American Healthcare REIT (AHR) has surged +146% since Hedgeye spotlighted it on The Call @ Hedgeye on May 28, 2024—making it one of the biggest gainers flagged on the show this past year.
Hedgeye REITs Sector Head Brian McGough puts it simply:
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“There are few companies with such a clear path to upside to consensus and an absolute acceleration in rate of change in cash flow as we have with AHR.” |
Let’s break down what’s driving this REIT’s dramatic rise—and why McGough believes there’s still upside to $40.
FUNDAMENTALS: High-Growth Platform in Senior Housing
AHR is a healthcare-focused REIT with a diversified portfolio of senior housing and outpatient medical properties. Approximately 67% of pro-rata Net Operating Income (NOI) comes from integrated senior housing (ISHC and SHOP), with outpatient medical at ~21%, triple-net leases at 10%, and debt investments at 2%.
This diversified structure provides both downside protection and upside optionality—especially as demographic trends increasingly favor senior care.
Operational momentum includes:
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Strong margin and occupancy gains across SHOP and ISHC
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A healthier balance sheet—leverage reduced from 9x pre-IPO to ~4.5x
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A beat-and-raise quarter, with growth in NOI and FFO (Funds From Operations)
After IPO’ing at $12, AHR has more than doubled and now trades near $27.66. But despite the surge, Hedgeye sees accelerating cash flow momentum—and room for more upside.
QUANTITATIVE SIGNAL: bullish
Hedgeye CEO Keith McCullough’s Risk Range™ Signals identified AHR’s upside breakout early—driven by his proprietary algorithm that analyzes price, volume, and volatility trends. Since that initial long call, AHR has surged +144%, reinforcing both the strength of the signal and the underlying investment case.
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While the stock has moved into a higher-volatility regime, the bullish trend remains intact. That’s critical at this stage of the move—especially with projected FFO growth in the high teens through 2026. The signal continues to align with AHR's accelerating cash flow trajectory.
MACRO: Riding the Right Regime with Demographic Tailwinds
Most REITs struggle when interest rates rise. But AHR is built differently. With the macro backdrop shifting from Quad 4 (slowing growth/disinflation) to Quad 2 (accelerating growth/inflation), AHR’s profile fits the current regime—and benefits from secular demographic drivers.
Growth tailwinds include:
- $86 million in external acquisitions in 1H 2025
- Expanding senior housing margins (+600 bps) and occupancy rates (+400 bps) over the TAIL duration
- Favorable demographic trends from America’s aging population
While AHR’s cash flow yield (FFO) is just 25 bps above the 10-Year Treasury, the pace of improvement justifies the premium. As McGough puts it:
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“AHR’s internally and externally driven cash flow growth is expected to keep accelerating from here.” |
BOTTOM LINE: AHR Has Already Doubled—And Has Room To Run
AHR has already more than doubled since our call—and our REITs team believes it still has room to run. With sector tailwinds, improving fundamentals, and accelerating cash flow, McGough sees the stock reaching $40.
“There are few companies with such a clear path to upside to consensus,” McGough reaffirms.
Want to catch moves like this before they happen? Tune into The Call —Hedgeye’s daily webcast where our analysts share their highest-conviction stock and sector ideas in real time.
