GMRE - Earnings call transcript Q1 2022 | Global Medical REIT Inc.

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Operator

Good day, and welcome to Global Medical REIT First Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator instructions] Please note, this event is being recorded. I'd now like to turn the conference over to Steve Swett with Investor Relations. Sir. ahead, go Please Mr. is line now your live. Swett,

Steve Swett

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

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

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

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

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

Jeff Busch

strengthening almost year With year. our for the we to million also by you quarter our revenue quarter, grew Thank quarter were $X.XX to We well a by strong increased portfolio earnings balance XXXX very off having our our positioned and we a compared thank first Steve. Good million, morning, to XX%, XXXX, XXXX in $X.X during of call. entering and our Coming per joining while last in of shareholders share. $XX the you, common respect sheet. which income attributable earnings was first net the or start strong total year to and to XX.X% are

Our quarter $X.XX was XX% which prior at our in FFO quarter, of share operating level leverage liquidity versus $X.XX first our enhanced impact and our despite strengthen unit per that to prior per reflecting the compared and unit, average the unchanged year's was on performance in AFFO the average the of year both quarter share were equity and sheet. XX% first due additional balance to consistent issuance

target we seeing, deals recently, million have for in of year asset our and we so far good environment discussed to in this another We our $XX source $XX we've on with are opportunities. that quarter the new under acquisitions. activity for continue acquisitions types of very contract. opportunities feel an closed full million the second the additional and million quarter pace acquisition we of but competitive, the effectively Based very As remains closed $XX first about

acquisition to the on addition, the quarter call our to makes like hard over rates the the to with way to contributions team results Alfonzo that, turn thank our pleased work our and first interest I going want we investment activity and discuss more to With cap performance. its in their to expect detail. I'd forward, rates for market. effects as rising In the of target rise am assets into

Alfonzo Leon

Jeff. you, Thank

properties. for very sourcing successfully efforts, and diligent we continue close But market the high-quality facilities competitive. source mentioned, to our remains Jeff As medical through

square a leasable During XX,XXX MOB square aggregate for purchase a $X.X at rate Center Gainesville, of of a X.X%. $X.X and the X.X%. cap million, Sarasota, of first foot rate included Rapids, an a of Rehabilitation XX,XXX square purchase purchase $X Greenwood, with million with a for million. Michigan, price with of a cap acquisition weighted for $X.X Grand in a foot Florida price X.X% for for a of square feet acquisitions XX,XXX X.X%, containing Center in square XX,XXX of cap of investment a a price cap quarter, These average in we foot closed foot XX,XXX a of with price rate Indiana X.X%, a $XX MOB Arthritis on cap million rate million rate of in Georgia four a purchase

the $XXX purchase of are or under million. far subject million so of in remain year to and with comfortable $XX.X for These and price period results. $XXX to for mentioned, Additionally, a purchase turn we for currently in a Bob? to we for X.X%, $XX.X million cap discuss an far million almost acquisitions, aggregate cap square-foot to a under with $X.X of financial customary conditions. Point, properties I'd properties to square million, diligence X%. million, X.X%. two Bob, closing currently cap have Rocky rate Fairbank, $XXX in in for We foot like as due center full office properties the With rate second of including contract of with price our of have average price an quarter, acquisitions a acquired Jeff a aggregate four a building at in surgery purchase an X,XXX call of so the over XXXX, XX,XXX over between medical of purchase $XX contract, our of closed now the close target Carolina another price Alaska million North portfolio rate

Bob Kiernan

weighted increase total of XX.X% to GMRE revenues you, continues X% total our portfolio coverage average driven portfolio times million, square our X.X over the with $XX.X first rent tenants leasable of $X.X occupancy, activity acquisition feet, contractual escalations. our primarily Alfonzo. quarter year. relationships with quarter, million performance. Thank from achieved the benefit included to end solid strong first average At the the lease rent years XX% and XXXX, in weighted year-over-year by of past In term, we five

to the current our of and $XX stock quarter to stock quarter our compensation to Our compensation total first million that to expense. expenses compared in year note The expenses and in interest $X.X the reduction in primarily million line offset due in and depreciation costs for due prior operating portfolio, $X.X XXXX quarter. by G&A higher first quarter and amortization in in the $XX.X our XXXX were The was due million were partially lower expenses, million, quarter decrease were for G&A costs cash G&A were prior and expectations. of $X.X expense. primarily $X.X increase larger G&A compared the a non-cash was our expenses quarter the million. our Within million, with year G&A to

quarter. expenses million continue we our costs, average estimated even G&A and size be million $X.X the ahead, forecasting increase to expect per of continue $X.X to component stock remainder Looking and of we're our a as during $X.X on XXXX, to million to note G&A $X.X total compensation million portfolio. between these between the that we basis the quarterly Of

a the operating the impact and the million quarter, these expenses in lesser year compared to to degree, for in leases. quarter of prior $X.X growth driven $X.X with our in expenses Our gross were portfolio the by the increase million first being

expenses quarter these net $X the the first amount XX% for to XXXX. $XX.X per of share the and the unchanged the vacancies the unit, first in to FFO XX% expense per first $X.X a our and on was our was properties these XXXX also the cash which was income up the $XXX,XXX quarter to that million, unchanged $X.X quarter and to $X.XX we in common relates million where to first was of quarter first majority XXXX AFFO quarter per of recovery in of AFFO XXXX. leases from Net million company The share Regarding expenses, basis. million comparable $X.XX $X.XX million of share, share or first remainder the XXXX up to account first our relates from for of leases. quarter. year in $X.XX relates first quarter compared is stockholders Reflecting FFO the of quarter, recognized revenue, issuances, to or prior to gross per a was attributable equity of impact the $XX compared

Jeff delivered year by mentioned, the growing leverage consistent of As portfolio the performance, our average from despite X quarter. points reduction prior percentage

Moving the sheet. balance on to

which XXXX, real through was to XX, estate investment billion, XX, from gross our $X.X million price common slightly ATM was up stock the our million issuances approximately earlier. XX.X%, $XX.XX of generated At $XXX As XXX,XXX year-end $X.X gross at ratio Relative a had shares per debt of of share. March proceeds nearly we average is XXXX. an from of first approximately of quarter year and equity, $XXX in in leverage up XXXX, million March gross of we

positioned the questions. and Overall, and average call to million. please our throughout the weighted we is we're our rate continue the borrowing year. forward Our X.XX% on look was the sharing open quarter execute prepared progress with interest current acquisition remarks. to revolver $XXX strategy and you our our to during capacity for under concludes believe overall unutilized This well Operator, business

Operator

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

Bryan Maher

Good morning.

Jeff Busch

Good morning.

Bryan Maher

questions. A couple of

market out the then and your Are don't or there this and seeing are as assets mind higher and morning opportunity, in less competitive again at uncertainty coming you, maybe about you noted for and shown opportunities terms You that interest you as being more performed? acceptable release to that higher the press global issues. rates the are

Jeff Busch

you I'll period you rates right We're transition are bit. cap Give now. in up probably going little -- a give where a just

buy. spread, cost we we others you $X.X did our an very have. can we're because of that rate being billion of with capital cap Historically, on as with well average of in careful our like we historically very, in higher see So, past, X.X% and relative how the to

well. we're up. It's did it So, a seeing We to market. very tough been starting loosen

did right our past, cap see, we're the to bit go a going. look that we're looking to little We some and have get total. starting high in a rates now and we let the it and see year’s given should maybe But deals do performance wait and we more well on

our a we have So, pipeline is good quite pipeline, strong.

what this expect do least we to do year. We at traditionally

the for and we're But keep higher issue. to but the an on some are are starting of these go cap not to waiting there there, somewhat rates cap going deals up. that's out rates So deals

Bryan Maher

you really of little going where for that, basis, utilizing share an if to acquisitions or done fund prepared acquisition-by-acquisition if down down complete should something, years, you to the general well the should hit with of of price to we you've expect to a around past should on slow market prices kind raise really So, less in it share market be to, capital, XX? couple the the ATM ends to over determining your acquisitions out trended is the XX, have ATM or be

Jeff Busch

No, It's we about could still for acquire. us. spread all

that We spread have a happened. good

not took bigger stock what small chunks rates. even So some with the that it's all that deal. work. you rates not a deals do bigger so go opportunity buying deep of communities could X. to in It's running everybody cap cap spread. given tell wants between we average our about going deals these those because see it of about do willing due buy and and the of better work world the even million ATM We're that all could an not I that is. $X -- But keep continue some the niche what the diligence with through It's we where competitive buy It's debt for the through going price to of in everybody, up, our And spread. an and to up to where we is capital with

extra spread and years used higher a so So and share have historically, share, like rates. as to of couple $XX with not be And to -- the did this at therefore, $XX we we a we interest -- could a ago. we get used doing

could we keep be we still going growing. forward a and make accretive So so could spread,

Bryan Maher

higher looking XXXX? multi-tenant some that that at would as you the And rest you Is hope about that's still just have might cap we I case lastly, that talked last capture more that me. all of about rate. lease quarter, to And think for think up lower the properties occupancy to

Jeff Busch

deal with to one. Alfonzo let I'll this

Alfonzo Leon

country we're Sure. at there's I there's across multi-tenant good and well. up the to as potential very the looking Yeah. absolutely properties. lease No, mean where ones opportunities good

definitely yes, multi-tenant. So at looking

Bryan Maher

Thank you.

Operator

comes go Our from KeyBanc next Austin question Markets. of Wurschmidt Capital ahead. Please

Austin Wurschmidt

thank Yeah. Good morning and you.

fewer any cap point deals any or involved And seen pushback of been sort bidders you're competition curious, as until discussions you've less expectations, in with underwriting, around at slow have So market movement the spread if sellers potentially Jeff, see rates, could has on I'm some you the in just on seller there the narrows? we that transactions. these this transaction

Jeff Busch

I'll you Alfonzo adjust. the -- give for quarters usually let It takes explain. two and I'll to one

You're their and in sort of mind getting mind, or get the got your to then sellers they reality later. see number,

XXs resistant you in our which When deals tell. pretty only that quality right we're By volume year, and really picking that any could we normally tell can own assets, drop the Alfonzo. over would out our how large I sales is very out with have we and a for too $XX they're bidding competitors. because our of Xs I So gone there. good out in XXs, is up out the pretty get there's contracts do territory, million in our their usually, to range. ahead, assets Xs volume, and sign there's up and tell some there, they that picked we XXs, of and plus, -- our and let prices, get we've Go My too, I'll very number. sellers that people a the had bidders now this explain That's good they'll but good float can't Alfonzo we time. in very to many beginning with volume. can less larger categories as and our

Alfonzo Leon

Yes, sure.

across the the assets. And of so, buyers, I spectrum. market uniform not that, types to I you've types mean, of entire mean, to is different got different add

lease cap soon. for in not larger cap of price sort maybe the point tenant while this interesting to moved up meaningful actually, there's really going that single example, for now. traded and And moved I'm large more traded cap to buildings. high with or change So tandem portfolios, for have a rates range anytime has have interest X net And it's example, X that in locks where rates with expecting That out cap not that's be a low difference rates for in and for, portfolios debt.

the cap the who more who about real lease rate be to portfolios. building. are emotionally look, and attached of in more will are market, that so, And think on physicians who going I sellers, versus there own investors movement in pragmatic selling Also, buying be market estate, office the to net their more their depending segment medical versus own

across but So a it's going or and to definitely of cap it's to seller, not beginning increase to be take is going assets. type rates it's the depend going uniform, two, the in the type market, but interest rate of the to cost the change on quarter

Austin Wurschmidt

be you're And those could the contract, to you feel No, at months closing the aren't under that's road, range. in yields color. have do like deals you really the risk helpful down seven in those that XX the at of average mid-X% with X you're targeting, to stepping or low that sort

Jeff Busch

the is build not to our and mean, the what I do trying So, portfolio, time to build necessarily we're FFO trying market. fundamentally,

trying of quality rates. mean that So fluctuations be I build in -- sense, -- to we're we're quality with to dollar cost our trying a not about interest we're in average assets portfolio investments and worried not a tenants.

Austin Wurschmidt

in at, Ohio, that And comfortable of your on the you last you Can expect what's one again, sale earlier that's the to that that for comments? pushed earliest with some detail just still pushing held provide additional back Okay. some around That's when price back? given trade just you of then are for saw closing. me. timing asset fair. the We And sort that's

Alfonzo Leon

really the we financing. to either have expectation. timing is But It's It's from Yes. We a this timing way our related again, point, just have buyer's on don't either it. our not for comfortable return any just sale that and moved. dependent the are us for don't earned from matters -- it's that. and a Hi. on a concerns a way. timing with at a concerns We owning any how that's math nice sale have issue perspective, where time think expectation perspective, third This that's I And quarter where or sale. -- we're an relative to is,

Austin Wurschmidt

the and time. appreciate the I update for thanks

Operator

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

Connor Siversky

there. the having Good Thanks morning, out for call. on me

Jeff Busch

morning. Good

Connor Siversky

in Jeff's maybe you comments shift Alfonzo, most severe Working and seeing where earlier, IRFs your whether at cap back to surgical it's question rates is this hospitals, of for a in are the terms the moment? target but assets, MOBs, or

Alfonzo Leon

Between me might cap might as to infrequently, in asset much. trade those But of that investors that an IRFs the used very not be range might traded we say, IRFs rate cap and would investor think I the that like to be dipped X here. types, I and three It much. now X class that buy asset and think given the I actually that's into the IRFs, change change making demand types range. the think not

space. MOBs the of I alluding think maybe going surgery you're Hard meaningful course. mid-X sort that range, up cap many rest it's depend cap was cap but quicker and hospitals to move high -- that in really type stayed up like cap to X, like Given about have creates X range. of range than lease centers, have Surgical of are and it's those the to started what sort of who on going on are, talking I don't also going to And but operator -- is, are But tell. the in X rates, as than surgical better who do hospitals high And MOBs the and hospitals, are for surgical also surgeons of to have the competitive. gotten MOBs, depends the the be factors, sub-X those before, think in location pretty trading the there's net change to cap range, a different it I

Connor Siversky

Understood. Okay.

this for slower So shifts still to then sense stability a here premium the if I'm move, I'm if looking safety. the be premium layer risk assets, these the accordingly. trying maybe investors reading that lease MOBs, the you’re would because risk get of of it of the maybe correctly, net to right, --

Jeff Busc

coverage competition maybe the I over million It's sort see be on -- the higher rates million earnings risk to of a comment not property. we of because you thing, -- level. million a $XX coverage a $X our It's are this. rent than also market. or arbitrage if often also much a tends It’s want buy their property, $X to ratios their We

So it's it's ability not price. move a move many XX it that which of and really It's Therefore, of to lower, tend plus volume we not up closing year. there's to drive the XX It's therefore, our amounts, the to the necessarily risk we million. large a in risk, and factor. is that the price the money, in capital deals needs to do hit $XXX funds

that's some deals, going we a the and the cost these of they're smaller of be that assets to and the So be will looking get, competition not there. lot seeing at private equity

the debt and A expect have at where will XX% move when competition, we'll them less that they on going rates look these were that's deals. debt. putting to lot So others of I up the they're did, given their

from to of that a paying going lot not more and plus thing money. they're the Now bank be type getting

entered that's money market longer we up. by an easy we easy think of I few us cheap But going take then going little to where up the of do. and our a where disappearing, we the a a and ago move So larger what that's there real and end move advantage when were that we the some traditional bread getting forward. our starts years the butter into lot did it's and to have stepping deals, up little definitely going X, money ourselves we because a bit, groups that was cheap to

Connor Siversky

Got it. Thanks That’s everyone. color. helpful

Operator

from go comes question next of Janney. Our Please ahead. Rob Stevenson

Jeff Busch

Rob. Hi

Rob Stevenson

X/XX. been Most other think it so if lot -- debt keep debt financing than How there Is of quarter a still answered. type in But I like Hi, choppy at $XXX the you Bob, near-term given are any so, disruption especially, be good the here over guys line, have when million the you to going questions was morning my line on or that any things have being side? of guys. the market? access on the capacity something to of about the need thinking in next or

Bob Kiernan

Yes.

redone the the got like the looking we've We facility. on the year and revolver loan and now having are alternatives on debt. great ago different we that We at a just feel term revolver capacity had

so capacity got today. XXX And we've of

us we've we out, is go to -- good we about and that. different at then look gives flexibility. that diversify and we to a we we market, to how look with our it -- look just flexibility. I options look at So have to pointed as thoughtful I as again for and ahead to opportunities continue it we -- do choppy today, assess we be ahead, as lot But approaches diversify. is think a got think -- But And flexibility you that of careful want maintain

Rob Stevenson

are then the you And are the thinking obviously, mean, almost that's would million September. and any or have XX-year X% a or stay But now Jeff, in mean, similar reason preferred your equity to keep -- where something I terms that $XX you Bob crazy that how about goes assuming in preferred of outstanding? debt things. if Okay. they redeemable why dramatically to X.X% things you is guys of there I relatively changes cost,

Jeff Busch

Bob?

Bob Kiernan

with opportunities. capital. approach some a overall the of cost reason to that At a no come we're I period mean, there's in respect anything away have our capital at to you having capital, that certainly really of scenario -- us you have see I it is or the and on whole, something up today from debt it's not advantage where sheet with pursue looking and gives sense as considering we're I'll reduces lower, to capital an being can preferred the as and the our -- permanent to to -- it. of redemption closer. balance September, that do equity cost start. And in common the of Yes, for yes And an we X.X%, over don't our get in But it be preferred. think opportunities have having evaluating the these on that But options us and great those don't yes, you would coming for

Rob Stevenson

Thanks guys. time. Okay. Appreciate the

Jeff Busch

you. Thank

Operator

[Operator Instructions] Our from ahead. Sanabria next Markets. go Juan Please question Capital comes BMO of

Valeria Zimina

this Hi, Valeria Juan. is for on

Just the question. of remind back leverage target topic? a quick Can us debt you your going to

Bob Kiernan

Sure.

keeping about we debt could our talked our assets -- above that. we've at general have of to -- leverage could XX% It that's could So, it and that, that we're below go below. range. think in it target But I But terms in the shift be XX%. flexible

Valeria Zimina

over last you. Thank that? significantly rent quarter. the estimated since coverage, long-term coverage Got down rent you. What what's And EBITDAre care acute hospitals, coverage? so shifting went drove to And

Bob Kiernan

Yeah.

is those So financial, that the is relative underlie keep total huge a a -- of to rent amounts. those that -- there's that it's the mind But overall couple of this in in from getting and X.X% of of again, just the timing matter the data financials overall. perspective, is an just our point, flow properties a not this

down That comfortable financials to healthy LTACH. still comparatively, a a at in But up there There really the it it's a with the is drive or wasn't I seasonal well. as mean, particular. rent coverage times that X.X element coverage. we're down. times coverage, rent X.X So anything for could while very is

Valeria Zimina

Right.

Jeff Busch

by and of bit were still that caused of hit bit that. less little beds a I COVID, during a we're little filled LTACH, was that period mean time. It

well facilities, We the it very it's some well. and going periods and strength. time. showed expect COVID facility, needed forward, because other up during to the you But performs do down type like business quite of they medical a medical But had

paid that All their that them closed down. had of on had rent total coal we when downturn

assets. So those comfortable quite we're with

Valeria Zimina

Okay.

your back specific right? kind So comments than rather that fundamentals. of it's property bit that shift little the a a larger Am I maybe operator reading in to earlier more

Jeff Busch

that having test, hospitals bit if at able if in of it, adjusting look want that to people type being mean can't much take as I are shortages, as you a more acute they come to the labor of Yeah. to business, stuff. not COVID

that they is not is business. to Business and much It's rehabs business. aging really type get to going all on adjust need the not to an that there a their business this, So just need a for of LTAC we're and that there something normal, in. had bit we population, under of we've we're bought fine. a is the We're back And diversification. paying. to acute historically, the good really buying a that though tenants doing small even of going and interested business. MOBs focus hospitals consistently are our multiple couple of And We ones added forward, in, very on mostly are our our piece they're been those with

Valeria Zimina

That’s so all Thank you me. Okay. makes sense. That for much.

Operator

to this This question-and-answer remarks. concludes our any over conference back session. now At time, closing I management would for like to turn the

Jeff Busch

much, week. and good time. Have appreciate so Well, you, a everybody, your thank

Operator

today's for now you conference The presentation. has concluded. Thank attending

You may now disconnect.

Global Medical REIT (GMRE) 5 May 222022 Q1 Earnings call transcript