Hello, everyone. Thank you for joining us, and welcome to the American Healthcare REIT Third Quarter 2026 Earnings Conference Call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Alan Peterson, Vice President of Investor Relations and Finance. Alan, please go ahead.
Good morning. Thank you for joining us for American Healthcare REIT's Third Quarter 2026 Earnings Conference Call. With me today are Chairman and Chief Executive Officer, Jeff Hanson, President and Chief Operating Officer, Gabe Willhite, Chief Investment Officer , Stefan Oh, and Chief Financial Officer , Aric Chang. On today's call, Jeff, Gabe, Stefan, and Aric will provide high-level commentary discussing our operational results, financial position, our increased 2026 guidance, and other recent news relating to American Healthcare REIT. 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. Therefore, you should exercise caution in interpreting and relying on them.
I refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results, financial condition, and prospects. All forward-looking statements speak only as of today, November 6th, 2026, or such other dates as may otherwise be specified. We assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. During the call, we will discuss certain non-GAAP financial measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.
Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable measures calculated in accordance with GAAP are included in our earnings release, supplemental information package, and our filings with the SEC. You can find these documents, as well as an audio webcast replay of this conference call, on the investor relations section of our website at www.americanhealthcarereit.com. With that, I'll turn the call over to AHR's Chairman and Chief Executive Officer, Jeff Hanson.
Thanks, Alan, and good morning, everyone. Last quarter, I discussed the durability of AHR's competitive advantages and our progress in scaling this company with both ambition and discipline to drive compounding earnings growth for shareholders. This quarter, I'd like to advance that story one step further. First, the headline results for the quarter. Total same-store NOI growth of 13.8%, our 11th consecutive quarter of double-digit growth, with both our SHOP and ISHC, or Trilogy segments, benefiting from increasing operating spreads and significant margin expansion as well. Another increase in full-year guidance, which now implies, at the midpoint, full-year NFFO per diluted share growth of over 30% versus last year. Strong external growth with $2.1 billion in completed investments year to date and an awarded pipeline of more than $1 billion, a significant portion of which was secured on relationship, not price.
None of that pipeline is reflected in our revised guidance, and all of it's expected to be match-funded with proceeds from our unsettled forward sale agreements. Lastly, efficient balance sheet management as we continue to materially deleverage while generating significant growth, which is highlighted by net debt to EBITDA of just 1.9x at quarter end. These figures matter individually, but what matters more is what they say collectively. Our strategy's working, and it's fueling our ability to build on our track record for continued growth. AHR has multiple engines of value creation working simultaneously: organic operating growth, accretive external investment, internally generated development, and an increasingly sophisticated operating platform. We've accelerated growth and upgraded portfolio quality while simultaneously strengthening the balance sheet, which is positioning us with real capacity to keep playing offense going forward.
Put simply, this is not just a larger AHR, it's a more capable AHR, one in which our platform's core competencies are increasingly working together as an integrated system to produce consistently strong results that are beginning to compound. The sector tailwind is not the AHR advantage, as we often say internally. Our platform and our execution is. The team will run through the operating details in a moment, but the progression you'll hear is important. These results are proof points that our operating model is creating tangible value. We believe high-quality real estate is imperative, but not sufficient to produce the best results. Superior results are achieved by partnering with the strongest operators and enhancing their ability to execute. As an operating REIT, we increasingly think about AHR as a dynamic operating platform.
The model combines institutional scale, resources, and capital with proven regional operating expertise, and then surrounds those operators with resources that can make already strong businesses even better. That's where durable value is created. It all starts in our communities. The quality of care and outcomes our operating partners deliver every day is the foundation of everything that we do. Strong clinical outcomes earn trust, and trust is ultimately what drives occupancy, rate, and payer mix. In our business, if done well, quality of care and financial performance move together. Turning to external growth, the headline is more opportunity, same standard. Our external growth activity remains significant, but the emphasis must remain where it belongs. Long-term per-share value creation is the objective, and that's the driving force behind everything that we've done this year. Importantly, external growth is not simply adding NOI.
It's reshaping the quality and risk profile of the enterprise. We're allocating capital toward newer vintage senior housing in affluent, supply-constrained infill markets where operating growth and pricing power is embedded in real estate that's very difficult to replicate, which is a powerful combination. Our $3 + billion of closed and pipeline investments represent assets that are all accretive to first-year NFFO, accretive to NAV per share, enhance overall portfolio quality, and are expected to be meaningful contributors to both NFFO per share growth and same-store NOI growth for years to come. Importantly, these $3 billion in investments reflect an average vintage of 2019, representing some of the highest quality senior housing product in some of the best markets in the country. On our August call, I described our approach to today's sector opportunity as measured aggression.
We'll continue to move decisively when quality, basis, operator, market, and expected returns meet our standard. That combination, speed and execution when opportunity meets preparedness, and patience when it does not, is what we mean by the measured aggression reference. Given our reputation, our relationships, and our track record, much of what we pursue never reaches the broader market. We're taking the same approach to scaling the platform. We've been deliberately investing in conjunction with and ahead of robust growth. Over the last several months, we've strengthened critical leadership capabilities across our finance, investments, strategic asset management, and enterprise technology divisions. These hires introduce added depth to an already strong team, and they're the architecture for the company we're scaling AHR into. Gabe will cover these details in a moment. I also want to recognize Brian Peay, who retired on September 30th after a decade of service.
He helped guide AHR through a period of remarkable growth and our listing on the New York Stock Exchange, and he leaves us with a strong financial foundation. We're grateful for his leadership and for his support of a smooth transition, and we certainly wish him well in retirement. We're also pleased to welcome Aric Chang, who joined us on October 1st. Aric comes to AHR from Public Storage, an S&P 500 operating-intensive REIT, where revenue management, data, and capital deployment drive results, the same disciplines at the center of AHR's operating business. His experience brings together a rare combination of what the next phase of AHR requires. We welcome Aric, and you'll hear from him later in the call. I'd like to close with a central point. The demographic opportunity in the sector is certainly extraordinary, but it will not determine the winners. Expertise and execution will.
We believe AHR is increasingly positioned at the intersection of historically strong sector fundamentals and an integrated operating and capital allocation platform built to convert those fundamentals into superior long-term shareholder value. We remain early in this opportunity, and we're intensely focused on ensuring that the best version of AHR is still ahead of us. With that, I'll turn the call over to Gabe, who will walk you through the operating results and other important detail for the quarter.
Thanks, Jeff. 2026 marked a new phase for AHR. While phase one was about entering the public market and proving what we knew we could do as a company, phase two has been about leaning into platform enhancements, taking the company to a new level, and making sure the company is built for the sustained growth and value creation opportunities that we see today. We have expanded our operator relationships, we have enhanced our asset management and operator support functionality, and we are supercharging our data capabilities. I am happy to report it is working. Total portfolio same-store NOI grew 13.8% year-over-year, accelerating from 13.2% in the second quarter, which was already a high watermark. Together, Trilogy and SHOP make our SHOP+ portfolio, and both segments took occupancy higher and at the same time expanded margin again.
The setup we described to you in August is now in the results, and we feel confident about the future. Stepping back, our portfolio and strategy rests on two core beliefs. First, that the resiliency that comes from the more needs-based portion of the broader senior housing continuum will drive relative outperformance. Second, that there is absolutely no substitute for elite operating partners. There is no better example of those beliefs than Trilogy. Once again, Trilogy delivered another impressive quarter, growing same-store NOI 15.7% year-over-year and 1.6% sequentially. Same-store occupancy averaged 91.2%, roughly 110 basis points ahead of a year ago. You will recall in August, we characterized the second quarter skilled nursing occupancy step-down as seasonality. While the third quarter is typically a seasonal low for skilled nursing, Trilogy's skilled nursing occupancy actually overcame that seasonality and further increased to 90.2%, up 30 basis points sequentially.
Senior housing occupancy also grew across the campuses, reaching 92.6%, up 70 basis points sequentially. Trilogy also delivered on expense controls, further bolstering margin. Same-store revenue grew 4.8%, while same-store operating expenses grew 2.2%, with controllable costs actually down 3.7% year-over-year. Same-store NOI margin finished 21%, roughly 200 basis points ahead of last year. As those more familiar with Trilogy know, there are many levers that drive growth. Quality mix in Trilogy's post-acute care business is an important one. Quality mix reached 75.7% of same-store resident days, up roughly 80 basis points from a year ago. The continued improvement you are seeing in quality mix is a result of being the preferred option as health systems, physicians, and Medicare Advantage plans alike look to high-quality care providers, and that is important.
Trilogy's focus on care also shows up in its overall CMS star ratings across the portfolio, which are now sitting at 4.2 stars. Its quality measure ratings, which are now sitting at 4.8 stars on average, both industry-leading among the large skilled nursing operators in the country. Turning to SHOP, this quarter by every measure was a standout. Same-store NOI grew 28.2% year-over-year, accelerating from 20.5% in the second quarter and growing 9.1% sequentially. Same-store occupancy averaged 90%. Same-store revenue grew 9%, driven by accelerating RevPOR growth of 5.4% year-over-year. Notably, ExPOR grew just eight-tenths of a percent. The RevPOR to ExPOR spread expanded to roughly 460 basis points. That widening spread unlocks tremendous value and propelled same-store NOI margin expansion of 350 basis points year-over-year to 23.5%, and ultimately strong NOI growth.
When we say that execution matters, this is what we are talking about. Demographics alone do not do that work for us. All of the work that we continue to do to ensure our operators have the full strength and backing of our platform is having an effect as we evaluate the results we have achieved. That work is not done, and it probably never will be. We will continue to evaluate opportunities to further enhance our operating capabilities across our portfolio through data and analytics, the Trilogy platform, our innovation forums, and our strategic asset management. It is important to note the scale of our SHOP segment has grown materially. SHOP now spans 109 properties and over 10,000 units, up from 71 properties and over 5,700 units a year ago.
We are excited to have these assets on our platform. I have no doubt that our strategy of pairing the highest quality assets with the highest quality operators will allow us to continue to build upon the results we have already achieved. In furtherance of that mission, I am excited to expand on some of our talent acquisition. Ann Lacey joined us in September as Executive Vice President, Portfolio and Asset Management for Senior Housing. Her mandate is to drive our multimodal operator support system across our growing portfolio. Ann is a highly capable expert who will draw from a rare and sought-after background. She spent seven years at one of the best private equity investors in the senior housing space, and prior to that, spent over 11 years with Sunrise Senior Living, a leading senior housing operator.
Jon Crosier, our new Chief Technology Officer, is leading the data and technology strategy that, among other things, puts the revenue management, analytics, and reporting tools we built alongside Trilogy in the hands of more of our regional operating partners every quarter. Jon will draw on experience in both the public and the private sector, having worked at the Irvine Company, one of the most sophisticated private real estate companies in the U.S. Also, just this week, we added to Jon's team from the healthcare REIT industry, further enhancing our capabilities. Together, Ann and Jon will help drive performance across the portfolio and operators, unlocking innovation through collaboration in an industry that rewards you for doing so. They are already making an impact and are poised to help us further enhance the platform for multi-year growth.
I want to close by extending my gratitude to our regional operating partners and our asset management team. They produce this quarter in our communities one resident at a time. I know they all agree that care will always come first. When you operate with that conviction, the results will follow. With that, I will turn it over to Stefan.
Thanks, Gabe. The third quarter was transformative for our SHOP portfolio. We meaningfully enhanced the quality of the portfolio through our recent acquisitions. Not only are the assets exceptional in many ways, but the operators we partner with are equally impressive. How we acquired these properties was also important. As Jeff and Gabe alluded to earlier, every deal is won on partnership, but not always on price, and that proved to be valuable this quarter. During the third quarter, we closed approximately $1.69 billion of new investments across 17 senior housing communities. That brings us to the $2.1 billion of completed investments year to date that Jeff referenced. Two transactions in particular defined the quarter. The first was our acquisition of properties owned and operated by Kensington Senior Living. To date, we have closed on six Class A communities for approximately $572 million.
These are part of an eight-community portfolio carrying an aggregate contract purchase price of approximately $873 million. What made this portfolio so compelling starts with the real estate. Kensington purpose-built seven of the eight communities. Approximately 93% of the units are dedicated to assisted living and memory care, and the communities sit in affluent infill sub-markets across the Los Angeles, San Francisco Bay Area, Washington D.C., and New York metropolitan areas, where developable land is scarce, zoning is restrictive, and entitlement timelines are prolonged. The opportunity reached us through a limited channel process rather than a broadly marketed auction, and we were not the highest bidder. Kensington, as both owner and operator, selected AHR based on alignment and long-term partnership. The transaction formally establishes our relationship with Kensington, and we expect to close on the remaining two communities by year-end.
The second introduced LCB Senior Living to the AHR platform as a key operator in the Northeast. In that series of transactions, we acquired eight communities for approximately $696 million across East Coast markets, all built between 2020 and 2022. Seven of those are now managed by LCB, and with five of the communities developed by them, they bring development capabilities in the same way Kensington does. In all, 10 communities were marketed together, and only a solution for all 10 was going to clear the market. Rather than walk away from a highly strategic opportunity or stretch our capital allocation discipline to take all 10, we secured all of the assets and assigned the two communities that did not fit our strategy to another investor at our allocated basis.
This series of transactions gives us our first meaningful footprint in the Northeast and establishes a long-sought relationship with LCB at immediate scale. Beyond those two deals, we have closed $800 million of investments this year that have been a continuation of our strategy to expand with many of our existing regional operating partners in the markets where they already excel. This results in an average deal size of approximately $114 million and is comprised of single-asset transactions and smaller portfolios. This is how we de-risk external growth while adding market share in the regions we have identified as offering among the best risk-adjusted returns. Ultimately, what matters most is how these investments are enhancing our portfolio.
We have been deliberately allocating capital towards newer vintage senior housing in affluent, supply-constrained markets, and the average age of the SHOP portfolio now stands at 18.1 years compared with 22.9 at the end of 2025. The result is a newer, higher-quality portfolio with an increasingly attractive long-term risk-adjusted return profile. In addition, our relative scale provides an advantage. We don't face the pacing pressures for external growth that we would if we were larger, while also allowing us to significantly enhance the overall portfolio quality relatively quickly. Looking ahead, our awarded pipeline stands at over $1 billion, which includes newly awarded deals as well as those previously disclosed. We expect a portion of those to close late in the fourth quarter and the remainder to close during the first quarter of 2027.
In addition, we continue to see a robust acquisition market with ample opportunity to strategically grow with our operators through single-asset or small portfolio transactions. As our expanding network of operators takes us into new regions of the country, the available opportunities also continue to expand, allowing us to maintain our focus and discipline on growth. Finally, I want to reiterate the importance we place on choosing our operating partners. Their commitment to the highest standards of care and resident experience is what ultimately allows our communities to perform at their highest levels and remain competitive over the long term. Those standards are non-negotiable for AHR. As demonstrated by the Kensington transaction, this isn't a one-sided process.
The alignment has to be felt by both sides to truly create the partnership and trust that allows us to be their capital partner of choice and for them to be our preferred operating partner. When we pair the strength of our operators with our disciplined acquisition strategy and underwriting standards, we believe the outcome is a better resident experience and strong investment performance. With that, I'll turn it over to Aric.
Thanks, Stefan, and thank you, Jeff, for the kind words. Before I get into the numbers, a brief word. For months before I joined, I watched this team execute on the plan AHR committed to. Now, several weeks on the inside, I can say with confidence that AHR is exactly the top-tier organization that it looked like from the outside. I'm proud to be part of this team and to be delivering our 3Q results. I'll cover three items: third quarter financial performance, our updated full-year guidance, and our balance sheet and liquidity profile. We reported normalized FFO of $0.58 per diluted share for the third quarter, up 31.8% from the same quarter last year. This was driven by strong execution from our operating partners and asset management teams, alongside our investments teams, delivering accretive acquisitions to our growing portfolio.
Given these results, we are now raising full-year 2026 NFFO per diluted share guidance to a range of $2.23-$2.26, up from our prior range of $2.15-$2.19. At the midpoint, that represents over 30% NFFO per diluted share growth over 2025. We are also raising total portfolio same-store NOI growth guidance to a range of 12%-14%. At the midpoint of guidance, that is up 100 basis points versus the previous guidance midpoint, and it is driven by higher growth expectation across all of our property segments. At the segment level, Trilogy same-store NOI growth moves to a range of 14.5%-16.5%, up 100 basis points. SHOP moves to a range of 23%-26%, up 500 basis points.
Outpatient Medical moves to a range of 0.5%-1%, up 25 basis points, and Triple-Net Properties move to a range of 2.5%-3.5%, up 50 basis points. As always, this guidance reflects only the transactions and capital markets activity completed through today, and no additional acquisitions beyond what is closed year to date. Guidance does not include any of the awarded deals still in the pipeline. While we are raising our outlook for same-store NOI and earnings, our G&A guidance is unchanged. We are strengthening the platform with talent and scaling efficiently, which means more of our growth is reaching the bottom line. Now, turning to the balance sheet. Net debt to annualized adjusted EBITDA improved to 1.9x , half a turn lower sequentially, and 1.6 turns lower than a year ago. On liquidity, we remain well-funded to support our growth.
As of today, we have approximately $1.3 billion of gross proceeds available under unsettled forward sales agreements relating to 24.6 million shares. Along with full $850 million of capacity under our lines of credit. The takeaway is simple. We are already fully funded for our awarded pipeline of over a billion, plus additional future investment opportunities. Having worked at some of the industry's best capitalized REITs, I am pleased to say that my philosophy on capital allocation and capital structure aligns closely with the strategy AHR has already employed to date. My focus is now twofold, sharpening and expanding the capital tools already at our disposal and effectively communicating our strategy to the market. You should expect enhanced disclosure and greater visibility around how we intend to fund growth and manage our capital structure over the long term.
We will continue to be strategic about when and how we raise capital, only doing so when we can deploy it accretively to grow both long-term earnings and NAV. On a personal note, I have enjoyed getting to know many of our analysts, investors, and operating partners in my short time here, and I look forward to continuing those conversations. I would like to close by thanking the entire AHR team for their warm welcome and for what they have accomplished so far this year. Strong operating results, record investment activity, while materially reducing leverage, putting us on track for full year 2026 NFFO per diluted share growth of over 30%. Those accomplishments are a reflection of the two things Jeff opened with, ambition and discipline.
We are upgrading and strengthening our portfolio, team, and balance sheet all at the same time without losing sight of our core mission to deliver high-quality care and outcomes for our residents. That is the philosophy that enables AHR to continue creating long-term durable value for our shareholders. With that, operator, we would like to open the line for questions.
We will now begin the question -and -answer session. Please limit yourself to one question and one follow-up for a total two questions. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question is from Farrell Granath with Bank of America. Your line is now open. Please go ahead.
Welcome, Aric, for your first earnings call with us at AHR. I first wanted to touch on your acquisition pipeline. Appreciate all the details, especially for what you have been acquiring. Now just looking forward, you have refueled your pipeline. I am hoping you can give a little bit more color on the type of momentum that you are seeing and the quality of product that you are seeing come into the market, especially as it seems that you are targeting that newer vintage type of asset.
Hey, Farrell. This is Stefan. Appreciate the question. I would say first of all, obviously what we have been acquiring, we are really excited about the portfolio that we are building. Quite frankly, we are not seeing anything that is indicating that the deal volume in the market is slowing down. It is continuing to be very good. It is a strong deal flow. We are continuing to underwrite deals that are working for both us and our operating partners. We are going to continue to be looking at very high-quality newer assets. A good majority is going to be in infill markets, high barrier to entry markets. We are also going to be continuing to look at those strong secondary markets as well. If you look at the pipeline that we have right now, most of those assets are actually in the same MSAs as the headquarters of our operators.
We are continuing to grow with our existing operators. We are continuing to stick with our strategy. I mean, it has been working really well. I think the way we have handled our growth and our partnership with our operators continues to pay off. They are bringing us a lot of off-market deals. We are getting a lot of deals through relationships. So we can be selective as we continue to grow, but I think there are going to continue to be a lot of opportunities for us to look at and bid on.
Great. Thank you. I guess also on that point, especially when it comes to the scaling of your SHOP portfolio, I know that you have been able to expand not only in geographic, but also in your partnership with different operators. A little bit on the lessons learned or as you are scaling, what are items that you are very focused on as you continue with this momentum in your pipeline?
Yeah. Farrell, Jeff Hanson. Good morning. Good question. Thank you for that. Look, I think that the strategy that is actually differentiated and fairly unique to AHR in terms of how we grow externally, it is really a two-pronged approach that we have been communicating the same way since the earliest roadshows for the IPO. We are either expanding with existing trusted operators that are already in our stable in market areas that they already compete very effectively with. That materially de-risks the external growth proposition. When we do go into new regions with new operating partners, it is highly circumspect, very strategic, and it is usually going to be with size and scale. This year, 2026, is a perfect example of that two-pronged strategy. The LCB portfolio and the Kensington portfolio being perfect examples of the latter, while we are simultaneously executing over $800 million in deals that represent expansions with existing trusted operators.
Again, that kind of expansion, especially with the, Stefan did not mention this, but a lot of what were brought from our operators happened to be already managed by our operators for other capital that is ready to exit. That is the quintessential de-risking of external growth. The last thing that I would point out there is, we have grown from eight to 11 SHOP operators outside of Trilogy this year. If we were okay with expanding our operator base in a year to two dozen, we literally could have done another $2 + billion in deals this year that would have met our requirements in terms of asset and location quality. But that is not our playbook. That is not our strategy.
And we think that very intentional, strategic, and aggressive growth with existing operators in our stable not only de-risks, but drives greater results in the long term, and certainly a better risk-adjusted return profile overall.
And Farrell—
Great. Thank you.
—it's Gabe. I just add an important nuance to that. We don't view operators as commodities that can be traded. We view them as long-term partnerships, and it really having an impact on our performance to be partnered with an all-star team of operators. So, we'll be more selective as we scale, and we actually find the operators before we find the investment opportunities as we start to scale. And then we look back on 10 and 15 years of doing senior housing, investing through the RIDEA structure, and what are the lessons learned from that as we scale as well. One of the big takeaways, and this is an important thing because I think new entrants probably can draw from that experience, is how even good operators can get over their skis, and it can impact our total performance.
One of the ways that we've seen that happen over and over again is just taking on too much too fast and getting spread too thin and deteriorating the culture and ultimately the performance. When we're looking to scale, and Stefan and his team are looking for multiple outlets to grow with so that we are not overwhelming the operator bench that we have. We're very methodical about it, and we want to make sure that our growth ambitions are aligned with the capabilities and the capacity of our operator bench. That's a critical part of the whole proposition.
Stefan alluded to it briefly in his prepared remarks, our relative size advantage, and I think this is important. It means that we don't have to capture the entire market to generate meaningful and attractive external growth for our shareholders. We simply need to capture the right opportunities at the right basis and with the right operating partners, which is exactly what we've done all year long. No shortage of opportunities. This year's volume industry-wide has been 2x what last year's was, and the vast majority of the capital markets teams on the brokerage side that control 80% or 90% of the SHOP product are all saying generally the same thing. They're expecting the same level of velocity next year.
Great. Thank you so much for the extra detail.
Your next question is from Ronald Kamdem with Morgan Stanley. Your line is now open. Please go ahead.
Great. Starting with the SHOP portfolio, the same store guide raise of 500 basis points. I guess I was hoping we could double-click into that. Between pricing, occupancy, and expense controls, maybe give us a sense of what really outperformed your expectations. Obviously, as we flip the calendar to next year, just some thoughts on the durability of that outperformance. Thanks.
Thanks, Ron. It's Gabe. A few things go into that, and there's always multiple levers in this business. It's an operating business. You need to approach it as such. What we were really happy to see this quarter over the last one is great sequential occupancy growth at the same time, pricing power within the portfolio driving RevPOR from 3.8% at the beginning of the year to 5.4% today. I think it's important to note, by the way, our same store universe doesn't change as the year goes on. We said it at the beginning of the year, so this is an apples to apples comparison of what's going on and illustrates the value of having great operators, but also having a platform layered on top of that that can help those operators achieve even more success than they would if they weren't on AHR's platform.
We've talked a lot about leveraging the Trilogy platform, their revenue management strategies, and their revenue management playbook, and rolling that out through our roster of operators. It is having an impact, and that is one of the ways that we're able to grow RevPOR at that level. Those advantages are structural and embedded in our portfolio, so we feel like we're poised well to take advantage of the really generational opportunity in senior housing today. We feel good about 2027 and our ability to outperform expectations as we move through the opportunity ahead of us.
Hey, Ron. It's Aric. It's nice to chat with you again. One thing I'll add is, while we won't get too in the weeds on 2027, you asked about durability. If you look at what's implied for Q4 with our revised guidance, it's basically a repeat of a really outstanding high 20% print in Q3. That should give you some signs that we feel really confident in the durability.
Great. Really helpful. My second question is just on the Trilogy side of it. I just would love to hear, as you transition from sort of occupancy gains to pricing gains and incremental margins, just how that business has been evolving at this stage. Thanks.
Yeah. Hey, Ron. It's Gabe again. It kind of varies. It's dynamic, right? Trilogy's business has a lot of levers to pull to drive the NOI performance. We have, with Trilogy, not only one of the best operators in this space, but we also have a management contract that we think is the most aligned in this space as well to the bottom line. So Trilogy, better than probably anybody else, is focused on every incremental way that they can grow that NOI. So right now, what's going on with their business is, for the first time, maybe this summer selling season on the private pay side, less focused on running promotions and more focused on capturing residents at the right rate and building occupancy at the right rate. We saw that work very well in an even higher and higher occupancy environment.
As we all know, rate management and revenue management is going to become a more critical part of the business. On the post-acute care side of their business, it's all about mix shifts still today and tapping into the opportunities that come from being more highly occupied. As you know from knowing Trilogy well, Medicare and Medicare Advantage are the preferred reimbursement sources for the residents that are moving in there. Even within Medicare Advantage, there are literally hundreds of Medicare Advantage plans that Trilogy works to optimize and prioritize the partners that are willing to pay them for the quality of care that they provide, because that comes at a higher cost than the low-quality providers. They're always looking for partners who are willing to meet the reimbursement level for the high quality of care. So they optimize that.
I think you'll continue to see good rate growth out of Trilogy, probably on the Medicare Advantage side, significantly above the Medicare rate increases as we've seen over the last 11 quarters.
Thank you.
Your next question is from Michael Goldsmith with UBS. Your line is now open. Please go ahead.
Good afternoon. Thanks a lot for taking my question. Maybe continuing the same line, your occupancy has now hit 90%. We have heard from others, right, when you hit that 90% level of occupancy, the algorithm shifts from occupancy to rate. Just wanted to get your perspective on that and then just talk a little bit about how you have been positioning yourself for when you reach this point when you can start to continue to maybe push rate a little bit harder. Thanks.
Thanks for the question, Michael. This is not a new dynamic for us. Two years ago, we started seeing higher occupied buildings more reliant on revenue management than on occupancy gains in order to drive NOI. Two years ago is when we partnered with Trilogy to bring in a revenue management expert that came from aviation and hospitality background, highly dynamic pricing models, to help come up with strategies at Trilogy that can optimize revenue management there. That has been working for a long time within Trilogy's portfolio, which, as you know, is over 50% of our NOI. We are tapping into that playbook and those strategies and have been for over a year now with our other operators to focus there. That is where the future is in this business for NOI growth.
Certainly, there is still, though, let's not forget, at 90%, our goal is not to remain at 90% occupied in our portfolio. We are still working to grow occupancy, and we still have several years of occupancy gains that are going to fuel strong NOI growth. Just backing up, because I think this is the question everybody wants to know, how sustainable is the NOI growth, and what level is it going to be, and for how long? Let's just talk about that for a second, right? Our strategy, our portfolio, our platform are working. 28% NOI growth on a same-store basis actually accelerated meaningfully from last quarter, and that is this year's NOI growth coming off of 2025 3Q's NOI growth, which was on a same-store basis over 25% as well.
We feel like we are going to be as well positioned as anybody to take advantage of the supply-demand dynamics in senior housing today and the runway that we have. Let's focus on what we actually do know and not speculate about where we go from here. We absolutely know that RevPOR growth is stronger as things get more highly occupied, so we expect to see that. We absolutely know that we are at the very front end of an incredible demand surge with the baby boomer generation that is going to put even more pressure on occupancies higher and create even more demand for the product. We know that being more AL and memory care focused in the higher acuity side of the senior housing continuum not only makes our portfolio more defensive, but it provides more runway for that demand.
People won't be priced out by a discretionary decision about where to live. If you would have asked us two years ago, "What is the NOI growth going to be in your SHOP portfolio?" I don't think we would have said, "We are going to do 25% the first year, and then we are going to follow that up with 28% the year after," but we would have been right. So where do we go two years from now? I think we have the right platform, the right portfolio to drive outperformance. We have demonstrated that we can do it, and we feel well-positioned to take advantage of a supply-demand dynamic that is only getting better from here.
Yeah, Gabe, that is excellent. Michael, I would add one thing. This is Jeff here. We are seeing this show up in our outperformance in terms of underwriting, acquisition underwriting versus actual that we do every quarter. All of the $1 billion roughly that we bought in 2025, as of 3Q this year, is materially outperforming underwriting, and our underwriting actually hasn't changed. Double digit, and the outperformance is roughly low double digit in terms of NOI, which means initial first year cap rate to the upside of almost 75 basis points. So, not only are the operators that we are adding to the platform and expanding with performing exceedingly well, but the value that we are able to add after we absorb new assets is meaningful. So, I think the main takeaway there is we are not just getting bigger, we are getting better as a platform.
It falls right into my follow-up question about the operating platform as a differentiator. To your point, you are outperforming your underwriting. What can you attribute that to specifically? Is it the revenue management side? Is it the analytics? Is it the asset management capabilities? Just trying to get what is the core tenet that is driving that outperformance of your underwriting?
It is all of the above. It is broad-based. Gabe, do you want to elaborate?
Yeah, first, what you need to do is start with great real estate, and you need to pair the great real estate with the highest quality operators in the country. If you have those two things, you are ahead of pretty much everybody else, and you are going to get good results. Of course, being AHR, we are not satisfied with just those two things. Our strategy and our thinking is, how do we take it further from here? How do we get better from here? How do we drive outperformance from here? It becomes the operator support ecosystem. All credit to our investment team for doing $2.1 billion of assets that are 2019 vintage or newer this year. That creates the opportunity for the operators.
When we layer on data and analytics that helps with benchmarking and real-time performance visibility, portfolio-wide dashboards, pricing, and CapEx intel with the Trilogy platform, which can help with revenue management, search engine optimization, employee experience, our innovation forums that bring this roster of best-in-class operators together to leverage more than just Trilogy's ideas. Let me be clear, our other operators have great ideas, and ideas can be leveraged throughout the platform as well. Creating a forum for them to be able to do that has been critically important. The final component of it is having a bench of asset managers, with now Ann Lacey leading the charge, that have real operational experience and have actually been in charge of making sure that the buildings are fully optimized.
They can come in as kind of a high-end consulting agency and take maybe underperforming assets or even the highest performing assets and make them better with our asset management team. All those things come together, and that's what creates the value, and that's what leads to outperformance.
Thank you very much. Good luck in the fourth quarter.
Your next question is from Michael Carroll with RBC Capital Markets. Your line is now open. Please go ahead.
Yeah, thanks. I wanted to dig into Trilogy's results a little bit more. I know that, Gabe, you mentioned that they have some expense-saving initiatives in place, and the controllable expenses actually declined year-over-year. Can you give us a little bit of details on why the controllable expenses declined? What did they do? And is this just kind of a one-time decline, or is this going to be ongoing over the next several quarters?
Yeah. Trilogy does a lot of things well. All credit to them. If the Trilogy team is listening to this call, thank you guys. We appreciate you, and I know you know that already, but I want the world to know it as well. For them, it is everything. They look at everything all the time. They are constantly looking at how they can run their business more efficiently. This quarter, it just happened to be looking at employee benefits and getting some cost savings around employee benefits without eroding the quality of those benefits is what they were able to capture. So, it is more of a one-time thing, Mike, but also at the same time, it is not. It is repeatable because it is Trilogy being Trilogy, just finding ways to optimize the business, expand the margin, and grow NOI.
The best alignment in the industry.
Okay. Okay, great. Then just looking at the broader portfolio, I know we spent a lot of time talking about SHOP and the Trilogy portfolio. What about the other assets? I mean, is there an opportunity to maybe sell some non-core assets? Is that something that the company is looking at a little more in focus as you are growing much more significantly in other parts of the portfolio?
Sure. Yeah, Jeff here. Thanks, Mike. Yeah, we always do, as you know. First of all, our RIDEA vertical, both SHOP and Trilogy, is the go-forward engine for AHR. So, our capital, our platform expansion efforts, and our external growth is exclusively focused there. I think what you are asking is, as it relates to the OM portfolio, and I will say what I think I said in the Q&A last quarter, we understand the value that is embedded in that portfolio. We have already sold 30 of the assets. We have taken NOI contribution from 35% down to roughly 10%, and that continues to drop rapidly. That is by design. We have been net sellers, we will continue to be. We are always looking for ways to drive long-term shareholder value and seeking optionality in doing so.
Okay, great. Thank you.
Your next question is from Wes Golladay with Baird. Your line is now open. Please go ahead.
Hey, good morning, everyone. Maybe just sticking with the topic of dispositions, there is a strong transaction market for senior housing. Do you have any interest over the next year or so selling into that, maybe some of your older assets that no longer fit the go-forward criteria?
Yeah. Thanks, Wes. We're constantly looking at the portfolio and evaluating disposition candidates. Sometimes it's because they're older and non-core. Sometimes it's because we feel like we've gotten all the value out of it that we can, that we've taken it to the highest level, and that might be a market-driven decision. At the end of the day, it might be where you're looking at your micro markets and where new supply is coming, so tracking that's pretty critical to seeing where you might have vulnerabilities. We are doing that. It's something we'll continue to do. Nothing to announce just yet on what types of dispositions you might expect for 2027, but I'd expect early in 2027, we may have more to report there.
Okay. With the election results earlier in the week, did anything stand out to you, either positive or negative, at the local level?
At the national level, I think it is most relevant to Trilogy's business, and having a split Congress and White House means that the base case for us is that there is not going to be a lot of change in the skilled nursing industry, both from a regulation perspective and a reimbursement perspective. I think it is business as usual there, and predictability in an environment where Trilogy has been able to drive out performance seems to be a favorable outcome. At the local level, nothing to really highlight just yet. We will see how things play out. Of course, we are always tracking what states we are in and what is happening in those states to make sure that we are guarding our risks from regulation as well. I think at this point, nothing meaningful that is going to change our strategy.
Yep. Thank you for the time.
Your next question is from Austin Wurschmidt with KeyBanc Capital Markets. Your line is now open. Please go ahead.
Great. Thank you. Just going back to Trilogy for a minute, recognizing NOI growth hasn't slowed. You have seen revenue growth slow a little bit for maybe some of the reasons you highlighted in the call, with occupancy being a little bit higher, even though that does continue to ratchet up. Can the Med Advantage opportunity and just Q mix shifts that you've talked about, as well as the opportunity set on the private pay senior housing side of the business, can those increases continue to drive or drive re-acceleration in the top line over time?
Yeah, and I think too, part of that, Austin, is Trilogy's unique business, having this integrated campus model. For those unfamiliar, Trilogy's got post-acute care and private pay senior housing under one roof, and those two businesses have almost opposite inflection points on seasonality, where the senior housing part of the business from an occupancy perspective is strongest at the end of the summer and in the early fall. At the same time, the skilled nursing occupancy tends to be the weakest. They are at vastly different revenue numbers, right? The post-acute care business might be 2x or 3x what the Trilogy private pay business is on the senior housing side, but with a margin that is correspondingly half or a third of what the senior housing margin would be.
The NOI works out to, on a per bed basis, back of the napkin, kind of roughly similar. So, you're seeing good NOI growth and maintained NOI numbers, but you might see a more nuanced thing on the revenue side of Trilogy, where there's a mix shift happening where there's more people in senior housing beds at a lower revenue rate than there are on the skilled nursing side, and it looks like a decel in revenue when actually it's just Trilogy's business as usual. To the overarching question of how can Trilogy grow and how long can this last, that is the question that we've been asked every quarter for the last 11 quarters, and every quarter for the last 11 quarters, Trilogy has surprised us on how well they can continue to grow and the different levers that they find to grow.
Part of that is the alignment, like Jeff said. Not only do we have a great RIDEA contract, but we were the first people in the space to create an operator incentive equity plan where Trilogy's long-term incentive plan is actually paid in AHR stock. So, they're riding the wave of the value creation at Trilogy and fully aligned to do that. I wouldn't bet against them.
Yeah, and we're going to keep asking you, don't worry. But within the non-same store pool portion of Trilogy, I mean, it's still half of Trilogy's overall portfolio. I think you're approaching about one year since you guys acquired the Kingston portfolio. You're adding IL villas. How does the growth compare within that pool of assets relative to the same store pool, and anything specific we should be thinking about as we head into next year? Thank you.
Yeah. So, maybe the most undervalued part of our entire platform is Trilogy's development capabilities, right, and how that flows through in the Trilogy non-same store. So, we have Trilogy doing three to five new campuses a year, the development. They're de-risked. Trilogy's built over 80 properties themselves, developed themselves, and they've value engineered the prototype. So, we get asked a lot of questions of, "How can you actually still do development at Trilogy? How does it make sense when nobody else really is?" That's part of the reason. It's the value engineering of the building, not only from a cost perspective, but also from an operations perspective. It's stripping out the developer returns that are part of development. And now Trilogy is actually doing their own general contractor work on some of the projects as well, which further takes the cost down.
So, as those enter the total portfolio pool when they come online, they do provide a growth opportunity that I think is going to be sustainable and repeatable over the long term. And like I said, three to five campuses a year is what you can expect from Trilogy. But on top of that, we have over 30 campuses with excess land or a direct path to excess land where we can do campus expansions at Trilogy, which are typically private pay senior housing, either IL or memory care or assisted living expansions. Those have great returns, maybe smaller dollars attached to the overall project. On the Kingston portfolio specifically, that's a deal that we closed at the end of 2025, where Trilogy is a great operator, is able to take over assets and start to implement their own operational plans in those assets.
We're seeing really good progress within those buildings, and I think they'll enter the same-store pool, I believe, next year, and they'll fuel some powerful same-store NOI growth next year as well.
Appreciate all the details. Thank you.
Your next question is from Michael Lewis with Truist Securities. Your line is now open. Please go ahead.
Thank you. I was hoping I'd be the one to ask the election question so I could say the term "bluenami," which I think is fun to say, more fun than blue wave. Instead, I'm going to ask about acquisitions. You talked about going into new regions of the country, maybe higher quality, and price per pound was up. Are going-in yields and expected stabilized yield changing because of the mix or maybe just because things got more expensive for levered buyers or for any reason? And a second part of that, how do you feel about the acquisitions you made prior to 3Q versus the product you're buying now? Would you still buy it today?
Thanks for the question, Michael. I guess, just to answer your second question first, obviously, we're very proud of the acquisitions that we did prior to 3Q. Maybe the Kensington portfolio and the LCB portfolio, maybe there's a different geographic layout and maybe a quality difference in terms of the build-out and such. But at the end of the day, all of the acquisitions we're doing are really based around what is the performance level, what can the operator do in these properties? Are these long-term assets where they are going to be competitive for many years to come? I think there's definitely, with some of the assets that we've recently acquired, a built-in fortress there where these markets are not going to be seeing a lot of supply increase. It's just very difficult to build in these areas.
There's a long process that has to happen for someone to do that. But at the end of the day, it's all a matter of what is the long-term performance that we can generate out of our entire portfolio? I think we've built a very good mix of assets that are going to continue to do that. To your first question about price per unit, I think again, it just plays into where are we buying, what is the quality of the real estate, what is the age? Again, what is the ability to actually build in those locations? We're just not going to see a whole lot. These are very high-performing assets that are generating very good RevPOR based on the fact quality is very high, the rates are very good, and they're serving a market that is for a more affluent customer.
That's just a factor of the type of assets, has nothing to do necessarily with the yields or the pricing. All of that has remained consistent throughout our entire portfolio and all the acquisitions we've been doing recently. That's not a function of us paying more or accepting less of a yield—
Yeah.
—from these assets. At the end of the day, too, even though maybe there's some of these assets that are being priced at a higher per unit, they're still all below replacement cost. We know that they're good investments for us and they're going to be protected investments as well.
Yeah. Mike, Jeff here. Thanks, Stefan. I'd add the entire $3+ billion, for context here, that's closed year-to-date plus pipeline, the yields are consistent with everything that we've been communicating all year long. Mid-fives to mid-sixes initial stabilized real yields. Initial yields was stabilized above seven. With 2019 vintage, it's some of the highest quality, best located senior housing product in the country. Stefan referred to high barrier to entry and also as a distinction fortress markets. What we mean by fortress markets is much of what we bought, not all, but much of what we've bought this year is in fortress markets where it's five to eight to nine years concept to delivery because there is no developable land.
You have to assemble parcels, go through the entitlement process, and then develop or redevelop. In terms of higher price per unit, the economics support it. Kensington's a perfect example. All those assets are in these fortress markets. They're super high acuity, almost 100%, well, 100% of seven of those eight assets, all seven that they built, purpose-built for their plan, is all AL and memory care with RevPOR between $16,000-$26,000 a unit. The economics are fully supported, and you've got not only additional occupancy lift in everything we're buying this year, but also enhanced pricing power with material barrier to entry, rather.
One more thing we haven't touched on that I want to bring up, because I think people are just getting this wrong by quoting price per unit too much. We're seeing the boomer generation wanting more space and focus on bigger units. The price per unit that you might be thinking of historically in senior housing for a studio room, that is not what we're buying. We're buying the bigger units, which is where the demand is showing up the most. Many times there's two-bedroom units that people are wanting to move into. Maybe we need to shift as an industry to start talking more about the price per square foot and how much amenity space there is and what those amenities look like, because all of that goes into that per pound equation that we're talking about.
I think if you're out there buying studio AL right now, I like where we're positioned on a relative basis, where we have more one bedrooms, bigger units. Oftentimes we have two bedrooms, and they're highly amenitized buildings. I think that's where the demand is going to be the highest. We could be wrong. We could be making the wrong bet, of course, but I like where we're at.
Everything we bought this year is still below replacement cost, so that's a good cross-check.
Great. Thank you. Maybe I cheated. I asked a multi-part question there, but my second question, given the cost of equity and the cost of debt, is it safe to assume you're going to fund all your capital needs with equity for the foreseeable future? To the extent you could talk about it, how much forward equity capacity do you like to have in reserve at any given time?
Hey, Mike. It's Aric. Great question. I'll clarify one thing. Based on the visibility we have on the pipeline and then some, we don't have any plan to go out to the market. We are fully funded for that pipeline. To answer your question, whenever we do go to the markets, we intend to have match funded opportunities. We are raising capital with identified accretive investments. In the terms of, you asked about sort of capacity and what we like to have. Again, it would be based on the opportunities at hand.
Thank you.
Your next question is from Dave Rodgers with Raymond James. Your line is now open. Please go ahead.
Hey, everyone. Good afternoon. Just one question for me to follow up on maintenance CapEx, this Trilogy. Looks like it's growing much faster than the size of the portfolio. Just not sure if that was related to some acquisitions and deferred CapEx that you saw specifically there, and then maybe just a broader question around how much deferred CapEx are you seeing as you're looking at assets and as that acquisition pipeline for SHOP or within the Trilogy business continues to grow?
Well, one thing is, on the maintenance CapEx that we've disclosed, it's only on the total portfolio basis. That is sort of a reflection of as we've increased the portfolio and the campuses.
Not only that's spot on. Not only that, but the Kingston portfolio that we bought, we built in some maintenance CapEx into that that we knew about when we came into the deal. So you're seeing that show up in the numbers as well.
All right, great. Thanks.
Your next question is from Seth Bergey with Citi. Your line is now open. Please go ahead.
Hey, thanks for taking my question. I just wanted to follow- up with some of the kind of hiring that you've done, and specifically on the technology side. Can you go into a little bit more detail on kind of what technology capabilities or initiatives that you'd kind of like to add to the platform that maybe you don't currently have?
Yeah, it's a combination of enhancing what we already have and adding to it. It's not just adding new things, it's making things better. We want market data and intel that our investment team can use to be a competitive advantage when we're evaluating sites. Some of that means tapping into the data that we already have to use it more efficiently. Some of that is looking at the alternative data sources where we feel like it's giving us an edge. We're looking at things that maybe different than what the world broadly is looking at.
On the asset management side, it's about further building out the connection points with our operators so we have more insight faster into what's going on within the buildings beyond just the financial data that we're getting and really digging into the operational data so that we can give more insights and help them be better at executing their business plans. It's layering on AI to all that data so that we can better use the data that we have. Jon Crosier, our new CTO, has been at the company for a little over two months now, and everybody's excited about the progress that we made in that short amount of time. I think getting better on this front is really exciting right now. The senior housing business is one that rewards innovation, and it shows up in the NOI.
So we are going to lean in and be innovators in the space, use the information that we have, and use our new tech team to help drive total portfolio performance.
Great. Then maybe just a second one to follow up on some of the comments you made earlier around SHOP and Trilogy being the go-forward engines of the company and being net sellers of OM. Would you look to do that just as you have been in terms of one-off transactions as they arise, or would you look to do that as a larger portfolio sale? Can you just talk about the demand out there for Outpatient Medical and the depth of the buyer pool that is out there for those types of assets?
Yeah. Thanks, Seth. This is Jeff. Look, we are opportunistic. As I have said before, I will say again, nothing is bolted down. It is a stable asset class. The 35 years I have been in this business, there has always been strong demand from a variety of capital sources.
Great. Thank you.
Your next question is from Nick Yulico from Scotiabank. Your line is now open. Please go ahead.
Thanks. Yeah, I just wanted to go back to the RevPOR growth in the third quarter in SHOP, 5.4%, that number that strengthened this year. Just want to make sure that there's not like a comp issue affecting that number this quarter, making it artificially high. Thanks.
No. Great question. That's not what's driving it. It's actual execution within each building, operator by operator, building by building. It's a focus on street rate, right? It's not one-off in-place increases that happen mid-year. It's execution on especially the rent concession front. As you get more occupied, it's not only do you have more pricing power on rate, but you should stop using rent concessions as much as well. We actually took our rent concession number down 34% year over year because of a hyper-focus on that. That's kind of circling back to the question before and data and analytics and what are you providing to your operators and how do you leverage that. It's many different operational data points that you're drawing from to say, "Hey, I think we've got an opportunity here.
Let's go out and attack it." The great thing about having great operators is when you bring those types of ideas to them, they actually can go out and execute.
Okay, great. Thanks, Gabe. Second question, Aric, for the balance sheet. I think you have the swaps maturing in January. I think the term loan as well. Just latest thoughts on refinancing those. Thanks.
Yeah, great question. Obviously, with the maturity in January, we are working on that. Right now, we want to maintain flexibility and optionality there. Won't get into exactly on 2027 capital markets execution. One thing I will note is if you look at our Q, we did put in place a swap in October, and that is to hedge some of our floating rate exposure going into 2027. It is basically effective in January 2027, concurrently when the existing swaps mature and the term loan matures. You know that we are being mindful of floating rate exposure and working on things.
Yeah.
Thank you.
We're working on refi opportunities and alternatives now, and we'll advise accordingly.
There are no further questions at this time. I will now turn the call back to Jeff Hanson, Chairman and CEO, for closing remarks.
Well, thank you, ladies and gentlemen, for your continued support and confidence, and we hope everybody has a great weekend.
This concludes today's call. Thank you so much for attending. You may now disconnect.