American Healthcare REIT (AHR) risk factors, FY2024 10-K

Risks Related to Our Business and Financial Results

1. 01The financial deterioration, insolvency or bankruptcy of one or more of our major tenants, operators, borrowers or other obligors could have a material adverse effect on us
2. 02We are dependent on tenants for our revenue, and lease defaults or terminations could reduce our ability to make distributions to our stockholders
3. 03We have experienced net losses in the past and we may experience additional losses in the future
4. 04Our prior performance may not be an accurate predictor of our ability to achieve our business objectives or of our future results
5. 05Our success is dependent on the performance and continued contributions of certain of our key personnel, and, in the event they are no longer employed by us, we could be materially and adversely affected
6. 06Our financial results and our ability to make distributions to our stockholders are subject to international, national and local market conditions we cannot control or predict
7. 07We face significant competition for the acquisition or disposition of senior housing, SNFs, OM buildings and other healthcare-related facilities, which may impede our ability to take, and increase the cost of, such actions, which may materially and adversely affect us
8. 08Our investments in, and acquisitions of, senior housing, SNFs, OM buildings and other healthcare-related facilities may be unsuccessful or fail to meet our expectations
9. 09If we cannot obtain debt or equity funding on favorable terms, our ability to acquire, and make necessary capital improvements to, properties may be impaired or delayed, which could have a material adverse effect on us
10. 10All of our integrated senior health campuses are managed by the Trilogy Manager and account for a significant portion of our revenues and operating income. Adverse developments in the Trilogy Manager’s business or financial strength could have a material adverse effect on us
11. 11We may incur additional costs in re-leasing properties with specialized uses, which could materially and adversely affect us
12. 12We may be unable to secure funds for future tenant or other capital improvements, which could limit our ability to attract, replace or retain tenants, pay our expenses and make distributions to our stockholders
13. 13A breach of, or failure in, information technology systems on which we rely could materially and adversely impact us

Risks Related to Investments in Real Estate

1. 14Changing market conditions could lead our real estate investments to decrease in value or may cause us to sell our properties at a loss in the future
2. 15Most of our costs, such as operating and general and administrative expenses, interest expense and real estate acquisition and construction costs, are subject to inflation and may not be recoverable
3. 16Our high concentrations of properties in particular geographic areas magnify the effects of negative conditions affecting those geographic areas
4. 17Our real estate investments may be concentrated in senior housing, SNFs, OM buildings or other healthcare-related facilities, making us more vulnerable to negative factors affecting these classes than if our investments were diversified beyond the healthcare industry
5. 18Our buildings that are subject to ground leases could restrict our use of such facilities
6. 19Our use of property-level rent coverages to measure our tenant’s ability to make rent payments may not be accurate
7. 20Terrorist attacks, acts of violence or war, political protests and unrest or public health crises have affected and may affect the markets in which we operate and have a material adverse effect on us
8. 21Our business, tenants, residents and operators may face litigation and experience rising liability and insurance costs, which may materially and adversely affect us
9. 22Inaccuracies in our underwriting assumptions and/or delays in the selection, acquisition, expansion or development of real properties may materially and adversely affect us
10. 23If we contract with a development company for newly developed property, our earnest money deposit made to the development company may not be fully refunded
11. 24We may not retain any profits resulting from the sale of our properties or receive such profits in a timely manner, because we may provide financing to the purchaser of such property
12. 25Representations and warranties made by us in connection with sales of our properties may subject us to liability that could materially and adversely affect us
13. 26We face possible liability for environmental cleanup costs and damages for contamination related to properties we acquire, which could materially and adversely affect us
14. 27Our current and future properties and our tenants may be unable to compete successfully, which could result in lower rent payments and could materially and adversely affect us
15. 28Ownership of property outside the United States may subject us to different or greater risks than those associated with our domestic operations
16. 29Acquired properties may expose us to unknown liability
17. 30Severe weather events, natural disasters and the effects of climate change and regulatory and societal responses thereto could materially and adversely affect us
18. 31affected property, as well as anticipated future revenue from that property. Climate change and natural disasters may also have indirect effects on our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable

Risks Related to Real Estate-Related Investments

1. 32Unfavorable real estate market conditions and delays in liquidating defaulted mortgage loan investments may negatively impact mortgage loans in which we have invested and may invest, which could result in losses to us
2. 33The mezzanine loans in which we have invested in the past, and may continue to invest, involve greater risks of loss than senior loans secured by income-producing real estate
3. 34We expect a portion of our real estate-related investments to be illiquid, and we may not be able to adjust our portfolio in a timely manner in response to changes in economic and other conditions
4. 35Bridge loans involve a greater risk of loss than traditional investment-grade mortgage loans with fully insured borrowers
5. 36If we sell real estate-related investments prior to their maturity, we may be forced to sell those investments on unfavorable terms or at a loss

Risks Related to the Healthcare Industry

1. 37tenant’s ability to make rent payments to us or an operator’s ability to operate facilities held in RIDEA structures efficiently, either of which could have a material adverse effect on us
2. 38If seniors delay moving to senior housing facilities until they require greater care or forgo moving to senior housing facilities altogether, such action could have a material adverse effect on us
3. 39Events that adversely affect the ability of seniors and their families to afford resident fees at our senior housing facilities could cause our occupancy rates and revenues to decline, which could have a material adverse effect on us
4. 40Adverse trends in healthcare provider operations may materially and adversely affect us
5. 41Our tenants and operators may be affected by the financial deterioration, insolvency and/or bankruptcy of other companies in the healthcare industry
6. 42Our tenants and operators may be subject to significant legal and regulatory actions that could subject them to increased operating costs and substantial uninsured liabilities, which could have a material adverse effect on us
7. 43The Healthcare Reform Act and similar foreign laws impose additional requirements regarding compliance and disclosure

Risks Related to Joint Ventures

1. 44When we serve as a managing member, general partner or controlling party with respect to investments or joint ventures, we may be subject to risks and liabilities that we would not otherwise face

Risks Related to Debt Financing

1. 45We may incur additional indebtedness in the future, which could materially and adversely affect us
2. 46To the extent we borrow at fixed rates or enter into fixed interest rate swaps, we will not benefit from reduced interest expense if interest rates decrease
3. 47Hedging activity may expose us to risks
4. 48Lenders may require us to enter into restrictive covenants that could adversely affect our business
5. 49Interest-only indebtedness may increase our risk of default, adversely affect our ability to refinance or sell properties and ultimately may reduce our funds available for distribution to our stockholders

Risks Related to Our Corporate Structure and Organization

1. 50Our charter imposes a limit on the percentage of shares of our common stock or capital stock that any person may own, and such limit may discourage a takeover or business combination that may have benefited our stockholders
2. 51Our stockholders’ ability to control our operations is severely limited
3. 52Conflicts of interest could arise as a result of our officers’ other positions and/or interests outside of our company
4. 53Certain provisions of Maryland law may make it more difficult for us to be acquired and may limit or delay our stockholders’ ability to dispose of their shares of our common stock
5. 54The MGCL and our organizational documents limit our stockholders’ right to bring claims against our officers and directors
6. 55Our structure may result in potential conflicts of interest with limited partners in our operating partnership whose interests may not be aligned with those of our stockholders

Risks Related to Taxes and Our REIT Status

1. 56TRSs are subject to corporate-level taxes and our dealings with TRSs may be subject to a 100% excise tax
2. 57If our “qualified health care properties” are not properly leased to a TRS or the operators of those “qualified health care properties” do not qualify as EIKs, we could fail to qualify as a REIT
3. 58We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability or reduce our operating flexibility
4. 59In certain circumstances, we may be subject to U.S. federal, state and foreign income taxes even if we maintain our qualification as a REIT, which would reduce our cash available for distribution to our stockholders
5. 60Dividends payable by REITs generally do not qualify for the reduced tax rates on dividend income as compared to regular corporations, which could adversely affect the value of our shares
6. 61Dividends on, and gains recognized on the sale of, shares by a tax-exempt stockholder may be subject to U.S. federal income tax as unrelated business taxable income
7. 62Characterization of our sale-leaseback transactions may be challenged, which could jeopardize our REIT status or require us to make an unexpected distribution
8. 63Complying with the REIT requirements may cause us to forego otherwise attractive opportunities
9. 64If the operating partnership fails to maintain its status as a partnership and were to be treated as a corporation for U.S. federal income tax purposes, its income may be subject to taxation, which would reduce the cash available for distribution to stockholders and likely result in a loss of our REIT status
10. 65Foreign purchasers of shares of our common stock may be subject to FIRPTA tax upon the sale of their shares of our common stock or upon the payment of a capital gains dividend

Risks Related to Our Common Stock

1. 66The market price and trading volume of shares of our common stock may be volatile
2. 67Our ability to pay dividends in the future may be limited by agreements relating to our indebtedness and other factors
3. 68Future offerings of debt securities, which would be senior to our common stock, or equity securities, which would dilute our existing stockholders and may be senior to our common stock, may adversely affect our stockholders
4. 69We may be unable to raise additional capital on favorable terms, or at all, needed to grow our business
5. 70If we pay distributions from sources other than our cash flows from operations, we may not be able to sustain our distribution rate, we may have fewer funds available for investment in real estate and other assets and our stockholders’ overall returns may be reduced
6. 71Our distributions to stockholders may change, which could adversely affect the market price of shares of our common stock
7. 72If we fail to maintain an effective system of internal control over financial reporting and disclosure controls, we may not be able to accurately and timely report our financial results