ATI Physical Therapy Credit Rating & NNN Cap Rate Analysis

ATI Physical Therapy Business Overview & NNN Investment Profile

ATI Physical Therapy is one of the largest outpatient physical therapy providers in the United States, operating approximately 866 clinics across 24 states under a single unified “ATI” brand. The company specializes in outpatient rehabilitation services including physical therapy for spine, shoulder, knee, and neck injuries, work injury rehabilitation, hand therapy, and other specialized treatments. ATI generated approximately $753 million in revenue in fiscal year 2024 and has historically received exceptional quality ratings from the Centers for Medicare & Medicaid Services through the Merit-based Incentive Payment System.

However, NNN investors must approach ATI Physical Therapy properties with extreme caution. The company was delisted from the NYSE in December 2024 for failing to maintain minimum market capitalization requirements and subsequently went private through a merger at $2.85 per share completed in August 2025. The privatization was led by existing creditors Knighthead Capital Management and Marathon Asset Management, a structure that typically indicates financial distress requiring restructuring away from public market scrutiny. ATI’s own 2024 annual report expressed substantial doubt about the company’s ability to continue as a going concern, citing persistent negative operating cash flows, accumulated net losses, and a capital structure burdened by heavy interest costs.

Risk Factors for ATI Physical Therapy NNN Properties

The primary risk for ATI NNN investors is straightforward: the tenant may not survive in its current form. ATI has been unable to generate positive free cash flow, relying on successive rounds of debt financing to fund operations. The company issued $26 million in PIK convertible notes in March 2025 and has been steadily accumulating additional debt instruments. The privatization removed public reporting requirements, meaning investors will have limited visibility into ATI’s financial condition going forward. In a worst-case scenario, ATI could enter bankruptcy proceedings, potentially rejecting unfavorable leases as part of a restructuring.

The mitigating factor is that ATI’s individual clinic locations are relatively small, affordable properties in suburban retail locations that are highly re-tenantable. Physical therapy clinics of 2,500 to 5,000 square feet in strip centers or standalone buildings can be converted to other medical uses (dental, chiropractic, veterinary), personal services, or small retail without major capital investment. Landlords who purchased ATI NNN properties at high cap rates (8%+ or higher) may have built in enough cushion that re-tenanting at market rents still produces an acceptable return.

Cap Rate Analysis & Pricing for ATI Physical Therapy NNN Properties

ATI Physical Therapy NNN properties trade in the 8.00% to 10.00%+ cap rate range as of Q1 2026, reflecting the severe credit risk. Properties with longer remaining lease terms and strong locations may trade at the lower end, while those approaching lease expiration or in weaker markets may trade well above 10%. The going-private transaction and going concern disclosure have significantly widened cap rates from the 7.00% to 8.00% range that ATI properties might have commanded when the company was publicly traded and showing operational improvement.

Pricing for ATI NNN properties typically ranges from $800,000 to $3 million, reflecting the small clinic footprints and suburban locations. At these price points, ATI properties are accessible to individual investors, but the credit risk demands thorough due diligence on the specific location’s re-tenanting potential, remaining lease term, and the landlord’s ability to absorb a potential vacancy.