American Healthcare Reit Sets Bar Higher For Shop To Fuel Next Growth Stage

Leaders with American Healthcare REIT (NYSE: AHR) believe lower reliance on rent concessions, stronger pricing dynamics and selective acquisition opportunities could fuel the company’s next stage of growth.

The Irvine, California-based real estate investment trust reported third quarter senior housing operating portfolio (SHOP) same-store net operating income (NOI) growth of 28.2%, up from 20.5% in the second quarter. During Friday’s earnings call, executives focused on how the company can sustain that momentum without outgrowing its operating partners.

“At 90%, our goal is not to remain at 90% occupied in our portfolio,” President and COO Gabe Willhite said during the question-and-answer portion of the call. “We’re still working to grow occupancy.”

AHR’s SHOP segment now includes 109 properties and more than 10,000 units, compared with 71 properties and more than 5,700 units a year ago. Its roster of SHOP operators outside Trilogy Health Services expanded from eight to 11 this year.

That expansion could have been larger. CEO Jeff Hanson said AHR could have completed another $2 billion or more in acquisitions meeting its asset and location standards if it had been willing to expand its operator roster to roughly two dozen.

“But that’s not our playbook,” Hanson said. “That’s not our strategy.”

Instead, AHR is focused on growth with existing operating partners in markets it knows well, while entering new regions through larger transactions with carefully chosen providers. Hanson said the recent Kensington Senior Living and LCB Senior Living transactions were examples of this strategy playing out.

AHR stock rose 3.23%, an increase of $1.81 per share on Friday to rest at $57.91 at market close.

This comes as acquisition opportunities continue to remain plentiful for many institutional groups interested in senior living investment. Chief Investment Officer Stefan Oh said most assets in AHR’s current pipeline are in the same metropolitan areas as its operators’ headquarters, with partners continuing to bring the company off-market opportunities.

“We are not seeing anything that’s indicating that the deal volume in the market is slowing down,” Oh said.

But even strong operating partners can struggle when they grow too fast, spread leadership thin and weaken culture, Willhite cautioned. The company’s leaders are taking those factors into consideration in their acquisition plans.

“We don’t view operators as commodities that can be traded,” Willhite said. “We view them as long-term partnerships.”

Same-store revenue per occupied room increased 5.4% year over year, compared with 3.8% growth at the beginning of 2026.

Willhite cited street rates and reduced discounting as strong factors playing into the better performance, with AHR reporting a 34% reduction in concessions compared to last year.

“As you get more occupied, it’s not only do you have more pricing power on rate, but you should stop using rent concessions as much as well,” Willhite said.

SHOP same-store revenue increased 9%, while operating expenses grew 0.8%. Same-store NOI margin reached 23.5%, an increase of 350 basis points from a year earlier.

Trilogy Health Services came up multiple times during Friday’s earnings call. The operator is working with AHR to develop a revenue management strategy that the REIT can extend to other regional operating partners. The effort uses pricing tools, benchmarking and operational data that will help operators identify areas to improve within individual communities or markets.

“The great thing about having great operators is when you bring those types of ideas to them, they actually can go out and execute,” Willhite said.

AHR is also growing its asset management and technology capabilities to support this ongoing shift. Ann Lacey joined in September to lead senior housing portfolio and asset management, while Chief Technology Officer John Crozier is now overseeing improvements in data and analytics.

Next steps for AHR include getting quicker access to operational information beyond financial reports and adding AI into the company’s data ecosystem. This is being done to help operators improve execution, Willhite said.

Meanwhile, recent acquisitions have changed the composition of AHR’s SHOP holdings. The portfolio’s average age declined to 18.1 years from 22.9 years at the end of 2025.

In the third quarter, AHR completed roughly $1.69 billion of investments across 17 senior living communities, including six from Kensington for $572 million and eight communities on the East Coast for $696 million, with seven of those properties now managed by LCB. AHR is still able to buy communities below replacement cost, including in affluent markets where limited land and long entitlement processes restrict competing development, Oh said.

Of the recent acquisitions, Willhite noted that larger units and a range of amenities are important factors for enticing incoming older adults.

AHR’s investment pipeline exceeds $1 billion, with some transactions expected to close later this year and in the first quarter of 2027, and leaders expect to close the remaining two Kensington communities by the end of 2026.

AHR raised its full-year SHOP same-store NOI growth outlook to between 23% and 26%, raising the guidance midpoint by 500 basis points during Friday’s earnings conference call. Pending acquisitions were not included in this updated guidance.

Willhite described the advantages of the company’s SHOP platform as structural and said leadership feels well positioned heading into 2027 as pricing power improves.

Potential dispositions could also reshape the portfolio. Willhite said AHR continually evaluates older or noncore properties, communities where it has maximized value and markets facing new supply. There were no specific sales to announce, though he said more information could come early in 2027.

For now, leadership’s emphasis remains on improving operations while adding communities that fit its operators’ capabilities.

“We’re not just getting bigger,” Hanson said. “We’re getting better as a platform.”

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