Business context and reporting period
This is Griffin-American Healthcare REIT IV, Inc.’s annual report for the fiscal year ended December 31, 2020—not a quarterly filing. Although the request identifies American Healthcare REIT, Inc., the filing’s registrant is Griffin-American Healthcare REIT IV, Inc. The REIT invests in medical office buildings (MOBs), senior housing, senior housing operated under a RIDEA structure, and skilled nursing facilities (SNFs). At year-end it owned 89 properties comprising 94 buildings and approximately 4.86 million square feet; it also held a 6.0% interest in a senior-health-campus joint venture.
Financial and operating results
| Metric | 2020 | 2019 |
|---|---|---|
| Total revenue and grant income | $155.1 million | $120.8 million |
| Net loss | $18.9 million | $18.9 million |
| Net loss attributable to controlling interest | $18.1 million | $18.8 million |
| Operating cash flow | $35.5 million | $39.5 million |
| Segment NOI | $71.4 million | $64.1 million |
| FFO attributable to controlling interest | $38.5 million | $30.1 million |
| MFFO attributable to controlling interest | $35.4 million | $33.8 million |
Revenue grew about 28%, primarily reflecting acquisitions and the transfer of five senior housing facilities to RIDEA operations. RIDEA occupancy fell to 74.9% from 83.2%; its segment NOI declined to $8.6 million from $8.7 million as higher operating costs offset revenue growth. Excluding $1.0 million of government grants, 2020 FFO was approximately $34.1 million and MFFO approximately $31.1 million. These are non-GAAP measures and are not substitutes for GAAP earnings or operating cash flow.
At December 31, 2020, total assets were $1.09 billion and total liabilities $540.4 million. Debt comprised $476.9 million outstanding on the credit facility and $18.8 million of fixed-rate mortgage principal. The credit facility had $53.1 million of unused capacity; cash and cash equivalents were $17.4 million, with an additional $0.7 million of restricted cash. The weighted-average effective interest rate on debt was 3.38%. The credit facility matures November 19, 2021, with a one-year extension option subject to conditions and a fee. Management estimated 2021 principal payments of $477.5 million, including the credit facility balance.
Cash distributions were $17.8 million and distributions reinvested through the DRIP were $19.9 million. For tax purposes, 85.5% of 2020 distributions were classified as return of capital. The board reduced the annualized distribution rate from $0.60 to $0.40 per share effective with the April 2020 distribution.
Changes, outlook, and material developments
- Operating cash flow declined about 10% year over year, while total revenue and segment NOI increased. Net loss was essentially unchanged; FFO rose, while MFFO increased modestly.
- Interest expense was $20.8 million, slightly above $20.6 million in 2019, as higher borrowing balances were partly offset by lower rates and a smaller derivative fair-value loss. Borrowings under the credit facility increased from $396.8 million to $476.9 million.
- The company recorded a $3.6 million impairment on two RIDEA senior housing properties classified as held for sale. It recognized $1.0 million of CARES Act grant income. MOB tenant concessions were described as insignificant; no contractual MOB rent was forgiven. The company reported collecting all contractual rent through year-end from leased, non-RIDEA senior housing and SNF tenants.
- Management reported an approximate 16% decline in RIDEA resident occupancy from February 2020 through February 2021, based on preliminary information, and significant increases in labor, testing, PPE, and other care costs. Its stated near-term focus was occupancy recovery and expense management; it did not provide formal numerical earnings or distribution guidance.
- In October 2020, independent directors formed a special committee to evaluate strategic alternatives, including asset sales, a stock-market listing, or a merger. No transaction was assured. After year-end, on March 18, 2021, the board approved a $9.22 estimated NAV per share as of September 30, 2020, compared with the prior $9.54 estimate as of December 31, 2019. The estimate is unaudited, is not a GAAP fair value, and is not a guaranteed sale price. The board also suspended the DRIP effective April 1, 2021 and suspended repurchases for requests received after February 28, 2021.
- There is no established public market for the shares. The auditor issued an unqualified opinion on the financial statements; management reported effective disclosure controls and internal control over financial reporting.
Key risks and items for investors to verify
- Verify the precise registrant and confirm that this filing is relevant to the intended company; the filing names Griffin-American Healthcare REIT IV, Inc.
- Track the credit-facility extension or refinancing, related covenants, and the company’s ability to meet the substantial 2021 maturity without impairing liquidity.
- Monitor senior housing occupancy, labor and care costs, and the pace of recovery from the pandemic; the filing cautions that future operating and rent-collection effects remain uncertain.
- Assess distribution sustainability: the rate was cut, most 2020 distributions were classified as return of capital, and the DRIP and repurchase plan were subsequently suspended.
- Review the strategic-alternatives process and any resulting transaction, including potential effects of advisor incentive payments and the absence of guaranteed liquidity.
- Evaluate the assumptions behind the $9.22 estimated NAV, the held-for-sale properties and impairment, geographic and tenant concentrations, and the use of non-GAAP FFO, MFFO, and NOI alongside GAAP results.