National Healthcare Properties, Inc. has released its investor presentation for the third quarter of 2024, highlighting several key developments and financial metrics.
The company's portfolio consists of 198 properties, with 72% in the OMF (Office, Medical, and Flex) segment and 28% in the SHOP (Senior Housing Operating Portfolio) segment. Following the completion of lease extensions with UPMC, the same store OMF weighted-average remaining lease term increased from 4.3 years to 6.5 years in Q3 '24.
In the SHOP segment, average occupancy increased by 1.7% quarter-over-quarter, rising from 75.9% in Q2 '24 to 77.6% in Q3 '24. Additionally, proactive OMF leasing activity resulted in 15 lease renewals totaling 57,820 square feet at a positive lease renewal rental spread.
The company has undertaken a strategic disposition initiative, with a pipeline of 21 properties valued at $173.4 million, comprising 2 SHOP and 19 OMF properties. The weighted average remaining lease term for the OMF pipeline is 3.7 years, which is expected to improve the existing portfolio's weighted average lease term. Through October 2024, the company sold 11 properties at attractive prices, totaling $258.4 million in aggregate sales or contract price at a cash rate of 6.3%.
Financial performance has shown improvement, with Adjusted Funds from Operations (AFFO) increasing by 26.4% year-over-year, from $1.5 million in Q3 '23 to $1.9 million in Q3 '24. In the SHOP segment, same store cash NOI improved by 23.3% year-over-year, reaching $8.6 million in Q3 '24. The SHOP segment also saw a 2.4% increase in same store revenue quarter-over-quarter, rising from $51.5 million in Q2 '24 to $52.7 million in Q3 '24.
The OMF segment delivered durable same store cash NOI of $21.7 million, driven by strong leasing activity, particularly the UPMC portfolio renewals of 10* to 15-years completed in Q4 '24.
Furthermore, the company reported maintaining a net leverage of 46.1% as of Q3 '24. Other significant developments include the internalization of management, expected annual savings exceeding $25 million resulting from the elimination of related party fees and reimbursements, and engagement with BMO for continued preparation for a public listing, corporate credit facility, and future equity offerings. Additionally, a four-for-one reverse stock split was successfully completed to enhance marketability and liquidity for shareholders.
Following these announcements, the company's shares moved 0.3%, and are now trading at a price of $15.7. For the full picture, make sure to review National Healthcare Properties's 8-K report.
