Investing in healthcare real estate can be tricky. Many people worry about stock performance and the impact of market events. This is especially true for those who’ve invested in American Healthcare REIT (NYSE: AHR).
Recently, American Healthcare REIT’s shares dropped by almost 3% after a lock-up period ended. This affected many investors who bought shares before the company went public. Our article will explain what happened, why it matters, and what it means for investors.
Investors in American Healthcare REIT Inc., previously known as Griffin-American Healthcare REIT, are invited to reach out to Haselkorn & Thibaut for a complimentary consultation. By calling 1-800-856-3352, they can explore options for recovering losses.
Read on to learn more about this important market event.
Key Takeaways
Table of Contents
- American Healthcare REIT’s stock fell 2.91% to $15.67 on August 6, 2024, after its lock-up period ended.
- Legacy shareholders who bought shares at $40 before the reverse stock split now face big losses with the current price.
- The company went public in February 2024, raising $672 million by selling 56 million shares at $12 each.
- AHR reported a net income of $0.01 per share in Q2 2024, up from a loss of $11.9 million in Q2 2023.
- The company cut its quarterly distribution from $0.40 to $0.25 per share in April 2023, a 37.5% decrease.
American Healthcare REIT Stock Performance
American Healthcare REIT’s stock took a hit after its lock-up period ended. The 3% drop affected both new investors and legacy non-traded REIT shareholders.
Drop in share price after lock-up period
American Healthcare REIT saw its stock price fall on August 6, 2024. Shares dropped nearly 3% after the lock-up period ended for legacy non-traded REIT shareholders. The stock closed at $15.67, down 2.91% for the day.
This decline happened during a broader market downturn, adding to investor concerns.
The end of the lock-up period allowed more shares to be sold on the open market. This increase in supply likely put pressure on the stock price. Legacy shareholders who couldn’t sell before now had the chance to cash out.
The drop shows how lock-up expirations can affect stock performance and create market volatility.
Impact on legacy non-traded REIT shareholders
The drop in share price after the lock-up period has greatly affected legacy non-traded REIT shareholders. These investors held about 66 million shares, which they bought at $40 per share before the reverse stock split.
Now, they face a big loss as the stock price fell to $15.67, down 2.91% after the lock-up ended.
Legacy shareholders have seen their investment value shrink by more than half. The current stock price is far below the estimated NAV of $31.40 per share from March 31, 2023. This gap between the stock price and NAV shows the tough spot these investors are in.
They may need to decide whether to sell at a loss or hold on, hoping for a future price rise.
Company Background and IPO Details
American Healthcare REIT formed through a merger of three companies in 2021. The firm went public in February 2024, raising $672 million in its initial public offering.
Merger history
American Healthcare REIT formed from a big merger in 2021. Three companies joined forces: Griffin-American Healthcare REIT III, Griffin-American Healthcare REIT IV, and American Healthcare Investors.
This move created the 11th largest healthcare-focused REIT worldwide. The new company now manages about 19 million square feet of healthcare real estate.
The merger aimed to save money and grow stronger. It promised to cut yearly costs by $21 million. On September 23, 2021, the deal was done. This union brought together a vast portfolio of healthcare assets under one roof.
The result was a global healthcare REIT with a wide reach in the market.
IPO details and performance
After the merger, American Healthcare REIT moved forward with its initial public offering (IPO). The company launched its IPO on February 7, 2024. AHR sold 56 million shares at $12 each.
This sale raised $672 million for the company. On the first day of trading, shares opened at $12.85 and closed at $13.22.
The IPO had a big impact on AHR’s finances. The company planned to use the money to pay off debt. They set aside $703.8 million to repay credit facilities. As of March 31, 2023, AHR’s estimated net asset value per share was $31.40.
Based on outstanding shares, the market valued the company at about $1.5 billion. These details show how the IPO affected AHR’s financial standing and market position.
Recent Financial and Market Performance
American Healthcare REIT’s second quarter results showed mixed performance. The company reported net income but adjusted its guidance downward for the full year.
Second quarter net income and adjusted guidance
American Healthcare REIT reported positive financial results for the second quarter of 2024. The company saw a significant improvement in its net income compared to the previous year.
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Income | $0.01 per share | $(11.9) million loss |
| GAAP Net Income (Common Stockholders) | $2.9 million | N/A |
The REIT’s financial outlook appears promising. Management has adjusted its 2024 guidance favorably, indicating confidence in future performance. These results suggest a positive trend in the company’s operations and financial health. The next section will explore the normalized funds from operations for American Healthcare REIT.
Normalized funds from operations
Normalized funds from operations (FFO) for American Healthcare REIT showed a decline in recent months. This key metric reflects the company’s financial performance in the real estate sector.
| Period | Normalized FFO per Share |
|---|---|
| June 2023 | $0.37 |
| Latest Reported | $0.33 |
The drop in normalized FFO stems from higher interest rates. These rates affect capitalization and discount rates in the real estate market. AHR’s Q2 net income was $0.01 per share. This figure shows the company’s earnings after accounting for all expenses and taxes.
Distribution and NAV Decline
American Healthcare REIT cut its distribution rate. This drop, along with other factors, led to a decline in the company’s net asset value.
Reduction in distribution
American Healthcare REIT cut its quarterly distribution in early 2023. The payout dropped from $0.40 to $0.25 per share for Class T and Class I stockholders. This 37.5% decrease took effect on April 4, 2023.
The company paid the reduced amount in cash around April 18, 2023. This wasn’t the first time payouts shrank. In May 2020, the yearly rate fell from $0.60 to $0.30 per share.
The lower distribution affects how much money investors get back. It may signal financial stress or a change in company plans. Shareholders might worry about future income from their investments.
The next section will explore why the Net Asset Value (NAV) declined along with the distribution cut.
Factors contributing to NAV decline
American Healthcare REIT faced a steep 15.5% drop in its net asset value (NAV). High inflation and rising interest rates played key roles in this decline. The board had to make tough choices to keep the company stable.
They decided to cut distributions to save money for long-term goals. This move aimed to protect the company’s cash flow during tough economic times.
The board’s focus on liquidity became crucial for the REIT’s future plans. By reducing payouts, they hoped to weather the financial storm. These steps were part of a larger strategy to keep the company strong.
The next section will explore how these changes affected distributions and overall NAV.
Broker-Dealer Investigations and Potential Securities Fraud Claims
Haselkorn & Thibaut (InvestmentFraudLawyers.com) is looking into possible securities fraud claims. They want to protect investors who may have lost money due to broker-dealer mistakes.
Haselkorn & Thibaut investigation
Haselkorn & Thibaut has started looking into possible FINRA claims against broker-dealers linked to American Healthcare REIT. This law firm focuses on helping investors who may have been wronged.
Our experienced investment fraud lawyers have taken on the biggest names on Wellstreet. We offer free consultations to investors who want to discuss legal options for AHR.
Investors who lost money with AHR might have a chance to get it back through FINRA arbitration. Haselkorn & Thibaut aims to protect investors’ rights and hold brokers accountable. Their work involves checking if brokers followed FINRA rules when selling AHR investments.
Next, we’ll look at the company’s background and IPO details.
Broker-dealer obligations and investor protection
Broker-dealers must follow strict rules when recommending investments. They need to study each investment carefully and make sure it fits their clients’ needs. This includes looking at a client’s risk tolerance, net worth, and market experience.
If brokers fail to do this, they could be held responsible for any losses their clients suffer.
Non-traded REITs are complex and risky investments that often come with high sales fees. Because of this, broker-dealers must be extra careful when suggesting these to clients. They must explain all the risks and make sure the investment matches the client’s goals.
If they don’t, they might face legal trouble. Investors should always ask questions and understand what they’re buying before investing.
Conclusion
American Healthcare REIT faces challenges after its recent stock drop. Investors should watch for potential recovery and future growth. The company’s merger history and IPO performance offer insights into its market position.
Financial results show mixed signals, with adjusted guidance and reduced distributions. Broker investigations raise concerns about investor protection. Shareholders must stay informed and consider their options carefully in this evolving healthcare REIT landscape.
