Photo: Chiron / Fairfax medical-office archive
Chiron is trying to sell its medical-office portfolio and build a different business: senior living communities where it shares in the results of day-to-day operations. Its latest report shows both the size of that bet and the time it may take to pay off.
The Bethesda, Maryland-based real estate investment trust reported November 4 that core funds from operations fell to $0.75 per share and unit in the third quarter, from $1.12 a year earlier. Its net loss attributable to common shareholders widened to $8.9 million from $6.0 million.
At the same time, Chiron completed a $173.2 million purchase of The Pinnacle, a newly built, 175-home senior living community in North Bethesda, in October. That took its senior-housing operating portfolio from two communities with 292 homes at September 30 to three with 467 homes.
A property purchase is only the start
The Pinnacle opened in June and was 30.9% occupied at September 30, up from 5.1% at June 30, according to Chiron. Those are point-in-time readings before Chiron completed the purchase, not average occupancy for the quarter under its ownership.
Management expects the community to reach a stabilized yield on cost above 7% in 2029. That is a forecast for a mature operation, not a return the property is already earning.
The other two communities show how different the stages of this business can be. The Landing averaged 95.1% occupancy during the third quarter. The Riviera, which opened in March, averaged 25.6%. Chiron expects The Riviera to stabilize in the second half of 2028.
For investors, the distinction is between owning a building and filling it. New communities have operating costs while apartments are still being leased. Chiron’s quarterly supplement reports $6.2 million of cash revenue and $5.5 million of operating expenses for the two-community portfolio in the third quarter, leaving about $696,000 of cash net operating income before other company costs.
Medical offices are the funding side of the pivot
Chiron says it has hired a broker and is actively pursuing a sale of its outpatient medical portfolio. It has not announced a completed portfolio sale in this release.
At September 30, that portfolio covered 4.6 million leasable square feet and was 93.6% leased. It produced $101 million of annualized cash net operating income, and same-property cash net operating income grew 1.6% from a year earlier. Annualized income is a run-rate measure, not a promise of the next year’s collections.
The company also bought a Reston, Virginia, land parcel zoned for senior housing for $15.4 million in September. Its broader plan depends on selling medical assets and putting capital into the new senior-living business.
Lower earnings and more leverage
Chiron’s third-quarter funds from operations were $0.50 per share and unit, down from $1.00. Core FFO excludes additional items. Both are supplemental non-GAAP measures used in property investing, not substitutes for net income or operating cash flow.
General and administrative costs included $2 million of severance and transition expenses tied to the strategic shift, including $1.2 million of cash costs. Consolidated debt was $661.7 million at September 30, before the October Pinnacle purchase, and leverage was 41.2% of gross assets, compared with 39.9% at June 30.
Chiron reported no debt maturities in 2026 or 2027. The nearer test is execution: completing the medical-office sale process and turning newly opened senior communities into occupied, income-producing properties.
JBizNews Desk | Bethesda, Md.
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