American Healthcare REIT Sees Upside in Independent Living Villa Concepts, Touts Trilogy Recovery 

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American Healthcare REIT (NYSE: AHR) sees future upside in expanding independent senior living development at some of its Trilogy Health Services senior living campuses, according to President and CEO Danny Prosky. 

Prosky’s bullish comments on Trilogy’s operating upside going forward and the tailwind from the REIT public offering last month came during Friday’s fourth quarter 2023 earnings call.

Trilogy comprises the Irvine, California-based real estate investment trust’s largest operator, and Trilogy delivers the full continuum of senior living and skilled nursing services. As it stands, the Trilogy portfolio saw a 300 basis point occupancy increase in 2023 compared to 2022.


By adding independent living villas, Prosky envisions future opportunity to expand Trilogy’s revenue and help improve the march toward pre-pandemic operating margins.

“I firmly believe we will get back to the margins that we saw pre-COVID; I don’t know how long it’s going to take,” Prosky said. “I think a big part of that is going to be through occupancy growth and … it’s going to play a big part as far as continuing to show margin improvement.”

The IL units described by Prosky are duplexes with private kitchens and garages in a small neighborhood design with a shared clubhouse. Existing IL villa units run at 95% occupancy, he added.


With the lower acuity offerings seen as low-hanging fruit, Prosky said the villa concepts “typically lease up” before construction and bring “very high, single-digit yields.”

With land already owned by Trilogy and “shovel-ready” sites, Prosky sees private-pay upside going forward while keeping construction costs lower due to already having land for new build expansions.

“I think that would further, obviously, increase the amount of private pay in the Trilogy portfolio and be an interesting area for growth,” Prosky said.

Trilogy reported a net operating income same-store increase of 14% in 2023 with margin expansion in 4Q23 to 16.7%, as most Trilogy communities include 45% senior living units with a balance of skilled nursing units.

Overall, AHR’s NOI growth for its senior housing operating portfolio was 44.9% in the fourth quarter of last year and 27.2% for 2023 overall as occupancy grew at a “torrid pace” in 2023.

“We believe that we are still in the early innings of capturing the full value of the current supply-demand dynamic that has been a tailwind for our portfolio,” Prosky said. “Our SHOP portfolio still has room to grow.”

In total, AHR’s senior living portfolio extends to 55 properties in 14 states with seven operating partners as of the end of 2023.

In early February, AHR offered 64.4 million shares of common stock that resulted in raising nearly $773 million with net proceeds to pay down short-term and floating rate debt with a 7.5% interest rate. The figure of nearly $773 million raised was higher than what was reported on Feb. 7 of $672 million raised.

Full-year guidance was issued by executives on Friday of $1.18 to $1.24 per diluted share for normalized funds from operations, and leaders noted “the potential” for around $68 million of asset sales in the future. 

AHR stock fell 1.35% on Friday to rest at $13.93 per share at market close.

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