GMRE - Earnings call transcript Q3 2018 | Global Medical REIT Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen and welcome to the Global Medical REIT’s 2018 Third Quarter Earnings Conference Call. [Operator Instructions] Please note that today’s conference call is being recorded with a webcast replay available for the next 90 days. The dial-in details for the replay can be found in yesterday’s press release and can be obtained from the Investor Relations section of the company’s website at www.globalmedicalreit.com. After our speakers’ remarks, there will be a question-and-answer period. [Operator Instructions] I will now turn the conference over to Global Medical REIT’s Investor Relations representative, Mary Jensen. ahead. go Please

Mary Jensen

ended not Good meaning closed, operator. that is its such Last after Reform forward-looking XXXX X Safe night, results created contained as of Certain project, terms Thank intend, estimates the forward-looking and maybe results. Act activities forward-looking and the statements on to future or regarding including and thereby. assumptions the risks herein Medical statements could, morning, statements assumptions are any operations statements forecasts by terms identified acquisition company’s cash by and Private or statements. REIT the are financial historical our funds any market of plan, any to considered for statements operations forward-looking will, months and quarter Global the our within raising our Except other tenants; of any business regarding revenues, plans, future operations it XX, expect, current protected our statements on use and are other or any or issued the to opportunities flow similar and intent expenses, XXXX. our and herein, statements and future and for economic statements be acquisition regarding operating items, subject the and current you, statements results, third everyone. statements forecasts predict, September set of the prospective capital and Harbor financial Litigation and from but dividend announcement may, payments, matters projections information, forth should, estimate, anticipate, phrases, funds information of These continue references FFO including, expected the of including and such phrases, regulatory believe, about any Securities any These AFFO; conditions or expectations, objectives based future adjusted of their industry from and for changes including any concerning performance strategies certain are future our uncertainties. future or and and limited pipeline activity, impact regarding

the REIT. medical today investment the update be any capital Jeff, like in filed I markets statements. and not other on estimates our including the higher obligation pipeline annual AFFO projections, forward-looking to report Risk in of Factors expenses XX-K These in reasonable, of estate in or Important do the on is United pursue in our differ or go that those dispositions in Although operations commentary materially risks States or completing risks not and projected not or statements lower Form revenues that, future. well Securities With Exchange would Global and acquisitions may our and all funds estate no anticipated cause expectations, we than of may undertake we assumptions or adjusted or assumed Please or reports we Medical prepared statements obtained the set factors real FFO are in from section believe with could estimates results forward-looking due our anticipated things contained any as materially be turn we We to intend over Busch, realized forward-looking in call our that healthcare referenced our real CEO our have differ that quarterly funds the from financial from could elsewhere identify note operations that please actual that and from include remarks from or ahead. report results our to actual to resistant the statements. than our forward-looking projections on are forth market XX-Q to or in and Form for JLL the factors successful projections Commission. of reports. among based Jeff reflected data as

Jeff Busch

Mary our and you, welcome Thank everyone to call.

Investment Joining GMRE GMRE. me Officer I today start is management Bob rest a his Bob XXXX review Chief will and quarter and the plans. Leon, ongoing Officer acquisition our activity. from strategic then and off the year team. quarter the will operational for with and follow of a has by company’s the and a Chief review our financial Kiernan, will great the Financial Alfonzo with of Alfonzo highlights our followed results of the company’s third update for provide been market

is proud We for which the two have very something on last quarters, our are AFFO of. basis covered we an dividend

borrowing rent of our under while blended in contract the portion Including to office we so approximately addition million that and what cap quality. have will we year, for continue $XX rate assets closed gross we exceed located Since of $XX.X scale our continue for support quarter, build business medical estate pipeline million target rate, properties a net have blended where million investments million. interest rate estimated annual real opportunities medical long-term strategy. Currently far solid to grown a X generating for tenant to portfolio are systematically we of last efficiencies the These $XXX of $XX we totaling across now a additional assays have cash in acquired improving three a of X%. our In can cap X.XX%. markets and lease our growth portfolio, increasing our capacity have have and external our fixing

credit the Great have a mentioned several us potential in at attractive with operators tenant. we buyers Hospital Bend quarter University acquired of located tenant was As approached Regional Hospital Kansas offers. recently our change System, the by Since Kansas last AA- of

and assets. to mind, are of we upon realize hold agreed are we the our value in buy that an a Although appreciative color remarks. will this believe of we unique of can our assets. gain more cognizant price that on opportunities redeploy one in operator, where additional opportunity we an provide properties his owner realize $X have and a purchase million to on we transaction to Alfonzo With

the a interest our strengthen to we balance rate. our capacity increasing credit our facility continued of maturity, sheet, extending portion debt During and our borrowing quarter fixing

shares addition, of could began and million quarter. We our on other ATM ATM during ATM purposes essential believe down paying capital acquisitions the an activity provide which after above $X. that program corporate In at source our Bob third and selling XX details competing additional to serves we as include our fund debt. will recent and

equity public we private a force and continued part our diversify approach domestic our well market as relationship we our the additional debt as capital In another multifaceted relationships capital sources. addition, are continue as Israeli identify as of and and These with equity with of source sources. relationship to discussed to banks where this capital

more We discuss happy session are this to detail on this during call. Q&A in

the over to who provide turn our details to like would will I Bob the third regarding CFO call Kiernan, highlights. quarter Now, financial

Bob Kiernan

our press which nine released – on and our the operating on quarter results period. posted position our Thank you, website we posted Jeff. also package provides months details and for release Yesterday our earnings to by our financial and

appreciate package our quarters. continued forward We in our analysts and comments investors the on to future ongoing and enhancing look package to and suggestions

The XX%. million, $X.X XXXX, almost expenses – up be from months period an XXXX. of continued XXXX expenses the the $X.X in September the revenue percent Total million put our third September reduction Now G&A third increased the in and for as this from invest our this in driver XXXX. our expense total our nine total XX, the to percent our in size. lease increased leases. for XX% revenue million from same of ended from a we Revenue this months a to large quarter million of a months was underlying as $XX nine acquisition growth as our XX, of third as $XX.X ended of our up XXXX, expenses The larger nine last increased for in of interest quarter revenue XXXX. total To from to total as third increased of to compared for decline September to to driver well The is $XX.X total continued quarter and the to of Depreciation and $XX.X ended cost perspective, the expenses portfolio. third revenue year. GMRE $XX.X result rental increase portfolio impacted expense component by total to in third revenue results, amortization quarter actively of a quarter increase expenses healthcare quarter our million net million on terms for efforts XXXX our from to XX, portfolio. revenue continues positively as activity million increased XXXX, the

September decline last period ended as months XXXX, total to and XX.X% three XX.X% our XX, was sequential compared the revenue of quarter. percent a from G&A in comparative the XX% a For

These increase the non-cash as professional G&A a were to For September revenue ended X-month and months the XX.X% in decrease of costs XXXX, implementation in expense period. was fees. XX.X% a compared ended impacted primarily XX, other nine by by in an Sarbanes-Oxley percent offset total results LTIP comparative

the we employees accounting sequentially, QX. of was fixed the related to awards account each from to by this our the at expenses comp will awards of implementation $X.X QX rather reporting driven of for to non-cash Date expenses million LTIP Grant stock During us in of in Please note date. these decrease that accounting LTIP manager revaluing This allow $XXX,XXX early decreased new stock standard. compensation related quarter, than guidance adopted to values granted that to our as

Looking $XXX,XXX. these our new by share expected will our not serve expense fluctuations LTIP approximately limit in as ahead, the primarily LTIP is September costs any awards of performance price. on QX the of achievement outstanding be Based in new guidance XX, to to variability expense of be cost the will at in thresholds driven changes this and the awards

to between to G&A an million currently G&A to actively annual look run-rate per our continue $X.X between to $XXX,XXX and cash ranging We we range expect million. $XXX,XXX $X.X ways to for quarter reduce expenses representing

third quarter versus in largest correlated items $X.X million in of million expense positively line expense was depreciation two the both with in interest, and third portfolio quarter $X.X were XXXX the of are Depreciation growth. the quarter. our which prior Our

million depreciation quarter September the $XX the X million period. the XXXX. million comparative XX, of For quarter totaled third to in expense million the ended $X.X Interest months in in $X.X to third $X.X compared was compared XXXX,

shareholders XXXX. period of we or These increases of September X during down borrowings in of net For $XXX,XXX the expense common quarter XXXX, income attributable share, per $X.XX impact period million periods Reflecting approximately $XXX,XXX net in totaled the were third income to interest last to primarily same increasing ended comparable XX, year. interest $X.X per average compared and $X.XX higher was to increased expense million respective $XX.X in had which rates. share from the revenue, to rental due the in or months the

shareholders common increased loss to For to $X.XX $X.X to the attributable to loss increased X FFO versus XXXX comparative months AFFO a On net quarter September third million a to to $X.XX XX, XXXX, $X.XX remained Due sequential quarter third compared $X.XX per of $X.XX in net primarily in the and per FFO from and higher share per share XXXX. $XXX,XXX rental of ended revenue, $X.XX approximately period. share. a or income per respectively and share per $X.XX basis, at per increased share AFFO or share of the $X.XX flat improved

period the share share the in $X.XX ended increased AFFO XXXX $X.XX to ended $X.XX to XX, year. per September share same per for period. share months September FFO compared the per XX, months comparative the in to compared $X.XX XXXX, X For increased to last per X

Moving of of carried sheet the on XXXX, estate as of our sheet a was on million. at real assets to balance value portfolio $XXX September gross XX, our balance

total million of at debt balance our Looking side million sheet debt fixed we drawn on and at $XX unamortized facility of includes of $XXX discount, notes net the rate payable. have XX, which September approximately million liability the credit of XXXX, $XXX

its credit million, X-year our increased capacity a to credit $XXX term amended we which loan. includes a $XXX revolving quarter, the new $XXX During and million facility million and facility

a XX We year extension also extended with revolver option. August to of X the the term

the $XXX aggregate the by our accordion our on across pricing interest LIBOR credit up on an reduced term to component entering The also fixes term hedged million. rate feature we includes our to X.XX%. into And the We grid. agreement swap loan addition, in a capacity the increase spreads to risk facility that loan

debt average years, interest the of was rate As of of company’s weighted the X.XX XXXX, weighted X.XX%. a XX, September average with term

mentioned Lastly began million program. using $XX our we as earlier, Jeff ATM

Alfonzo common anticipate to debt. of our With paying things per our who other the Leon, of During average will of turn down the quarter, gross an share sold will landscape shares an acquisitions XXX,XXX include price GMRE’s generating we proceeds that, stock investment using ATM $X.X of portfolio. could which corporate I and for provide million. Chief purposes, at over Officer the future $X.XX and We Investment overview

Alfonzo Leon

Bob. Thanks

report We robust acquisition GMRE our to in are pleased strengthening progress through building and continued pipeline.

our As despite to points has the in quarter quarter XXXX, of seven $X.XX $X.XX second rate per AFFO in per share a the per third we from share $X.XX from hikes fourth the XXXX. and of Fed result this points. quarters fourth basis of XX in set accomplished basis share grown the XXX that And to XXXX

are ways am our ambitious team most proud initiatives to key and of as goals, the proud quarter rally progress We ability around make finding every of push and I we to forward. challenges. the enjoy overcome set

an niche Within of investor goal have proven portfolio build as at have above market building $XXX healthcare yields estate that the the REIT million to medical our real and ourselves of a ability a basis quality XXX estate real our of potential. excellent All market XXX experienced established cap average. with are basis growth points long-term we points to near-term the

$XXX XX office/surgery yield. investment and average center properties of X% By over or is XX% asset X% portfolio now care hospital a our mix surgical million X% acute of is of consists square other. is is at Our outpatient, portfolio feet X.X hospital, XX% X.X the general medical is totaling rehab million type, hospital, today

We markets source the Our and higher of risk our industry experience that great Fed yields always in providers knowledge secondary strategy been for our attractive to lever fundamentals healthcare adjusted by deals properties relationship deal. tertiary leased has deep get looking across non-rated to the and with in to our have healthcare sector, credit.

to it’s deals. to with accretive nobody sources a and to found the relationships waste efficient making ourselves strength in to is time has acquire ambiguity play REITs underwriting $X deal also in pride to million and the close range. we even priority extremely larger be market processing leverage in of probably million referral MOBs expertise can our to We biggest The We our access market by bringing get deals. indecisiveness $XX We on same been the bureaucracy.

underwriting our edge our and that very disciplined Our we in is taken With remain with conservative process. said, competitive speed selection a reliability. stance

mentioned lot Great tenant. health system deal we the spent acquire a As of time quarter, tenant Kansas underwriting this Regional of Health System a predicted acquired We and last likely a Bend University local that our Hospital. would

this the News forward believe of shareholder believe move on will have this meaningful attention this the buyers us to transaction we potential of at have have attractive our disposition KU approached caught return maximized disposition. and create with offers we who with asset we process. with interest with valuations. we Based the Ultimately value decided on we

We are in the this of beneficiaries space. several dynamics

settings capture diversifying our is First, estate growing healthcare strategies are which patient to in providers resulting more real demand care. for

away from procedures that is oftentimes geographic more within an which Second, patients hospital driving population the has need outpatient created are demand the meet areas to aging campus.

into other suburban groups technology estate transaction extremely We Too value are they getting estate real plus these across deals healthcare has groups XXXX, to communities that had capital. changed investors, assembled much into Since getting ignored. the It’s offers, environment. market. reimbursement in also thrive is Core but environment. is lot getting fourth, have healthcare front deals are we serve. of XX portfolios market too unusual in a put continue in settings. too located an deals more physicians real strategically based MOB fee poised many a active. are outpatient Healthcare will Third, believe pushing And believe large

was MOBs MOB scarce, new data market fact, of gotten in for mix an year MOB core and This is strategy. $XXX approximately as and in business coincided were was anemic. with for broad comps capital Today sold extremely sector the opportunistic very largest transformation is also weekly deal Hermann to in transparency, I million, a flow XXXX sector Memorial market to almost likely Fundamentally, efficiency. still have pioneering, our million. would liquidity like outpatient these And the services by and as investors, dedicated to bigger the The $XXX deal flow, MOB it In then for robust the this from was anchored ample positive going MOB increases listings expanded. returns. this MOB buildings have returns sold the space. reiterate MOB

good network. We are strategically buying our a just The transaction why is are well of case not real tenants underwriting study the healthcare estate, Bend we delivery and this are as strategy. to valuable they Great

We grade critically our strategy growth for focused settings. these this rent quality take their plans. is time are or that recruitment the and in business, to investment are offer for needed look and an their high providers a buildings happy that of deals will healthcare that be With pursue questions. look spend tenant lease understanding uniquely providers deals. product solid we niche. not We EBITDA coverage your with ratios. physician chasing communities We enormous There cost to suited on we lot suburban We tenants, obvious their investment lower for opportunity and

Operator

The ahead. for Robert Our Drew of Baird. floor now questions. coming open from is question [Operator Babin you. Thank Instructions] is go Please W. first

Drew Babin

Hey, good morning.

Jeff Busch

morning. Good

Drew Babin

contract. detail some that ones I in the the were closed quarter, so acquisitions and Alfonzo in third the far was hoping quarter fourth the on ones for under closed that

competition, If there the about ones bigger what them of you in what you you a of terms about are you did their sort could them unique, just any made talk few local strength? and excited and maybe the of on see tenants

Alfonzo Leon

Great.

ENT start So Valley McAllen. the will with I

few So, one was for attractive reasons. this a

doctors. doesn’t have that of doctor growing a the is lot tremendously. is McAllen This all, ENT ENT of place in First an

ENT So are X in doctors has ourselves the McAllen. that with affiliating XX we of group

that deal condominium. being initially was operated was a The other as that attractive about it thing is this

did we condos into one it we what building. collapsed actually is diligence during and the So made

higher just if our able we were that condo. So than have, were process to filling through get would yield a we we

the a city, resulted recently that’s called growing in in health is Hospital, stable attractive which fact it XX% very grown us Via tenants, the was – that Rock the in yields rapidly that acquired So attractive a a announced condo the Derby offered contact, The large Christi, interest a mile developing a coverage, the group great and system tremendously grade for center up interesting the has group and hospital, it’s hospital. which Regional behind rent that’s a tenancy investment road the us. surgery pretty

So they This we the were met by kind with private outlined the their rebuilding facility, the group when they of in us to when hospital. very they was funded hospital out, why local physicians. incredibly build well by sponsorship were new thought a were investors hospital trailer, they for compelled and great strategy, nice

that us The a ourselves associated now is facility, was for nice to this interesting So also was to nice Wichita suburb of of very part the with Via that community with property very contact. chance Utah hospital going Bountiful, a in in docs Derby, align growing leading be Christi.

get that as so collateral close of higher we we as tenant. process. were tenant we X building additional got a so assigned that the Our tenant us worked years with prepaid under to their that was that execute rent purchase result had to able in and lease, a in deal option that purchase option now at And was previously with that an the essence of to doctor yield

floor. was in that’s we another group This discussions in pretty is were currently are diligence the Tooele, quickly. in the acquired and growing put a while in center to first group We Utah surgery

attractive – one we we billion very to ourselves more Cincinnati, in which the a opportunity revenues with deal So to a buy it’s a is felt straightforward. TriHealth with deal, the good Cincinnati property and pretty TriHealth entrepreneurial operators lot This this a in The align an just $X.X one health XX,XXX dock that want sense with. business very nice its yield is with in of largest very with employees.

are for very – a our great primary by and with credit. have care we the primary deals in process. the yield the system is potentially used a It Those associated health facility very system. nice health So looks

Drew Babin

acquisitions is that’s something the with that OP And any color. contract, being why they ask units these there deals, discussed the if potentially under or of demand great that that’s on something for That’s are great. the concurrence table? closing Okay, in is of

Alfonzo Leon

Yes.

them portfolio MLB about of Women’s couple each. a and Texas the of for OP – both So million X Heartland Healthcare have components

Drew Babin

negotiated Okay. And assume prices? those I are

Alfonzo Leon

Yes.

are nine. but of remember negotiated, they don’t line. I So what’s north north they of all are exactly both

Drew Babin

credit, the guess Great. place that add and Bob a used potential And I on to what accordion rates term that? be be in need with for is to conditions of additional one there question swapped that more the feature, might to be to loans line fixed

Bob Kiernan

Yes.

grow the could group. approval So to to their to we that subject the we as yes, exercise additional term speed we could to we accordion as into that bank ahead look of And discussions lender incorporate need we definitely course approval. now with could we

Drew Babin

Okay, all great, that’s for me. you. Thank

Operator

Thank you.

Our coming ahead. is Please D.A. go from next Oxford question of Barry Davidson.

Barry Oxford

Great. Thanks guys.

the I of getting Israeli rates the bonds, U.S.? out On you capital better, a – more voice from more in here that it’s have new the is those on bonds, traditional there, better are guys bank there think a but great you the sources

Jeff Busch

– sort lower varies rate because These Inc. equity than won’t there. a different them. really Hi their It ours. have Barry, much The we is like are of opportunities this they Jeff. of is otherwise their all yes, answer take FED rate

side So bonds And is us. other a it’s the only and on it’s to also profile a equity will there if then we here. the than take available risk deal better

at are So of we we take they better market, could the of They for so discount to just to a market, the tend equity the company. there less raise this in equity. on is possibility money rates are sourcing – sourcing type you a are

is and sources we also income. at type to keep dividend. this all And bringing that of have environment look in the and be of So in goal to growing keep but equity, cover do to got our we to clever a

Barry Oxford

the in competitive then look think as many at Right, XXXX you lastly, can and the you the color mentioned so great. acquisitions market on for Alfonzo you do ‘XX when in you that. ‘XX? as did do you And Thanks

Alfonzo Leon

Yes.

going think in substantially rates the interesting So to up, how the bit going I converged is trend surprised there was is been to see will despite mean line a And up little talked deals. approached picked as a to chase mean again. volume end people conferences, year bit by I folks of lot I the as I have but a change I be is low go next and of a to there don’t lot year. that market XXXX. eagerness of It to a I

So to really I the that’s a predict it’s But of changing next there supply to into hard come how healthy I see going very market play and is year. think matured out. deals don’t market, that has

Barry Oxford

Right.

is as of So better picking your of up good should there guess far there on you you fair there, share? lack out to you supply I a of word though be out as see the the a kind still competition lot market, seems so a even to able number of buildings corner be

Alfonzo Leon

as say fluctuates supply into over and providers, strategy employed steadily more. up. more would but as increased becomes I services And is is and the I it clearly get outpatient, And this more down, years. Yes. of up and mean a pushed has more is outpatient by more the off-campus there timeline

is And think change mean think that’s I I going continue anytime market bigger. so to the get there don’t is to I – soon. going to

Barry Oxford

will Thanks, floor. yield the I guys. Thanks. Great.

Operator

management over to or closing back Thank like you. turn I floor any At additional for this the time, comments. would to

Jeff Busch

to the many direction company Francisco. of forward you very at looking in San pleased seeing NAREIT of you and are the Thank are We very much. conference with

Operator

gentlemen, this today’s and Ladies concludes conference.

time may your You lines day. this and a have disconnect at wonderful

Global Medical REIT (GMRE) 6 Nov 182018 Q3 Earnings call transcript