GMRE - Earnings call transcript Q2 2020 | Global Medical REIT Inc.

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Operator

Greetings! And welcome to Global Medical REIT’s, Second Quarter 2020 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Evelyn Infurna. ahead. go Please

Evelyn Infurna

Good Medical operator. and to welcome Thank second morning quarter Global REIT, earnings the you, everyone conference call.

or as XX, for result Securities in results company company’s the will XX, of the pandemic Furthermore, today including factors intends this Chief XX-Q this without materially contained statements December company’s Harbor quarter include obligation not from effect statement Alfonzo Harbor a Safe relating information, are to risks and on this and are for year On provisions. Reform described COVID-XX to forward-looking contained tenants Officer; call company its those the limitation forward-looking its of forward-looking in Please may those otherwise. including no our the purpose The be call considered events we Litigation and call. making the assumes may forward-looking Securities and these Busch, use facts the Act XXXX, Jeff historical the our a and beyond variety statements company by forward-looking, Chief Private Form differ whether note with that Bob affected by provisions the Kiernan, for are Safe ended on of any and Chief the complying XX-K Statements the Exchange Financial statements XXXX to of is statements statements the ended Commission covered Leon, businesses. and statements conference which actual The June XXXX by forward-looking and statements Officer Investment Officer. have Executive other control, made on for and filings. updated future publicly of in those be and new

company and the certain operations. such funds measures as funds call non-GAAP conference adjusted from to may operations refer financial this from on Additionally,

the most these numbers currently the You and financial and in its the filings to with of measures in comparable company’s can find earnings a GAAP Securities non-GAAP Commission. tabular release Exchange reconciliation

found website the Relations this be bear we REIT. like I any to Jeff Please may the company’s are Investor Busch, Global we information keep of to the given of if turn page difficulties. us remotely have www.globalmedicalreit.com. so Additional Medical circumstances, call on would the call technical with in mind Executive doing that Chief at Officer over

Jeff Busch

Evelyn. for joining thank our quarter you, Thank Good you call conference earnings second morning, today.

me doing time. Global our is pandemic and our facilities and introduced Kiernan, this Officer. our Joining operating. strong Alfonzo the a well Financial and had Leon, to the affected pandemic our Investment the operations second despite on Officer, are we staying that Bob tenants Chief healthy our all navigate as everyone has are that hope of call Medical and through today Chief We the those open of quarter by challenges unprecedented

For that represents collected the nature us of and will our in while healthcare our XX% rent second of perform occupied are gives the current provide deferral challenges properties the essential some facing tenants of saw the which are to our course there X% services environment, well. of confidence tenant XX% the tenants reduction rents, and continue portfolio our we significant now request, quarter, in rents we a

cap the transactions at in As we we X.X% of anticipated, have an year-to-date acquisition slowed, rate. completed million volume average XXX second quarter however weighted

given our of acquisition be to respect fluid ahead, activity the pandemic. the our continue we measured with Looking to nature

as acquisitions of our health We will we safety du-diligent prioritize both remainder process the our on-site the and year. for well pursue as teams as

the milestones. ended, Medical As important quarter Global achieved several

cost for times. the for all I transaction company’s on to effective special delivered the unprecedented will managing that during that value like committee would internalization completed long-term board’s thank the First, transaction significant, process and through stock-holders. the the we provide the the process. most work our its was internalization to I internalization believed

average this X.X%. a Second, asset. billion has and asset rate cap work $X of building portfolio in exceeds I our by of am now portfolio weighted our very teams’ proud

believe five an it the for and excellent the Over provides company’s continued that foundation past years growth.

borrowing over $XXX bank facility to half our discuss We the and results. our capacity XXXX. increased positions now our million this the us we capacity well heading that will ahead believe second Lastly, upsizing or million I year this by second of to expanding $XXX Bob, by borrowing turn to call our quarter into credit participants. increased

Bob Kiernan

XX, and second night quarter Reporting note rent. Thank to our the rents, and of Total via total million market of continued growth increased XX% reduced Last of or second rent Jeff. deferrals release ended the April X.X tenant second same and July, to amounts collected our our between have supplemental rent financial we well June XXXX would press million, increases. rent primarily quarter approximately collected acquisition and through This and $XX.X X% for portfolio for to and collections package contractual that quarter July deferral expect strategy, of XXXX. XX.X% our our December of number that rent our activity results the by been to quarter between of rent represents posting we deferral you, collect these after the reported closed, GMRE to as due as accretive revenue website investment store our our year-over-year earnings

of of including acquisition compared the components Depreciation to acquire finance of the for remained we expense for XXXX second same continue XX.X% $X.X costs the in to interest due expenses June and line items quarter the one the compared approximately were was the interest as to prior quarter. quarter, of recognized in quarter Lastly, to be XXXX, actively by higher Depreciation and quarter, million the average to XXX,XXX related related year properties. quarter reserves period quarter the is Included X.X% the for expense our manager. rent X driven in for months from second used to deferred compared second $X.X in our to in XXXX. $XXX,XXX the year this $XX internalization million $XXX,XXX up in approximately activity. expense period. million, year ended tenant. the period we XXX,XXX was Total period, relatively second in ago expenses million our $X.X primarily Depreciation million X largest LTIP to total continue to for in for to large Interest XX, expenses two $X.X of of XXXX increased as the total expense compensation ago the was flat three expense Included G&A each line acquisitions. expenses and borrowings quarter our XXXX, for million the approximately expense of second expenses year-over-year. of amortization rent,

Net in income to attributable of change the X.XX% Our management $XXX,XXX our compared was the average second of $XXX,XXX driven in XXXX prior by second and X.XX% decline borrowing borrowing income the was to LIBOR in the past largely the rent compared year. quarter the primarily quarterly X.XX% over related I was was quarter quarter costs net mentioned. common of in in due second for that XXXX to reserves quarter, costs reduction the quarter year-over-year XXXX. in to expenses in of The and internalization the to second the stockholders $XXX,XXX XXXX. and sequential The

quarter was quarter, unit for $X.XX up per to share XXXX, or the $X.XX FFO of XXXX the up year sharing second for year second as Our the was prior compared AFFO of unit, quarter as the prior $X.XX and compared $X.XX to per quarter.

on to the balance Moving sheet.

$XX was of $XXX million or As real year-end in million, an from XX, XXXX, increase estate June of nearly our XXXX. gross investment XX%

was million Turning second million at reflects of at side quarter, end of to the acquisition as and previously during Activity sheet, from of as as from equity up $XXX the our of repayments the issuances. of slightly quarter, using year-end quarter volume, the debt the pace liability discussed the XXXX. our first the proceeds well total $XXX end second million balance slower $XXX

Specifically, XX sales of program. through stock million common our per share our $XX.XX average we a ATM at price issued weighted of

we quarter finished expanding XX had these end, as this our total credit by updates events, facility detail facility will and on discuss credit availability quarter $XX in million. on is Regarding the significant liquidity, approximately we've credit our and of and some more cash including acquisitions with of our million. I cash shortly, our which internalization, total facility Since availability liquidity, million. our on closing considering including million After closing today, of XXX on our to XXX

of fixing the to would also our LIBOR the million now term component internalization. details We at $XX at term swapped the financial $XXX of for I like effectively loan facility term, the the to million remainder management the in discuss related the recent X.XXX% X.XX%. LIBOR new of debt

the own All of by performed the organizational are of Management we in of future fees. our future entity With continuity. structure keep now manager fees, Inter-American eliminates potential our manager million that ensuring the allowing The capital manager streamlines more previous the of and new perspective functions the by manager proceeds for management transaction, acquiring REIT cash. internalize also the on eliminates employees incentive to raise employees $XX.X including a fees any GMRE equity; quarterly in elimination the management

associated and $X.X forward, running quarterly the Going accretive financial more could years, we cash former meaningful by be will was that internalization $X.X quarter. management. per to million This million an the management grow of with at scale future to as offset additional G&A fee, be portfolio. the G&A incremental achieve economies in which projecting of we're million $X eliminating continue In we anticipate internalizing benefit potentially of

regulations and we state call the engagement well that including we’re for with our and us here progressing navigate investment our position of on the give you collections who review noted, turn the pandemic, because quarter are these with to we've activity. of the the achieved will believe shared now the second over investment of local call, today, Alfonzo tenants quarter rest we that changing including outlook the specific landscape to third uncertainties. clarity collection a the at that our to I will the first level, With on-going lack quarter, in and consistent year. rate the of As unable and uncertainties

Alfonzo Leon

the million completed cap Bob. for million cap you, have in of weighted acquisition an the approximately Centerville a on Maryland $XX.X Virginia for thus including for X MLB crossed We $XX.X reach additional portfolio of XXXX million rate three followed our was X.X%. to weighted second million, for strong billion year. the expansion for Dumfries, of at MercyOne X.X% $X we announced Health of reached a to in anchored the that conjunction in rate start with year a Hospital approximately overall the the four comprised acquisitions, us closed Since at We've and X.X% end $XX with an in we Last quarter, facility, and have of in acquisitions Fairfax, of milestone cap had the far million. $XX.X milestones other second $X additional quarter, properties in to Thank exciting Rosa, Virginia of multi-tenant Iowa mark. average million credit in addition average That at quarter. $XXX our first the this MedStar an by properties, Spectrum we by week, of a many

to the As year-over-year fewer second slowed all acquisition asset on were recent large pace second earlier, in adoption estate roughly COVID impact the investment of across estate sales real to [Indiscernible] mentioned a According the our Jeff COVID related to and portfolio our to all XX% restrictions. quarter, due mainly down the quarter transactions. Americas report, market in real the due in types

as Within the the [ph] first Revista XX% healthcare were half sector in by year. down year-over-year estate of volumes transaction the real reported

a I'd the been Now like several have over we in what with provide past. overview detailed more seeing to the you transaction months markets of

the volumes. forward volumes, consistent. averages back, to monthly pulled levels the active with uncertainty delays since by and in disruption the we picked volumes April buyers rates The operators private the deferment to with to real but and in kept generally more closings, with similarly the pre-COVID remained to are niche very which left transaction equity public have remained healthcare REITs. open a many Pricing moving rent. estate in many during public private large no little Although XX% to with has reported July, been May historical market XXXX. stepped flack XX% in to back than offerings, back our To for impacting transaction buyers in equity In no up resulting degree, market since operators market talking was to of offering and little is and mid-May, tracking

pricing or that our getting particular higher properties XX with XX basis are However, to lower financing properties in while quality deals, quality points points pricing higher. XX to difficulty having basis tighter, other XX

like more of deal seeing still the in continue about are deal healthy came to stabilizing. deals at May, and many consensus We are will that industry second sidelines be the were volumes back the June It April in in And seems market see that to the the a practices XXXX seems XXXX. pace. flow and half put optimism We and in on July.

So volumes they and to coming may see have to month from closing quarter. were to in quarter with lot deals from a delayed LLI a deals volumes May. would deals to from delays is than recovered, to July been the XXX although the that second suspected of coming we were closing, would of market. in expect higher quickly typically, slower days August third that been June market take without Since deals typically the XX have April and the

$XXX closing the end. have At year of our So for year would with with the year for the get months this of bring time, one goal usually to at the million. which total to of be September, of we two month everyone completed real deals, under their which market for million, by $XX is if the the test busiest contract transactions properties trying will

these As today. can joining assurance criteria we we properties Thank acquisitions. investment ultimately our made has no for us like open be will for will operators to these that you our now evaluating would against call policy been the today, carefully be We on close with questions. and

Operator

ahead. from B. Please comes Maher from from Riley. question Bryan go first Our Instructions] [Operator comes

Bryan Maher

on good congratulations guys. I morning the and and deal was big know for a that internalization. you that Great,

congrats. So

Jeff Busch

you. Thank

Bryan Maher

are XXXX there going relates it to stimulus is in the the from coming body to may recovering rent getting in at that be business upon, two just you to second that language of the items, a touch As or the I looking some not need that's But any touched tenants your briefly more prepared need you July, to wanted of level of where that upon to end an collections end comments. your forward? be half with probably

Jeff Busch

Jeff. Hi, facilities Brian. is services. The our It’s most answer non-discretionary that to essentially of are

do later. you got it do If you now, to it don't

of So back our was cancelled pandemic the one at the eye for pretty time, or out less of people predict is as and delay, there to and and for our only that was away. than places lack had right of will procedures care community, of emergency like deaths nice had a surgeries these community don't standard facilities But type We because close don't see to facilities that places, more of maybe problem. go tenants are been There of expect much were backlog again, We We business away. it immediately they situation. close will the expect past, attributed type can’t they how them health after come And the most a the but do that in general our others a a surgery amount lot open. don't when business. pretty much now procedures, a business the opened, business. of they the most down. closing and go away, they closed came closed was We government cataracts real of don't cause ever laser

procedures. business pandemic of the now their back facilities, their people have see with pretty in Those at moves and is seem these when close. the the they're don't delay we business again to protective and dipped feel They may abilities of comes So But like steady. it we gear, area. may with doing going the then out

Bryan Maher

they for you cap and But is lower same sellers higher they out for the cash? seeing if rate are assets the expectations selling as coming sellers? the the other know, is you of my this change Alfonzo, relates any you quality the because motivation reasons pre-COVID? to and quality assets. Or to then about in it table the for And I really And had maybe need talked sellers there. question know are Great.

Alfonzo Leon

it's probably It's is desire sensing thus been or probably cash suspect think different very not tell. heightened is I'm I sellers why what hearing what to higher before. a always for a I’ve what that far, to hard I from diversification. are mean, But I selling. for sharing hard there mean, desire I'm So, I tell and

Bryan Maher

all Thank Great. for All right. That's me. you.

Operator

from Next Please with Alex go Baird. question Kubicek ahead. comes

Alex Kubicek

morning, rate of sweep far rate little just cap front. Good a your think the everyone. cap the fair quality curious When say X% your a said, high of that you more cost thus is end to or comfortable range about coming that's to market a most the like Surprising lower capital say third by-product. on it you're gets just quarter. today, in at more investing target today, you to expensive, More little

Jeff Busch

of But cost at have an half, the Our we about a targets same still seven it's a down. gone has capital and definitely rate. and average

of a So that tend around different unusual seven. eight. MLBs buy And closed we That types, closed we just bunch are on high. sometimes to the on saw then that you facilities, was to projects we close more

are, spread, what going So, and spread. that intentionally what we it are, size shareholders. lower. It's just half. an us us the an to the as it is spread seven not the of to and accretive makes we because of It's what average And The average for extra hit deals more the at deals the the just everything averages extra trying about are. get, look a

Alex Kubicek

of noticed to other on in covenant facility, AFFO. new this And sense. your that have quarter going have, credit makes the of XX% I you there's to then question a like fourth dividend That be your the I looks at year, keep

do the a that want tight grow, thoughts you you in to of would from for of relatively anticipate XX% Or as what your some ratio of kind your curious think payout kind to build over are? kind just, in keeping XX% of volatility, So time range? perspective, just cushion sort you board's you on perspective and

Jeff Busch

We interest earnings goals. rate. it's now, spread have we gone And because lower right two the up, the has stock our the extra good extra, from make with the because

two goals; bring one, to have goal We strong debt to a leverage. is percentage down the very our lower

is we up we the to it go, AFFO. time, the could same other manage also because bring is The goal at as

time, and requirement ratio than We're coverage our just to X% above So XX% time. a the that in internalization be improves is just at a same to banks. our with our much position We and that, over the flat go at the was basis. same plan and fortunate rent more higher for year, deleverage cost cost basis our increases

just So it and tremendous where compared to is our getting better. were, and keeps spread we going

those therefore do and So time. we're two both same are the our to goals at going

Alex Kubicek

Make sense. Thanks for taking my questions.

Jeff Busch

you. Thank

Operator

next Siversky go comes question from ahead. Berenberg. with Connor Our Please

Connor Siversky

Good for much morning, on the me everybody. very having Thanks call.

the a Just offer bit hit strategy financing your to a maybe on high somewhat Could little group? is detail leverage, a strategy of EBITDA the the current over the still you down perhaps perspective on more rest provide or little compared if more grow bring to target? to environment on incrementally that years, in little certain leverage how could several you next the

Jeff Busch

Bob?

Bob Kiernan

Sure.

Connor. So yes,

as this, term So at anything. we're the and pipeline as much driven more by near looking much of acquisition kind the as in

our at of and hitting the the near and, all leverage, for our to to as our Jeff is so, but increasing to And same do time that, over targets that. goal time, down relative AFFO and gradually term, bring mentioned,

really relative think I acquisition terms again, that us of And priority. that first that pipeline into how need guides our to to into really the, that’s process. to, look we how So in the

know, don't now I three dealing really we're of right I per a a don't we're, term near what of look leverage se. target, think want more a year speak our pipeline. I at And to our is both to acquisition in kind so And with

Connor Siversky

timeframe? the Appreciate a paid specific reason may then Any the haven't thanks. initially in there color collections, for better Okay, what on that or be Is tenants to any all where bit COVID And it we impact yet? or current practices more the, markets in rhyme little than there. a little XX% categorize perhaps anticipating.

Jeff Busch

the mean, No, you Delta that as Connor. there of of I entered that we've think collections, largely deferrals is it's XX% into.

there's those from and the among say. real deferrals a So, varied I common wouldn't not I denominator deferrals. don't,

to that from we And nothing in just so you're difference again terms up so XX particular. primarily in the And, XXX. of there, bridging deferrals

Connor Siversky

Okay, me. appreciate for That's all the color.

Operator

over and Thank everybody. I turn you to would Well, and for stay family. thank are you. comments. I like closing safe to hope Jeff you. Thank floor you And your safe, the you

Operator

participation. your This concludes today's teleconference. Thank you for

Global Medical REIT (GMRE) 6 Aug 202020 Q2 Earnings call transcript