American Healthcare REIT (AHR) Q1 2026 Transcript

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Date

Friday, May 8, 2026 at 1 p.m. ET

Call participants

• Chairman, Interim CEO, and President — Jeffrey Hanson
• Chief Operating Officer — Gabriel Willhite
• Chief Investment Officer — Stefan K. Oh
• Chief Financial Officer — Brian S. Peay

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Takeaways

• Total portfolio same-store NOI growth -- 12.1% growth, marking nine consecutive quarters of double-digit gains across the company’s portfolio.
• ISHC (Trilogy) same-store NOI growth -- 14.5% increase, with an average same-store occupancy of 91.2%, up approximately 220 basis points, supported by 6.9% same-store revenue growth.
• Trilogy same-store quality mix -- 75.5% of resident days on a same-store basis, up about 60 basis points, with a total portfolio increase of 200 basis points, reflecting focus on Medicare Advantage and payor quality alignment.
• Trilogy same-store NOI margin -- Exceeded 20% for the first time since COVID, establishing a post-pandemic operational milestone.
• SHOP segment same-store NOI growth -- 19.7% increase; same-store occupancy averaged 88.6%, up approximately 255 basis points; NOI margin expanded by about 215 basis points to reach 20.6%.
• Q1 acquisitions -- Closed $162.8 million in new SHOP segment acquisitions, including five communities in California and Missouri ($117.5 million), and two in Kansas ($45.3 million).
• Post-quarter SHOP acquisitions -- Acquired six SHOP assets in Georgia and South Carolina for $86.4 million, expanding Southeast presence.
• Pipeline of awarded deals -- Over $650 million, with a focus on SHOP and about 80% involving existing operators.
• Development pipeline -- $173.9 million in-process, with $52.4 million funded, predominantly involving Trilogy campus expansions and independent living villas.
• Normalized FFO -- Reported at $0.50 per diluted share, reflecting 31.6% growth from $0.38 per share in the prior year’s first quarter.
• Leverage profile -- Net debt to annualized EBITDA improved to 3.0x, down by 0.4x from year-end 2025.
• ATM forward sale agreements -- Sold about 8.1 million shares for $412.7 million in gross proceeds, with unsettled agreements representing $527.4 million in additional proceeds.
• Credit facility amendment -- Increased unsecured revolver capacity to $800 million, extended maturity to April 2030, with no current borrowings outstanding.
• 2026 guidance -- Raised full-year same-store NOI growth target to 9%-12% total; 11%-15% at Trilogy, 15%-19% in SHOP, 0%-2% in outpatient medical, and 2%-3% in triple-net lease.
• 2026 NFFO per share guidance -- Now $2.09 to $2.30 per share, up $0.04 at the midpoint, targeting 20% growth over 2025.

Summary

American Healthcare REIT (NYSE:AHR) reported accelerated external growth initiatives, underpinned by $249.2 million in closed SHOP acquisitions and a $650 million pipeline primarily with existing operating partners. Management highlighted capital efficiency improvements, with no borrowings under the newly expanded $800 million revolving facility and dry powder from $527.4 million in unsettled forward equity. The company disclosed a shift in asset mix, divesting a third of outpatient medical holdings and increasingly concentrating investment in higher-growth SHOP properties. Diversification and underwriting discipline provided access to off-market opportunities and quality assets below replacement cost, confirmed by management’s statement that “We are still buying below replacement cost.” Guidance for general and administrative expense was increased, attributed solely to stock-based compensation linked to performance and rising share price. The development pipeline’s expansion, particularly in integrated senior health campuses, reflects ongoing pursuit of market-specific scale with Trilogy as anchor partner.

• The company’s disposition strategy continues to reduce exposure to low-growth and triple-net segments, which now comprise less than 6% of the portfolio and are “shrinking every day.”
• Trilogy Health Services’ use of dynamic revenue software enables daily unit pricing based on demand and attributes, providing “a significant tailwind for revenue.”
• An estimated three to four new Trilogy campuses will be developed annually, with regional scale in Wisconsin contingent on achieving at least five to six assets and on securing required bed licenses.
• Management’s dividend policy is structured to retain earnings, providing a not inconsequential amount of self-funded equity, which is considered the cheapest capital source for acquisitions.
• G&A guidance increases result from new stock-based awards, including programmatic operator equity incentives, and higher share prices, not from expenses unrelated to performance.
• On supply constraints, the leadership stated that certificate-of-need regimes in key states maintain “the most durable competitive moat” and limit new skilled nursing supply to their own pipeline.
• The asset management approach allows for immediate occupancy ramp and rate optimization after new acquisition, accelerating non-same-store NOI growth relative to stabilized assets.
• Declining Medicare growth rates are being offset by quality mix improvements and payor selection in skilled nursing, with management noting, “Their skilled nursing rate, if you look at our supplemental, is growing at 5% a year—ahead of inflation.”

Industry glossary

• SHOP: Senior Housing Operating Portfolio—a segment of owned senior living properties managed directly for operational upside rather than leased to tenants.
• NOI: Net operating income—the company’s preferred cash measure at the property level (excluding corporate expenses, depreciation, interest, and taxes).
• FFO / NFFO: (Normalized) funds from operations—a REIT-specific performance metric adjusting net income for real estate depreciation and other non-cash items.
• ISHC / Trilogy: Integrated senior health campus—a segment managed by Trilogy Health Services, combining independent living, assisted living, and skilled nursing on the same campus.
• RevPOR: Revenue per occupied room—a key metric for evaluating per-room top-line performance in senior housing properties.
• ATM: At-the-market equity issuance program—a flexible tool for raising equity capital opportunistically via open market share sales.
• CON: Certificate of need—a regulatory approval required in some states for new healthcare facility development, restricting supply growth.

Full Conference Call Transcript

Jeffrey Hanson, Chairman and Interim CEO and President; Gabriel Willhite, Chief Operating Officer; Stefan K. Oh, Chief Investment Officer; and Brian S. Peay, Chief Financial Officer. On today's call, Jeffrey Hanson, Gabriel Willhite, Stefan K. Oh, and Brian S. Peay will provide high-level commentary discussing our operational results, financial position, our increased 2026 guidance, and other recent news relating to American Healthcare REIT, Inc. Following these remarks, we will conduct a question and answer session. Please be advised that this call will include forward-looking statements.

All statements made during this call other than statements of historical fact are forward-looking statements and are subject to numerous risks and uncertainties that could cause results to differ materially from those projected in these statements. Therefore, you should exercise caution in interpreting and relying on them. I refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results, financial condition, and prospects. All forward-looking statements speak only as of today, 05/08/2026, or such other dates as may otherwise be specified. We assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

During the call, we will discuss certain non-GAAP financial measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable measures calculated in accordance with GAAP are included in our earnings release, supplemental information package, and our filings with the SEC. You can find these documents as well as an audio webcast replay of this conference call on the Investor Relations section of our website at americanhealthcarereit.com.

With that, I will turn the call over to our Chairman, Interim CEO, and President, Jeffrey Hanson.

Jeffrey Hanson: Thanks, Alan, and good morning, everyone. Before the team gets into the quarter, I want to provide a brief update on Danny Prosky, our CEO and President. As you know, he experienced a health event in February and he continues to recover at home. We are very pleased to share that he underwent the only important medical procedure that was part of his treatment and recovery plan a couple of weeks ago. It went exceedingly well, and he is in good spirits and making strong progress at home.

I would also note that during the entirety of this interim period, he has remained fully engaged in each of our board meetings virtually, and he and I speak regularly each week on the business front. Although we do not have a definitive timeline for his reentry, given the recent procedure we do expect to have that clarity soon and look forward to sharing the details with you in the near term. In the meantime, AHR is advancing with full momentum, and I want to be clear about what that looks like from where I sit.

As most of you already know, I served as Chairman and CEO of our predecessor companies, so stepping into this seat is not a transition into unfamiliar territory. To the contrary, it is a return to a business, a strategy, and a team that I know intimately and have significant track record with. Gabriel Willhite, Stefan K. Oh, Brian S. Peay, and the broader leadership team are executing at a high level, and my role has been to lead alongside them day to day and full time since Danny’s event, making sure that we continue to operate with the discipline and ambition that you expect of AHR. The results you will hear this morning reflect that fact.

Q1 was another exceptionally strong quarter across core metrics: double-digit same-store NOI growth for the ninth consecutive quarter, efficient capital formation and accretive deployment, an even further strengthened balance sheet, and raised full-year guidance. Rather than isolated data points, these represent the output of a strategy that we have forged together over time and a team that is executing consistently. What gives me the greatest confidence, though, is what lies beneath these numbers. AHR exists to deliver higher-quality care and superior resident and patient outcomes while also striving to be the most sought-after and trusted capital partner for some of the best operators in the space. This mission is not a slogan.

It is the operating logic that AHR fully embraces and that our people live each and every day through our strategic operating partnerships. When we get our operator relationships right, underwrite with discipline, and structure capital to support long-term performance rather than short-term optics, financial results naturally follow. Q1 is another quarter of evidence that this approach is not only effective, but that it is effective at scale. With that, I will turn it over to Gabriel and the rest of the team to walk through our operating performance. Gabriel?

Gabriel Willhite: Thanks, Jeffrey. Q1 2026 was another strong quarter for AHR's operating portfolio. We delivered total portfolio same-store NOI growth of 12.1%, our ninth consecutive quarter of double-digit total portfolio same-store NOI growth. That kind of sustained consistency reflects the confluence of three key things: the enduring strength of the fundamentals underpinning long-term care, the quality of our regional operating partners, and the durability of our platform. Let me say a word about the strength of those fundamentals because I think it is important context for everything you are going to hear today. Long-term care demand is being driven by a demographic wave that is still in the early stages.

The 80+ population, the core consumer of long-term care ranging from independent living to skilled nursing, is growing at an accelerating rate as baby boomers age. Meanwhile, new supply growth across senior housing remains near historic lows. The economics of new construction do not pencil for most developers today, and that dynamic has not changed recently. What you get from that combination—surging demand meeting constrained supply—is a compelling operating environment our operators are experiencing right now: occupancy surpassing prior high-water marks with potential for stabilized occupancies to settle well beyond 90%, sustained rate growth, and expanding margins. We believe this trend will continue well into the next decade.

Now into the quarter, our ISHC segment, also known as Trilogy, delivered same-store NOI growth of 14.5% with same-store occupancy averaging 91.2%, up roughly 220 basis points year over year. Same-store revenue growth of 6.9% was driven by both rate and occupancy improvements. A big driver of rate growth has been the continued improvement in quality mix, which now stands at 75.5% of resident days on a same-store basis, up roughly 60 basis points from a year ago, and up 200 basis points on a total portfolio basis.

This shift directly reflects Trilogy's continuing focus on alignment with payor sources, especially Medicare Advantage plans, that value quality outcomes and are committed to paying a rate necessary to deliver high-quality care, which, of course, is the hallmark of Trilogy's business. Trilogy's clinical reputation is what earns its strong census, and we continue to invest in maintaining and expanding it. I am proud to report that as a result of Trilogy's consistent use of the various levers at its disposal, Trilogy's same-store NOI margins have now eclipsed 20% for the first time since COVID. Congratulations to the Trilogy team for surpassing another important milestone. Turning to SHOP, same-store NOI increased 19.7% for the first quarter.

Same-store occupancy averaged 88.6%, up roughly 255 basis points year over year, and same-store NOI margin expanded approximately 215 basis points to 20.6%. Performance in the SHOP same-store pool reflects our approach to bottom-line optimization—more specifically, the utilization of various levers available which enable us to continuously calibrate financial performance through dynamic revenue and expense management in our operating portfolio. Early in the year, that meant building a strong occupancy foundation to combat what I view as regular seasonality pressures in our high-acuity portfolio and positioning the portfolio to capture incremental demand as the selling season really gains momentum.

As move-in activity accelerates in the spring and into the summer, we are highly focused on managing street rates while taking a more measured, resident-focused approach to in-place pricing. This ability to adjust in real time—market by market, asset by asset, by acuity level, and even unit by unit—is absolutely central to how we seek to sustain NOI growth above historic averages over the next several years without compromising high-quality care and outcome standards that take precedence. The operating leverage in this portfolio continues to build. As occupancy continues to push higher, each incremental dollar of revenue flows through at a disproportionately higher margin.

Combined with the structural demand tailwinds I described earlier, we remain highly confident in our ability to deliver sustained double-digit NOI growth through 2026. I want to close by thanking each of our operating partners as well as our AHR asset management teams for their unwavering commitment to the residents and communities they serve—Trilogy Health Services, Senior Solutions Management Group, Great Lakes Management, Compass Senior Living, Heritage Senior Living, Cogir Senior Living, Priority Life Care, Heritage Communities, and WellQuest Living. Your work is the foundation of everything we are able to report today. Thank you. With that, I will turn it over to Stefan.

Stefan K. Oh: Thanks, Gabriel. Q1 2026 was a productive quarter for our investments team, and I am pleased to say the volume and quality of what we are seeing in the market has only increased as we move through the year. Year to date, we have closed $249.2 million of new acquisitions, all within our SHOP segment. Approximately $162.8 million of those acquisitions closed during the first quarter. This includes the five previously announced communities in California and Missouri for approximately $117.5 million and two additional properties in Kansas that closed after our last earnings call totaling approximately $45.3 million.

Subsequent to quarter end, we closed on six more SHOP assets in Georgia and South Carolina for approximately $86.4 million, deepening our Southeast presence with one of our trusted regional operators. Every deal we do starts the same way: with a relationship. Before we spend time underwriting any asset, we have underwritten the operator first—their commitment to resident care, how they run their buildings, and how their teams have performed under varying circumstances over time. In parallel, we build a deep understanding of the market before we invest capital. That operator-first approach means that a lot of our activity comes through off-market or limited-process channels where we have a genuine informational advantage.

Our trust in the operator drives our confidence to pursue opportunities alongside them, informed by real insight into execution, consistency, and alignment. This depth of conviction is simply not available to everyone underwriting the same asset in a broadly marketed process, and it is a meaningful competitive advantage in how we price risk and project returns. Our underwriting process is equally deliberate—we look at market demographics, operator expertise, acuity mix, asset age, the holistic long-term cash flow profile, and the competitive set, not simply initial yield. The goal is not near-term accretion for its own sake; it is building a portfolio of assets that will generate durable, compounding NOI growth for years to come.

We are highly selective, and that selectivity has served us well. What gives us added confidence heading into the back half of this year is what we are seeing from the 2025 investments we closed. Across a number of our acquisitions completed last year, performance is already tracking ahead of our initial underwriting. That is a direct reflection of how we approach every deal from day one. The asset management plan is developed with our operating partners since they are touring and underwriting the deal alongside us. So by the time we take ownership, that plan is already in motion, and our partners are executing against it.

Seeing those early results come in above expectations reinforces our conviction in both the process and the operators we are deploying capital with, and it informs how we underwrite and structure new investments today. In addition to the approximately $250 million we have closed to date, we have a pipeline of over $650 million of awarded deals that have yet to close. We expect to close these well before the end of 2026 and feel very good about the quality and composition of what is in front of us. On development, our in-process pipeline totals approximately $173.9 million in expected cost, of which approximately $52.4 million has been funded to date.

These are predominantly Trilogy campus expansions and independent living villa projects. They are capital-efficient growth opportunities layered onto existing operational platforms that should extend our earnings runway at attractive yields with limited market risk. In summary, we remain well positioned with capital available to execute quickly and efficiently, a growing network of trusted operators, and a pipeline that gives us real confidence in continued accretive deployment through the balance of this year at the very least. With that, I will turn it over to Brian.

Brian S. Peay: Thanks, Stefan. Q1 2026 was another quarter of strong financial performance, and I am happy to report that these results support an increase to our full-year 2026 guidance. For the first quarter, we reported normalized funds from operations, or NFFO, of $0.50 per diluted share, representing 31.6% growth compared to $0.38 per diluted share in Q1 2025. These results were driven primarily by the continued double-digit total portfolio same-store NOI growth, supplemented by accretion from the $950 million of acquisitions completed in 2025 that are now contributing to earnings.

Our proactive, hands-on asset management approach has continued to deliver solid financial performance at the start of 2026, and the strength of Q1 gives us confidence in raising our same-store NOI growth guidance for the full year to a range of 9% to 12%. At the segment level, our current full-year 2026 same-store NOI growth guidance is as follows: 11% to 15% growth at Trilogy; 15% to 19% growth in SHOP; 0% to 2% growth in outpatient medical; and a range of 2% to 3% growth in our triple-net lease property segment.

Turning to the balance sheet, our net debt to annualized EBITDA improved to 3.0x as of 03/31/2026, down from 3.4x at the end of 2025, as strong EBITDA growth continues to improve our already attractive leverage profile. On the capital markets front, during the first quarter and the first few days of the second quarter, we entered into forward sale agreements under our ATM program to sell approximately 8.1 million shares for $412.7 million in gross proceeds. As of today, we maintain unsettled forward agreements under our ATM program representing approximately $527.4 million in gross proceeds, assuming full physical settlement.

With well over $1 billion available on our existing program, we will continue to utilize this tool opportunistically depending on how the stock is trading. I also want to highlight the credit facility amendment completed subsequent to quarter end. We increased our unsecured revolving credit facility capacity from $600 million to $800 million, we extended the maturity to April 2030, and we have two six-month extension options. As of today, there are zero amounts outstanding on the revolver. Between our forward sale agreements and the increased available capacity on our line of credit, we have meaningfully de-risked the execution of our external growth plans, which include the over $650 million Stefan described.

This should provide us with the ability to deploy capital at scale throughout 2026. Combined, the strong organic and external growth is prompting us to increase our full-year 2026 NFFO per share guidance to a range of $2.30 to $2.09 per share, up $0.04 at the midpoint and would now reflect 20% growth in NFFO per share over 2025. As always, our guidance includes only those transactions and capital markets activity that have been completed as of today. We are entering the rest of the year from a position of strength—growing earnings, continuing to improve our already attractive leverage, creating ample liquidity, and fostering relationships with operators that continue to deliver strong performance.

We remain focused on executing our mission of facilitating high-quality care and health outcomes for residents while creating long-term value for our shareholders. And with that, operator, we would like to open the line for questions.

Operator: We will now open the call for questions. Please limit yourself to one question and a follow-up, two total. You will be allowed to re-queue if you wish. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Farrell Granath from Bank of America. Farrell, please go ahead.

Farrell Granath: My first one is in regards to the same-store NOI growth guidance within your segments. We know that the Trilogy, or Integrated Health Campus, guidance was increased, but SHOP remained unchanged, and especially that all segments outperformed the midpoints of your guidance this quarter. Can you give a little more color on how you are thinking about that pacing through the rest of the year, or generally if there is any baked-in conservatism?

Brian S. Peay: Sure. Good morning, or afternoon as it is. Trilogy had such a strong quarter that we felt a lot of conviction they were going to continue to exceed. If we did not raise guidance, then the rest of the year would have looked relatively flat compared to the first quarter. So that was a no-brainer. On the SHOP side, we still have tremendous conviction in the space. We love our operator base, and we believe they can continue to deliver. If you look at the supplemental and go into the SHOP portfolio, what you will notice is that sequentially from Q4 2025 to Q1 2026, there was a pretty significant uptick. Same-store SHOP NOI increased by a little over 9.3%.

That is part of the reason why it gave us pause. It is only the first quarter, but we have tremendous conviction about their ability to continue to perform.

Farrell Granath: Thank you. And then my follow-up question is in regards to your sources of capital. I know you just ran through a little bit on the lowering of your leverage as well as the ATM that you have outstanding. Can you walk me through how you think about sourcing of capital and uses when you are thinking about your acquisition pipeline going forward?

Brian S. Peay: Yes. REITs are an interesting vehicle—required to pay out 90% of your taxable income, it is really difficult to maintain a lot of retained earnings. Having said that, our board has decided on a dividend policy that is allowing us to retain a not inconsequential amount of earnings. That is the cheapest form of equity that we can source, so that is first and foremost. Second, we have dedicated ourselves to a disposition program. Over time, we have been selling smaller, less strategic, lower-growth assets. That is a nice source of funds for us to utilize for external growth, for debt paydowns, and for whatever else might come up.

Beyond that, on the equity side, we have been a user of the ATM in the past, based on the stock price, and I think we will, again, based on stock price, utilize the ATM in the future. It is an incredibly efficient vehicle for raising capital, and when you can do it on a forward basis, you can do it in a non-dilutive way. Obviously, our use of those funds—we are doing it in an immediately accretive, but more importantly, a long-term accretive fashion. I did leave out the line of credit. We are happy at 3.0x debt to EBITDA.

There is nothing bad that happens to us to the extent that number continues to go lower; it really just creates dry powder. As long as we can continue to hit the earnings growth that we have projected, we do have $800 million of capacity. In thinking about those as alternatives, I do not think you are going to see us run the debt up very much at all. We are committed to running the company with essentially investment-grade ratios because we know that it is going to help the equity trade at its best possible multiple.

Operator: Your next question comes from the line of Austin Wurschmidt from KeyBanc Capital Markets. Austin, please go ahead.

Austin Wurschmidt: Great, thanks. Gabriel, the Trilogy portfolio this quarter saw very strong sequential NOI pickup from all the levers that you have spoken about in past quarters. I think it was even better sequential growth versus what you saw last year, which was really strong. Recognizing there are a lot of moving pieces and some seasonality in this business, does that sequential strength carry momentum into the spring and summer, or is that not necessarily the right way to think about the business?

Gabriel Willhite: I think that is a great way to think about the business, Austin. One thing I will point out—in 2025, many things went right for Trilogy, most of which are repeatable, and a few were one-time. For example, we talked about the Medicare Advantage strategy and trying to find different ways to optimize our partners on that front. In March 2025, we signed a new contract with a partner that was substantially higher and opened up more residents to Trilogy facilities, so it had a strong impact on 2025 earnings. That would be a bit of a headwind in 2026.

Counterbalancing that is exactly what you are talking about, which is coming into the year with higher occupancy than we had last year at Trilogy. That higher occupancy unlocks the ability to not only push rate on very full buildings within the Trilogy ecosystem—some with private-pay occupancies near 100%—but it also helps us continue to work on the Medicare Advantage strategy, prioritizing partners that are willing to pay for the quality of care that Trilogy delivers. There are a lot of different Medicare Advantage plans you could have a contract with.

Some are looking for the low-cost provider; others realize the best way for the plan to make money is to provide the highest quality of care to the resident to get them healthy faster. That is exactly what Trilogy brings to the table. I am still a big believer in Trilogy. They are one of the best operators I have ever seen. If there are ways to pull different levers to continue to push on NOI, they will figure out a way to do it. And we have the right, unique alignment with our management contract with them that will reward them for their outperformance with AHR stock, like we have talked about in the past as well.

Austin Wurschmidt: That is helpful. It leads into my follow-up question: you highlighted NOI margins are now back above 20% for the first time since COVID. Given the higher occupancy today and the ability to push rate on the private-pay side of the business, what sort of medium- or longer-term opportunity set do you see to drive margins across the Trilogy portfolio?

Gabriel Willhite: We did 134 basis points of margin expansion last year—that was a pretty good mark for them. In some ways, it could get trickier in 2026 as you push further ahead, because the Medicare growth rate is decelerating a little bit. That number is triggered off inflation, and as inflation comes down, that number comes down as well. One other thing I have not talked about yet is the development pipeline at Trilogy. Currently, if you look at what we have disclosed in our supplemental, you will see that it skews toward IL and senior housing.

Those businesses have higher margins, and as we lean into those product types and try to expand on the AL and IL side of their business, I think you will see margin expansion as a result of asset mix shifting to more private pay as well.

Austin Wurschmidt: Helpful. Thanks for the time.

Operator: Your next question comes from the line of Michael Carroll from RBC Capital Markets. Michael, please go ahead.

Michael Carroll: Gabriel, I wanted to continue on that line of questioning, specifically talking about Trilogy's expansion plans in Wisconsin. I noticed the development that recently broke ground was in Wisconsin. Should we think about the growth that Trilogy is going to pursue in that new state as largely happening via development?

Gabriel Willhite: I think that is probably the base case, Michael. What we would like to do is get to a spot where the best operators have a regional presence. Regional presence matters because they can get a regional director to oversee multiple different facilities, and there are synergies from sharing employees and creating an upward path for employees within your campuses. We would love to see a concentration of Trilogy campuses in Wisconsin where we can utilize the benefits of that kind of regional strategy that has worked so well for Trilogy in the past.

It is hard for Trilogy to find acquisition opportunities that allow them to run their integrated model, and we do not want to move away from the integrated model. Maybe 75% of Trilogy's assets are purpose-built for their business. It is one of the reasons why they outperform: there are operational and care synergies that come from having AL, IL, and SNF under one roof. If you have a Trilogy prototype that has been value-engineered over several iterations, it is just easier to do that. So I think that is the base case. We are always looking for creative solutions. The Portage campus that is in our supplemental is one of those interesting opportunities.

It was a defunct assisted living building that went dark. It was a 50-unit building, which is really hard to operate. We bought it, and instead of building ground up, we added on the necessary skilled nursing component. It was a really smart way to lower the total development cost, and it is going to be a good deal for us because of it. I think we will continue to look for those opportunities, but the base case is the Trilogy prototypes.

Jeffrey Hanson: Michael, keep in mind also, the state where Trilogy has the most concentration is Indiana. They may have 7 thousand to 8 thousand beds in Indiana. The total addressable market in Indiana is far larger than that, so they can continue to grow in Indiana and in all of the other states they are in, in addition to Wisconsin.

Michael Carroll: That is helpful. Sticking with Wisconsin a little bit, how many assets do you really need to get that regional scale, and how many developments in Wisconsin are you willing to pursue at a time? Should we think about that as one a year, or can Trilogy pursue more if they like the success they are having and try to build that necessary scale right away?

Gabriel Willhite: We are evaluating all those things right now. To your first question about how many you want for a regional concentration, I think you want to be in the five to six-plus range. We are committed to what we have said in the past—three to four new campuses a year with Trilogy. That is currently a mix of Wisconsin and its other existing markets. Partially because of the CON requirements—those widen the moat for Trilogy and create a competitive advantage. These are CON states; you need the licenses in Wisconsin. That is something we need to manage through to make sure that we get the license in the counties we want to be in as well.

So I think it will be incremental within the Wisconsin market as we augment it with markets Trilogy has already identified in the states they currently operate in.

Michael Carroll: Great, thanks. Appreciate it.

Operator: Your next question comes from the line of Seth Bergey with Citi. Seth, go ahead.

Seth Bergey: Hey, thanks for taking my question. I wanted to dive into the $650 million pipeline a little bit more—geographically where those assets are located and whether those are primarily with existing operators? And then the third point would be whether your underwriting yields have changed at all given it seems there are more players entering the senior living space.

Stefan K. Oh: Hey, good morning, Seth. Deal activity right now is very high. Our pipeline is in great shape. We have closed $250 million so far this year and have another ~$650 million that has been awarded. It is almost exclusively in SHOP. We are not surprised to see other people showing a lot of interest in this space—it is attractive and still in the early stages of extended demand growth. We are in an advantageous position. About half of our deals are coming on an off-market basis. We have been able to raise capital that allows us to compete on the targeted assets we really want to buy, and we have a good reputation as a buyer.

If you look at the composition of our deals—higher quality, newer—primarily with existing operators that we already have in our portfolio today. One hundred percent of what we have closed so far has been with existing operators. Our pipeline is probably a mix of about 80% existing and 20% new. We continue to look in all the major regions where our operators are already located. That is our primary focus: growing in the areas where they have expertise. The team has done a great job of identifying, sourcing, and underwriting with our partners on these acquisitions, and I think we are going to be very pleased as we close these throughout the year.

Seth Bergey: Thanks. And then thinking about the supply and demand picture, where are you acquiring at a discount to replacement cost, and how high do rates need to move before you start to see new supply come in on the SHOP side?

Stefan K. Oh: We are still buying below replacement cost. Construction, although there is not a whole lot of it, continues to come in at higher amounts—the cost to build continues to grow. We have been fortunate to continue to find deals below replacement cost, even in primary markets where we see high barriers to entry. Pricing continues to be within our bandwidth. We are still seeing stabilized yields in the 7s, and that is through continued disciplined underwriting. Our previous underwriting is proving out, and that gives us more confidence going forward.

Gabriel Willhite: One thing I would add to that, Seth—AHR has been in the SHOP business for a long time and through cycles. On the supply side, the things Stefan is targeting are areas where we think there is more runway before supply really picks up. That is why you do not see us focused on Florida, which is a great state for senior housing but one where we have seen it become overbuilt quickly. The pipeline he is building takes into account when supply may start ramping, and it is built to have a longer runway.

Seth Bergey: Okay. Thank you so much.

Operator: Our next question comes from the line of Ronald Kamdem with Morgan Stanley. Ronald, please go ahead.

Ronald Kamdem: Hey, great. I want to go back to Trilogy. You are always optimizing for revenue, but thinking about the occupancy trajectory and the incremental margins that are coming through, how much more upside do you think you have at this point and how is that playing out?

Gabriel Willhite: On a few different fronts, Trilogy still has a lot of meat on the bone. From the occupancy perspective, even at what I think are market-leading levels, we are still seeing occupancy grow—especially strong in the senior housing space. Typically, this is a downtime of the year with seasonality, so it is nice to see that Trilogy has been able to hold steady and had a really great year of occupancy growth last year. I think that is going to continue. When people understand there is a market reputation for being the place that takes care of your family the best, you are going to be a preferred provider.

The other thing they have really figured out is that quality will carry the day from a rate perspective as well. If you appreciate the quality of care above all other things, you are willing to pay for that quality and experience because it costs a little more to deliver that. Trilogy is leaning into the revenue management side through a proprietary software program they developed over years that prices units dynamically on a daily basis, based on market demand, market prices, leasing, and unit attributes. They are far in front of where many other senior housing operators are, by and large, and that will be a significant tailwind for revenue.

The real question is the velocity of those things—it is hard to predict how quickly occupancy will continue to build when you are at higher levels and how much rate growth will continue over the next year. I have extreme confidence both will be higher by the end of the year than they are now, but the rate of change is hard to speculate on.

Ronald Kamdem: Great, and then my follow-up—during the quarter there was a lot of talk about the CMS proposed rate. The preliminary rate came out at 2.4%. How did you and Trilogy react to that? Does that change anything for the business plan, not only near term but longer term, if that rate continues to trail inflation?

Gabriel Willhite: This is where people are often the most uninformed on Trilogy’s business, so I am glad you asked. Most people assume that skilled nursing rates will just grow at an inflationary rate and you are stuck with it. If you have followed Trilogy for the last several years, you have seen that is not true. Their skilled nursing rate, if you look at our supplemental, is growing at 5% a year—ahead of inflation and significantly ahead for a couple of reasons. One, a big component of their skilled nursing is private pay. Those rates move much like private-pay senior housing, and Trilogy has control over those rates, so I would expect them to outpace inflation.

Even though Medicare Advantage contracts typically price off of the Medicare rate increases, Trilogy has been able to select MA plans and manage those relationships in a way where they are generating rate growth of 6.6% last quarter—well above inflation and the Medicare rate—because they are being more selective about who they partner with. As occupancy grows, it creates the opportunity to be even more selective. They have sophisticated systems for managing that entire process, which comes with scale, experience, and great leadership. The 2.4% was not a surprise.

That is more like a floor than a ceiling, and I fully expect Trilogy to manage all of their opportunities for maximizing revenue growth within skilled nursing to push it beyond 2.4%.

Ronald Kamdem: Helpful. Thank you.

Operator: Your next question comes from the line of Juan Sanabria from BMO. Juan, go ahead.

Juan Sanabria: I wanted to ask about the SHOP RevPOR growth—looks a little below where you were trending last year. Was there an impact from the typical seasonality with some discounts in the first quarter that may have impacted growth, and how should we think about RevPOR trending for the balance of the year?

Gabriel Willhite: The biggest reason for the deceleration in RevPOR growth is that we changed the same-store universe, which happens once a year for us. If you looked at our 2025 same store, the RevPOR growth there would be high 4s—more in line with what we are expecting and managing toward. The reason it is lower in the current same store is that we have shifted some non-stabilized assets into the same store. Those assets have incredible NOI growth, but the strategy has always been build occupancy first and grow rate second.

As they are building occupancy, they are a meaningful component of the NOI growth on a same-store basis, and we think it is a great way for us to add value and grow NOI. The second thing is that it would be an oversimplification of a complex operating business to look at one number like RevPOR without the context of the expense side. We are managing toward NOI growth—taking many different things into account to deliver the most NOI growth. For example, we asked our operators to focus on reducing the referral fees we pay for move-ins.

That helps on the expense side, and if you pass a little of those savings on to residents, it may be a headwind for RevPOR. But it still grows NOI and expands margin. It is exactly what we did: we reduced referral fees by over 20% in our portfolio year over year. As occupancies push higher, you need to look at a variety of things to optimize NOI, and that is what we are asking our operators to do.

Juan Sanabria: Great, thank you. Earlier in the call, you noted sources and uses to fund acquisitions, including dispositions. There seems to be a very strong bid across the spectrum for different asset types within health care, including medical office. Have you thought about potentially selling assets more quickly or at a larger scale—assuming you have the ability to redeploy those proceeds—to take advantage of the bid, or maybe explore joint venture opportunities?

Brian S. Peay: Juan, my guess is you are talking about our outpatient medical portfolio. Everything else is such a tiny piece—our triple net is less than 6% and shrinking every day. We are well aware of the value embedded in our outpatient medical segment. All the fundamentals that make the long-term care business really positive are equally true for outpatient medical: older, aging America; more doctor visits; more things happening in an outpatient setting than in hospitals; and a lack of new supply. Having said that, we have not added to our outpatient medical—we have not even underwritten an outpatient medical building in years. It continues to shrink as a piece of our portfolio.

We have sold over a third of the assets in the outpatient medical segment—smaller, slower-growth assets. We have another handful of buildings we are continuing to expose to the market, and we expect to sell those. Beyond that, we are pretty happy with our portfolio. It is a nice balance. We loved having outpatient medical buildings during the pandemic—the occupancy in that segment was higher at the end of 2021 than it was at the beginning of 2021. As of now, we are committed to a diversified strategy of health care investments.

But everything we are buying is SHOP, and we are selling a little more outpatient medical, so that is going to become a smaller and smaller piece of the total.

Juan Sanabria: Thank you.

Operator: Your next question comes from the line of Alec Feygin with Baird. Alec, please go ahead.

Alec Feygin: Thanks for taking my question. On the development strategy, is Trilogy or AHR the bigger driver of identifying where and when to start new projects?

Gabriel Willhite: Within the development pipeline at Trilogy, it is collaborative, but the Trilogy team is really driving the identification of opportunities—bringing them to us to collaborate and then deciding which to pursue. The development pipeline at Trilogy for new campuses is probably 30 markets deep within its current footprint. How do we decide which three or four to pursue a year? We have to marry a few different things: land availability significant enough to build out an entire campus and allow room for expansion (including villas), and where we have access to bed licenses. There is some magic to that as well.

Because Trilogy has scale, there is almost a bed-license bank they can pull from within their ownership universe to move licenses from one campus to the next or slide licenses from one county to the next. Those rules are complex and hard to navigate, and it is hard to find the licenses to do it. That is a big advantage for Trilogy that I do not think people fully appreciate. We are going to continue to be incremental in the new campuses we add. The opportunity set is really deep, and it is a multi-year development pipeline that is essentially exclusive to us, so that is going to continue for the foreseeable future.

Brian S. Peay: And as you can imagine, we are going to help decide what makes the most sense for us as far as the commitment to development, the dollars we are putting out, and the yields we are going to demand in return for that.

Alec Feygin: Thank you for all that. Switching gears—beyond the three to four developments for Trilogy, what is the appetite with other operators to do development funding? If not now, what would you need to see in order to pursue those opportunities in the future?

Gabriel Willhite: It is something we are looking at. We have not hit go on any new developments with other operators right now. First, we are looking at our existing portfolio and taking a page from the Trilogy playbook—seeing where we have excess land in high-demand, high-occupancy assets, and expanding our existing SHOP buildings. The IRRs on those investments are the highest in our entire portfolio; the limitation is the dollars are not unlimited and not a major amount either. We are doing that, and we are actually using Trilogy’s development capabilities to help us manage those processes—a great example of platform synergies working for our collective benefit.

With other new ground-up developments, we are thinking about how we can expand our existing relationships, use our operating partners that have development experience, and potentially grow their presence in their current markets. We have not found the perfect opportunity to do that yet, but I think we are getting closer. The holdup is that we are buying things below replacement cost, and that will be the holdup until that shifts. We know the demographics will continue to be strong and that supply is not enough to keep up with demand over the next five to ten years—we will hit max occupancy at some point.

The question is when do you really want to start developing to meet that opportunity when you have other opportunities in front of you that are below replacement cost? It is hard to say yes to that.

Alec Feygin: Yeah, that is great color. Thank you for the time.

Operator: Your next question comes from the line of Michael Stroyeck from Green Street. Michael, please go ahead.

Michael Stroyeck: Thanks, and good morning. Within Trilogy, expense growth saw a pretty nice deceleration in 1Q versus recent quarters. Were there any one-timers that may have impacted expenses during the quarter—anything worth calling out that may have driven that deceleration?

Gabriel Willhite: No, it is more of a broad focus on expense management. This was in response to decelerating Medicare reimbursement, us understanding that was coming and getting out in front of it to manage expenses. When I say “us,” I mean really the Trilogy team. We made some significant investments last year, and I think this year we will see expense management really work for them and help expand margin further. No one-timers.

Michael Stroyeck: Understood. And going back to a point you made on CONs—As SNF occupancy continues to trend higher, have you seen any states relax certificate-of-need rules or any indication we could see an acceleration in supply growth across any of your markets?

Gabriel Willhite: No. In fact, that is exactly why I say Trilogy has the most durable competitive moat in our entire portfolio. If you look at skilled nursing development, beds as a percentage of inventory being added is negative and has been for several years—more beds are coming offline than online. If any are coming online, I would speculate almost all are coming from Trilogy. So the supply side on that part of the business is not going to be a problem. That is where there is the absolute longest runway in our portfolio.

It is really hard to develop SNF because most existing buildings are focused on Medicaid, with an average Medicaid mix of 60% to 70%, which makes it hard to pencil from a development perspective. It works at Trilogy because they have the integrated campus, great hospital relationships, and a disproportionate amount of residents on Medicare and Medicare Advantage plans, which are higher-reimbursement sources. That is really hard to replicate if you are not an experienced operator with regional concentration.

Operator: Your next question comes from the line of Michael Goldsmith with UBS. Michael, please go ahead.

Michael Goldsmith: Good afternoon. Thanks a lot for taking my questions. On the last call, you indicated that the non-same-store pools for both Trilogy and SHOP actually grow faster than the same store, but that could be lumpy. How should we think about the NOI growth in the non-same-store pools for Trilogy and SHOP relative to the same-store pools?

Brian S. Peay: Anecdotally, that is not a bad supposition. If you unpack the type of asset we have been targeting, these are assets that are going to have a tremendous amount of internal growth. So when we finally put them into the same-store pool, you are going to see dramatic same-store earnings growth. For example, in 2025 we bought a building that was 74% occupied from a developer who had cycled through operators and then self-operated. We bought it in a market where we have a trusted operator running buildings for us at 95%+ occupancy. We have tremendous conviction in their ability to grow that asset.

Not every asset is like that, but that is the type we have been targeting, and there is upside. So it is fair to say the non-same-store is going to grow faster than the same store.

Michael Goldsmith: Got it. Some of your peers have reported that U.S. SHOP has gotten more competitive. Given AHR does not disclose initial yield, are you seeing more cap-rate compression to start the year? And can you share the timing on that $650 million pipeline?

Stefan K. Oh: On timing, a majority of what we have in the $650 million pipeline will close by the end of this quarter, with the remainder closing in the third quarter. As far as pricing, it is fair to say that cap rates have moved generally 25 to 50 basis points over the last year, but it is very deal specific. We are buying a mix of light value-add and stabilized assets. We are focused on long-term cash-flow durability—what is the projection over several years, not just the first year. That has been consistent throughout. We have still been able to find deals that make a lot of sense for us, and there are many other deals we continue to look at.

Michael Goldsmith: And while I have you, can you walk through what was the driver of the G&A guidance increase?

Brian S. Peay: Sure. It is not a bad thing—in fact, I think it is a positive. The real increase in G&A is tied to stock-based compensation. Two buckets. First, last year investors approved our ability to reward our operators for outperformance with incentive compensation in the form of AHR stock, which gives us best-in-class alignment. We did grant some shares, and those grants are now showing up in the numbers. Second, stock-based comp goes up when the stock price goes up, and we have been in the blessed position of having the stock price go up. So the G&A guide went up.

Michael Goldsmith: Thank you very much. Good luck in the next quarter.

Operator: There are no further questions at this time. I will now turn the call back to Jeffrey Hanson, Chairman and Interim CEO, for closing remarks.

Jeffrey Hanson: Thank you, operator, and thank you, everybody, for investing your time and for your continued support and confidence in the company. I know Danny is attending the call this morning as well, and he is looking forward to reconnecting with all of you directly as soon as he is able. With that, we will conclude the call, and have a great weekend.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

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