Fresh off of an initial public offering, American Healthcare REIT executives said Monday that the company is considering buying the remaining 26% of Trilogy Health Services that it currently does not own.
“Trilogy is our largest and best operator,” Chief Financial Officer Brian Peay said during a webcast with investors. Trilogy currently operates more than 130 senior living communities and skilled nursing facilities in five states: Ohio, Kentucky, Indiana, Michigan and Wisconsin.
“We also can selectively and accretively develop within the Trilogy portfolio, which may include villa, wing additions or even ground-up campus development,” Peay said.
After divulging plans to launch an IPO late last month, American Healthcare REIT announced Friday that it had completed its IPO of 64.4 million shares of its common stock at a price to the public of $12 per share. The Irvine, CA-based real estate investment trust’s stock now trades on the New York Stock Exchange under the symbol AHR.
Peay said that the public offering also can help the REIT expand with the regional operators currently in its senior housing operating portfolio.
“We hope to be able to take advantage of potential dislocations in the market that may be due to property owners unable to refinance maturing debt or buildings that are in need of capital expenditures to make them more competitive within their markets,” he said.
As an example, Peay said, the REIT recently took over the ownership of a seven-building portfolio of assisted living communities in Texas.
“We were a mezzanine lender to the portfolio. We stepped into the shoes of the borrower for the amount of our mezzanine loan,” the CFO said. “We hope to be able to continue to pursue these types of opportunities at the right price while being constantly mindful of our balance sheet.”
American Healthcare REIT President and CEO Danny Prosky said Monday that the company’s listed common stock opened on the NYSE at $12.85 a share and closed its first day of trading at $13.22, “reflecting a roughly 10% increase from the offering price, which we believe is a great start to our journey as a publicly listed company.”
The IPO raised $772.8 million at the outset. The REIT intends to use the net proceeds to repay approximately $717.6 million of the amount outstanding under its credit facility as well as invest in future growth.
Pricing the stock was a long process, according to Prosky.
“It wasn’t done just on a whim over the last week,” he said, adding that the REIT has been working with banks and investors over the last couple of years.
“With the advice of our advisers, which included the company’s lead underwriters at Bank of America and Morgan Stanley, the board determined that a $12 to $15 range was an appropriate price range to generate interest,” Prosky said.
The REIT acquires, owns and operates healthcare real estate properties that in addition to senior living communities and skilled nursing facilities also includes medical office buildings, hospitals and other healthcare-related facilities. As of Sept. 30, the portfolio included assets totaling approximately $4.6 billion and consisting of 298 buildings and integrated senior health campuses located in 36 states, the United Kingdom and the Isle of Man.