Citigroup Adjusts Price Target on Healthpeak Properties to $23 From $22, Maintains Neutral Rating

American Heathcare REIT, Inc. AHR is scheduled to report third-quarter 2024 results on Nov. 12, after market close. While the quarterly results are expected to reflect year-over-year growth in revenues, normalized funds from operations (FFO) per share might exhibit a decline.

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In the last reported quarter, this Irvine, CA-based healthcare real estate investment trust (REIT) delivered a normalized FFO per share of 33 cents, beating the Zacks Consensus Estimate by 13.8%. The quarterly results reflected year over year growth in total portfolio same-store net operating income (NOI).

American Heathcare’s normalized FFO per share surpassed the Zacks Consensus Estimate in two of the trailing three quarters and missed in the remaining period, with the average surprise being 13.9%. The graph below depicts this surprise history:

American Healthcare REIT, Inc. Price and EPS Surprise

American Healthcare REIT, Inc. price-eps-surprise | American Healthcare REIT, Inc. Quote

Factors to Consider Ahead of AHR’s Upcoming Results

American Healthcare owns a portfolio of clinical healthcare real estate properties, focusing primarily on medical office buildings, senior housing, skilled nursing facilities, hospitals and other healthcare-related facilities. With a well-diversified portfolio, the REIT is likely to have experienced healthy demand during the third quarter, aiding leasing activity.

In the third quarter, the integrated senior health campuses segment, which enables better care of residents by allowing them to access multiple levels of care within one campus is anticipated to have fared well.

AHR’s senior housing operating portfolio (SHOP) is likely to have benefited from an aging U.S. population and a rise in healthcare expenditure by this age cohort, which is generally higher than the average population. With the segment witnessing positive net move-ins, occupancy is expected to have remained high.

A well-diversified tenant base with long-term leases is expected to have contributed well to stable rental revenue generation, boosting the top line.

However, high interest expenses are expected to have been a spoilsport for AHR during the third quarter.

AHR's Projections

The Zacks Consensus Estimate for third-quarter resident fees and services is pegged at $463.3 million, suggesting an increase from $416.2 million reported in the year-ago period.

The Zacks Consensus Estimate for third-quarter revenues is currently pegged at $512.9 million, implying a 10.5% increase from the prior-year quarter’s reported figure.

However, the Zacks Consensus Estimate for third-quarter real estate revenues is pegged at $46.9 million, suggesting a marginal decrease from $47 million reported in the year-ago period.

American Healthcare activities during the soon-to-be-reported quarter were inadequate to gain analysts’ confidence. The Zacks Consensus Estimate for third-quarter normalized FFO per share has remained unrevised at 32 cents over the past month. The figure implies a decrease of 8.6% from the year-ago quarter’s reported number.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict a surprise in terms of normalized FFO per share for American Healthcare this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.

American Healthcare currently has an Earnings ESP of -6.25% and carries a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Performance of Other Healthcare REITs

Ventas, Inc. VTR reported third-quarter 2024 normalized FFO per share of 80 cents, in line with the Zacks Consensus Estimate. The reported figure increased 6.7% from the prior-year quarter’s tally.

Results reflected better-than-anticipated revenues. Ventas’ same-store cash NOI increased year over year on strong performance in the SHOP, outpatient medical and research portfolio and triple-net leased properties. VTR has provided an improved 2024 outlook.

Healthpeak Properties, Inc. DOC reported a third-quarter 2024 FFO as adjusted per share of 45 cents, beating the Zacks Consensus Estimate by a penny. The reported figure remained unchanged from the prior-year quarter.

Results reflected better-than-anticipated revenues. Growth in total merger-combined same-store cash (adjusted) NOI was witnessed across the portfolio. However, higher interest expenses undermine the results to an extent. DOC revised its 2024 outlook.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

Zacks Investment Research

Denver-based Healthpeak Properties, Inc. , valued at $15.9 billion by market cap, specializes in owning, operating, and developing premium real estate for healthcare discovery and delivery. Its portfolio, worth over $20 billion, includes properties for Lab, Outpatient Medical, and CCRC tenants.

The leading healthcare REIT’s shares have outperformed the broader market considerably over the past year. DOC has gained 38% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 36.8%. However, in 2024 alone, DOC stock is up 15%, while the SPX is up 25.7% on a YTD basis.

Narrowing the focus, DOC has also surpassed the Real Estate Select Sector SPDR Fund , which has gained 27.1% over the past year and 9.6% in 2024.