Q4 2025 American Healthcare REIT Inc Earnings Call
Everyone to American Healthcare read Q4 2025 earnings conference call.
Speaker #1: Well, in many cases, it's experience, right? It's having a presence in that market, having the experience of operating in those markets at scale.
All lines have been placed on YouTube prevent any background noise.
Speaker #1: Knowing what the demand levers are, how to market properly, how to hire the right staff—the right regionals to oversee those communities. Building in the processes that they might have in place, adding to the resident and the employee experiences.
Speaker #3: Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the American Healthcare REIT Q4 2025 earnings conference call.
After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to redraw your question, press star 1 again, thank you. I would now like to turn the call over to Ellen Peterson vice president of investor relations and finance. Please go ahead.
Speaker #3: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad.
Speaker #1: I mean, there are a lot of different ways that I think someone with experience, and the values that we see in our operators, can change how those assets and communities are being managed.
Speaker #3: If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Alan Peterson, Vice President of Investor Relations and Finance.
Speaker #1: And the bottom line is, you want great care. You want the employees to have a good experience, and you want the residents to also have a good experience, and I think our operators are primed to do that.
Speaker #3: Please go ahead.
Good morning, thank you for joining us for American Healthcare reads. Fourth quarter 2025 earnings conference call with me today are Jeff Hansen chairman and interim CEO. And president Gabe will height Chief Operating Officer Stefano Chief investment officer and Brian pay. Chief Financial Officer on today's call, Jeff Gabe Stefan and Brian will provide high level commentary discussing. Our operational results financial position, our 2026 guidance, and other recent news relating to American Healthcare. Rhe following these remarks, we will conduct a question and answer session.
Speaker #4: Good morning. Thank you for joining us for American Healthcare REIT's fourth quarter 2025 earnings conference call. With me today are Jeff Hansen, Chairman and Interim CEO and President; Gabe Willhite, Chief Operating Officer; Stefan Oh, Chief Investment Officer; and Brian Peay, Chief Financial Officer.
Speaker #1: They've got the ability to implement those in all the communities that we're acquiring.
Speaker #2: And I'd add to that, Stefan, I'd echo everything you just said. When we're partnering with operators on this, we're looking for experienced people that know how to run the business, know how to manage labor and expenses, in addition to all the things that Stefan's talking about.
Speaker #4: On today's call, Jeff, Gabe, Stefan, and Brian will provide high-level commentary discussing our operational results, financial position, our 2026 guidance, and other recent news relating to American Healthcare REIT.
Please be advised that this call will include forward-looking statements all statements made during this call other than statements of historical Factor. Forward-looking statements that are subject to numerous risk. And uncertainties, that could cause actual results to differ materially from those projected in these statements, therefore, you should exercise caution and interpreting and relying on them.
Speaker #2: And what we're seeing is that the outsized demand growth is actually having an impact on the transition time. So because you've got this pent-up demand for—or maybe not 'pent-up demand' is the right word, but surging demand for the product—if you can bring in a new operator and show people that are coming in for tours and seeing the building that you've got a great resident experience, you can fill the building up faster and you can turn it around quicker than you have been able to in the past.
I refer you to our SEC filings for a more detailed discussion of the risk that could impact our future, operating results Financial condition and Prospects.
Speaker #4: 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 that are subject to numerous risks and uncertainties that could cause actual results to differ materially from those projected in these statements.
All forward-looking statements speak only as of today, February 27th, 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.
Speaker #4: Therefore, you should not be 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.
Speaker #2: And that is a very compelling investment opportunity for us.
During the call, we will discuss certain non-gaap Financial measures which we believe can be useful in evaluating the company's operating performance.
Speaker #4: Got it. And as a follow-up, many of the SHOP players have been talking about a slight increase in competition for transactions. Can you talk a little bit about what you're seeing? And then, in addition, does your relationship with Trilogy insulate you a little bit, given you're able to deploy $370 million into Trilogy assets in 2025?
These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with gaap.
Speaker #4: All forward-looking statements speak only as of today, February 27, 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.
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.
Speaker #4: And how should we think about Trilogy investment trends going forward?
Speaker #4: 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.
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 www.americanhealthassociates.com.
Speaker #1: Well, let me start with just your answer about competition—I mean, or your question about competition. I think it's fair to say that there has been an increase in those that are pursuing SHOP.
With that, I'll turn the call over to our chairman and interim CEO and president Jeff Hansen.
Speaker #4: 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.
Well thanks, Alan and greetings to those of you joining us today.
Speaker #1: Both from the other healthcare REITs and also from private equity. I think where our advantage lies is in the fact that about half of our acquisitions are being done on an off-market basis.
Before the team dives into our results. I want to start by addressing the leadership update that we shared earlier this month.
Speaker #4: 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 www.americanhealthcarereit.com.
Speaker #1: We are working very closely with our operators, and they are bringing us potential transactions that they only know about because they have capital partners on the other end that are maybe looking to exit. Maybe they have assets themselves that they're at a point where they would like to recapitalize.
As you know, I've stepped into the role of interim CEO while Danny's on a medical leave of absence, I'm pleased to share that. He's at home recovering well and is in good spirits. In fact he remains engaged he and I speak regularly each week on the business front.
Speaker #4: With that, I'll turn the call over to our Chairman and Interim CEO and President, Jeff Hansen.
And he's participating in all of our board meetings virtually while he's on the mend at home.
Speaker #5: Well, thanks, Alan, and greetings to those of you joining us today. Before the team dives into our results, I want to start by addressing the leadership update that we shared earlier this month.
Speaker #5: As you know, I've stepped into the role of Interim CEO while Danny's on a medical leave of absence. I'm pleased to share that he's at home, recovering well, and is in good spirits.
He intends to return and the relative near term but it's too early to have timing visibility at this point. By the way, we appreciate the many well-wishes sent from our partners and stakeholders, we passed them along to the prosky family, and for that he's grateful. So thank you.
Speaker #1: So, we have been able to, through our relationships, really grow our pipeline through those off-market assets that are available.
Speaker #5: In fact, he remains engaged; he and I speak regularly each week on the business front, and he's participating in all of our board meetings virtually while he's on the mend at home.
Speaker #2: On the Trilogy front, I'll take that one, Stefan. So it was an atypical year that we can't promise will happen again. We had a lot of deals that we did with Trilogy that Trilogy was already managing for different capital, that we had the opportunity to go out and recap with an operator that we completely trust 100%.
Speaker #5: He intends to return in the relatively near term, but it's too early to have timing visibility at this point. By the way, we appreciate the many well wishes sent from our partners and stakeholders.
For those of you who don't know me, well I served as chairman since the company's formation and previously LED ahr predecessor companies as both chairman and CEO. I'm 1 of the 3 co-founders of the companies. And I led this platform for roughly 16 of the past 20 years alongside both Danny and Matt Strife. Matt, of course, being our third founding partner and a current board member
Speaker #5: We've passed them along to the Prosky family and, for that, he's grateful, so thank you. For those of you who don't know me well, I served as Chairman since the company's formation and previously led AHR's predecessor companies as both Chairman and CEO.
Speaker #2: Sometimes in situations where the assets weren't even stabilized yet, so that we were confident in the growth profile from developments that we were doing through the pandemic.
Together, We Built This platform over the past 2 decades, with a Clear Vision to create a disciplined Healthcare Company, focused on providing and facilitating high-quality care and Superior health outcomes. Our team here continues to reinforce this internally and externally
Speaker #5: I'm one of the three co-founders of the company, and I led this platform for roughly 16 of the past 20 years, alongside both Danny and Matt Stryfe.
Speaker #2: That's probably not repeatable. A lot of those opportunities we've already taken advantage of. What is repeatable, and what we do have an advantage on, is the development capabilities of Trilogy.
As this vision is actually what drives our performance and long-term value, creation. And this Foundation remains firmly in place today.
Speaker #5: Matt, of course, being our third founding partner and a current board member. Together, we built this platform over the past two decades with a clear vision.
Along the way. Dan Matt and I have built the executive management team that you know, so well today,
Speaker #2: So, like Brian mentioned earlier, there's $150 to $200 million a year of development with Trilogy that we're essentially not competing with other capital partners for.
Speaker #5: To create a disciplined healthcare company focused on providing and facilitating high-quality care and superior health outcomes. Our team here continues to reinforce this internally and externally, as this vision is actually what drives our performance and long-term value creation.
Speaker #2: So you can strip out the developer economics in some cases. You can strip out the general contractor economics, and those flow through directly to AHR and to the Trilogy management team that has an LTIP that's aligned with AHR's stock price.
Speaker #5: And this foundation remains firmly in place today. Along the way, Dan, Matt, and I have built the executive management team that you know so well today.
Speaker #2: So they participate in the value creation for the work there as well.
Speaker #5: Your next question comes from the line of Pharrell Granite with Bank of America. Your line is open.
Speaker #5: The rest of the board and I have tremendous confidence in our team's ability to continue to do what they've done exceedingly well over the past decade, which is to drive the growth and the performance of this REIT.
Speaker #6: Thank you. I guess my first question was really just about the bridge between your normalized FFO growth and then your total same-store NOI growth.
Speaker #5: I want to be very clear at the outset: this is a seamless continuation of the strategy and execution you've grown to expect from this team.
Speaker #6: And potentially on the other side of it, the total NOI growth that we could potentially expect, especially in the SHOP segment when thinking about the acquisitions that you performed in 2025.
Speaker #5: My role as Interim CEO is one of continuity, support, and advisory. There's no change in strategy. Our investment and capital allocation strategy, risk management framework, balance sheet posture, and long-term value orientation remain unchanged.
Lish plan. It's also important to note that I've been engaged as the interim CEO full-time. Since the day after Danny's medical event, and I can tell you that the organization is operating with the same alignment, focus and Clarity of execution as it ever has.
1 of the company's greatest strengths, by the way, has always been the depth and the commitment of our people which is particularly evident during times like this.
Speaker #2: Yeah, so listen, stopping short of giving you precise numbers, I can just give you a couple of things to keep in mind. On the shop side, because we only adjust our same-store pool once a year at the beginning of the year, there's a tremendous amount of shop assets that we sourced and purchased in 2025 that are not going to be in the same-store pool this year.
Speaker #5: And our executive team continues to work very closely with the board in executing against the established plan. It's also important to note that I've been engaged as the Interim CEO full-time since the day after Danny's medical event.
Importantly, the results. You're about to hear reflect the strength of this platform and the depth of our team. And with that, I'll turn the call back to the team to walk. You through the quarter and our Outlook, thank you.
Speaker #5: And I can tell you that the organization is operating with the same alignment, focus, and clarity of execution as it ever has. One of the company's greatest strengths, by the way, has always been the depth and the commitment of our people, which is particularly evident during times like this.
Thanks Chef operationally, the fourth quarter tapped off another exceptional year of outsized, inner wide growth for HR.
Speaker #2: And by the way, if you look at pay, if you look in the supplemental at page 10, you can see that the total portfolio is less occupied than the same-store portfolio.
We delivered total portfolio. Same store in Aly growth of 11.8% in the fourth quarter and 14.2% for the full year 2025
Speaker #5: Importantly, the results you’re about to hear reflect the strength of this platform and the depth of our team. And with that, I’ll turn the call back to the team to walk you through the quarter and our outlook.
Speaker #2: And that's really sort of tied in with what I described earlier, which was we're bringing in buildings that were undermanaged. They were underoccupied.
This marks our second consecutive year of double digit, total portfolio, same store and a wide growth and an underscores. The value of our Hands-On Asset Management approach.
Speaker #5: Thank you. Thanks, Jeff. Operationally, the fourth quarter capped off another exceptional year of outsized NRY growth for AHR. We delivered total portfolio same-store NRY growth of 11.8% in the fourth quarter and 14.2% for the full year 2025.
Speaker #2: And now we have an operator that we trust, that we feel very confident they're going to be able to fill those buildings. So I feel good about the non-same-store.
Performance was once again led by our operating portfolio which is comprised of our integrated senior health campuses also known as Trilogy and Shop segments.
Speaker #2: Their ability to grow and all of those dollars, and all that growth, is going to, inure to the benefit of the shareholders. They're just not going to show up in the same-store ratios.
these segments now contribute 76.9% of Consolidated cach noi for our business and are where we continue to see the benefits of scale alignment and operating Leverage
Speaker #5: This marks our second consecutive year of double-digit total portfolio same-store NRY growth, and it underscores the value of our hands-on asset management approach. Performance was once again led by our operating portfolio, which is comprised of our integrated senior health campuses, also known as Trilogy, and SHOP segments.
Speaker #2: On the SHOP side, it's approximately 60% of the portfolio that's in same-store. On the Trilogy side, I think it's 83%—81, 83, something like that.
The growth in our same store operating portfolio, in 2025 was driven by 3, primary things occupancy, gains discipline, rate management, and continued expense controls.
Speaker #2: So there's less non-same-store assets. And as you can imagine, those non-same-store assets were buildings that we took out of service because we wanted to add a wing, or we took it out of service because we're adding patio homes.
Speaker #5: These segments now contribute 76.9% of consolidated cash NRY for our business and are where we continue to see the benefits of scale, alignment, and operating leverage.
Additionally is occupancy is moved higher throughout 2025 each incremental movement, contributed to noi growth and noi margin expansion as we've seen. Margins expand 130 basis points and 280 basis points in our Trilogy and Shop segments, respectively, in full year 2025 compared to 2024
Speaker #2: And that happens quite quickly. And, by the way, the returns on those are dramatic and very beneficial to the bottom line. So, generally speaking, I think that the non-same-store assets are going to perform well this year.
Speaker #5: The growth in our same-store operating portfolio in 2025 was driven by three primary things: occupancy gains, disciplined rate management, and continued expense controls. Additionally, as occupancy has moved higher throughout 2025, each incremental move-in contributed to NRY growth and NRY margin expansion, as we've seen margins expand 130 basis points and 280 basis points in our Trilogy and SHOP segments, respectively, in full year 2025 compared to 2024.
That operating leverage combined with pricing discipline and occupancies sitting near 90% positions was very well as we enter into 2026.
Speaker #2: You might even argue they're going to perform better than the same-store. But the good news for us is that we don't adjust the same-store pool except for at the beginning of the year, and everything we bought in 2025 is going to be in the 2027 same-store growth.
Focusing on Trilogy, same story, and why increased 14% in the fourth quarter and 18.4% for the full year?
Same store occupancy reached 90.6% in Q4 of 275 basis points, year-over-year Revenue growth was supported by both rate and also quality mix improvements.
Speaker #2: And so, I would anticipate those numbers to be very positive as well. So we're talking about multi-year growth, bottom line.
Speaker #5: That operating leverage, combined with pricing discipline and occupancies sitting near 90%, positions us very well as we enter into 2026. Focusing on Trilogy, same-store NRY increased 14% in the fourth quarter and 18.4% for the full year.
And quality makes it continues to Trend favorably.
Speaker #6: Great. Thank you. And I believe you've been addressing this throughout the call, but just really wanted to nail it down. When thinking about the investment opportunity and especially with the pacing that you're able to be deploying your capital into these regular type structures, either through adding investments into Trilogy or into shop, how is it comparing to what you were able to do in '25, especially since now we've seen other peers have actually been increasing potential investment volume for '26?
Medicare and Medicare Advantage penetration increased year-over-year contributing 220 basis. Point improvements in both quality, mix as a percent of Resident days and as a percent of Revenue in Q4 2025, compared to Q4 2024,
Speaker #5: Same-store occupancy reached 90.6% in Q4, up 275 basis points year over year. Revenue growth was supported by both rate and also quality mix improvements.
We believe that this continued shift reflects, exactly how Trilogy is proactive approach to aligning, its care and services with the right payers best serves its residents.
Speaker #5: And quality mix continues to trend favorably. Medicare and Medicare Advantage penetration increased year over year, contributing 220 basis point improvements in both quality mix as a percent of resident days and as a percent of revenue in Q4 2025 compared to Q4 2024.
This emphasis on high-quality care and health outcomes continues to be recognized and appreciated by the health systems and Medicare Advantage insurers that trilogy partners with
Speaker #6: Just trying to get a sense about where things could potentially shake out.
High quality operators, will continue to Garner the most demand for growing care needs of the Aging population.
As we enter 2026.
Speaker #1: I feel like you're trying to roundabout the question for me to give you guidance. But I will say this: obviously, if you look at how we acquired our portfolio or how our acquisitions laid out last year, it was a little lumpy.
Speaker #5: We believe that this continued shift reflects exactly how Trilogy's proactive approach to aligning its care and services with the right payers best serves its residents.
Trilogy is operating a historically, strong occupancy levels, with embedded pricing Tailwind. They give us confidence in delivering, another year of double digits. Thanks to Toronto, I growth in the segment.
Speaker #5: This emphasis on high-quality care and health outcomes continues to be recognized and appreciated by the health systems and Medicare Advantage insurers that Trilogy partners with.
Speaker #1: Obviously, a lot of it came from the back end. I think you're going to see something that's a little more even over the course of this year.
Speaker #5: High-quality operators will continue to garner the most demand for growing care needs of the aging population. As we enter 2026, Trilogy is operating at historically strong occupancy levels with embedded pricing tailwinds that give us confidence in delivering another year of double-digit same-store NRY growth in the segment.
Turning to shop this segment, again, delivered, the strongest growth across our portfolio. Same store in Hawaii, increased, 24.6% in Q4, and 25.2% for 2025, compared to the same period in 2024.
Speaker #1: And I think I would just add, we are going to be looking at a lot of opportunities. We are going to be finding those that make sense for us.
same store occupancy surpassed 90% in the fourth quarter averaging 90.6% up approximately 290 basis points year-over-year
Speaker #1: We're going to continue to be underwriting in a disciplined way that will provide us with high-quality assets and long-term performance. And we have the capital.
Speaker #5: Turning to shop, this segment again delivered the strongest growth across our portfolio. Same-store NRY increased 24.6% in Q4 and 25.2% for 2025 compared to the same period in 2024.
to combined with solid rev 4 Groth the resulting. Noi growth is a testament to our and our operators focus on high-quality care and outcomes in our investments in the resident and employee experience. Providing us additional pricing power in the markets, we serve
Speaker #1: We can compete. And I think we also have a great reputation as a buyer. So I think that, along with the fact that we are seeing more product available in the market so far this year, will lead to some very good things for us.
Speaker #5: Same-store occupancy surpassed 90% in the fourth quarter, averaging 90.6%, up approximately 290 basis points year over year. Combined with solid RevPOR growth, the resulting NRY growth is a testament to our and our operators' focus on high-quality care and outcomes in our investments in the resident and employee experience, providing us additional pricing power in the markets we serve.
These operational, Focus areas and Investments, along with the strong supply and demand imbalance. Within the long-term care sector have allowed us to not to have some meaningfully compromise on any of the levers of Revenue growth such as rate or occupancy, within our pricing strategies.
Speaker #2: We're certainly aware of expectations for acquisition volume this year. I will tell you that we want to make certain we're not making bad deals.
Once again, we expect shop to continue to lead our portfolios organic growth in 2026. And this growth will be supported by our Dynamic Revenue management which were piloting with a number of our operators and properties by leveraging. The platform that we continue to invest in with truly
Speaker #5: These operational focus areas and investments, along with the strong supply and demand imbalance within the long-term care sector, have allowed us not to have to meaningfully compromise on any of the levers of revenue growth, such as rate or occupancy, within our pricing strategies.
Speaker #2: And if you think about the evolution of the underwriting, I think it may be evolving slightly. And what I mean by that is, it's not as though Stefan's team has immediately switched from being very conservative to overly aggressive.
I expect that these developments in Revenue management that have really been continuously evolving over time to allow us in our partners to capture sustained levels of above average, noi growth, well, into the next decade.
Speaker #5: Once again, we expect SHOP to continue to lead our portfolio's organic growth in 2026. And this growth will be supported by our dynamic revenue management, which we're piloting with a number of our operators and properties by leveraging the platform that we continue to invest in with Trilogy.
Speaker #2: It's more a factor of when we were buying things in 2024 and 2025. We put in there some level of growth—immediate growth—in those.
Finally, I want to thank our operating partners for their commitment to our mission of providing high-quality care and outcomes for the residents. They care for
Speaker #2: And what's happened is exactly that. We have seen that growth already in '26. We've seen the growth in late '25. So what that means is that they can continue to evolve their underwriting and be slightly less conservative. I think the other thing that he has mentioned a number of times, Stefan, is that there's going to be enough volume out there, and there are going to be deals that are going to match up with our underwriting, with our needs, with our cost of capital, with our operator base.
Speaker #5: I expect that these developments in revenue management, which have really been continuously evolving over time, do allow us and our partners to capture sustained levels of above-average NRY growth well into the next decade.
Which we expect to continue this year with that. I'll turn it over to Stefano.
Thanks Gabe.
2025 was a highly active investment year for ahr.
Speaker #5: Finally, I want to thank our operating partners for their commitment to our mission of providing high-quality care and outcomes for the residents they care for.
We closed on over 950 million of new Investments across our Trilogy and Shop segments. All in collaboration with our trusted Regional operating partners.
Speaker #5: Their standards of care have helped contribute to the great health outcomes and the resulting financial performance we've achieved, which we expect to continue this year.
Our investment philosophy remains consistent. We are focused on relationship-driven sourcing disciplined underwriting and long-term cash flow durability and growth.
Speaker #2: And especially when we're bringing in such a huge chunk of those off-market directly through our operating partners, I give ourselves a pretty good shot at doing well this year on the acquisition volume.
Speaker #5: With that, I'll turn it over to Stefan Oh.
Speaker #6: Thanks, Gabe. 2025 was a highly active investment year for AHR. We closed on over $950 million of new investments across our Trilogy and SHOP segments, all in collaboration with our trusted regional operating partners.
The majority of our acquisition volume this year was within shop where we added newer assets and attractive submarkets alongside existing Regional operators.
Speaker #6: Your next question comes from Delano Sethbergy with Citigroup. Your line is open.
This is now positioned our shop segment as the second largest within our Diversified portfolio in terms of cach noi.
Speaker #6: Our investment philosophy remains consistent: we are focused on relationship-driven sourcing, disciplined underwriting, and long-term cash flow durability and growth. The majority of our acquisition volume this year was within SHOP, where we added newer assets and attractive sub-markets alongside existing regional operators.
Speaker #5: Okay, thanks for taking my question. And good to hear that Danny's at home and doing better. I guess just to start off, you kind of mentioned some of the real estate that you're targeting, wanting maybe newer vintage assets.
I designed yet without set allocations. We've shifted more of our portfolio into our operating portfolio segments, which is where we continue to see the best risk adjusted returns.
Nonetheless we will remain Nimble and respond appropriately to any changes that occur in the transaction markets to take advantage of attractive opportunities as they arise.
Speaker #5: And good locations, and that all makes sense. I guess you touched on this a little bit with wanting to partner with operators that have experience.
Speaker #6: This has now positioned our shop segment as the second largest within our diversified portfolio in terms of cash NRY. By design, yet without set allocations, we've shifted more of our portfolio into our operating portfolio segments, which is where we continue to see the best risk-adjusted returns.
In many cases, our shop Acquisitions, were relationship, sourced or off-market opportunities where we had deep familiarity with the operator and the local market dynamics.
Speaker #5: But just kind of giving the alignment that you have with Trilogy and some of the revenue management tools that you've kind of discussed on the call, would you kind of look for maybe less experienced operators to partner with where you can really kind of use that know-how that Trilogy has to kind of improve results and kind of drive higher returns on kind of lower with lower quality operators?
We continue to seek opportunities, where we know the operator first and can underwrite performance with conviction.
Our goal is not simply near-term accretion but sustained, noi growth.
Speaker #6: Nonetheless, we will remain nimble and respond appropriately to any changes that occur in the transaction markets to take advantage of attractive opportunities as they arise.
Speaker #6: In many cases, our shop acquisitions were relationship-sourced or off-market opportunities where we had deep familiarity with the operator and the local market dynamics. We continue to seek opportunities where we know the operator first and can underwrite performance with conviction.
This is why we underwrite, all our acquisition targets. Holistically by focusing on Market demographics, operator, expertise Acuity, mix and age of asset, just to name a few of the many metrics. We evaluate to inform our potential risk, adjusted returns.
Speaker #2: That's a very interesting question. I think what I would say to that is, we don't necessarily want to go into a situation where we're basically developing the operator.
the detail R team emphasizes allows us to be confident in allocating our dollars today to provide for the best possible near-term and long-term performance outcomes
Speaker #6: Our goal is not simply near-term accretion, but sustained NRY growth. This is why we underwrite all our acquisition targets holistically, by focusing on market demographics, operator expertise, acuity mix, and age of asset, just to name a few of the many metrics we evaluate to inform our potential risk-adjusted returns.
Additionally. With many of our deals in 2025, we bought the newest asset within the respective markets and we expect those communities to be Market leaders for some time.
Speaker #6: The detail our team emphasizes allows us to be confident in allocating our dollars today to provide for the best possible near-term and long-term performance outcomes.
Data continues to show that new starts and Supply. Growth are at historically low levels with deliveries of new stock below. 1% of existing inventory, giving us conviction in our expectation. That competitive pressure in those markets will remain muted.
Speaker #6: Additionally, with many of our deals in 2025, we bought the newest asset within the respective markets, and we expect those communities to be market leaders for some time.
Further any incremental Supply should be absorbed rather quickly by the growing demand, highlighted by the baby boomer generation. Turning 80 this year.
this Dynamic should allow us to maintain Market position for the next several years and Beyond
Speaker #6: Data continues to show that new starts in supply growth are at historically low levels, with deliveries of new stock below 1% of existing inventory. This gives us conviction in our expectation that competitive pressure in those markets will remain muted.
In addition to successfully accelerating several previously, announced pipeline deals in the third quarter, which enabled us to close approximately 665 million of new acquisitions in the fourth quarter.
Speaker #6: Further, any incremental supply should be absorbed rather quickly by the growing demand, highlighted by the baby boomer generation turning 80 this year. This dynamic should allow us to maintain market position for the next several years and beyond.
We have continued to secure and closed new acquisitions. In the first 2 months of 2026, that will further complement our portfolio.
Year to date. We have closed on approximately 117.5 million in new acquisitions within our shop segment, and we maintain over 230 million of awarded deals in our pipeline.
Speaker #6: In addition to successfully accelerating several previously announced pipeline deals in the third quarter, which enabled us to close approximately $665 million of new acquisitions in the fourth quarter, we have continued to secure and close new acquisitions in the first two months of 2026 that will further complement our portfolio.
After a busy end 2025, we continue to see more deal activity and more property is available for acquisition in 2026, through both off and on Market channels, and we are prepared to competitively deploy capital in pursuit of this increasing volume of opportunities.
Speaker #6: Year to date, we have closed on approximately $117.5 million in new acquisitions within our SHOP segment, and we maintain over $230 million of awarded deals in our pipeline.
With regards to development, our pipeline remains focused, primarily on Trilogy expansions and campus growth initiatives.
Speaker #6: After a busy end to 2025, we continue to see more deal activity and more property available for acquisition in 2026 through both off- and on-market channels, and we are prepared to competitively deploy capital in pursuit of this increasing volume of opportunities.
These projects are designed to generate attractive, incremental yields with limited market risk leveraging, existing campuses to mitigate any operating losses upon opening as well as providing faster. Cash flow to recycle right back into the new development projects.
In summary, Capital allocation remains aligned with our long-term strategy.
Speaker #6: With regards to development, our pipeline remains focused primarily on Trilogy expansions and campus growth initiatives. These projects are designed to generate attractive incremental yields with limited market risk, leveraging existing campuses to mitigate any operating losses upon opening, as well as providing faster cash flow to recycle right back into the new development projects.
We believe we are well positioned within the industry with available liquidity and a strong operator Network, that allows us to source and execute on a creative opportunities.
With that. I'll turn it over to Brian.
Thanks, Stefan the fourth quarter, rounded out, a strong year, for ahr as evidenced by the growth. We are able to achieve
Speaker #6: In summary, capital allocation remains aligned with our long-term strategy. We believe we are well positioned within the industry with available liquidity and a strong operator network that allows us to source and execute on a creative opportunity.
We reported normalized funds from operation attributable, to Common stockholders, or nfo of 466 cents per diluted, share in the fourth quarter of 2025 and at $1.72 cents per diluted share for all of 2025.
that represents 22% year-over-year nfo per share growth in 2025 as compared to 2024
Speaker #6: With that, I'll turn it over to Brian.
Speaker #5: Thanks, Stefan. The fourth quarter rounded out a strong year for AHR, as evidenced by the growth we were able to achieve. We reported normalized funds from operations attributable to common stockholders, or NFFO, of $0.46 per diluted share in the fourth quarter of 2025.
importantly, this level of growth was achieved while continuing to improve our debt to Ava by nearly a full turn in 2025,
Speaker #5: And at $1.72 per diluted share for all of 2025. That represents 22% year-over-year NFFO per share growth in 2025 as compared to 2024.
And additional accretion from the 950 million of new acquisitions.
Speaker #5: Importantly, this level of growth was achieved while continuing to improve our debt-to-EBITDA by nearly a full turn in 2025. Our earnings growth in 2025 was primarily driven by the double-digit total portfolio same-store NRY growth, helped by the accretion from buying out the minority interest in Trilogy back in September of 2024, and additional accretion from the $950 million of new acquisitions.
Our Acquisitions were completed with a combination of retained earnings and accredited. Equity issuances over the course of the Year from our ATM program. And the November 2025 follow-on Equity offering
I'm pleased that all areas of the organization. Contributed to the growth. We delivered to our shareholders in 2025 and expect to carry this momentum into 2026.
Looking ahead to this year, we issued 2026 nfo guidance of a $1.99 to 2 hours and 5 cents per diluted share.
Speaker #5: Our acquisitions were completed with a combination of retained earnings and accretively priced equity issuances over the course of the year from our ATM program and the November 2025 follow-on equity offering.
This implies another year of double-digit nfo per share growth and only includes the previously consummated 2026 Acquisitions that Stefan mentioned earlier of 117.5 million.
Speaker #5: I'm pleased that all areas of the organization contributed to the growth we delivered to our shareholders in 2025, and expect to carry this momentum into 2026.
Our total portfolio same store. Noi growth guidance for 2026 is between 7 and 11%.
That range is comprised of the following segment level same store. Noi growth ranges.
Speaker #5: Looking ahead to this year, we issued 2026 NFFO guidance of $1.99 to $2.05 per diluted share. This implies another year of double-digit NFFO per share growth, and only includes the previously consummated 2026 acquisitions that Stefano mentioned earlier of $117.5 million.
8 to 12% growth in 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.
Moving to our Capital markets activity and balance sheet, we continue to execute opportunistically in the equity markets during Q4 of 2025.
Speaker #5: Our total portfolio same-store NRY growth guidance for 2026 is between 7 and 11 percent. That range is comprised of the following segment-level same-store NRY growth ranges: 8 to 12 percent growth in Trilogy, 15 to 19 percent growth in SHOP, 0 to 2 percent growth in outpatient medical, and a range of 2 to 3 percent growth in our triple-net-lease property segment.
We settled forward, Equity agreements, raised additional Capital via our at&m program and completed a forward Equity follow-on offering in November of 2025.
Speaker #5: Moving to our capital markets activity and balance sheet, we continued to execute opportunistically in the equity markets during Q4 of 2025. We settled forward equity agreements, raised additional capital via our ATM program, and completed a forward equity follow-on offering in November of 2025.
We utilized the secretively priced Equity to fully fund. The approximately 665 million of Acquisitions closed in the fourth quarter. The 2026 Investments that have only recently closed and fund our plans 2026 development spent
As a result, we de-risked much of the execution for the growth plans, we have in 2026 and maintain, ample capacity as highlighted by our 3.4 times. Net debt to IB. Do to capitalize and close on the opportunities to fund team continues to evaluate.
Speaker #5: We utilized this accretively priced equity to fully fund the approximately $665 million of acquisitions closed in the fourth quarter, the 2026 investments that have only recently closed, and fund our planned 2026 development spend.
importantly, this debt to ibida metric does not account for the approximately 287 million of unsettled forward agreements from our APM and the November 2025 follow-on offering
Speaker #5: As a result, we de-risked much of the execution for the growth plans we have in 2026 and maintain ample capacity, as highlighted by our 3.4 times net debt-to-EBITDA.
Speaker #5: To capitalize and close on the opportunities Stefano's team continues to evaluate. Importantly, this debt-to-EBITDA metric does not account for the approximately $287 million of unsettled forward agreements from our ATM and the November 2025 follow-on offering.
We are entering 2026 from a position of strength. We have operating momentum, Capital availability, disciplined underwriting and improving leverage metrics equipping our team to continue to deliver on our mission of providing and facilitating high-quality care and health outcomes for our residents, and creating value for shareholders.
With that operator, we'd like to open the line for questions.
Speaker #5: We are entering 2026 from a position of strength. We have operating momentum, capital availability, disciplined underwriting, and improving leverage metrics, equipping our team to continue to deliver on our mission of providing and facilitating high-quality care and health outcomes for our residents, and creating value for shareholders.
At this time, I would like to remind everyone in order to ask a question. Please press star then the number 1 on your telephone keypad,
we request that you limit yourself to 1 question and 1 follow-up.
You're welcome to reach you with additional questions.
We will pause for just a moment to compile the Q&A roster.
Your first question comes from the line of West go with their Alliance open.
Speaker #5: With that, Operator, we'd like to open the line for questions.
Speaker #6: At this time, I would like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad.
Speaker #6: We request that you limit yourself to one question and one follow-up. You're welcome to requeue with additional questions. We will pause for just a moment to compile the Q&A roster.
Hey everyone. Um, can you maybe dive in a little bit deeper on the acquisition environment? Are you seeing any? I guess, sub segments, whether it's higher Acuity or a little bit lower Acuity. That is having having any, uh, cap rate compression or any changes to terms of the management agreements.
Hey, Wes. Yeah, this is Stefan. Thanks for the question. Um,
Speaker #6: Your first question comes from the line of West Holiday with Bear. Your line is open.
Speaker #7: Hey, everyone. Can you maybe dive in a little bit deeper on the acquisition environment? Are you seeing any subsegments, whether it's higher acuity or a little bit lower acuity, that are having any cap rate compression or any changes to terms of the management agreements?
uh first, let me just say that. Um obviously we're very pleased with what we uh were able to accomplish in volume and quality of Acquisitions this year. Um, and wanted to just publicly acknowledge uh, the teams here at ahr and our operators, uh, for allowing us to to, to do what we could do. Um, I think, uh, just kind of directly at your question. Um,
Speaker #8: Hey, Wes. Yeah, this is Stefano. Thanks for the question. First, let me just say that, obviously, we're very pleased with what we were able to accomplish in volume and quality of acquisitions this year.
Speaker #8: And wanted to just publicly acknowledge the teams here at AHR and our operators for allowing us to do what we could do. I think, just kind of directly at your question, we continue to focus on higher acuity shop assets.
You know, we continue to focus on higher Acuity uh, shop assets. Um, you know, we think that there's a, a real benefit to to focusing on the the AL the memory care side. Uh, I think it just uh allows us to um have more confidence in in the long term stability of of that.
Speaker #8: We think that there's a real benefit to focusing on the AL, the memory care side. I think it just allows us to have more confidence in the long-term stability of that asset class.
Speaker #8: We do, obviously, have some independent living in our acquisition portfolio, and most of it is part of a continuum of care. But really, at the end of the day, that's maybe 20% of the total units that we're acquiring.
Rate on, uh, on on the io side. Um,
Speaker #8: I think there is a little bit of variance in terms of what we will see in pricing when it comes to a full continuum asset of AL, memory care, and IL, versus something that might be strictly independent living.
But, you know, for the most part, we're sticking with, uh, with the higher Acuity, uh, asset class. So, um, you know, I think, uh, again that that gives us some advantage.
Okay, thanks for the time.
Your next question comes from the line of Ronald Camden with Morgan Stanley. Your line is open
Speaker #8: Obviously, a little bit lower cap rate on the IL side. But for the most part, we're sticking with the higher acuity asset class. So I think, again, that gives us some advantage.
Speaker #7: Okay. Thanks for the time.
Hey, uh, just uh, 2 2, quick ones. Um, just starting with the shop, um, thinking about sort of the guidance for, for this year, making in some deceleration, it was just trying to think through. If you can decompose, in terms of, you know, refor and occupancy. How maybe you see this year playing out uh versus 2025, thanks.
Speaker #6: Your next question comes from the line of Ronald Condom with Morgan Stanley. Your line is open.
Speaker #9: Hey, just two quick ones. Just starting with the shop, thinking about sort of the guidance for this year, making in some deceleration, was just trying to think through if you can decompartmentalize in terms of REFPOR and occupancy—how maybe you see this year playing out versus 2025.
Speaker #9: Thanks.
Speaker #8: Yeah. Hey, Ron. Morning, afternoon. So the thought is this. We had over 250 basis points of occupancy increase in our shop portfolio just in 2025.
Yeah, Hey Ron, uh, morning, good afternoon. So, you know, the the thought is this we had over 250 basis. Points of occupancy increase in our shop portfolio just in 2025 and the question becomes, you know, are we going to do another 250 plus basis point increase? Uh, it it's hard to say. I I also think it's important to to, to look at where we came from. Same story. I know why growth in shop, uh, grew 20 grew 50% in 2024 25% in 2025, and now, the midpoint of our guidance range is 17%. So that's a pretty dramatic growth. Uh uh, trajectory for that segment.
Speaker #8: And the question becomes, are we going to do another 250-plus basis point increase? It's hard to say. I also think it's important to look at where we came from.
you know, we do know that we, uh, the the the more occupied our buildings get the more pricing power, we have
Speaker #8: Same-store NOI growth in SHOP grew 50% in 2024, 25% in 2025, and now the midpoint of our guidance range is 17%. So that's a pretty dramatic growth trajectory for that segment.
And at 90.6%, I think is the same store uh occupancy. We have more and more pricing power. You'll see us push rate uh for the existing residents but you'll also see us pushing Street rates. Far more aggressively. Uh I think what you're going to see over time is they'll there's going to start to become scarcity, uh, in certain markets.
Speaker #8: We do know that the more occupied our buildings get, the more pricing power we have. And at 90.6%—I think is the same-store occupancy—we have more and more pricing power.
Speaker #8: You'll see us push rate for the existing residents, but you'll also see us pushing street rates far more aggressively. I think what you're going to see over time is there's going to start to become scarcity in certain markets.
we have a tremendous conviction in the business over the next 5 to ten years and can pretty comfortably say that occupancies are going to be somewhere between 95 and 100% during that time, period, exactly where they end 2026 is sort of remains to be seen
That that's that's I guess. Did you say you had another question?
Speaker #8: We have a tremendous conviction in the business over the next five to ten years and can pretty comfortably say that occupancies are going to be somewhere between 95 and 100 percent during that time period.
Speaker #8: Exactly where they end 2026 sort of remains to be seen. That's, I guess—did you say you had another question?
Yep, I just wanted to hit on sort of Trilogy a little bit, um, as well, just because I, you know, you guys are at 90% occupied. Um, you know, I think you you've made some comments about the benefit of, of, of quality mix being able to sort of help help the business and so forth. I guess just want to get an update on, you know, occupancy upside and how much that sort of makeshift you think can help, uh, sustained pricing. Thanks.
Speaker #9: Yep. I just wanted to hit on Trilogy a little bit as well, just because you guys are at 90% occupied. I think you've made some comments about the benefit of quality mix being able to sort of help the business and so forth.
Speaker #9: I guess I just want to get an update on occupancy upside and how much that sort of mix shift do you think can help sustain pricing.
Speaker #9: Thanks.
Speaker #8: Yeah. Great. Question, Ron. This is Gabe. So Trilogy's model, as everybody knows, is unique in the space, where they've got the mix of skilled nursing, assisted living, independent living, memory care all under one roof in an integrated campus.
Yeah, great question, Ron, this is Gabe. Um, so Trilogy is the model is everybody knows is is unique in the space where they've got the mix of skilled nursing Assisted Living, Independent, Living Memory Care. All under 1 roof, and an integrated campus, and that creates different drivers for their noi growth. We're pretty proud. Like Brian said that the numbers that they put up in 2024 and 2025. Um, and we're very appreciative that we have a strong partner at trilogy there, so I want to thank them for all their efforts on it. The key thing with qix is going to be, um, shifting to the higher pay or sources, which you've seen us do over the last 2 years, having more people in Medicare setting and Medicare Advantage settings, helps and fewer in the Medicaid setting helps.
Speaker #8: And that creates different drivers for their NOI growth. We're pretty proud, like Brian said, of the numbers that they put up in 2024 and 2025.
Speaker #8: And we're very appreciative that we have a strong partner at Trilogy there. So I want to thank them for all their efforts on it.
Speaker #8: The key thing with QMIX is going to be shifting to the higher payer sources, which you've seen us do over the last two years. Having more people in Medicare settings and Medicare Advantage settings helps, and fewer in the Medicaid setting helps.
Um, we're also augmenting, the existing campuses with more Villa projects, which you can see in the development pipeline, there pushing, um, even more earnings growth through on the senior housing side and Shifting The Mix to more private pay globally. All those, levers are things that trilogy can use to to drive the overall
Speaker #8: We're also augmenting the existing campuses with more villa projects, which you can see in the development pipeline there, pushing even more earnings growth through on the senior housing side and shifting the mix to more private pay globally.
noi performance and it's difficult to to predict exactly which way they're going to go. I can tell you that we're going to optimize for noi growth. We're not going to um, sacrifice rate for occupancy, we're not going to sacrifice occupancy for rates, and we're going to make sure that trilogies point every level that they have and to continue to grow the business as they've demonstrated that they can do.
Speaker #8: All those levers are things that Trilogy can use to drive the overall NOI performance. And it's difficult to predict exactly which way they're going to go.
Your next question comes from the line of Austin richness with Key Bank Capital markets. Your line is open.
Speaker #8: I could tell you that we're going to optimize for NOI growth. We're not going to sacrifice rate for occupancy. We're not going to sacrifice occupancy for rate.
Speaker #8: And we're going to make sure that Trilogy's pointing every lever that they have to continue to grow the business as they've demonstrated that they can do.
Speaker #6: Your next question comes from the line of Austin Ricksmith with KeyBanc Capital Markets. Your line is open.
Yeah, I just want to go back to the same to my growth outlook for Trilogy, you know, recognizing that it is a little bit lower than, you know, where you started, you know, last year, you know, straddling kind of that last 2 year starting point. Um, I do recognize the occupancies higher today, but gave you did highlight the flow through benefits that these levels. So I guess what are some of the the moving parts to drive that, that upside versus the initial range that, you know, has kind of been a, a Tailwind for you guys the last couple of years,
Speaker #8: Yeah, I just want to go back to the same-store NOI growth outlook for Trilogy. Recognizing it is a little bit lower than where you started last year, straddling kind of that last two-year starting point.
Speaker #8: I do recognize the occupancy is higher today, but Gabe, you did highlight the flow-through benefits at these levels. So I guess, what are some of the moving parts to drive that upside versus the initial range that has kind of been a tailwind for you guys the last couple of years?
Speaker #8: Yeah, great question, Austin. I appreciate it. There are a number of different ways that things can break, where I think with Trilogy, we've got upside potential that's disproportionate to downside risk.
Great question, Austin, I appreciate it. There are a number of different ways that things can break where. Um, I think with Trilogy, we've got upside potential that disproportionate to downside risk. I do not see us going backwards in occupancy, but the velocity of occupancy gains could could outpace even what we think. Um, especially in the post-acute business, where historically, there have been pressures on length to say, from both a Medicare and a med Advantage plan perspective, those seem to be normalized if that Trend holds true, then I think you can expect some upside in our occupancy assumptions,
Speaker #8: I do not see us going backwards in occupancy. But the velocity of occupancy gains could outpace even what we think. Especially in the post-acute business, where historically there have been pressures on length of stay from both a Medicare and a MedAdvantage plan perspective.
Speaker #8: Those seem to be normalizing. If that trend holds true, then I think you can expect some upside in our occupancy assumption. The same is true about MedAdvantage plans and the rates that we're getting there as well.
Speaker #8: 2025 was a tremendous year for optimizing rate around MedAdvantage plans, and primarily driven by one particular contract. If we get more attention on that front, and we've got more partners that are recognizing and leaning into Trilogy's quality of care, I could see outsized growth coming from that lever as well.
The same is true about men Advantage Plans and the rates that we're getting there as well. 2025 was a tremendous year for optimizing rate around met Advantage Plans, um, and primary primarily driven by 1 particular contract. If we had get more, um, attention on that front, and we've got more partners that are recognizing and leaning into trilogies quality of care. I could see outside growth coming from that, um, lever as well. And then on the private pay side, you know, what Trilogy has going on with Revenue management is, is pretty unique. They've built a proprietary platform within their system. A solution that can price each unit dynamically in real time based on a number of attributes that they load into the program. They also can take micromat micro Market data, real time and load that into the system. And they, uh, can push that.
Speaker #8: And then on the private pay side, what Trilogy has going on with revenue management is pretty unique. They've built a proprietary platform within their system, a solution that can price each unit dynamically in real time based on a number of attributes that they load into the program.
Information. They have a way to push that information through to the people that need it. The most that are actually in the building. All of those things combined, I think give them a strategic Advantage, competitive advantage on the revenue management front. And if we can push that throughout our, uh, platform to our other shop operators, I think it will benefit ahr as a whole.
Speaker #8: They also can take micro-market data in real time and load that into the system. And they can push that information. They have a way to push that information through to the people that need it the most, that are actually in the building.
Speaker #8: All of those things combined, I think, give them a strategic advantage—a competitive advantage—on the revenue management front. And if we can push that through our platform to our other shop operators, I think it will benefit AHR as a whole.
No, that that's that's really helpful. I mean, are you able to offset the lower rate growth environment from the government reimbursement, side of the business with, you know, the private pay portion and just through, you know, the mixed shift opportunities, you highlighted to drive that that flow through and, you know, or is it going to take more time? I guess depending on, you know you said you kind of can't predict kind of the demand, but the contracts are in place to to, you know, set it on the right path. I guess. Directionally.
Speaker #10: Yeah, that's really helpful. I mean, are you able to offset the lower-rate growth environment from the government reimbursement side of the business with the private pay portion, and just through the mix shift opportunities you highlighted, to drive that flow-through?
Speaker #10: Or is it going to take more time, I guess, depending on—you said you kind of can't predict the demand, but the contracts are in place to set it on the right path, I guess, directionally?
That's that's a great question, Austin. That's the 1 that we, all wish we had a crystal ball. That was perfect to be able to tell where we go from here, their scenarios where they can make up for it, I think, uh, absolutely, but a lot of things would have to break trilogies way in order for that to happen and I think it would be too speculative to be helpful for us to predict that those things would all break our way.
Your next question comes from the line of Michael. Carroll with RBC Capital markets. Your line is open.
Speaker #8: That's a great question, Austin. That's the one that we all wish we had a crystal ball for—that was perfect—to be able to tell where we go from here.
Speaker #8: There are scenarios where they can make up for it. I think absolutely. But a lot of things would have to break Trilogy's way in order for that to happen.
Speaker #8: And I think it would be too speculative to be helpful for us to predict that those things would all break our way.
Speaker #6: Your next question comes from the line of Michael Carroll with RBC Capital Markets. Your line is open.
Thanks, um, Gabe. I wanted to Circle back on your comments regarding the, uh, Revenue management system. Um, I know in your prepared remarks, I think you were highlighting some pilot, programs of kind of rolling that out to some of your other shop related Partners. I mean, can you kind of help us understand where you are, at in that process of rolling out that program and, um, have those um, Partners to start to see some type of benefit related to that yet?
Speaker #11: Thanks. Gabe, I wanted to circle back on your comments regarding the revenue management system. I know in your prepared remarks, I think you were highlighting some pilot programs of kind of rolling that out to some of your other shop-related partners.
Speaker #11: I mean, can you kind of help us understand where you are at in that process of rolling out that program? And have those partners started to see some type of benefit related to that yet?
Speaker #8: Yeah, thanks for bringing it up, Mike. I think it's an important differentiator for AHR as a whole, and really stems from our unique partnership with Trilogy.
Speaker #8: So let me back up for a minute. With Trilogy, we've got, I think, an unparalleled alignment within the space, where the management agreement with Trilogy is highly incentivized based on an LTIP.
Speaker #8: And that LTIP is paid in AHR stock. We were the first people in the space to adopt a management equity plan that fully aligns our company's performance with the currency we're using to pay Trilogy's long-term incentive.
Yeah. Thanks for bringing it up, Mike. I think it's an important differentiator for ahr as a whole and, and really stems from our unique partnership with Trilogy. So let me back up for a minute. With Trilogy, we've got, um, I think in, in unparalleled alignment within the space where the management agreement with Trilogy, is highly incentivized based on an ltip and that ltip is paid in a HR stock. We were the first people in the, in the space, to adopt the management Equity plan that fully aligns our company's performance with Trill the currency we're using to pay trilogies long term incentive. What that did was really unlock a financial incentive for the trilogy platform to help support our other shop operators. So now, um, if they're doing extra work in investing, in more time and effort and resources into helping our other shop operators, perform better, they're actually particular
Participating in the value. Creation from that work.
Speaker #8: What that did was really unlock a financial incentive for the Trilogy platform to help support our other shop operators. So now if they're doing extra work and investing more time and effort and resources into helping our other shop operators perform better, they're actually participating in the value creation from that work.
Speaker #8: That was the catalyst for revenue management and how that could be spread through our shop portfolio. But there are other areas where that can work as well.
Speaker #8: That can work in sales and marketing, search engine optimization. That can work in recruitment, employee engagement. It can work in enrichment for residents. There are a lot of different things that we're trying to test out to see how we can grow the platform value by partnering with Trilogy.
Speaker #8: And also some of our other operators that have great programs that can be spread throughout our operating platform to others through means that we can be a conduit for.
Speaker #8: So, where we're at in that process is it's still too early for us to release the results from it. I think the people that are using it are both ends of a different spectrum.
Speaker #8: One is good operators that are very highly occupied, where the strongest lever for NOI growth is going to be revenue management in '26, and
So where we we're at in that process is is still too early for us to release the results from it? I think the people that are using it are both ends of a different Spectrum. 1 is good operators that are very highly occupied where the strongest lever for noi growth is going to be Revenue Management in 26 and 27 and 28 as they kind of pick up the pricing power from that very high occupancy. The other end of the spectrum is people who are maybe have rates that are on the lower end of market in the markets that they're in and understanding why that exists. And if we can solve it with a revenue management tool, then we'll be, we'll just have another, you know, quiver or arrow in the quiver to use in these situations throughout our portfolio.
And then 1 operators are finding this most successful. I mean, I'm guessing that some of the bigger ones that you have are probably not going to want or need this type of help. Um, but are you, are you starting with the few operators today and you plan on rolling it out to the majority of your operators down the road. If it's successful with these first few
That's exactly right. We take a view that all of our Partnerships with our operators are collaborative. Um we're not going to force anybody to use anything that they don't find to be helpful if they're already maximizing their revenue management programs and they've already tapped into it as far as they can go, great. That's what we fully expect them to do. If they're smaller Regional operators, that feel
Like their resource constrained, that don't have a full it team to build out a proprietary program, like, Trilogy has. That's where we can be helpful. That's where we can help, um, give them the resources. They need to outperform the market.
Your next question comes from the line of Nikki Leo with Scotia Bank. Your line is open,
Uh, thanks. Uh, hi. I in terms of the Acquisitions, you know, the awarded deals, the 230 million in the pipeline. Um, I know those aren't in guidance, but can you just give us a sense for like the potential, uh, timing of those? And what is, uh, delaying the closing? Since I know, I think you said some of those have been in place and the pipeline since the third quarter. Thanks.
Hey, yeah, this is Stefan. Um, well I guess I guess just to address the first thing. Um, you know it's not it's not a delay of um closing. Uh just just to kind of go back to where we were when we last talked. Um about uh, uh, on this call about Acquisitions. Um, at that time, we had about 580 million that we had closed through the the point of the earnings call. Um, since that time in the last 3 and a half months, we've we've closed on about 500 million of Acquisitions and added, and it, uh, uh, uh, close on yeah, close on 500 million Acquisitions. And then, in addition to that,
That we've added to our pipeline. So, um, you know, if you look at what we said in the, in the third quarter, uh, call where we had 400 over 450 million of of pipeline, um, we've we've actually added, you know, somewhere around 275 million to that today. Um, you know, it's it's a, I mean, I will say that, uh, the pipeline is robust, the, the deal activity is very high. Um, you know, there's always a Slowdown that happens in December, and through the middle of January, um, uh, on the market, a deal side, but, um, even even despite that we've seen a lot of activity happening over the past 4 or 5 weeks. Uh, we're New Deals have been coming out, um, and on top of that, we, we, we've been working, uh, with our operators on off-market deals. So, there is a, there's a lot of of, uh, uh, deal flow. There's a lot of things that we are reviewing right now. Um,
And, um, you know, the pipeline is, is very Dynamic. So I would expect that, um, you know, we're going to continue to be, uh, very busy reviewing deals that we think make sense for us, um, and and being uh, uh, you know, very competitive on the ones that uh that we really want to uh, Chase.
You know, it's not it's not a delay of um closing. Uh just just to kind of go back to where we were when we last talked. Um about uh on this call about Acquisitions. Um, at that time, we had about 580 million that we had closed through the the point of the earnings call. Um, since that time in the last 3 and a half months, we've we've closed on about 500 million of Acquisitions and added, and it, uh, uh, uh, close on yeah, close on 500 million Acquisitions. And then, in addition to that, we've added to our pipelines. So, um, you know, if you look at what we said in the, in the third quarter, uh, call where we had 400 over 450 million of of pipeline, um, we've we've actually added, you know, somewhere around 275 million to that today. Um, you know, it's it's a, I mean, I will say that, uh, the pipeline is robust, the, the activity is very high.
It's going to dictate a portion of the revenue, you know, as you expand on that page versus on the Medicare Advantage side. Um, whether that's sort of in reaction to that race, just as people think about kind of the Comfort level and you know, where rates could be and how they impact Trilogy this year when you when we'll have more visibility on that, thanks.
Sure.
So um the the main drivers off of the Medicare rate that's coming out in April are obviously they're going to be Medicare and Medicare Advantage. Um so everybody can figure that part out about it. What's more nuanced and probably more helpful? Nick is that within that Medicare rate there is a mixed shift even within the resident that comes in through, Medicare and Trilogy will optimize even within that payor source to find people with acuities that, they feel like they can take care of well. So that's why you see a a rate on the Medicare um rate on that page in our supplemental. That's 5.2%. When the national average increase was closer to 3%,
So if that's a Acuity shift and that can be helpful for Revenue growth, that can be helpful for noi growth. That can be helpful for margin expansion on the Met Advantage side. Those contracts typically um price off of a percentage of Medicare as well. So the Medicare rate increase will flow through to Medicare Advantage. The, the dynamic part of that, pay our source though is that there are individual contracts.
With different Med Advantage, Plans throughout the trilogy portfolio. And there, there are a lot of them, all of those contracts are negotiated separately as a discount to the Medicare rate. And that's what you're seeing. When you see, um, the Medicare Advantage per patient day rate, increase relative to the Medicare rate. We're basically shrinking the discount that's being applied from Medicare Advantage plans, and that's Med Advantage, Plans, leaning into the quality at Trilogy. So trilogy's 5-star rating is
uh, over 4 for its entire portfolio on an overall basis and 4 over 48 for a quality measures.
Those numbers are far higher than other National providers and probably the industry-leading on both counts. Um, those are the numbers that the med Advantage. Plans are looking for when they're leaning into quality and trying to figure out who could really manage the cost of this residents care, the best and deliver the best quality of care for them.
Your next question comes from the
With BMO Capital markets, your line is open.
Hi, uh, good morning. Just hoping you could talk a little bit more about the investment Pipeline and
so what year 1 yields uh, you expect, uh, given what you're seeing, let's kind of already logs and loaded and what's being marketed and as part of the acquisition strategy or goals, if you're trying to move up,
Quote, unquote quality Spectrum to higher demographic.
Type, uh, seniors that can afford higher rent increases or higher. If thinking about
Affluence and importance there.
Yeah, thanks. Thanks for the question 1. Um, so uh, I, I think to, to, the first part of your question, um, you know, we we, I, I would say that, uh,
Your next question comes from the line of BMO Capital Markets. Your line is open.
We have seen on an aggregate basis. If you look at what we have, what we have been buying right now, um, pricing that's in you know around the high 5 low 6 number um stabilizing in the 7th.
Hi, uh, good morning. Just hoping you could talk a little bit more about the investment pipeline, and so what year 1 yields you expect, given what you're seeing with kind of already locked and loaded, and what's being marketed and as part of the acquisition strategy or goals, if you're trying to move up.
Um, you know, I think, uh, it's fair to say that there has been, uh, some cap rate compression that has occurred over the past few months. Um, but I think that's, uh, still a pretty accurate reflection of where things are, um,
Quote, unquote, quality spectrum to higher demographic.
in terms of, uh,
Type, uh, seniors that can afford higher rent increases, or how you're thinking about it.
Affluence and importance there. And
You know how we're looking at our Acquisitions and what we're trying to achieve, um, we we our strategy has not changed. We are focusing on, uh, new or higher quality, uh, properties. Um, you know, we're continuing to focus on higher Acuity, um, uh, communities. Um,
Population of of uh future residents comes to fruition. Um, there is an expectation that they are going to have uh, high quality uh, experience. So um, I would fully expect that that is is uh, a population based that uh, you know, we will continue to be focused on just based on the type of assets that we're acquiring
Hey Juan, this is Brian. Um, I would add to that. We're in a really advantageous position with our cost of capital. It allows us to buy buildings that are you know we call that we're calling them value ad but it's not value. Add in the traditional sense that it's an old building that's falling down that you got to spend a bunch of capital on it. Instead, it's a, it's, it's more likely a new vintage, 2017, 2018 construction. Uh, you know, maybe the developer still owns it. They were finally able to get out hole and we're able to buy those, uh, they're under-managed, they could be in the 70%, uh, occupancy range, and it's in a market that we know and we have a trusted operator that we feel very confident that they're going to be able to fill those things up. Uh, so we don't need to buy stabilized assets in order to get the returns that we, we want over time. They can come in a little lower, um, but we have full expectation that they're going to be in the 7s, if not, maybe even better than that.
Great, and then just my follow-up. Uh, Curious on both the shop and the trilogy segments on the noi flow through of incremental Revenue with both segments, kind of just over 90% of how we should be thinking about that. Um,
Going forward, thanks.
Yeah, it it's a range 1. This is a game depending on how occupied you are. So at the high end of, uh, occupancy rates, you can maybe, get 70, 80 to noi on incremental occupancy in shop. Same thing is true really in trilogies uh, Assisted Living memory care and independent living on the um,
On the post-acute Care at Trilogy, in the skilled side of the business. There's obviously lower pull through because every patient needs a certain amount of hours of care per day. They're still. Um, don't get me wrong, they're still margin expansion that can come from that incremental occupancy, that should be
eskel accelerating.
Yeah.
As you get to the higher occupancy levels because you're probably fully staffed, um, as you get higher and higher up, but it won't be to the same extent as the shop portfolio because of the component of care.
Yeah, and and slowly on the show and similarly on the shop side as you can imagine. Um the margins on the the additional resident that moves in. Once you're above 90 95% occupancy, the pull through is dramatic and gave sort of even referred to some of those numbers. In the AL side. You know, it could be between 40 and 70%, depending on your occupancy because at some point, you become fully staffed, you probably don't need to buy too much more incremental food. Uh, for for residents, certainly your insurance costs, didn't go anywhere your property. Taxes didn't go anywhere. Uh, so the pull through is dramatic and then on the ill side, which is definitely a much smaller component of our portfolio. I mean, you're you're north of 70%, pull through on those.
Your next question comes from the line. It's Michael Goldsmith for the UBS, your line is open.
Good afternoon. Thanks a lot for taking my questions, uh, maybe just on on some of the, like unstabilized or under-managed, uh, properties that you are purchasing, you know, you can buy color until like, what goes into turning around the shop asset. That, that is in this manage what makes your incoming operator different than the prior, uh, operator. And and you know, what are your operators? You want to do differently than the prior operators couldn't accomplish
What in many cases it's experience, right? It's, it's it's, it's being having a presence in that market having the experience of operating in those markets on a, on a scale, um, knowing uh, what the, what the demand levers are, um, how to Market properly. Um, you know how to hire the right staff. Uh, the right regionals um to oversee those communities, um, you know, building in the processes that they might have in place, uh, adding to the resident and the employee experience is, um, I mean, there's a lot of different ways that um I think someone with experience and and uh and the um the values that uh we see in our operators can change how those uh assets and communities, are being uh managed. Um and the bottom line is, you want great care. Uh, you want the employees to have a good experience and you want the residents to also have a good experience.
I think our operators are are uh, primed to do that. They, you know, they've got the ability to to implement those in all the communities that we're acquiring.
And and add to that Stefan, I Echo everything you just said, um, when we're partnering with operators on this, we're looking for experienced people that know how to run the business, know how to manage labor and expenses. And in addition to all the things that theon's talking about and what we're seeing is that the outside demand growth is actually having an impact on the transition time. So because you've got this pent up demand for or maybe not pent up demand is the right word but surging demand for the product. If you can bring in a new operator and show that show people that are coming in for tours and seeing the building that you've got a great resident experience, you can fill the building up faster and you can turn it around quicker than you have been able to in the past. And that is a very compelling investment opportunity for us.
Got it and and as a follow-up, uh, many of the shop players have been talking about us fighting increasing competition for transactions. Can you can you talk a little bit about what you're seeing and then you know in addition to does your relationship with Trilogy insulate, you a little bit giving you able to deploy 370 million dollars into Trilogy assets and 2025. And as much as we think about Trilogy investment, Trends going forward.
Uh well let me let me start with just your your answer about competition. I mean or your question about competition. Um, you know, I think I think it's fair to say that there. There has been an increase in in those that are pursuing, uh, shop, um, you know, both from, uh, the other Healthcare REITs and also from private Equity. Um, you know, I think we're we're, our advantage lies is in the fact that, you know, about half of our Acquisitions are be being done on an off-market basis. Um, we are working very closely with our operators, um, and they are bringing us, uh, potential transactions that, uh, they only know about because they're, they have Capital Partners on the other end that are, are maybe looking to exit. Um, maybe they have assets themselves that, um, uh, they're at a point where they would like to, uh, recapitalize. Um, so we have, uh, we have been able to, um, through our relationships. Uh, really, uh, grow
Our pipeline through um, those off-market uh um assets that uh are available.
On the trilogy front. I'll, I'll take that 1 to find. So it was an atypical year that we can't promise. What will happen again? So we had a lot of deals that we did with Trilogy, that trilogy was already managing for different Capital that we had the opportunity to go out and recap, um, with an operator that we completely trust. 100% sometimes in situations where the assets weren't even stabilized yet. So that we
Confident, um, in the growth profile from developments that we were doing, um, through the pandemic. That's probably not repeatable. A lot of those opportunities we've already taken advantage of what is repeatable. And what we do have an advantage on is the development capabilities of Trilogy. So like Brian mentioned earlier, there's 150 to 200 million dollars, a year of development with Trilogy that we we're essentially not competing with other Capital partners for um so you can strip out the developer economics in some cases you can strip out the general contractor economics and those fields through directly to ahr and to the trilogy management team that has an ltip that's aligned with ahr stock price, so they participate in the value creation for the work there as well.
Your next question comes from the line of feral granex with Bank of America. Your line is open,
Thank you. Um I guess my first question was really just about the bridge between your normalized ffo growth and then your total same store and a y growth and potentially on the other side of it, the total noi growth that we could potentially expect especially in the shop um shop segment when thinking about the Acquisitions that you performed in 2025,
For us, we feel very confident, they're going to be able to fill those buildings.
So uh I feel good about the non same store their ability to grow and all of those dollars and all that growth is going to inure to the benefit of the shareholders. They're just not going to show up in the same store ratios uh on the shop side. It's approximately 60% of the portfolio that's in same store.
On Trilogy side I think it's 83% 8183 something like that. Um so there's there's less nonsense and as you can imagine those those non same store assets were buildings that we took out of service because we wanted to add a wing, or we took it out of service because we're adding patio homes and that happens quite quickly. And by the way, the Returns on those are are dramatic and and and uh, very beneficial to the bottom line.
So, you know, generally speaking, I think that the nonsense store assets are going to perform well this year uh you might even argue they're going to perform better than the same store, but the good news for us and that the fact that we don't adjust the same store pool except for, at the beginning of the year that everything we bought in 2025 is going to be in the 2027, same store growth and so I would anticipate those numbers to be very positive as well. So we're talking about multi-year growth, bottom line.
Great. Thank you. And I believe, you, you've been addressing this throughout the call, but just really wanted to nail it down when thinking about the investment opportunity, and especially with the pacing that you're able to be deploying your Capital into these right data type structures, uh, either through adding investments into Trilogy or into shop. I was like, comparing to what you were able to do in 25 since now. We've um, seen other peers have actually been increasing potential Investments for 26. Uh, just trying to get a sense about where things could potentially shake out.
I feel like you're you're trying to round about the question to for me to give you guys um but I I will say this so um
You know, obviously, uh, if you look at how we acquired our portfolio, or how we, how our Acquisitions laid out last year, it was it was a little lumpy. Um, obviously a lot of it came in the back end. I think you're going to see uh something that's a little more even uh over the course of this year. Um,
and I think I would just add, you know, we we are going to be looking at
A lot of opportunities we are we are going to be, uh, finding those that make sense for us. We're going to continue to be, uh, underwriting in a, in a disciplined way that will provide us with um you know, high quality assets uh and long-term performance and um
You know, we have the capital, uh, we can compete and, uh, I think we, we also have a great reputation as a buyer. So, um, I think, uh, you know, that along with the fact that we are seeing more product available in the market. Um, so far this year, uh, you know, will lead to some very good things for us. We're certainly aware of expectations for acquisition volume this year. Um, you know, I, I will tell you that we want to make certain we're not making bad deals. Um, and you know, if you think about the evolution of the underwriting, you know, I think it may be evolving slightly. And what I mean by that is it's not as though Stefan's team is immediately. Switched from being very conservative to overly aggressive. It's more of a, a factor of, you know, when we were buying things in 2014 2024 and 2025 we put in there, some level of growth immediate growth in those. And what's happened is exactly that, uh, we had seen that
Already in 26, we've seen the growth in late 25. So what that means is that they can continue to evolve their underwriting and be slightly less conservative. Um, you know, I think the other thing that he has mentioned, a number of times upon that there's going to be enough volume out there, and they're going to be deals that are going to match up with our underwriting, with our needs, with our cost of capital with our operator base. And especially when we're bringing in such a huge chunk of those off-market, uh, directly through our, our operating Partners. I, I give ourselves a pretty good shot at at doing well, this year on the acquisition volume.
Your next question comes from the line of staff. For the city group, your line is open.
um and good locations and and and that all makes sense, I guess, um, you know, you you touched on this a little bit, um, you know, with with wanting to partner with operators that that have experience but just kind of giving the alignment that you have with
Trilogy. And some of the revenue management tools that you've kind of discussed on the call, um, you know, would you kind of look for, you know, maybe less experienced operators to partner with, where you can really kind of, um,
you know, use that use that know how the trilogy has to kind of improve results and kind of Drive higher Returns on on kind of, um, you know, lower lower, um, with lower quality operators,
That. That's that's a very interesting question, I think, um, you know, I think
What I would say to that is um we don't necessarily want to go into a situation where we're basically developing the operator um you know, we want to go uh forward and and build with operators that have a proven track record.
Um, you know, that is certainly, uh, the, the more the, the more sure and safer play for us. Um,
Jeff Hanson: Smaller operators out there that, you know, given the right resources, they could do some great things. For us, I think, we really wanna focus on those that have the history, and can prove, and have proven themselves out.
Seth Bergey: Smaller operators out there that, you know, given the right resources, they could do some great things. For us, I think, we really wanna focus on those that have the history, and can prove, and have proven themselves out.
Obviously there there are probably a lot of great smaller operators out there that uh, you know, given the right resources, they they could, they could do some great things. But um, for us, I think, uh, we really want to focus on those that have uh, the history um, and can and, uh, and can prove, uh, and have proven themselves out. Yeah. And I'd add to that Seth. I I think the question is really getting at what's the value that we can derive from trilogies platform to help support people? Um, and that's come in kind of a different angle than what you're talking about. It's not newer operators that are new to the game that have to build out their uh platforms and and get get good at what they do. It's taking smaller Regional operators, who maybe don't have to scale and resources that uh, 150 facility Trilogy platform. Does and saying, hey how we, we're picking the winners and losers, you're obviously a winner, if you know how to deliver great experience for employees and for residents, how can we help you scale and grow with you? How can we be your
The Preferred Capital Partner for those best operators who want to grow because we know that the industry is going to demand growth.
Seth: Yeah. I'd add to that, Seth. I think the question is really getting at what's the value that we can derive from Trilogy's platform to help support people. That's coming in kind of a different angle than what you're talking about. It's not newer operators that are new to the game that have to build out their platforms and get good at what they do. It's taking smaller regional operators who maybe don't have the scale and resources that 150 facility Trilogy platform does and saying, Hey, help. We're picking the winners and losers. You're obviously a winner. You know how to deliver great experience for employees and for residents. How can we help you scale and grow with you? How can we be the preferred capital partner for those best operators who wanna grow?
Jeff Hanson: Yeah. I'd add to that, Seth. I think the question is really getting at what's the value that we can derive from Trilogy's platform to help support people. That's coming in kind of a different angle than what you're talking about. It's not newer operators that are new to the game that have to build out their platforms and get good at what they do. It's taking smaller regional operators who maybe don't have the scale and resources that 150 facility Trilogy platform does and saying, Hey, help. We're picking the winners and losers. You're obviously a winner. You know how to deliver great experience for employees and for residents. How can we help you scale and grow with you? How can we be the preferred capital partner for those best operators who wanna grow?
From the best operators and and we're here for it.
um, and then just as a kind of a follow-up, um, you know, you've kind of talked on, on the revenue management tools that you already have, you've talked on, you know, the operating leverage and
you know, on on kind of the skilled side. Some of the revenue off the nation from the different different payer sources. You know, when you kind of think about kind of the margin expansion, that's been about 300 basis points in shops. How much of that kind of do you attribute to kind of just the natural inherent operating leverage in the business and, and how much of it? Um, you know, is kind of that, you know, you know, the operating, uh, platform that you guys have with trilogy.
Seth: Because we know that the industry is gonna demand growth from the best operators, and we're here for it.
Jeff Hanson: Because we know that the industry is gonna demand growth from the best operators, and we're here for it.
I've come in and kind of a different angle than what you're talking about. It's not newer operators that are new to the game that have to build out there uh, platforms and and get get good at what they do. It's taking smaller Regional operators, who maybe don't have to scale and resources that uh, 150 facility Trilogy platform. Does and saying, hey how we, we're picking the winners and losers, you're obviously a winner, if you know how to deliver great experience for employees and for residents how can we help you scale and grow with you? How can we be your Preferred Capital Partner for those best operators who want to grow? Because we know that the industry is going to demand growth.
From the best operators, and we're here for it.
[Analyst] (Company Unknown): Just as a kind of a follow-up, you know, you kind of talked on the revenue management tools that Trilogy has. You've talked on, you know, the operating leverage and, you know, on kind of the skilled side, some of the revenue optimization from the different payer sources. You know, when you kind of think about kind of the margin expansion that's been about 300 basis points in SHOP, how much of that kind of do you attribute to kind of just the natural inherent operating leverage in the business, and how much of it, you know, is kind of that, you know, the operating platform that you guys have with Trilogy?
Seth Bergey: Just as a kind of a follow-up, you know, you kind of talked on the revenue management tools that Trilogy has. You've talked on, you know, the operating leverage and, you know, on kind of the skilled side, some of the revenue optimization from the different payer sources. You know, when you kind of think about kind of the margin expansion that's been about 300 basis points in SHOP, how much of that kind of do you attribute to kind of just the natural inherent operating leverage in the business, and how much of it, you know, is kind of that, you know, the operating platform that you guys have with Trilogy?
Oh great, great question. I think that, you know what, what you're seeing so far is Great, operators that we've selected, um, that are doing exactly what we want them to do, which is perform at a high level. We've for years. Had operator Summits, and more recently created quarterly touch points with our operator groups, to get together to share best practices. Um just for their own benefits. So they can start to build their platforms out and make sure that they're cutting edge because this is a very innovative business, that's always changing. And you can always get better at. I think some of that is picked up in the performance, but the trilogy platform value is not fully realized and not fully baked. I think we're in, we're in early stages of where we can go with that platform. Um, and hopefully we'll have
More to talk about in the next, you know, several quarters.
Um, and then just as a kind of a follow-up, um, you know, you kind of talked on, on the revenue management tools that you'll be have, you've talked on, you know, the operating leverage and you know, on on kind of the skilled side. Some of the revenue off the nation from the different different payer sources. You know, when you kind of think about kind of the margin expansion, that's been about 300 basis points in shop. How much of that kind of do you attribute to kind of just the natural inherent operating leverage in the business and, and how much of it? Um, you know, is kind of that, you know, you know, the operating, uh, platform that you guys have with trilogy.
Seth: Great, great question. I think that, you know, what you're seeing so far is great operators that we've selected, that are doing exactly what we want them to do, which is perform at a high level. We've for years had operator summits, and more recently created quarterly touch points with our operator groups to get together to share best practices, just for their own benefit so they can start to build their platforms out and make sure that they're cutting edge. This is a very innovative business that's always changing, and you can always get better at. I think some of that is picked up in the performance, but the Trilogy platform value is not fully realized and not fully baked. I think we're in early stages of where we can go with that platform.
Jeff Hanson: Great, great question. I think that, you know, what you're seeing so far is great operators that we've selected, that are doing exactly what we want them to do, which is perform at a high level. We've for years had operator summits, and more recently created quarterly touch points with our operator groups to get together to share best practices, just for their own benefit so they can start to build their platforms out and make sure that they're cutting edge. This is a very innovative business that's always changing, and you can always get better at. I think some of that is picked up in the performance, but the Trilogy platform value is not fully realized and not fully baked. I think we're in early stages of where we can go with that platform.
Your next question comes from the line of Michael Stroh with Green Street. Your line is open
Thanks and good morning, uh, within shop. What are you seeing in terms of seasonality so far in the first quarter? And how much of an impact on occupancy from seasonality is currently baked in the guidance.
Yeah, good good question. Last year, there was the flu had a, a meaningful impact on the portfolio and although our our move in volume was as high as it had ever been. The move outs were disproportionately high and that was pulling overall occupancy down. Um, so far
Seth: Hopefully we'll have more to talk about in the next, you know, several quarters.
Jeff Hanson: Hopefully we'll have more to talk about in the next, you know, several quarters.
through 20 early 2026, we're seeing
Oh, great, great question. I think that, you know what, what you're seeing so far is great operators that we've selected, um, that are doing exactly what we wanted them to do, which is perform at a high level. We've, for years, had operator summits and, more recently, created quarterly touchpoints with our operator groups to get together to share best practices, um, just for their own benefit. So they can start to build their platforms out and make sure that they're cutting edge, because this is a very innovative business that's always changing. And you can always get better at it. I think some of that is picked up in the performance, but the Trilogy platform value is not fully realized and not fully baked. I think we're in early stages of where we can go with that platform, um, and hopefully we'll have more to talk about in the next, you know.
Orders.
Operator: Your next question comes from the line of Michael Carroll with Green Street. Your line is open.
Operator: Your next question comes from the line of Michael Carroll with Green Street. Your line is open.
Your next question comes from the line of Michael Stroh with Green Street. Your line is open.
Michael Carroll: Thanks. Good morning. Within SHOP, what are you seeing in terms of seasonality so far in Q1? How much of an impact on occupancy from seasonality is currently baked in the guidance?
Michael Carroll: Thanks. Good morning. Within SHOP, what are you seeing in terms of seasonality so far in Q1? How much of an impact on occupancy from seasonality is currently baked in the guidance?
Us in this room feel comfortable calling it that we're all the way past all the risk associated with the flu season. But so far we're we're getting through it better than we did. Last year and occupancy is is not deeply impacted at least through uh, February.
Thanks. Good morning. Uh, within SHOP, what are you seeing in terms of seasonality so far in the first quarter? And how much of an impact on occupancy from seasonality is currently baked into guidance?
Seth: Yeah, good question. Last year, the flu had a meaningful impact on the portfolio. Although our move-in volume was as high as it had ever been, the move-outs were disproportionately high, and that was pulling overall occupancy down. So far through early 2026, we're seeing much less of a flu impact. It's still. I think none of us in this room feel comfortable calling it that we're all the way past all the risk associated with the flu season, but so far we're getting through it better than we did last year, and occupancy is not deeply impacted, at least through February.
Seth Bergey: Yeah, good question. Last year, the flu had a meaningful impact on the portfolio. Although our move-in volume was as high as it had ever been, the move-outs were disproportionately high, and that was pulling overall occupancy down. So far through early 2026, we're seeing much less of a flu impact. It's still. I think none of us in this room feel comfortable calling it that we're all the way past all the risk associated with the flu season, but so far we're getting through it better than we did last year, and occupancy is not deeply impacted, at least through February.
Great. Um, then maybe 1 on Triple net portfolio. Uh, so there's a pretty steep decline in hospital coverage during the quarter. I know it's a small part of the portfolio, and 1 of the tenant has had pretty thin coverage for some time. But can you maybe just provide some color on what drove that sequential step down its, and if there are any concerns with rent payment there,
Yeah, good good question. Last year, there was the flu had a, a meaningful impact on the portfolio and although our our move in volume was as high as it had ever been. The move outs were disproportionately high and that was pulling overall occupancy down. Um, so far
Through early 2026, we're seeing
Sure. Yeah, look, uh, that hospital that we own in South Lake Texas. It's a suburb of Dallas. The tenant is Methodist of Dallas which is a double, A minus rated. Uh, credit rated hospital system.
Much less of a flu impact. It's still—I don't, I think none of us in this room feel comfortable calling it that we're all the way past all the risks.
Associated with the flu season, but so far we're getting through it better than we did last year, and occupancy is not deeply impacted, at least through February.
Michael Carroll: Great. Maybe 1 on Triple Net portfolio. There's a pretty steep decline in hospital coverage during the quarter. I know it's a small part of the portfolio, and 1 of the tenants has had pretty thin coverage for some time. Can you maybe just provide some color on what drove that sequential step down? If there are any concerns with rent payment there?
Michael Carroll: Great. Maybe 1 on Triple Net portfolio. There's a pretty steep decline in hospital coverage during the quarter. I know it's a small part of the portfolio, and 1 of the tenants has had pretty thin coverage for some time. Can you maybe just provide some color on what drove that sequential step down? If there are any concerns with rent payment there?
Great. Then maybe one on the triple net portfolio. There’s a pretty steep decline in hospital coverage during the quarter. I know it's a small part of the portfolio, and one of the tenants has had pretty thin coverage for some time. But can you maybe just provide some color on what drove that sequential step down, and if there are any concerns?
Jeff Hanson: Sure. Yeah, look, that hospital that we own in Southlake, Texas, it's a suburb of Dallas. The tenant is Methodist Dallas Medical Center, which is a AA- rated, credit-rated hospital system. They guarantee the lease. They vote with their dollars. They actually own, along with the doctors, they own 9% of the hospital. They have personally invested upwards of $25 million of their own money into our building, which is really nice when people are willing to do that. So they're quite committed to this asset. The volatility is tied to the fact that these guys are really shifting this hospital from a surgical hospital to a community hospital. They have added a emergency room, emergency medicine. They've added a stroke unit more recently. They've added nuclear medicine, and I think the next phase is orthopedics.
Jeff Hanson: Sure. Yeah, look, that hospital that we own in Southlake, Texas, it's a suburb of Dallas. The tenant is Methodist Dallas Medical Center, which is a AA- rated, credit-rated hospital system. They guarantee the lease. They vote with their dollars. They actually own, along with the doctors, they own 9% of the hospital. They have personally invested upwards of $25 million of their own money into our building, which is really nice when people are willing to do that. So they're quite committed to this asset. The volatility is tied to the fact that these guys are really shifting this hospital from a surgical hospital to a community hospital. They have added a emergency room, emergency medicine. They've added a stroke unit more recently. They've added nuclear medicine, and I think the next phase is orthopedics.
Concerned with rent payments there.
They guarantee the lease uh they vote with their dollars. They actually own along with the doctors, they own. 9% of the hospital. They have personally invested upwards of 25 million dollars of their own money into our building, which is really nice when people are willing to do that. Uh, so they're quite committed to this asset. The, uh, the the volatility is tied to the fact that these guys are really shifting this Hospital from a surgical hospital to a community hospital. They are, they have added a uh, emergency room, emergency medicine. They've added a stroke unit, more recently, they've
Sure. Yeah, look, uh, that hospital that we own in Southlake, Texas—it's a suburb of Dallas. The tenant is Methodist of Dallas, which is a double A-minus rated, uh, credit-rated hospital system.
Added nuclear medicine. And I think the next phase is orthopedics. And so From Any Given, uh, month to quarter to the next, it's going to move around quite a lot. Uh, they they're very committed to the building uh, and and the leases guaranteed. So I feel quite comfortable with the with the risk profile on this 1. Uh, they have a purchase option. It triggers in 2030, I would find it hard to imagine. They would not wind up buying it.
I will turn the call back over to Jeff Hansen, chairman and CEO for closing remarks.
Jeff Hanson: From any given month to quarter to the next, it's gonna move around quite a lot. They're very committed to the building, and the lease is guaranteed, so I feel quite comfortable with the risk profile on this one. They have a purchase option. It triggers in 2030. I would find it hard to imagine they would not wind up buying.
Jeff Hanson: From any given month to quarter to the next, it's gonna move around quite a lot. They're very committed to the building, and the lease is guaranteed, so I feel quite comfortable with the risk profile on this one. They have a purchase option. It triggers in 2030. I would find it hard to imagine they would not wind up buying.
Well, thank you, operator. And uh, thank you everyone for investing the time to join us today, and for your continued support and confidence. It's, uh, much appreciated. I know that, uh, Danny's on the call as well. So we're looking forward to his return at the appropriate time. And, uh, in the meantime, the team remains uh, focused on executing our strategy and creating long-term value for our shareholders with that. Thank you.
Ladies and gentlemen, that concludes today's call, thank you for joining you may now. Disconnect
They are they have added a uh, emergency room emergency medicine. They've had a stroke unit more recently. They've added nuclear medicine and I think the next phase is orthopedics. And so From Any Given, uh, month to quarter to the next, it's going to move around quite a lot. Uh, they they're very committed to the building, uh, and and the lease is guaranteed, so I feel quite comfortable with the with the risk profile on this 1. Uh, they have a purchase option. It triggers in 2030, I would find it hard to imagine. They would not wind up buying it.
Operator: I will turn the call back over to Jeff Hanson, Chairman and CEO, for closing remarks.
Operator: I will turn the call back over to Jeff Hanson, Chairman and CEO, for closing remarks.
Jeff Hanson: Well, thank you, operator, thank you everyone for investing the time to join us today and for your continued support and confidence. It's much appreciated. I know that Danny's on the call as well, so we're looking forward to his return at the appropriate time. In the meantime, the team remains focused on executing our strategy and creating long-term value for our shareholders. With that, thank you.
Jeff Hanson: Well, thank you, operator, thank you everyone for investing the time to join us today and for your continued support and confidence. It's much appreciated. I know that Danny's on the call as well, so we're looking forward to his return at the appropriate time. In the meantime, the team remains focused on executing our strategy and creating long-term value for our shareholders. With that, thank you.
I will turn the call back over to Jeff Hansen, Chairman and CEO, for closing remarks.
Well, thank you, operator. And, uh, thank you everyone for investing the time to join us today, and for your continued support and confidence. It's, uh, much appreciated. I know that, uh, Danny's on the call as well, so we're looking forward to his return at the appropriate time. And, uh, in the meantime, the team remains, uh, focused on executing our strategy and creating long-term value for our shareholders. With that, thank you.
Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.