Leaders with American Healthcare REIT (NYSE: AHR) plan to further invest in and grow the company’s senior housing operating portfolios in 2025.

The Irvine, California-based company is under contract to acquire two senior living communities assets in 2025 for $70.5 million, with plans to add the communities to its SHOP segment and assign a current regional operating partner to manage them.

The company also closed on a lease buyout for one of its Trilogy Health Services-managed communities and plans to start on several new developments for Trilogy this year, according to American Healthcare REIT CEO Danny Prosky.

Chief Financial Officer Stefan Oh said the company will continue to focus on acquiring communities to add to its SHOP segment, which Oh said has the “best risk adjusted return.”

While future acquisitions will likely remain with stabilized assets, buying potential “moderate value-add” assets isn’t off the table, he said during the company’s fourth quarter earnings call with investors and analysts Friday.

“We’ll also consider assets that maybe have some room to improve, but we can acquire those below replacement cost price,” Oh said. “We are probably more focused on the assisted living and memory care side of the SHOP portfolio than the independent living side.”

American Healthcare REIT also has 126 buildings or campuses in its “integrated senior health campuses” portfolio, which includes campuses comprising independent living, assisted living, memory care, skilled nursing and other ancillary services under RIDEA management agreements with Trilogy Health Services.

The REIT is in 2025 upsizing the portfolio with new development projects that include new campuses, independent living villas, and expansions of existing communities. The company expects to incur construction costs of approximately $136.6 million as a result.

Last year, the company exercised a purchase option to acquire the remaining 24% ownership stake of Trilogy Health Services from NorthStar Healthcare Income for $258 million.

Looking ahead to this year, Chief Financial Officer Brian Peay noted the coming pipeline is “very robust.”

“We have been very active over the past few months in looking at potential new opportunities, and we have been working very closely with our operators and identifying the opportunities that will be a best fit for the portfolio,” Peay said. “It’s definitely more significant than it was at this time last year.”

American Healthcare REIT’s stock closed at $29.77 by the time financial markets closed Friday, down 1.3% from the previous close.

American Healthcare REIT has a total of 86 properties in its SHOP segment and an average occupancy of 87.5% across its entire senior housing and care portfolio, which is above pre-pandemic totals.

Prosky noted that he is pleased with the company’s SHOP performance so far despite some slower winter months, with occupancy growing a total of 600 basis points throughout 2024.

The real estate investment trust is looking at “pretty strong” rate increases in 2025, particularly due to the limited amount of new development occurring and near record lows of new supply coming to the market, Prosky said.

The REIT is also keeping an eye out on how proposed cuts to Medicaid could impact the company and its senior housing portfolio. The company reduced its exposure to Medicaid when it sold a skilled nursing facility in Missouri last year in December, Prosky said.And a little less than a quarter of Trilogy’s portfolio with the REIT has exposure to Medicaid.

“We don’t know what’s going to happen,” Prosky said. “I believe that if there are adjustments to Medicaid, it’s much more likely to be affecting those who benefited from the Medicaid expansion, for example, maybe reducing eligibility, work requirements, et cetera. I think that’s much less likely to see any effect on Medicaid reimbursements for long term care.”

Prosky added: “[Trilogy] has a lot of levers they can pull … It’s very easy for them to pivot and convert those rooms to assisted living, memory care, [or] more Medicare beds.”