ATI Physical Therapy Credit Rating & NNN Cap Rate Analysis

ATI Physical Therapy Business Overview & NNN Investment Profile

ATI Physical Therapy describes itself as a nationally recognized outpatient physical therapy provider in the United States; its last annual report filed with the SEC listed 866 clinics in 24 states as of December 31, 2024. 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 NYSE suspended trading in its common stock on December 3, 2024 and began delisting proceedings because the company had not maintained an average global market capitalization of at least $15 million over 30 consecutive trading days (Form 8-K, December 3, 2024). Funds affiliated with Knighthead Capital Management and Marathon Asset Management, which held ATI’s second lien convertible notes, were among five investor groups that together held about 98.6% of ATI’s common stock on an as-converted basis in March 2025, according to its 2024 annual report. 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’s 2024 annual report said the company has continued to generate negative operating cash flows and net losses. On March 3, 2025, it issued $26 million of second lien PIK convertible notes, which pay interest in kind (Form 8-K, March 4, 2025). ATI filed a Form 15 with the SEC on March 17, 2025 to deregister its common stock and suspend its SEC reporting, and its last public financial statements cover fiscal 2024, so investors have limited visibility into its current financial condition. 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 clinics are generally small spaces, which widens the pool of possible replacement tenants. Physical therapy clinics of roughly 1,000 to 5,000 square feet in strip centers or standalone buildings can often be converted to other medical uses (dental, chiropractic, veterinary), personal services, or small retail, though conversion costs vary by site. Landlords who bought ATI properties at higher cap rates may have more cushion if the space has to be re-leased at market rent.

Cap Rate Analysis & Pricing for ATI Physical Therapy NNN Properties

Live asking cap rates for ATI Physical Therapy and comparable tenants:

Active listings InvestmentGrade.com tracks with an asking cap rate (stated in the listing, or computed from its stated income and price when no rate is stated), listings last observed October 16, 2026. Asking cap rates are not closed-sale cap rates. The middle half is the range from the 25th to the 75th percentile of listings. The 10-year Treasury yield is 5.24% as of October 1, 2026 (FRED series DGS10). Ratings are the agency ratings in our ratings database for the entity shown, which may be a parent company; the rating type (for example issuer, senior unsecured debt, long-term debt or revenue bond ratings) varies by company and is shown on each tenant page. A rating applies to a lease only if the rated entity signs or guarantees it, so confirm the tenant and any guarantor in the lease. n/a means no verified rating is on file. Not shown because fewer than 3 active listings with a published cap rate were observed: Athletico, EyeCare Partners.

Whatever the asking price, 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.