GMRE - Earnings call transcript Q4 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 Fourth Quarter and Year End Earnings Conference Call. At this time, all lines have been placed in a listen-only mode. 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. now Relations conference Representative, will Medical to I Investor REIT’s Mary Instructions] turn over the Global [Operator Jensen.

Mary Jensen

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

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

Jeff Busch

to you, everyone and Thank Mary our welcome call.

a Joining strategic Officer. with review I’ll plans. review an of accomplishments for off and will today some a his Chief Bob of and on year. me are update start Bob fourth financial the review company’s then a will Investment XXXX quarter our Alfonzo ongoing Chief Kiernan, acquisition of our operational activity. company’s the excellent of with follow the and results Alfonzo Financial full and and our update provide Officer market provide our Leon,

real track We are established we the of and as very pleased investors estate. healthcare record with office other prudent medical

evolved we happy are We have how also as REIT. public a with

position our activity, full-year to quarter marketplace. the within addition In itself acquisition and to fourth well GMRE continues

in December and GMRE Investors gain sold medical is an acquisitions During a in We net Great square Bend it on feet of $XXX XXXX. we unleveraged compared to XX the $X.X achieving year, an complete return in interest XX% a average internal show to approximately of at feet cap in leverage sold of of reflects basis and our XX% underwriting portfolio. square during value a to $XX.X X.XX%. are a for totaling in to underwriting we disciplined our for network had asset, our disposition more lease XX% which the basis. This increase million we on creating acquired rate expertise million continue XXXX. testament rate generating square we a The XXX,XXX than feet of utilized XXX,XXX the weighted our to million

able a maturities, Though flexible offering offerings. capacity our our more believe $XX our capital $X.XX our of strategy and we in portion to manage testament create During our these and which another business This the interest OP approximately fixing $XX equity confidence credit rates. share. a of price million and per various through leverage raises, sheet. year, and million extended while we average strategic borrowing We our $XX balance increasing were of an a facility equity includes seller’s we through at to transactions, million raised is Unit

transactions these and very capital We and volatility these of sources year. market raise will Further, execution our to Bob a we potential source pleased with during and tumultuous able support you another of transactions We were timing of the attractive are through equity our multiple capital. relationships with the various foster on from remark. debt issuances as color provide more growth. international to continue investors, his prices portfolio in to

ongoing conversation Our as capital to with them multifaceted our well approach domestic a source. bank support as our diversified

of have we Board Lori Crowley continue addition, our as have REIT, as Wittman, markets Paula milestones the traded to and C-level demonstrate and both Ms. we over believe are already with aligned and our served diversified of that Board. these our In We and to Directors contributions a publicly evolve our of the addition them. extensive positions capital with whom the shareholders further quarters have estate commitment healthcare, expertise. Their real last strengthened in goals few

As goes, XXXX up far it’s to shaping be as us. good for another year growth

total the completed another pipeline square representing details price under this a I’d provide and very financial who’ll highlights. we With about $XX a one of far the quarter regarding for fourth transaction we’ve year, feet turn of like purchase potential have our CFO investors. strong to Bob a over Kiernan, contract, that, and have So XX,XXX of approximately million call to

Bob Kiernan

and year-end Yesterday Thank press earnings through our our financial website. via package simultaneous you, fourth posting XXXX and Jeff. release our results quarter of we reported a for

$X.X end our of fourth the the $XX.X in from to results, total million quarter revenue Regarding in XXXX, increased quarter the fourth and quarter up fourth results of XXXX. year million – fourth quarter

in revenue $XX.X For our by increase impacted of driven fourth December growth $XXX,XXX be net year quarter for an X.X% the over to last our by XXXX our in cash the XXXX. year. to of QX from to quarter XXXX positively XXXX, the revenue acquisition fourth of were up $X.X quarter total the rental from to a XX% in On our terms underlying basis, ended XX, $XX.X XXXX. increased same Total healthcare leases. revenue compared million, fourth from Revenue of rental increased leased million, increased activity or the portfolio. store our expenses up These continues million

ended a XX, acquiring December and XXXX. as and as million XXXX, year remain For XX, expenses, increased Depreciation to $XX.X revenue the million amortization of $XX.X interest expenses portfolio total continue ended efforts the we increased size. as of our as revenue our components total reduction of expenses continue for December as cost compared larger year large to expense our to our result expenses, actively from a percent decline properties. G&A well

the XX, the revenue three XX% ended total XXXX, of For December months G&A a our to as was comparative period. compared percent in XX%

was as percent a December the revenue XXXX. total in compared of year For to XX% XX% XXXX, XX, G&A ended

impacted public For expenses company in decrease fees. primarily year, an by other professional and these by were non-cash of a LTIP the offset increase results

and XXXX of quarter up expenses quarter. QX non-cash was just down last of in under LTIP fourth from $XXX,XXX slightly Our $XXX,XXX in from the

$X.X Looking million should we non-cash for year. LTIP estimated expenses between to million $X.X forward the XXXX, to range

in G&A reduce much an We largest continue a run interest estimate expense acquisition and in positioned are of G&A without range our that portfolio fourth Depreciation to million versus cash positively growth year, again impact $XXX,XXX very quarter, was the year of robust in scalable too the expenses XXXX representing an $X.X quarter continued million. cash two the well per to for quarter actively $X.X operating our platform and correlated should for look on for between $X.X activity prior that’s Therefore, million to line of we million and were with rate expense XXXX items XXXX. our for $X.X expense ways Depreciation both G&A. annual to in have fourth $XXX,XXX quarter. the

to in in fourth XXXX. to December XX, $X.X compared was compared For fourth of year quarter the in ended depreciation the million million expense $XX.X million Interest $X.X XXXX. quarter totaled million expense XXXX, the $X.X

totaled December proceeds $XX by increases XXXX. primarily to which interest compared XX, year the were borrowings, acquisitions. higher finance in $X.X XXXX, our the average in higher interest For used These expense interest million rates expense property and driven to were ended of million

Great per in in per quarter. this of during loss increased to or attributable Jeff gain we shareholders assets of mentioned, to our $X.X $XXX,XXX Bend of generates of quarter fourth and reported million impact $X.XX a the of revenue the the gain reflecting we net compares a common share that or sold rental $X.XX million, As quarter This a fourth income comparative share. loss $X the

or investment net $X.XX in approximately common to of Higher million share by for December the our On and For attributable $X.XX of revenue respectively. of per flat remained AFFO from a and the $X.XX funds sequential to quarter increased fourth in share, per $X.XX at $X.XX per FFO share respectively operations, impacted the improved AFFO per loss and XXXX. compared increased $X.XX year or XXXX. million FFO to a share and quarter driven a XX, XXXX, to versus approximately positively per basis, loss fourth net $X.XX ended rental activities $X.X to $X.X income share shareholders $X.XX

For share XXXX ended compared the to FFO in December to share ended XXXX per increased December in XXXX. $X.XX AFFO, compared increased the $X.XX XX, per XX, year share per $X.XX to $X.XX XXXX. to per share year for

balance a gross Moving estate $XX as our significantly sheet, portfolio at of value the and increase a of December assets at $XXX onto the million sequential end XX, of real carried million up million, of XXXX. was from XXXX, $XXX of

of balance payable. side our end million debt liability debt our million unamortized sheet at notes and on drawn XXXX, $XX XXXX, million from at of $XXX the our includes total facility at million fixed balance The we current $XXX reduced September discount. to year rate XX, of $XXX credit sheet, net approximately Looking

LIBOR our the amount of our average component During and the to average borrowings, years the of the of company’s December the million. $XXX X.XX was total bringing weighted additional At X.XX%. borrowings fourth weighted term we quarter, XXXX, facility interest hedged an $XX was debt of rate credit XX, fixed million

earlier a and through as of issuances, Lastly, us by ATM demonstrated combination OP public million mentioned raising public sources program. Jeff our in approximately and through demand available Unit of for activities the various a we direct $XX XXXX, to our equity offering underwritten equity

In X.X $XX OP X.X a issuance Specifically, an million December, $XX.X share, underwritten $X.XX common in Unit. we valued connection our offering per generating of of million at million. average through with million property per stock partnership issued operating year, sold units, acquisitions price at at our gross proceeds $X during public the shares OP of

proceeds our XXX,XXX shares through common our $X.X at we sold addition, per of generating of stock average $X.XX an million. gross of In price share, ATM,

overview Officer, XX, of portfolio. XXXX, a In cash March of and as the to that, over represents an declared dividend provide $X.XX an common per of $X.XX Directors our things Board record, to share. I per Investment March dividend will addition, With will rate of investment Leon, Chief on stockholders who now share, Alfonzo GMRE’s of turn our X, the annualized landscape

Alfonzo Leon

our square totaling impressive cap Bob. million, validates We Thanks, square $XXX In we we XX at and for XXXX, this completed approximately rate an which feet did average XXX,XXX transactions strategy. of are achieved results and per assets and Dermatology. leased Illinois pricing. Kansas, Podiatry, OBGYN Florida, These to X% Georgia, are primary and California providing and tenants ENT, $XXX foot in Texas, care, Ohio, oncology,

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

average. basis revenue to above diversified attractive focus fundamentals. real secondary, to facilities, a providers submarkets good tertiary facilities, quality portfolio of locations We yields at are points leased risk-adjusted XXX Our and and good been markets generating attractive basis newer goal XXX has healthcare buy healthcare points leading estate on to that with

today pipeline Our looking strong. is

various We activities in last status another we and market are a believe can number deals. phases achieve on currently year of underwriting conditions quo, growth. of prudent Like year, we if of remain

are of dynamics beneficiaries space. several the in have stated before, we As this we

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

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

in We settings. value-based, also Third, healthcare continue located like believe pushing these poised strategically the are real environment, a groups reiterate assembled will suburban they estate communities to physicians groups outpatient thrive would and more we larger serve. have reimbursement business fourth, across portfolios have strategy. that into healthcare technology into to believe I our

just estate. not buying real We are

tenants healthcare mile With on and suburban we We our driven We investment extra are happy the this value, solid with and for each that lower we that, stone We of deals why the close they is for enormous lease take turn look to every needed in coverage uniquely investment settings. pursue underwriting. cost are of these strive buildings and niche. network. in strategically high-quality offer with to we be for we opportunity to We healthcare our to suited deals look underwriting providers valuable are critically looking go in that communities ratios. your providers our that conviction There questions. an EBITDAR will delivery

Operator

comes D.A. your question. Barry first with with Davidson. question Please from [Operator of Instructions] proceed Our the line Oxford

Barry Oxford

you now? Great, be in much thanks negotiations? I late way guys. then question this more of stage is Alfonzo. half for what at guess Alfonzo, how is say would your percentage And least pipeline that, would or right

Alfonzo Leon

Sure.

as less looking options deals always to or of and have needed goals. dozen corporate opportunities one is we’re possible we’re a to as and roles all I different my for we more – So, create many active view our stages at match here always as

all we our of will execute on we’re – needs. a as bunch fits in working and we’re – corporate of So, it it a We’ve just stuff. lot stuff a pipeline of got which

Barry Oxford

thanks. following along just lines. Okay, same of up then great, And kind the great,

of guys or OP offering. the XXXX? did You you equity fair a offerings as ATM equity an units anticipate heavily in as guys markets Do amount of XXXX the you tapping did in via the

Bob Kiernan

worth million That’s approximately now, quality plan hard based in do right we opportunistic and we we have how purchases, – power market. grow of $XX upon Basically, we optimistic raised to are good to finding the say. purchasing

necessarily look capital. we therefore, always capital, So we but do for don’t need

acquisitions. if arises, could we raise for we So, opportunity when needed capital the

Barry Oxford

a just is units run-off the that OP more that of just or on one or amount Are a And on take basis? there would fair unit. Great. OP deals more

Bob Kiernan

to over of you year, to OP We’ve hard that a Last in three did million, in predict $X.X deals. pipeline, we in of It’s with hard and just to it lot unit a line. $XX lot OP get in a deal it’s few have units until we discussions an million are our really groups. the had completed finish recently predict. We interested

to conversations and many they’re willing pretty how fluid. the Just are take

Corona number is smaller we $XX and that up with last with a with million. big ended Sometimes year start started case we number, point the with one, small but a deal in a up end closed

we’re So, to we’re is interest always There and discussing it it. it’s hard a happy take to predict, lot it. in but of

Barry Oxford

much Great. Thanks so guys.

Operator

Montgomery from Stevenson line comes Janney Please proceed question question. next Our the with Scott. Rob with of your

Rob Stevenson

guys. morning, at Good planning on in you any Jeff or guys Alfonzo, are assets XXXX selling point? this the

Bob Kiernan

sale happened do What last the is There’s major at plans look now, right system. asset we year the with by was changing. but was no purchased upgraded, a conditions

contacting asset about a suddenly, and sale. lot were a us of rated became So the it groups

we’re if well, know calculation. the sale, assets, necessarily wait and asset could to on reinvest our That’s to we we but investors. don’t the dividend in whether have going extra will return we So, to do sell the it

Rob Stevenson

specific in there your Okay. pipeline this mix product types is then Alfonzo, point? And at of that targeting up assets healthcare any XXXX or predominantly anything the makes in

Alfonzo Leon

Yes.

So changed. we we’re we’re fluctuates, we’re come our the quarter-by-quarter market even it’s – that niche like you it at focus, properties I in, varied. – what quarter-by-quarter, mean done we the we’ve for varies, of look if hasn’t – what that to look inventory

more focusing So, the we’re quarter-by-quarter any best opportunities, quarter-by-quarter and pick really can. really type, good asset we not it’s good trying necessarily about to just estate real finding one on

focused. So, not necessarily asset quality focused, it’s more

Rob Stevenson

does comprise current in the And anything pipeline particular? of

Alfonzo Leon

at It’s and – stages a it’s and why... it different that’s mix, and everything as always is is

Rob Stevenson

in issued first the And far you the quarter? Okay. All ATM under right. guys anything then Bob, thus have

Bob Kiernan

far ATM XXXX. done We about $X have we’ve – the in in million so

Rob Stevenson

– December using outstanding XXst, what’s guys because you of forward what for came collectively that the what the should we And I offering be rolling count? at equity sort share shares – had of the of and month that middle units the and was the was Okay. mean everything,

Bob Kiernan

– were year-end in OP right $XX average shares be weighted million, around would right right $XX – at shares around QX, under and just shares million. then for Sure. The the right

Rob Stevenson

that I guidance terms are guys then now guys how that, of to you forward, G&A public are guess are you continue guidance you that provided I mean you how thinking company, providing as And stuff in about Okay. going earnings a mature? you guys guys thinking maturing about like but some and

Bob Kiernan

Yes.

the to more long-term lumpiness just able Rob, not full be feel around, point, but focusing, we’ll providing color think current not activity, the portfolio, on to and with based control. we’re to but near-term where I outlook, of the over individual grow think provide at guidance. providing good lines this the really hopefully on near-term acquisition the size those We comfortable of we the these that I continue I providing give mean about rather on of color portfolio, comfortable and we guidance some we are that kind better some can very

Rob Stevenson

Okay. Appreciate it. Thanks guys.

Operator

Please Our of with question. Drew next with proceed question from Baird. Robert comes your line the W. Babin

Unidentified Analyst

Good Alex on morning. This Drew. is for

Given – dilution your the of Do capital quarter? the recent you recent late leaking quarter timing activity. any into anticipate first

Bob Kiernan

I was, on based so deploy lag think leverage powder. our just little it I’d the at ended we way timing QX, year the and Yes. the as we in look be a bit a the and/or redeploy I of at XX% under dry acquisitions, QX mean there’d of

Unidentified Analyst

mentioned a constantly you pipeline Got And are it. That is you on. robust that guys working helpful. opportunity

and call last, generally We’re to six in you’re cap XX if trended the how us pricing could have just you seeing rates it color give trends curious on months? the any months

Bob Kiernan

Sure.

day about figure think and try I to what trends every out are. is the of rates where kind cap So,

rates the but the again, XXXX, looking where the market perfect. strengthening strengthened the level, necessarily six as in purposes, it’s bit. is did not a and that and I coming at that materially guess helps, by market stuff we the sense but it different. it a in XXXX softened end, months to little cap exactly, into But past, and comps, really year pinpoint the get start was hard our of I is I little you’re which bit, we for priced not year I start But kind high As XXXX, and think sense

that pressure some it going and I REIT that markets. in strengthening, to think the but – mean of is of shares some So, pricing the market, start the start sense putting year I’m back back in we as of market I to beginning just sense to was the hear coming the last of too think that with where kind year tell. felt they’re don’t the soon I yet we kind impact

– best were can I of you that’s end I So, in at we’re we sort the the of last year. think give market is, same

Unidentified Analyst

it. Got for Thanks the...

Bob Kiernan

And relates seeing changed similar to I we’re opportunities. mean how still really dramatically, hasn’t us, much, not Yes. niche too our that

us, So, market. as still as see – it in we’re relates same it to I the

Unidentified Analyst

Was the is rent a transactional question for update Thanks healthy, certain a is physician that activity group down appreciated. like still at there X.X me. from it. majority really last this Looks about be properties, or there. softening some ticked And Got half color there obviously, really coverage turn would driven by quarter. times any but

Bob Kiernan

I much. really it means to don’t Their well. think lumpy be pretty tends business as

are with hasn’t So, – not commentary would don’t I down I to the and I it have where we we and know more that that, we’re than mean been – given it and fluctuate is think relative. I expect concerned their up rent change if not coverage

Unidentified Analyst

guys. Thanks it. question my for taking Got

Operator

question next your Our Bryan line proceed with B. question. the with Please Maher of from Instructions] [Operator comes FBR. Riley

Bryan Maher

that in anything acquisition or AMG property, responsible kind you of morning, cap jumped that? Was a Specialty was at Hospital almost the pluses particularly out first Good special X% quarter, minuses guys. about The that there rate did for us.

Bob Kiernan

Sure.

– that facility; itself – it it the about that careful asset one So, causes context. great mean is the are an a a It’s not Medical kind to understood next of was why operator for Lane solid pursuing. was were built, timeline of was built, facility when exactly that and starters, us was profitable we lot Center. we Regional the a whole when making is the it’s LTAC very sure I class of that

I know many us and for folks to was market with And a also that they the opportunity. So years. have deal, that relationship off known came it’s one

There fix what lease, and great Regional nicely. did So, together that few a LTAC, next to a a the it things Lane as we Center Medical we that very came in had very nice view area. of in which I were to acquisition resulted profitable in

Bryan Maher

of mean Okay, in questions. the And XXXX XXXX little not XXXX. we give less your million then for have than was up this guidance, but and looking looking broad what of great. just million the you were some around times analyst – pays But kind code? bit are to in couple you and just in I no modeling for expecting a acquisition danced to of XXXX than brisk a question, maybe, definitely certainly, swath, a we’re broad in $XXX $XXX for something more zip that

Bob Kiernan

I a can we stay we of things front growing I hope for look mean sure. many as we for much quo, to I to as in us status have we continue if did as as and great alluded last my – year and of lot to opportunities goal as Yes. is options mean, options.

we’re good there built to folks, been a So and year of reaching out us. lot momentum that up has last excited,

a busy very stuff. We’re lot around running of looking at

So, in opportunities and of our a sales we’re forward year to of able being to wind coming the look in terms lot with really into grow.

Bryan Maher

increased people – landscape lastly, their appetite. year a out they there? What’s competitive for And the as anything competitive environment acquisitions, today are were looking as the have pulled in just they our they just ago, back, like aggressive you seeing have

Bob Kiernan

a else mean a just smaller single last it’s best a probably the – asset have portfolios don’t were don’t were And than really always I of up see this know that’s I the pinpoint market much it’s back it. something the to But we’re think I know there’s as dramatic a where robust. can exactly in number predict I impact and a sort folks keep mean lot. – of quality like I’m lot available, the I – on I you seems to waiting lot and and a sense know and been volume the asset kind in third I before, back become that, five, comment anything that, lot I there There outstripping a is to little single big get it kind them like really see of as we’re as with honestly take space. we mean The what demand I Yes. of as priced have some many to don’t and anyone to demand trigger kind they XXXX. of going have volume our to it. pretty see is supply don’t as have just how comment, year, sub-five, recently can. talk traded determined you come we feel of it’s any niche. and come what is and where to of there market players one And I would see good on mean have composed that you try and it’s comp few pricing few there been is I is of exact some and it lot anyone portfolios, where to everybody have and is fourth supply to can that we high think people material stuff that but do not change. have can there The fact I way to and an my the try is out. very the there’s come stuff, quarter hard that a be if for at prices a REIT I for if to don’t don’t can mean I are of as up to an I debt portfolios; that keep trophy stat that and it’s – probably, going know change – I up that general getting I to get. was assets is don’t year, and at talk stronger It’s all in to a many I start how a XXXX, with perspective. portfolios conferences headed. really that up I were from keep below to feels thought to things shares pure to tabs one point, but a ones

So, last think market. we And be we’re niche, our into as XXXX, as looks was it a looking busy as I us, at to it similar for come year.

Bryan Maher

Okay, me. great. all from Thanks. That’s

Operator

the to question-and-answer have we reached session I call remarks. turn gentlemen, and Jeffrey the back end Busch of for the Ladies to like closing and would

Jeff Busch

pleased We are direction another year. look with our the company call. for to forward of the conference joining very you Thank productive and

Operator

concludes This conference. today’s

your time. participation. may Thank your at for You lines disconnect you this

Global Medical REIT (GMRE) 7 Mar 192018 Q4 Earnings call transcript