GMRE - Earnings call transcript Q1 2019 | Global Medical REIT Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Global Medical REIT's First Quarter 2019 Earnings Conference Call [Operator instructions] Please note that today's conference call is being recorded, with the 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 section of the Company's website at www.globalmedicalreit.com [Operator instructions] I will now turn the conference call over to Global Medical REIT's Investor Relations Representative, Mary Jensen.

Mary Jensen

Good morning, everyone. Last night, after the market closed, Global Medical REIT announced its first quarter 2019 operating and financial results for the period ended March, 31, 2019. Certain statements contained herein may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and it’s company's intent that any such statements be protected by the safe harbor created thereby. continue identified anticipate, use intend, references believe, plan, project, are phrases terms may, to statements terms predict, as similar of such could, will, assumptions forward-looking and by including future of the and should, and forecasts These phrases, other results. any and estimate, expect, statement funds opportunities to, results, activity, changes any historical forecasts expected our of or economic acquisition strategies payments, information, forth operations, industry cash conditions or acquisition raising operations our statement Except statements items, including regarding future projections of are and or future from current matters for statements. impact future any financial their and herein, or regulatory future and including, our objectives tenants; and and from future expenses, regarding operating FFO, business; statements any set regarding the any but forward-looking flows capital other our dividend for any about pipeline plans, our any not on adjusted activity; limited or and operations, or revenues, information and statements including performance funds prospective concerning AFFO; regarding subject current uncertainties. statements on forward-looking based and risks estimates certain the are assumptions and are These to and expectations,

that the or we risks Exchange Securities quarterly and report projections we United cause operations, the or funds statements dispositions our expenses projected from the have we contained on materially XX-K completing projections, realized be or could our AFFO, are things, that FFO, due assumed projections the no herein in expectations, intend update Busch, filed statements. Global may and report results operations, that factors in or go Risk reasonable, and and the other forward-looking successful like or Although may Jeff reports to are or in believe to, of higher-than-anticipated with from Important identify Medical funds to our risks Factors in for annual be or from of any in or including materially acquisitions estimates XX-Q do These undertake among With in to pipeline we call the forth Form elsewhere actual on in or not the statements not factors financial our those Commission. the over adjusted include revenues of not Please any forward-looking obligation reflected that, our to actual differ estimates We Form of set Officer forward-looking States forward-looking future. all section that and Chief investment assumptions from results statements. our could I'd differ pursue lower-than-anticipated our REIT. ahead, Jeff. turn Executive to

Jeff Busch

Thank you, Mary, everyone, and call. to our welcome,

said a growth another that financial Alfonzo I shaping results Kiernan, Financial review us. operational to for Chief Today, Alfonzo a first we Leon, Officer. in provide the Company's and Joining market Investment our XXXX. Chief year an me Officer; follow of will will acquisition provide update are today the Back his Bob review XXXX strategic and plans quarter, be will with Bob Company's for of on and the for update our good our March, activities. ongoing and is up

medical million have our we $XX far raised $XXX by of invested capacity So and real this year, estate. million equity, in increased borrowing $XX million

price that to and for we approach aggregate XXX,XXX acquisition of million Right or disciplined with These contract square catalysts the we capabilities. XXX,XXX are acquisitions. expect Global medical to square investments. continues X potential to and acquisitions goals a acquisitions I year. of over exceed Medical strong the REIT growth approximately of we meet an a rentable now, purchase will have facilities, both our feet our for comprised very $XX approximately X Specifically, pipeline completed have under feet. have value-creation

underwriting prudent are leases industries and with high-quality supported care around. by underlying that long-term flows businesses highest of tenants long-term predictable delivery, a Our growth one cash the reached in health

quarter's Our support who that, over through call REIT our financial was increases like from will XXXX in IPO the and this our May to With X, sustainable of the Kiernan, cash provide dividend turn We indexes would lead outperformed details value. which to all CFO, Bob the -- shareholders from indices shareholder return continued will total believe period. our primary portfolio to our I during flow regarding to first highlights. XX.XX%,

Bob Kiernan

via our our website. XXXX press first results release quarter you, our financial simultaneous Yesterday, earnings reported a of Thank and for posting we Jeff. to package

in as of and $X.X total acquiring quarter interest properties. quarter actively of first as XXXX. way XXXX we increase to the was the our of our first revenue expenses million lease On XXXX, for of million of account first rental expenses primarily basis, million was The underlying $XX.X quarter first expenses XXXX. in our million to Depreciation in in quarter terms remain expenses change an as by in same-store to $XX.X to XXXX to the of attributable quarter revenue first in compared total results, This in our leases. million quarter XXXX up quarter first net $XXX,XXX Total first health an $XXX,XXX our quarter XXXX. X.X% of XXXX increase in XXXX. be the first Regarding our and activity expense compared continue we compensation. increased in revenue $XX.X driven growth XXXX. attributable The stock the first large $X the components of from of the first $X.X cash quarter portfolio. in expenses in was of the the continues our the LTIP to QX increase by our well increased a increase increase or from to G&A the noncash Revenue from to impacted $XXX,XXX G&A the positively million for amortization rental of increased quarter were from acquisition XXXX care

we've The QX of previously varied variability. quarter the $XXX,XXX noted, our XXXX to the year the estimate the prior should expense on LTIP third XXXX. reflects year, level that based share for in our million average quarter low per We of changes impact LTIP noncash and that of last As $X.X expenses expenses price.

G&A expenses first first the cash XXXX. Our unchanged the of quarter relatively of in quarter to XXXX were compared

Depreciation continue for are quarter, of in proceeds $X.X positively rates average were interest million first Depreciation versus first XXXX. We line range Interest to in million $XXX,XXX expense XXXX the million. first expense and XXXX again to $XXX,XXX in correlated year acquisitions. between the in quarter rate annual finance expense to of quarter. activity. increase our The was $X.X our prior $X.X $X.X interest million our with run the of quarter, two representing quarter expect and the both higher in million was million were G&A an to higher XXXX first for $X.X was largest in compared the to expense items used expense to interest borrowings, of driven both quarter the $X which by of property acquisition

that and impact first capital deploying result the dilution negatively quarter by last in believe during short-term year first activities the funds our We raising impacted Our from fully fourth quarter. was late of as have of the $X.XX a share quarter operations were and will of of XXXX and proceeds compared respectively, $X.XX in these first FFO FFO. to positive the XXXX. quarter a long-term $X.XX, AFFO leveraging per and quarter on first for

to on sheet. Moving balance the

at $XXX As investment and million our of real significantly of was XXXX. gross increase from XXXX estate XXXX, million, year-end March up $XX of XX, the from in an $XXX million end

Looking at side of the our liability sheet. balance

our reduced million total discount. $XXX As from December XXXX, net XX, debt of unamortized March debt XXXX, to million we at $XXX XX, approximately of

drawn credit and of Our fixed-rate notes million March $XX XX on debt payable. $XXX balance includes facility our million

exercised million. our our capacity of we facility. our accordion, $XXX credit $XX million Regarding In $XXX April, borrowing to million increasing

gross quarter, our of our of generating proceeds public $X.XX million. equity of stock per common sold stock the we we Lastly, average we through earlier, our at share, us and to million of sources $X.XX by shares sold in $XX.X the And $XX ATM, also Jeff equity generating approximately of common continued and proceeds mentioned Most gross million demand demonstrate an at as of offering million. a X.X $X.X price to quarter. XXX,XXX for public share significantly, through the shares per available various raising during underwritten

to acquisition, price In of property investment addition these the valuing provide over our Alfonzo issued to our unit. portfolio will who partnership will landscape things Investment Leon, the XX,XXX $XX.XX overview I Chief and that, of it connection GMRE's issuance OP units operating OP an With with in issuances, an $XXX,XXX turn at Officer, per at

Alfonzo Leon

Bob. Thanks,

allocate have So to continued far, plan efficiently. in execute we capital and our XXXX, business

feet for another of Also, we approximately lease million which second we process letter This average Rehabilitation $X.X million our deals X.X% That Vegas, this in of has years Saint South contract intent or $XX.X XXX,XXX and rent, of In in after ownership. a or acquisition Health; Building of additional far that $XXX an connected Hospital; Surprise, from Las which X yield hospitals acquisition of increase feet Center, $XX feet purchase completed active $XXX pipeline square initial inpatient annual a square Cobalt of are and negotiations. which initial in a robust an by we deals Nevada Bend, facilities in X.X%, During X-property a April, a combined an approximately to Zachary, Oklahoma to totaling hospitals. part the Regional results Arizona Joseph's acquisition Arizona investments in weighted momentum, by Oklahoma at Louisiana, almost average and closed The $XX included transactions end, with to almost this X.X%. approximately expected $XX yield on square in and of connected acquisitions announced is square approximately cap X PSA totals under the pursuing. more in date. Gilbert, million includes of X.X% under is the XXX,XXX and closed approximately XX,XXX deployed located by potential City, in million we feet, at of Medical under than deals previously have pipeline we a Indiana, year, to XXX,XXX and rehabilitation Health. quarter, by generate Trinity is portfolio quarter's so Encompass weighted expected or million of have rate connected connected of than Kindred-Mercy approximately approximately contract is of venture; term average more shortly to first all joint year million approximately million generates LOI approximately

the to As this our convincingly shareholders. demonstrate year's team's due of will diligence closing investment not guarantees. and subject we to are benefit in believe are deals your we be and current closings prowess always, Nonetheless, on underwriting happy to identifying attractive pipeline and our opportunities standards in-process that, rigorous our that With and questions. take and prudence

Operator

Please Instructions] comes Montgomery first The from question Stevenson Rob Janney go [Operator ahead. Scott. from

Rob Stevenson

of assets asset rest? these terms specific in are days wise targeting, anything interesting that that find you guys more Alfonzo, you the to the guys relative class

Alfonzo Leon

No.

I nothing classes asset we're the all thus mean, jumps been we've So Nothing -- in we out. really evaluate particular. acquiring far. that

said market in comes is I've not of consistent. calls, to that previous As the flow product

it's heavy Sometimes, MOBs.

Sometimes, there's a wave of surgery centers.

of hospitals lot a just rehab there's available. Sometimes,

it So good primarily and on pricing. properties always we're and just good tenants, attractive fluctuates, focused

in by particular. it. see really how It's I deals. driven nothing quality It's So not just more

Rob Stevenson

big the purchased to fund? the in than other portfolio access you something given $XX and anything April, ATM need And that the may in to that's million chunky portfolio

Alfonzo Leon

with if matching mean, I $XXX mid-March. you completed from No. has we that We half right filled equity it equity capital now have proud with business, for XX-week that. we closing like the MOBs process our I'm $XXX think over business our rest period so well a increased all-hands-on-deck exceptionally that -- $X And portfolio about our up portfolio, by IRF closed the pipeline about have that as of called and effort. just million. raising $XXX to it, our immediately $XX The -- transaction we million to that was of million the raise and of a mid-December say total count for. executed. Post Nothing million million that We're was an -- the of share been usual. IRF business we've No. we share XX%. of have by in

next as do on to quarters. our bulk growing in of we'll We progress so, the expect capital of invest portfolio. And the we make this couple

up right So IRF deals, completed. just around -- really portfolio, and our really the now, transactions selling particular. we we've in but no there's the right after nothing large Right now, portfolio turned with pipeline that started like just nothing

Rob Stevenson

you to anything mean, at of seems slog? looking how come the capital or market have add capacity are the and Okay. stack preferred within to And more on back. then, capital stack I that Bob, that in terms ability

Bob Kiernan

that of Rob, and on have look and all look our cautious mean, at just the dry time. thoughtful now, There's on to to we we -- I being front. powder trying our we how terms careful we Sure. growth capital be a markets the are about in Right of next need lot to that be invest we're step. just that

Operator

the Stifel. line Chad question from from with the next comes phone The of Vanacore

Chad Vanacore

you could more So the maybe they us have there? assets provide contract this some details two with under some on lease quarter, terms

Alfonzo Leon

okay. Yes, Sure.

a Very that East real demographic two The portfolio. has what buying thus Michigan in It's accumulated it's this of a deal. been clinic pretty much good properties. -- provider VA It's pretty good this dialysis a in handful in it. one six the and a good tenants. but-- and Lansing, with a complementary. as Again, good property far. leases, the Good-looking straightforward it's of estate. pretty is seller real line The leases the very have we've Clinic composed has This contract, we is portfolio well. estate, it, a leases, under zone So and long-term are two VA Minneapolis dialysis

Chad Vanacore

cap All kind I'm right. of about And each? sorry on talking what were rates we

Alfonzo Leon

So a and one X.X% Michigan cap the then Lansing, X.X% a Minneapolis East cap. is one is

Chad Vanacore

idea about All weighted size a what And what overall right. thinking deals that in maybe at then you of is are looking type And overall Alfonzo, kind properties just, of toward? give little aggregate? us the pipeline, of

Alfonzo Leon

Sure.

our pipeline now, of is right MOBs. composed So

So than kind some those surgery other of right $XX now. we're to segment the but to to million at at it in we asset our centers, the million I of where pipeline those from some made selectively an deal What been some lot property rehabs, is $X of looking looking about $XX the per per have cap a very much we've surgical line North deals reviewing sense. average, an $X a buying million. cap our million size. in And but on far, we targeting average we're targeting other average the description have country, what closer what haven't we're us, targeting be pricing is hospitals. $XX $XX the to sort million market now, that to has of about of general of in MOBs. been right for And are far. been needs not hit MOBs thus Thus of average that's really bulk million X.X% rate of pipeline at. of of opportunities, types properties looking size across But we're

Chad Vanacore

thinking them? dipped are around the below cap Xs just somewhere kind still surgical you X% mentioned, And they that with low Okay. rates trading hospitals those or have of about

Alfonzo Leon

find some it's of well kind that So it have few And I've I a surprisingly. should depends. Xs that looked which been Xs, there's been There's trading actually at that but not, into the into trade probably surprising.

map. over So the it's all

you rate narrow. more I with get within -- are more -- spreads the that of space, MOB cap you specific get whereas think segments that's

vary Within day, at -- really the surgical quality a hospital, it lot the a you're the the of lot. the can end varies tenant because of

one the that's working with health -- owned the very just operator, is be independent. surgical or very, Sometimes, If it joint different that are entities facility. it's national that if is a operating than system can venture there a physician a

the -- map. looked far made I've nothing us. to recently, And thus so it's sense all over few that's a that's at but been

Chad Vanacore

Alright.

dispose, it you're you Now anything fit now in is that portfolio longer? maybe any looking there that doesn't to

Alfonzo Leon

No.

Chad Vanacore

Alright.

because down this revolver transaction. assume your equity presumably up to back you What and was Just time as pop for closed average going raise, your that it's had CNL paid one debt me. more you balance on a quarter you I your question for the

Bob Kiernan

the Chad, was Right. Yes, about $XX in the in the average so $XXX quarter fixed-rate facility debt million the credit and first million. at was

Chad Vanacore

for expect Alright. can say the you interest the Bob, be? expense you to And year remind do what you

Bob Kiernan

the Well, into our will is the looking quarter rate facility. low the mix. credit second -- because of balance quarter, from down $XXX the of million if a And rate But the look it XXXs, perspective, on will the looking kind acquisitions. of there second on average in at depend you timing go

impact revolver pay the hedged between un-hedged the the mix swaps the have credit other with with piece, than the side, -- floating under and the The $XXX in facility, piece. higher the down was the quarter with first disproportionately on rate hedged we that million interest

on in X.XX% up quarter credit average facility. credit up with pushed million going the with our rate that the X.XX% that go facility. around So And that second balance to toward to mix, I'd down on $XXX the to the but level expect

Operator

next Robert Babin W. question with comes The Baird from Drew & Co.

Drew Babin

disclosure the on the appreciate I acquisition.

was in-place it lease around think X.X% escalator those. I

I escalator So portfolio I it, remind you what overall could is the kind of apologies was if us. And hoping around missed cash currently?

Bob Kiernan

even X% X.X% On the the -- portfolio. average, overall on

Drew Babin

other you list? last upgrades, there see I just that of there of Bend you on or there that tenants you popping kind Okay. Hospital That's list rent strength kind kind out trending helpful. could quickly to their is wrong maybe of any And running be Kansas? gaining anything Is year, your down of maybe in tenant credit the a either on ability list at do the is on there hand, is And saw as looked tenants, is the anybody pay ways maybe Great if your a where at watch you guess, tenant way? list

Bob Kiernan

Yes.

have at it's with our focus The a and real of issues. on tenants any, process. our credit point, active don't diligence month-to-month We're basis, a this first we material part, I'd say,

issues, material they're tenant at have larger, nothing get this bound note. we of to but As we're point,

Drew Babin

that's you have pace improving positive that's Okay. nothing faster your might on kind There's expected? of side the And too. than

Alfonzo Leon

know. don't I No.

might their think that interesting is an Deerfield. I positive to from out of the That's our pipeline. tenant can They had significant into side, On pretty point be company. investment one anything

It's a they're We Deerfield folks, think also group very group. interesting of. very I that highly So growing, the with met

other to facility So there but -- nothing mind. -- -- that, really but comes expected. as is And performing that than

Operator

The next question Matt Boone from the Capital comes FBR Market. phone from with

Matt Boone

any my perspective currently answered. pursuing? environment perspective? what off, have that of But I pricing you a when at to questions deals from are the And how's all? guess, competitive Most impacting If there competition acquisitions looking are been you're or start seeing at currently,

Alfonzo Leon

This is rates stable been, moving. have way considered, all guess, the Alfonzo. The been market has things with say, I'd I

have I rates the stable has are responding to my from buyers, DST think months been looking long-term it's significantly for it's well. I fact ago XX to seems perspective last There been increased over up. continued and months. from hearing them Statutory XX of that buyers, more go leases. have an about that as Trust to the the That more update Delaware started and

where probably is it of and today their than Especially to terms I'd a cap causing funds, there's buyers, five In were of small are -- a the like are folks XX really say like well, continues anything, were hard I properties lot my some lot for for years or have ago of to with of a like amount to are more a private go helping private close the but happened buying and promising competitive predictable. coming with other a with number us sellers, anecdotally -- continues up it's a of funds, more. time the are mattered, to us. is -- funds these it compare especially that to that is inbound of that of that to set more when just of market if more actually we've is is hear processes, office. would struggling raising transaction ourselves People private are for suspect really they is the of is even increase. where working calls it's a more sense funds newer continues certainty be now, them lot to what me their of the which advantage The what's And foothold. basis up of money I of really us We're I hear a maybe stretch. they ago, when lot volume are it doing seems I right it and lot selective. rates because and promising. hear but there's equity look -- say having these with just execution. frustrated very it seems allows noise getting very a of thing come it hear they some an being funds more even and getting that like funds just seems funds and has and I some just targeted off-market mattering really medical asked we're higher opportunities be market back to of these I deals to kind I on that always to situations and that years invite-only

So it's cap say, a kind of stabilized. long-winded, rate but the has I'd market not, is perspective from

broader it X trading to more targeting that is have stuff under pockets gotten I But gotten Some instead have what years, trading We've access. of range, or of lot X rare. we And helped substantially market, deals longer-term especially that X -- us. of of one-off than it's has and and at rest I sort don't that seems less and a as harder X, target deals. look done opportunities that portfolios XX competitive, years X the are we've the hear lease -- the -- the in were like

I the the range. think kind of it's X.X higher-quality X is still the stuff, that under for just bulk of to market in And X.

benefiting we're really from sort buyer, preferred us of is stuff of record not-for-profit, pack. targeting, our physician we're track become -- and growth fact have which ahead market tremendously or continues credit and our credit, the of lower was before gets noninvestment-grade primarily where the that which mostly it a the For and really

for. kind that's you're So that's long-winded. of don't I looking know what if

Matt Boone

expected minimal that conversations guys there? that the It expire near-term but expectation gone looks your for this just your one expiration have more you schedule. lease or those to have Is lease are have you it question re-shine X I like then tenants will what to year. And maturities pertaining on

Alfonzo Leon

ahead of And expecting Yes. our right it. we're expectation. We're those to be renewed. thus now, That's far, getting

Operator

Ladies the Q&A and back I'll call. portion turn Mr. of remarks. the Busch his call for concludes gentlemen, today's closing this to

Jeff Busch

of many to We're at the of and the Thank much. seeing Company month. forward direction you upcoming looking conference very pleased with Nareit very next the you

Operator

That call. today's concludes

You may disconnect. now

Global Medical REIT (GMRE) 10 May 192019 Q1 Earnings call transcript