Nine years after purchasing the majority interest in the parent company of seniors housing and care operator Trilogy Health Services, American Healthcare REIT has now bought out its minority partner, bringing its ownership stake in Trilogy to 100%. The deal was prefaced by a purchase agreement in November 2023, when AHR gained the option to buy NorthStar Healthcare Income’s 24% membership interest in Trilogy REIT Holdings, the parent organization of Trilogy Health Services, for between $240.5 million and $260 million, depending on the purchase date (they had until September 30, 2025). AHR also could use a combination of cash and the issuance of new convertible preferred stock.
Executing on that agreement, AHR is paying approximately $258 million in cash, comprising an $11 million pro-rata distribution owed to NorthStar Healthcare Income. AHR funded the purchase using net proceeds from an equity offering. In 2015, Griffin-American Healthcare REIT III and NorthStar acquired their respective stakes in Trilogy for a combined $1.125 billion, or $112,500 per bed. At the time, Trilogy was operating 96 skilled nursing facilities and SNF/assisted living hybrids with more than 10,000 beds across four states, owning 53 of the facilities and leasing the remainder. And it was earning around $90 million of EBITDA on $746 million of revenues, based on 92% occupancy at the time. Current financial performance is not known for the Trilogy portfolio, but now it comprises 126 campuses also in four states, with nearly 13,000 beds and units. Occupancy stands at 86%.
Also from that equity offering, AHR was able to repay around $194 million in outstanding debt on its lines of credit. That helps prime the REIT for future borrowing on its line of credit to fund potential M&A deals. It is not alone among REITs that are well positioned for active investing in the next 12 months.
