American Healthcare REIT (AHR) Q3 2026 earnings review
American Healthcare REIT's senior homes earn more while debt shrinks
American Healthcare REIT, which owns senior housing and nursing campuses, is earning more from the buildings it already had. Senior housing profit at those buildings rose 28%, as rents climbed and costs barely moved, president Gabe Willhite said. The REIT also bought $1.7 billion of new communities with money from share sales. By our math, the raised plan keeps that pace near 30% in the fourth quarter.
| Profit growth at properties owned a year ago | 13.8% 13.2% last quarter |
|---|---|
| Senior housing profit growth, same buildings | 28.2% 20.5% last quarter |
| Funds from operations per share, excluding one-offs | $0.58 +32% from a year ago |
| Full-year outlook, per share | Raised to $2.23–2.26 middle of the range: 31% growth |
⚖️ Verdict: 🟢 Bullish
The story got better, because growth at existing buildings sped up against last year's strong quarter. Debt also fell to 1.9 times yearly operating earnings. One caution: net income dropped 44%, mostly from accounting charges on bought buildings that last through next year.
The question now is how long senior housing rents can keep rising this fast with buildings about 90% full. Either rent gains carry growth into next year, or growth eases as empty rooms run out. The 2027 outlook will tell.
🐂 Bull Case
Senior Housing Profit Rose 28% at the Same Buildings
SHOP is the senior housing American Healthcare REIT owns and pays outside operators to run, so the REIT keeps the profit and the risk. "Supply and demand dynamics alone do not guarantee success in this business," president Gabe Willhite said.
This quarter tested that claim against a hard comparison, because the same buildings had lifted profit 25% a year earlier. Revenue per occupied room climbed 5.4% while cost per room edged up only 0.8%, Willhite said. So profit at buildings owned in both years still rose 28%.
- Operating costs: 72.3% of senior housing revenue, against 79.9% a year ago
- Staff pay: 43.0% of revenue, down 5.1 percentage points
- Margin at the same buildings: 23.5%, up 3.5 percentage points
Willhite credits the pricing system of Trilogy, the operator of the REIT's nursing campuses, which it now shares with its other operators. Finance chief Aric Chang said the raised outlook has the fourth quarter repeating this pace.
What to watch: same-building senior housing growth in the fourth-quarter results, due early next year. Growth near this quarter's level would show that rents can keep rising once buildings are almost full.
Trilogy Campuses Kept Profit Growth Near 16%
Trilogy runs the REIT's integrated campuses, which combine senior apartments and nursing care, and they earn over half of the company's property profit. Profit at Trilogy campuses owned in both years rose 15.7%, even though those campuses had grown 21.7% a year earlier.
- Revenue at those campuses: up 4.8%
- Operating costs: up 2.2%
- Occupancy: 91.2%
- Margin: about 21%, up about 2 percentage points
Higher occupancy and more patients covered by Medicare and private health plans lifted revenue, Willhite said. But a cut in employee-benefit costs also helped the margin, and he called it "more of a onetime thing".
What to watch: Trilogy's cost growth in the fourth quarter. Costs climbing faster than revenue would show that this quarter's margin gain came mostly from the one-time benefit saving.
Debt Fell to 1.9 Times Yearly Earnings
American Healthcare REIT has used money from new shares both to buy buildings and to repay loans. Net debt now equals 1.9 times a year of operating earnings, down from 3.5 times a year ago.
- Total debt: $1.38 billion at September 30
- Mortgage repayments so far this year: $155 million
- Unused credit lines: $850 million
- Share sales agreed but not yet settled: about $1.32 billion
This matters because low debt lets the REIT keep buying without new loans. Finance chief Aric Chang said it is "fully funded for our awarded pipeline", so the next purchases should not lift borrowing.
What to watch: the debt ratio after the pending deals close, early next year. A ratio still near 2 times would show the REIT can grow without more borrowing.
$2.1 Billion of Senior Housing Bought This Year
The REIT grows by buying senior housing and handing it to regional operators it trusts. It closed about $1.69 billion of purchases in the third quarter, taking the year's total to about $2.07 billion.
Chief investment officer Stefan Oh said Kensington Senior Living picked the REIT as buyer although "we were not the highest bidder". Its communities sit in wealthy suburbs where new building is hard.
Chief executive Jeff Hanson called the growth "ambitious but disciplined". The average age of the senior housing portfolio fell to 18.1 years from 22.9 at the end of 2025, Oh said, because the new buildings are recent.
What to watch: how many deals it has won but not closed finish by March, as Oh expects. The outlook leaves them out, so each closing adds profit the plan does not count.
🐻 Bear Case
Reported Net Income Fell 44%
Finance chief Aric Chang highlighted 31% yearly growth in funds from operations per share, a measure that skips property depreciation. Net income, the standard accounting profit, fell 44% to $31.2 million.
Last year's quarter also held a one-off tax benefit and an investment gain. Without those and this year's one-offs, profit rose about 35%, by our math.
- Depreciation and amortization: 12.2% of revenue, against 8.6% a year ago
- Charge for resident leases bought with buildings: $36.8 million, against $9.3 million
- The same charge scheduled for 2027: $136.7 million
This matters because the charge is the accounting cost of buying buildings that already have residents, so reported profit will trail the preferred measure.
What to watch: fourth-quarter net income per share against the full-year outlook. A shortfall would mean purchases add charges faster than they add profit.
Each Purchase Still Needs New Shares
American Healthcare REIT pays for its deals mostly by selling new shares, so each owner holds a smaller part of the business. Shares outstanding rose 35% from a year ago, to 231 million.
So far the deals earn more than the extra shares cost. Total funds from operations, excluding one-offs, rose 68%, while the diluted share count grew 28%. Another 24.6 million shares sit in sales that have not settled. The full-year plan now counts 207.7 million average shares, up from 201.3 million.
What to watch: per-share growth in funds from operations next year, after those shares settle. If total profit grows no faster than the share count, the buying stops helping each shareholder.
Nearly Full Buildings Leave Fewer Rooms To Fill
The worry is that senior housing profit must slow once buildings fill, because empty rooms are the cheapest source of new revenue. Occupancy at the same senior housing buildings averaged 90% this quarter.
This quarter argued against that worry. Willhite said "our goal is not to remain at 90% occupied", and operators cut rent discounts 34% from a year ago, he added. He also said demand from ageing baby boomers is only starting.
But one quarter cannot settle a question about the next two years, and the outlook so far covers only 2026.
What to watch: the 2027 outlook, due with fourth-quarter results. Strong growth in that plan would mean rising rents can take over from filling rooms.
Risks this quarter didn't answer
Several standing risks got little or no new evidence in the release, the quarterly filing or the call, so each one still waits for a later disclosure.
- Leadership: co-founder Jeff Hanson leads as chairman and chief executive, with a new finance chief since October; a named successor plan would ease this risk.
- Medicaid, the state health programme for low-income people: receivables from it rose 35% this year, while Medicaid revenue grew 12%.
- Bad debts: write-offs of unpaid resident bills rose 69% in nine months; a fall in the fourth quarter would show collections recovering.
- State exposure: Indiana and Ohio produce 28.7% and 10.5% of property profit; Willhite expects little change in nursing-home rules after the election.
- Purchase prices: Hanson said starting yields held in the mid-5s to mid-6s percent; lower yields on the next deals would show competition is reducing returns.
- New operators: the REIT added three senior housing operators this year; their first full-year results will show how well they absorb the new buildings.
- Bank loan: a $550 million term loan comes due in January, and Chang gave no refinancing terms yet.
👓 Other Themes
New Technology Chief Brings Data Tools to Operators
Jon Crosier joined as chief technology officer to build data tools for the REIT and its operators. Willhite said the team puts pricing, analytics and reporting tools built with Trilogy "in the hands of more of our regional operating partners every quarter". He added that the team will apply AI to operator data. No revenue figure ties to the work yet.
💲 Other KPIs
Borrowing costs fell 12.8% from a year ago, because the REIT repaid mortgages with money from share sales. The decline is narrowing: interest costs dropped about 35% at the end of 2025 and about 18% in the first half. Little debt is left to repay, so further savings depend on refinancing the bank loan due in January.
Net operating income, what buildings earn before overhead, interest and depreciation, reached 22.2% of revenue, up 3.7 percentage points from a year ago. Senior housing drove most of the rise, because its operating costs took a smaller share of revenue. The margin stood near 19% in the first quarter.
Spending on new buildings and upkeep climbed to 7.3% of revenue, against 4.9% a year earlier. Finance chief Aric Chang said upkeep spending grew with the larger portfolio. Willhite added that the REIT planned extra repairs when it bought the Kingston campuses. Projects now under way will cost about $193 million in total.
🔮 Guidance
Raised. The plan now has funds from operations per share, excluding one-offs, about 31% above 2025. By our math, that leaves about 60.5 cents for the fourth quarter, up 32% from a year ago. It is the third raise this year, and the middle of the range has moved up 22.5 cents since February. The plan counts only deals already closed.
Raised. Funds from operations under the industry's standard definition, which still counts deal costs and stock pay, now reach $2.13 to $2.16 per share. By our math, the fourth quarter brings about 59.5 cents. That tops this quarter's 55 cents.
Raised. The plan now has net income per share of 59 to 62 cents. By our math, that leaves about 17.5 cents for the fourth quarter. That beats this quarter's 14 cents. Charges for resident leases on bought buildings keep this measure far below funds from operations.
Raised. Profit at properties owned in both years now grows 12% to 14% this year. By our math, the fourth quarter then runs about 12.9%, a little below this quarter. Each of the three raises this year added 1 to 1.5 percentage points.
Raised by 5 percentage points. Senior housing profit at the same buildings now grows 23% to 26% this year. By our math, that implies about 29.6% in the fourth quarter, above this quarter. The group of buildings stays fixed from the start of the year, Willhite said.
Raised. Profit at Trilogy campuses owned in both years now grows 14.5% to 16.5%. By our math, the fourth quarter then runs about 15.7%, matching this quarter. The middle of the range rose 1 percentage point, and the range narrowed.
Raised slightly. Medical office profit at the same buildings now grows by up to 1% this year. By our math, that implies a decline of about 0.7% in the fourth quarter, after 0.4% growth in the third. Chief executive Jeff Hanson said the REIT keeps selling these buildings, which now earn about a tenth of its property profit.
Raised. Profit from buildings leased to single tenants who pay all running costs now grows 2.5% to 3.5%. By our math, the fourth quarter runs about 2.6%, close to this quarter's pace. Fixed yearly rent increases in the leases drive most of it.
❓ Key Questions
How will the January bank loan be refinanced?
The term loan and its rate hedges expire in January, and Chang said the REIT wants flexibility. The new rate decides whether this year's interest savings carry into 2027.
How much of Trilogy's cost cut will repeat?
Willhite called the employee-benefit saving "more of a onetime thing". Its size would show whether Trilogy's margin can keep widening next year.
Who will follow Jeff Hanson as chief executive?
Hanson, a co-founder, returned to lead the REIT this year after his predecessor retired. The materials give no succession timetable, though the board has added a lead independent director.
Why did write-offs of resident bills rise so much?
Write-offs climbed far faster than revenue in nine months, and Medicaid receivables also grew. Neither the filing nor the call explained the cause or any effect on next year's profit.
What will the pending deals add to 2027 profit?
The REIT has won deals worth over $1 billion that its outlook leaves out. A per-share estimate would show how much of next year's growth comes from buying rather than running buildings.