GMRE - Earnings call transcript Q2 2021 | Global Medical REIT Inc.

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Operator

Greetings, and welcome to Global Medical REIT Second Quarter 2021 Earnings Call.

As a reminder, 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 is being recorded. I would now like to turn the conference over to your host, Steve Swett, Investor Relations. ahead. go Please

Steve Swett

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

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

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

the reconciliation tabular earnings measures these the Company's GAAP a release in numbers to the find SEC. financial in and most with currently comparable filings can non-GAAP You of

over the now Investor Chief to of to turn found be the Medical of call would Global Jeff? I Relations the like website Executive REIT. at Officer Additional www.globalmedicalreit.com. information page Jeff may on Company's Busch,

Jeff Busch

second for you Thank call. you, and our Steve. XXXX Good conference earnings thank joining quarter morning

Chief their stable Kiernan, Joining everybody care Chief returns high-quality building is enjoy growing our aligned health our Officer. Leon, me today summer. Financial facilities, generate are portfolio for will and Officer; hope of investors. Alfonzo to stay GMRE We strong our and that committed a with and operators systems medical continues healthy Investment that to Bob and

pleased flexibility, and second on further We In continue execute value positioning with strategy our financial plans investors. XXXX. to we and very and enhanced to performance quarter, our us continue against for sheet drive balance our the this in growth executing are our strengthened our

our and have XX% XXXX our reduced at June of the XX, year-end and leverage XXXX. equity Importantly, XXXX both XX% at issuance XX March to from

million an raised $XXX first equity million second the quarter, Specifically, ATM price Adding $XX.XX per share. program average $XX of quarter. we we in at in the of our to to the raised

addition now million. recast to our the total also unsecured activity, and credit The in our quarter. second a of capacity amended facility facility has In we equity is $XXX

debt our share. extended With grew in attributable second shareholders we and the maturity. quarter, common meaningfully grid per income $X.XX pricing to our to reduced to respect also We earnings net

weighted at $X.XX, a our of same increased and second XX% have per acquisitions Despite quarter our the grew compared share to-date and X.X% competition seeing markets, FFO XXXX. are share XX% from the unit up unit to last also and in complete rate $XXX remain $X.XX, per We million year. cap to target our of for quarter AFFO up we in And that disciplined acquisitions able to fact average XXXX. to the been we

the With we to this to through value to discuss rest provide our to far so call of look progress XXXX. turn steady made our the forward Alfonzo shareholders acquisition I'd activity. continuing have year, We over to and to like that,

Alfonzo Leon

remains their care. within the of Thanks, medical successfully market source Investors valuing the our attractive medical competition, we the benefits target due facilities properties rate long-term Despite are during increasing to of fundamentals facilities pandemic range. outperformance health competitive. and continue Jeff. for to The optimism in cap

Vision second seven lab March Blue portfolio, cap Michigan. the million. two-building Rapids This totaling were Rapids, in care states. single-tenant call, A largest a lease; portfolio weighted at of Fortis], weighted acquisition XXXX AX-rated adjacent we Northeast in in primary rate care our hospital to imaging add-on Vision and Tallahassee, [Memora with four leased Grand independent primary MSA, $XX.X quarter, is million clinic portfolio weighted million Charleston, billion of million the HCA last in MOBs, and earnings a lease a million $X Since clinic the have and groups which cancer rate XX After leased namely and of in $X XX X.X%. a average have Health factoring to million market. which to $X $XX $X.X XX-year North During we of Grand new with $XX a at we is Blue Diagnostics, cap of on acquisitions Sky a a Carolina, center XXXX years the was closed bed existing million located XXX which of was Illinois with acquisition, on $XXX in we Year-to-date, Florida, to our X.X%. a our a A an XX% acquisitions with average now suburb acquired Sky completed of acquired in acquired term. South average one

most active the us We in have averaged XX among year, ranks closings MOB sector. investors per the which

focus individual has acquiring most on benefited on portfolios. investors focus tremendously us other assets large as Our acquiring

source three can will our purchase continue they secure currently network we in that properties million leverage offer customary relationships and due contract. to These to assurance of no currently closing conditions, we and we As and grow, are To price and to end, to be properties deals. aggregate that an continue we diligence closed. will with under $XX.X have subject

like are call remainder the we to range turn guidance million. now million to for to year, to discuss reaffirming Bob be over in results. our ahead acquisitions our and expectation the Bob? financial the I'd of to our $XXX XXXX within $XXX of Looking

Bob Kiernan

Thank Alfonzo. built a that platform with stable strong continues you, reliable benefit tenant. the GMRE from relationships our we and and have from to

This X.X% metrics, quarter, rent average $XX.XX and occupancy base XX.X% strong results, quarter weighted $X.X total produced rent our With portfolio escalation. remainder feet of contractual to with square we ended million excited to the portfolio bring. of performance weighted average per and foot leasable are with the XXXX of square with key of see respect we

weighted rent account collections a $XX.X quarter end was basis. term XX% X.Xx quarter, second rental In remained escalations. Our million, at strong. tenants X.X to for that of average lease collected had an years. rent, we average cash the year-over-year including achieved of our XX% rent coverage in ratio revenues increase tenants over and acquisition the by we've and Overall, on driven two our we impact QX Rent activity a of

Including Company was went $X externally QX as The year of second incurred Our second fees increased increase year to over months. million opposed our last year. XX costs, increase total for million million G&A the which the noncash current XXXX. to expenses $XX.X in quarter this for past due the quarter quarter cost the being from managed $XXX,XXX comparison last from second $XX.X internally in completed of expenses This quarter due of $X.X of the the second second of million million difference to managed an due remaining compared the XXXX. to year-over-year. XXXX $X.X expense quarter stock in in to The quarter the year reduces management to $X.X to of during is our XXXX $XXX,XXX XXXX million compensation last this primarily increase in the is in acquisitions structure. for primarily to second is the in growth G&A

$X as to million income per in was our share quarterly to as $X.XX or $X.X net in the quarter in anticipate of second on of $X.XX $X.X we Net stockholders size to second second we year portfolio. the FFO the and per quarter a was expense quarter share second the million of share second the the common ahead, unit, of for of XXXX XX% basis $X.XX our per in unit, G&A up even $X.XX share million compared attributable per in unit for per quarter $X.XX the or was prior quarter million units the Looking in XXXX, and income AFFO between XX% of $X.XX from in XXXX. half second increase in XXXX. share up remain quarter.

Moving on to balance sheet. the

Proceeds generated was of common second investment $XXX quarter our XX, from through million proceeds the new $XXX gross equity we second in ATM share. we equity ratio approximately million which average per stock had of June or an XX% of raised of quarter, In X.X XXXX. our million year from of $XX.XX price $X.X issuances quarter significantly pay end debt, issuances, issuances XXXX, of first at of were general and net of million the impact balance and this to $XXX the these down consistent was and at on acquisitions, our revolver XXXX. which As XXXX, Year-to-date, real the XX% down up from issuances. the equity June gross purposes. fund XX%, corporate used Reflecting is million estate XX, billion, year-end we shares at leverage of have for was of from the $XX with

our re-staged facility this an maturity. to As increasing gains, borrowing Jeff our $XXX to amended converting earlier, facility and by pricing quarter million credit reducing $XXX across costs and mentioned extending we capacity million, unsecured

X.XX%, the the sharing our $XXX to questions. on and far approximately are seen the for rest This is and open into weighted interest forward remarks. borrowing of so progress overall Our acquisition look revolver the in you current based prepared positioned was to business the strategy call average during the we year. continue concludes well throughout million. unutilized and quarter with progress our Operator, capacity executing we've please our Overall, rate our XXXX, on

Operator

from [Operator Amanda your Instructions] is question. today proceed Sweitzer Our with first of Baird. question Please

Amanda Sweitzer

And unchanged I you at to on or pipeline. the you acquisition of point just under wanted us end investors give the guidance. see confidence that what guidance to a you need approaching least give of sense full you your year low end? Can given that include when your raise you're to start that contract acquisition to higher towards guidance greater

Alfonzo Leon

Sure.

our needs, and reaffirmed sequencing you deals calls pipeline $XXX potential company purposes. flows, to we helps million. prepared management timing deals on guidance as And out Every our we and closing process, of keep and -- of logistical pulse this capital our in remarks, have in entire deal week, to So discuss for deals. the million $XXX in new pointed a

product a of calibrate report knowledge So, market deals management down guidance as sit we these of quarter, the team have and cumulative and help every our the management calls our at time. the acquisition And also is earnings a prepare pace pricing. to we

It's relative that will across we small a possibility transactions. the move there's we've needle. that larger possible not predict will the deals size, offer our or good transactions value. Given not always that we may come larger find to whether these find Historically,

is the market to at that know So, the reasonable we a the time. of the what a inherently on in deal of unpredictable, is but we flow number -- deals guidance try based provide

Amanda Sweitzer

up That's at are following that this much in that, volume either can basis of compares to monthly helpful, Alfonzo. a seeing quantify how But increased or and all And year you pre-COVID competition the talked deal you levels? then you the earlier about I on kind market. guess how deal on

Alfonzo Leon

Sure.

average. to XX%, comes every volume three look terms of talked of come. dollar market, the clearly and just at number of tracking volatility values, deals we to a And to to think XX% it's lot a it, XX, of XX to I I XX my average, So would call to on busy. closer with everyone there's above the last give but month if more before see -- And we full you time, numbers, on across and months you sense, in market, have mean, deals running month. a a in deals XX I based It's month, very been -- it's that dollar of rough at, running terms is just

have everyone So Everyone a this lot transactions of really is year market. expecting pretty to very, very thin. stretched to It's is busy. come

So, it's dramatic.

Amanda Sweitzer

how rest comfortable I me, available That's equity year leverage between from and provide thinking update and are funding capital on you that you you're Can you're an debt the today. both level for the deals Yes. helpful. about final and And equity where leverage of then question to today? mean, taking

Jeff Busch

Sure.

of we and in -- very of of We thinking price back second situations. pipeline our at And able doing were year leverage. ahead, for we'll equity just So advantage to we've opportunistic an with at assess done raised. and have additional as looking and and and kind $XX equity. million look $XXX are $XX conditions the those that sell at we million attractive this this this what quarter in of million and consider look market so we'll But range comfortable taking comfortable that we're and between shares

we've a far, been end that comfortable range the but I us. is still range that so And range, lower of at think for

Operator

of question proceed your Rob next Stevenson Janney. is from Please The question. with

Rob Stevenson

have one You lease a that is very over sort when few do when XXXX two heavy XXXX? bit rollover increase When had to guys of pretty you that but tenants tenants? so that the that guys little back lease the in looking and at in of to lifting not those, out approaching the starts years, you little Is little doing start noticeably. expirations a past large that tenants look especially a in or X% that lot you're of knock And lot sort down XX%? of half those you start of and XXXX, are

Jeff Busch

to Rob, that So start X% respect XXXX, and I'll of tenants. is specific X% two with

process And to socializing the start the as through concentrated. X% we tenants of those look add So we're of are up. get on it, X% and XXXX part you going this are there we're are a I at up kind that that X% today. at point. towards And kind are number of level -- 'XX, level that into increase you things working significant mean, call percentages it's pretty individually highly that to of say that and the

never we the can really process and it that. think those it successful I it's to focused too way early be be team really is and on So starting against the staging that today

Rob Stevenson

And Okay. then...

Alfonzo Leon

of We with years do that Let we're top all all number XX And few We was front get conversations was me of last -- them for are year. them out. we one that. three one in tenants and our two years our a of just add up. them of advance, of tenants time, renewed even to in this -- the starting came

Rob Stevenson

these core? volume Alfonzo, better given asset Okay. are opportunities any seeing you types days in the certain your others, then pricing and And over the among

Alfonzo Leon

that any terms of the popped Not would kind supply it really necessarily, it's I as nothing not opened it's really to meeting supply market. -- is as -- can demand. coming -- no. There's up But the characterize more I -- result tell in of of that a mind

Rob Stevenson

Okay. dividend one And Jeff, then me. earlier last for common. the $X.XX year to you the on guys this bumped

have magnitude the XX% XX% the payout, are frequency? How you and in were You future thinking in you those dividend targeted and XX% of about about here increases quarter. second increases the Board a to the

Jeff Busch

we done policy Well, down traded the brought off they're for what were the it's Right I up AFFO a can't the what last was to really mean we we to is dividend now, Board, start give we've year. time I idea do thinking. leverage. and every so of hopefully going --

from leverage and expect XX%, in see our strategic now, of will a that larger. XX% cycle leverage of how low end we're I leverage lot that reduce So AFFO the our to trade-off our a at now was larger, our to But get there. we went as go and you right

target. I our mean, the do in will right be the So I that. -- ratio calculate that dividend ratio we coverage expect

Operator

proceed is with next your of question. from The Connor Berenberg. question Siversky Please

Connor Siversky

activity, change tenant down operations two was I to tenants Just last into in last quarters base kind of rolling MOB to the complexion the within of in due the start or noticed list? on this had the Or rent is Wondering in there a the coverage quarter. if new portfolio, so? coverage. in slightly the ticked acquisition

Jeff Busch

mean, Connor, there that anything particular that really wasn't -- drove in I change.

it comfortable I the back trend of when to as that or individually and through we're went call decrease kind very from think up number it we still whole, level And looked anything is. at look it significant QX, a at that it. wasn't kind as the of I from QX

Connor Siversky

a helps. apologies we And remarks those maybe dispose basis, I or there plan plan Are with was the tenants on properties prepared the think they transition them to those cash as current on go Is missed a then the That if mentioned And two two what's of Okay. then it rent? I tenants? along? in this.

Jeff Busch

Yes.

basis, on not And can are I those. give them payments asset much backing there's from is receive Florida yes, some smaller. on Kansas color up, The any Derby, and So Derby did are and tenants kind cash so Melbourne, a that both the quarter. of during two we tenants

to just I'll an -- to on as the and the give Melbourne focus current going I'm update So status. asset

in the that, XX have lease Chapter and in bankruptcy, the us. through of and As an mentioned as plan. a company have affirmed And they court-approved part we've updated proceedings is have that gone they XX is reorganization past, they Chapter with

XX, bankruptcy arise. alternative position the of our we've different and pursue And to work efforts initiated the that improve tenancy moving However, the the with PPP handling reorganization of by equity some aggressive violation just the opportunity tenant they and along provisions, as building to the hasn't for way sides more we very of under lease over lack debt and situation, ongoing month. for of from been debt. prospects were asset. the received Chapter positive it our -- encouraged default including feedback provisions and that in and pursuit tenant CMBS both of high-quality that some the of progress in the the complied finances we've how last We and elements securing and the capital But with had underlying administrative continues was their nonpayment. several should We our be capital

than of I where what like. us. progress front. long-term think very pursue retenanting, be with that begin more this optimistic right provisions to is to court, have our although mentioned, in that disappointed rework And the here of slowly to there in potential two remedies building. the market to to on visibility result the a results that we is comply the plan. situation can certainly really hoped, looks we be prospects of about actively force the begin that violation We or them And and bankruptcy I to moving next into we continue the aggressive more we're step now, going is positive We possibly And more we better we with pursue for So to were bankruptcy. could as -- that can

really that's next steps, our those -- in next So is August. date are that and later court

that something working it's So in complexities obviously it the bankruptcy. is up, and that we're coming something due has to

Operator

your The with from of Barry Oxford is next Please proceed question. question Colliers.

Barry Oxford

Great, Alfonzo.

So Have the forward different how right When know behavioral property you probably more you at look is looking demand? when more liking you kind are of cap moved? Or looking acquisition health, rates are you so? type given in market and that seen I that at that viewing always property you're at now, you're types. that now going

Alfonzo Leon

Sure.

-- like facilities to of things behavioral to resorts, more camps. within much from at wide. So centers, about to building operator, different hospital that, setting much it or the I office beginning, the not within narrower But since is it of is I behavioral compare -- heavy and on of variety that so type with look what's Everything and behavioral behavioral this institutional the is pretty surgery been variety a -- is the emphasis. of kind pretty -- when looking variety we've perspective my medical than

So that's obstacle. one

behind their and a The doing services they're kind and of operator payers of more of their nuance look what there's provide. they're also a of lot what type and types business like, they each reimbursements of look varies what like and businesses. other one is It type positioned, the how kind lot,

their thing me, For how business are financials model, is advantages, big competitive what their a what like. their resilient is look

a said a a challenge I so above too. with is behavioral pricing challenge Having rents that to reasonable. the at our good are us has meaningfully The But to want though, subset to that of the they from reasonable, the attractive that tend other available. estate smaller residual there is have is mean appraised been make that real what's our monetize sense pricing is opportunities it's assets value, becomes perspective, value, that

So is cap some to last rates there's of seven compressed. or gotten printed of sort and years, the the reliably couple thing been behavioral have in mind They the cap for in that across into now keep other comps board were and of just eight have fixes. -- cap north

of types So differentiating that's shifted maybe. simplistic and think market of the approach applying a between sort is don't doing as types the businesses. I job well. They're of a operators of good

are we geriatric are there like a But it attractive. that ton There that that lot have operators of know are through a dig or we a deals -- makes you like looking. and some good few. find behavioral to And some as that So sense. too. pediatric challenging, are behavioral But get segments it's make to well we that very

Barry Oxford

ahead Got kind the No, the a it. states back the color perfect. of table? kind in out really COVID, to on would that's that. electric back A I don't surgeries? I Delta would you Barry, think kind postponing see cycle appreciate Jeff, with Or Jeff, look, some for and of there. going us of you question on say, we're in the coming

Jeff Busch

on it, they issues. I a -- time there got other want they're mean it there but wasn't wasn't of some what postponed they the is doing. lot of I vaccination, realistically, kind mean, table They the at better

themselves not procedures possible got a lot. a patients protect and really it's short it could to excellent So and be good those, practices The how in major. medical but procedures slump the worked

out time we the even I they that during So some can there still our impact. Delta postponed of the have collected rent. XX% mean,

of that bit are tenants a could good realistically. but shape, there be Our in little

Operator

Bryan question question. proceed Please with Riley your of B. is next Securities. The Maher from

Bryan Maher

questions can and learned purely or on about it how what's And for down out things the that lot of activity move it there's an every seller. a looking early to Wall But Street asset talk a on, is Is about side? lot assets Most and the you answered. Is we property. you're of been you seeing sellers? on deal developers a to Jeff, have pricing? my buyer, next of Alfonzo, on asked for is talked just sell seller What the sale. Alfonzo going Maybe motivating one the

Alfonzo Leon

things. combination a it's attractive. think mean, is yes, I I of pricing

they up I conversation. look way think a a have lot skeptical it come concerns. you some hear as one -- when And that's in to less at also expected, is activity there always rationale. in private not, ones private I group the the drives has equity the a buy by equity are The group. tax real brought is that market. are ahead -- I estate little they real selling I'm mean than investors, the than opcos. it like they would a more M&A but of monetizations acquired to they selling And after and when or or of estate, often own get physician founders that conjunction it's the with the the

it's reasons. right founder I there's the got you've a XX cycle to that's There's just a natural planning. a life the X, for just years, cycle, state of life owned variety a building time feels where of There's end think always it sell.

too. growing that's the estate market. mean there's I investors bigger a of estate. been You has matured, amount real come just of as that industry mentioned mean that's own a investors, real to just I more inventory

not and any so combination a thing. -- it's of things, it's one So

Operator

remarks. are would like back to at additional for There this turn closing to questions the Busch time. no I Jeff call

Jeff Busch

thank safe. hit, over cap this thank We mention market went that much easy. you just wasn't everybody. Bye. and I billion $X which one very And want in to this stay meeting, milestone attending for to like quarter. I'd we And

Operator

This today's concludes conference.

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

Global Medical REIT (GMRE) 4 Aug 212021 Q2 Earnings call transcript