting, 78.2% of 2019 distributions was classified as return of capital.
Material changes, outlook, risks, and unusual items
- The company completed 18 building acquisitions in 2019 for a reported contract purchase price of $201.2 million. It expanded the credit facility and used interest-rate swaps; the swaps generated a $4.4 million fair-value loss recognized in interest expense.
- The initial public offering ended February 15, 2019; the company continued raising equity through its distribution reinvestment plan. No public trading market exists. The latest stated estimated NAV was $9.54 per share, based on December 31, 2018 valuations, and was not a GAAP fair value or assurance of realizable sale proceeds.
- Management expected operating cash flow to increase in 2020 with a full year of operations from 2019 acquisitions and further first-quarter acquisitions. It also noted that coronavirus-related effects on residents, tenants, operators, and liquidity were uncertain and could become material; the filing did not provide quantified guidance.
- Key exposures include reliance on tenants and senior-housing operators, reimbursement and healthcare regulation, occupancy and labor costs, interest rates and refinancing, and limited liquidity for shareholders. One tenant represented 10.4% of annualized base rent/NOI at year-end, and Missouri represented 11.4%.
- The company adopted the new lease accounting standard (ASC 842) on January 1, 2019; prior periods were not restated. The auditor issued an unqualified opinion on the financial statements. Management reported effective disclosure controls and internal control over financial reporting. The company reported no material litigation.
- After year-end, the company reported additional acquisitions; as of March 19, 2020 it stated that it owned 89 properties comprising 94 buildings, approximately 4.863 million square feet, at an aggregate contract purchase price of $1.088 billion.
Important facts for investors to verify
- Confirm issuer identity: the filing is for Griffin-American Healthcare REIT IV, Inc., not the company named in the request.
- Review audited statements and the notes for the causes of GAAP losses, derivative accounting, debt maturities, covenants, and 2020 liquidity assumptions.
- Reconcile distributions against operating cash flow, FFO, offering proceeds, borrowings, and tax characterization; assess the sustainability of the $0.60 annualized distribution.
- Assess tenant/operator credit and concentration, including the 10.4% tenant exposure, Missouri concentration, and RIDEA occupancy and operating-cost trends.
- Do not equate the $9.54 estimated NAV with a realizable share price; verify repurchase-plan limits, pricing, and the absence of a public market.
- Evaluate the potential operational and financial effects of coronavirus and subsequent acquisitions, which were uncertain at the filing date.