US REITs: Making the Rounds; Upgrading AHR to Buy, Downgrading SBRA to Neutral

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US REITs: Making the Rounds; Upgrading AHR to Buy, Downgrading SBRA to Neutral

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22 Jun 2026 16:15:00 ET │ 16 pages

US REITs

Making the Rounds; Upgrading AHR to Buy, Downgrading SBRA to

Neutral

Seth Bergey, CPA, CFA

CITI'S TAKE +1-212-816-2066

We are upgrading AHR to Buy and downgrading SBRA to Neutral. Following seth.bergey@citi.com

Nareit, we have greater conviction that current industry tailwinds can AC Nick Joseph

persist for multiple years. Against that backdrop, we view AHR’s relative

underperformance (–1,100bps YTD vs the healthcare REIT sector) as an +1-212-816-1909

attractive entry point. Concurrently, we are downgrading SBRA from Buy to nicholas.joseph@citi.com

Neutral. Our relative preference for AHR is driven by: 1) a widening relative Lauren R McNichol

investment spread advantage as SHOP acquisition yields compress; 2) a +1-215-854-6039

pre-funded acquisition pipeline that should support upward earnings

revisions; and 3) the presence of an owned operating platform (Trilogy) that lauren.rose.mcnichol@citi.com

can drive sustained internal growth. In our view, as acquisition yields

compress, future IRRs will increasingly be earned through operating

execution rather than acquisition spreads. Healthcare remains one of our

preferred sectors within our model portfolio, and, within healthcare, we

continue to favor SHOP-focused names given favorable supply/demand

fundamentals.

Cost of Capital — On Citi's numbers, AHR trades at a ~5% implied cap rate vs. SBRA

at ~7.3%. Compression in going-in yields for incremental SHOP deals was a

consistent theme across Nareit as more public and private entrants compete for

deals. In our view, AHR's more advantageous cost of capital should better position it

to drive accretive external growth.