Business Context and Reporting Period
This Form 8-K, filed on March 24, 2022, by American Healthcare REIT, Inc., discloses the Board of Directors' approval of an updated estimated per share Net Asset Value (NAV) for the Company's Class T and Class I common stock. The valuation is calculated as of December 31, 2021. The filing also addresses the impact of the Company's transformational merger with Griffin-American Healthcare REIT III, Inc. and a self-management transaction completed on October 1, 2021.
Key Financial Metrics
The primary financial metric disclosed is the updated estimated per share NAV, which serves as the basis for distribution reinvestment and share repurchase plans. The filing does not provide standard GAAP revenue, profit, or cash flow figures for a specific reporting period, as this is a valuation disclosure rather than a periodic financial report.
| Metric | Value (as of Dec 31, 2021) | Value (as of Sep 30, 2020) |
|---|---|---|
| Estimated Per Share NAV | $9.29 | $9.22 |
| Estimated Net Asset Value (Total) | $2,574,688,000 | $746,967,000 |
| Fully Diluted Shares Outstanding | 277,040,000 | 80,988,000 |
| Appraised Properties Value | $2,835,905,000 | $1,203,878,000 |
| Debt Liabilities | ($1,310,781,000) | ($508,612,000) |
| Trilogy Joint Venture Interest | $828,180,000 | Not Applicable |
Material Changes Versus Prior Period
The increase in total Net Asset Value from approximately $747 million to $2.57 billion is primarily driven by the October 1, 2021, merger with Griffin-American Healthcare REIT III, Inc. and the acquisition of the Management Company. Key changes include:
- Asset Base Expansion: The portfolio now includes 180 appraised properties and a significant interest in Trilogy REIT Holdings, LLC (Trilogy), valued at $828.18 million.
- Debt Increase: Debt liabilities increased from approximately $509 million to $1.31 billion, reflecting the scale of the merged entity.
- Share Count: Fully diluted shares outstanding increased from approximately 81 million to 277 million.
- NAV Per Share: Despite the significant increase in total assets and debt, the per share NAV increased slightly from $9.22 to $9.29.
Guidance, Outlook, Risks, and Unusual Items
Valuation Methodology: The NAV was determined by independent third-party firm Robert A. Stanger & Co., Inc. ("Stanger") using income approaches (direct capitalization and discounted cash flow) for properties and debt. The Board approved the $9.29 figure to assist broker-dealers with FINRA Rule 2231 obligations.
Impact on Shareholder Plans:
- Distribution Reinvestment Plan (DRIP): Commencing with the March distribution paid in April 2022, shares will be issued at $9.29 per share.
- Share Repurchase Plan: Repurchases due to death or qualifying disability requested in the second quarter of 2022 or later will be executed at $9.29 per share. Prior requests will be honored at $9.22.
Risks and Contingencies:
- COVID-19 Impact: The Company continues to monitor the pandemic's impact on tenants, residents, and operating partners. Valuation assumptions include adjustments for non-recurring COVID-19 related expenses.
- Valuation Sensitivity: A sensitivity analysis indicates that a 5.0% change in key discount and capitalization rates could result in a per share NAV ranging from $8.48 to $10.18.
- Limitations: The estimated NAV is not audited, does not represent GAAP book value, and does not reflect liquidation value or potential disposition costs.
Important Facts for Investor Verification
- NAV Validity: Verify that the $9.29 NAV is an estimate based on specific assumptions (discount rates, cap rates) and not a guaranteed market price or liquidation value.
- Merger Integration: Confirm the extent to which the merger with Griffin-American Healthcare REIT III and the self-management transaction have stabilized the Company's operations and debt structure.
- Valuation Firm Independence: Note that Stanger was engaged after a competitive process following the merger, replacing the previous firm (JLLS), and was paid a customary fee not contingent on valuation results.
- Sensitivity to Rates: Review the sensitivity analysis showing a potential NAV range of $8.48 to $10.18 based on a 5% fluctuation in key financial assumptions.
- Share Repurchase Terms: Understand the specific cutoff dates for repurchase prices ($9.22 vs. $9.29) for shareholders affected by death or disability.