American Healthcare REIT Liquidation Sparks Investor Concerns and Losses

What Is American Healthcare REIT (AHR)?

American Healthcare REIT, Inc. is a real estate investment trust that focuses on healthcare-related properties such as senior housing, skilled nursing facilities, and medical office buildings. The company was formed in 2021 through the merger of Griffin-American Healthcare REIT III, Griffin-American Healthcare REIT IV, and American Healthcare Investors.

For years, AHR was sold to investors as a non-traded REIT, meaning it was not listed on a public stock exchange and was highly illiquid. In February 2024, AHR completed its initial public offering (IPO) on the New York Stock Exchange under the ticker “AHR,” selling 56 million shares for $12 each, at the lower end of its marketed range of $12–$15. The IPO raised approximately $672 million, which the company stated would be used to repay $703.8 million in outstanding credit facility debt.

The IPO and Its Impact on Investors

While the IPO was presented as a liquidity event, it ultimately crystallized losses for many long-term shareholders. Key issues from the offering and trading period include:

• Disappointing Share Price: The IPO price of $12 per share was far below AHR’s most recently estimated Net Asset Value (NAV) of $31.40 per share as of March 31, 2023, which had been calculated after a 4-for-1 reverse stock split. Many legacy investors purchased shares for the equivalent of $40 each, leaving them with heavy paper losses once shares began trading.
• Post-IPO Decline: When the post-IPO lock-up period ended on August 6, 2024, legacy shareholders holding approximately 66 million shares were finally able to trade. The stock fell nearly 3% that day, closing at $15.67 amid a market downturn.
• Lowball Tender Offer: Before the IPO, a third-party firm, Comrit, made a tender offer to purchase up to 228,136 shares of AHR at a 58% discount to its most recently estimated NAV of $31.40 per share. The offer price, $13.15 per share, reflected the company’s reverse stock split and indicated skepticism in the market about AHR’s valuation.

These developments show how the transition to public trading exposed the extent of AHR’s value erosion and the impact of earlier financial strain that investors may not have been fully informed of.

A Pattern of Red Flags

The IPO and trading losses are part of a broader pattern of financial and operational warnings that developed over several years. These issues have significantly harmed investors who were led to believe AHR was a safe, income-producing investment.

• Suspended Share Repurchases: In November 2022, AHR suspended its share repurchase plan, except for limited hardship cases such as the death or qualifying disability of a stockholder. This effectively eliminated liquidity for many investors wishing to exit the investment.
• Reduced Distributions: In March 2023, AHR’s board reduced its quarterly distribution from $0.40 to $0.25 per share for Class T and Class I shareholders of record as of April 4, 2023, citing a need to preserve liquidity and achieve long-term strategic goals.
• Stated Market Challenges: AHR attributed its declining property values and poor performance to high inflation and rising interest rates. While these factors have broadly affected the real estate market, non-traded REITs are particularly vulnerable due to their lack of liquidity, limited transparency, and high internal fees.

Taken together, these red flags show how investors were left exposed to risks that may not have been fully disclosed or explained by the financial advisors who sold these products.

What This Means for AHR Investors

The AHR situation underscores the inherent risks of non-traded REITs, which have repeatedly led to investor losses across the industry. Many of these products are marketed as safe, stable alternatives to the stock market but are often far riskier than represented.

Common issues include:

• Illiquidity: Investors are unable to sell their shares for years, and even when liquidity events occur—like an IPO—they may realize losses well below original purchase values.
• High Commissions: Brokers can earn commissions as high as 15% for selling non-traded REITs, creating a strong incentive to recommend them even when unsuitable.
• Unsuitability: Non-traded REITs are often inappropriate for retirees or conservative investors. When financial advisors fail to disclose the risks or recommend these products to clients with low risk tolerance, they can be held resarbitponsible for the resulting losses.

How Meyer Wilson Werning Helps AHR Investors

The decline in American Healthcare REIT’s value, the suspension of redemptions, and its disappointing IPO illustrate how investors can be harmed by unsuitable alternative investment recommendations. At Meyer Wilson Werning, we represent investors who have experienced losses due to their financial advisor’s failure to properly disclose risks or recommend appropriate products.

If you experienced losses tied to American Healthcare REIT, our firm can help you pursue recovery through arbitration and other legal options. Contact us today for a free consultation to discuss your situation and learn how our team can hold your financial advisor or brokerage firm accountable.

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