We value AHR by triangulating between NAV, FFO, and AFFO. Our target price of $37 reflects an ~24x 2025E AFFO multiple, at a discount to healthcare REIT peers. We believe this is justified given AHR’s smaller size and diversified ownership structure.

This stock is High Risk based upon our quantitative model but assigning a High Risk rating is not supported by other qualitative factors such as favorable exposure to senior housing and skilled nursing and relative size and flexibility on capital allocation that should help drive earnings growth, and so a High Risk rating has not been applied.

Risks to our target price include the following: (1) if the economy enters a recession, the company’s senior housing, skilled nursing, and medical office assets could face increased challenges in leasing space and pushing rents; (2) continued volatility in interest rates could have an adverse impact on REITs overall and the Healthcare REITs including AHR; and (3) if private market cap rates expand or compress more than we anticipate, the stock could underperform or outperform our target price.