GMRE - Earnings call transcript Q2 2022 | Global Medical REIT Inc.

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Operator

Greetings, and welcome to the Global Medical REIT Second Quarter 2022 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Swett, Investor Relations. Thank you, Mr. Swett.

begin. may You

Stephen Swett

morning, Second Good welcome Global to Thank XXXX everyone, Earnings REIT's Quarter Conference Medical you. and Call.

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

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

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

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

Jeffery Busch

of second the results morning, further than to quarter joining and growing quarter we to excellent a portfolio while thank year $XX XXXX to million. income we last earnings revenue earnings, to quarter With second $X.XX And you compared year, shareholders the by Steve. or After our total attributable the in in strong XX.X% of our was start acquisitions second for $XX.X more call. increased million common quarter. produce the per to $X.X million you, Good respect with our Thank to share. continued net our

to and was up Our per FFO were was unit, of $X.XX year of quarter, our reflecting continued share the which and $X.XX share the compared $X.XX our AFFO unit, prior both per and portfolio. growth

competitive, X due closed recently, effectively quarter, deals the As with quarter an our we of target acquisitions source environment remains in to contract very we've acquisitions and another far closed $XX the for $XX have and discussed under additional X million new for million so the second for but assets opportunities. million $XX acquisition continue diligence. in in We third

our we year activity selective to very pace feel opportunities accommodate order continue this ability to growth, this about acquisitions the our X, on weighted accretively. average X.X%. a $XXX In with be market In acquisitions seeing, that of to $XX has million cap facility strong rate terminal. on August expanded weighted cap third quarter we rising see starting the we addition, rates our with the properties million the and contract of effect so an estimated acquisition to the are on we and we're as and interest is on the under rate average in closed X.X% that delayed credit type grow of far in to full risen draw Based our

for additional provide our plan we agreements, entered later. We I want our our and With investment that, more Bob our in swap contributions detail. activity for and the which interest as stability in work I'd performance. discuss to will like to to quarter team our cost their debt with am call pleased on second hard thank to over into the color the Alfonzo activities provides results to also future. turn

Alfonzo Leon

Jeff. you, Thank

As Jeff for properties. competitive, facility successfully medical remains diligent our mentioned, very the sourcing to acquire efforts, we high-quality but and underwriting market through continue

rate we of leasable XXX,XXX During just an $XX.X completed weighted investment million average the over and second containing average at an XX% aggregate feet occupancy. for cap quarter, X of square X.X% a acquisitions

As million medical at a XXX-bed North X.X% with medical in a XX,XXX-square-foot office a price X a XX,XXX XX% building This occupancy; center included: properties to of leased have Rocky with property the purchase XX,XXX-square-foot building Medical of $X.X million acquisitions cap lease-up Carolina campus. a X.X% of at a by office and is Alaska, Fairfax cap feet rate These with Fairfax, I rate will cap for XX,XXX-square-foot the $XX price of for XX% X.X% portfolio Point, rate purchase a discuss, of Novant within Fairbanks, price anchored Health potential. surgery XX% X square Inova occupancy; of of million cumulative the Virginia $XX.X for purchase a a occupancy. of district in at

lobby facade. As and of the we to part acquisition, building budgeted the renovate

X.X% XXX% rate aggregate occupancy. the occupancy an X.X% Lexington, XX% million center lease $X.X surgery a area, for for systems a Missouri An X-property in the We and up at cap price vacancy Kentucky price to a at with currently a center portfolio health million, XX,XXX-square-foot containing of Summit, and XX,XXX-square-foot XX% Lease $XX.X are a groups. prominent square in purchase physician in foot discussion to purchase approximately of of XX,XXX cap of of rate with

for XXX,XXX-square-foot medical a purchase in third in X Geneva, $XX.X aggregate with estimated have our million, medical a These an We between this our Lake terminated $XX.X the proceeds of now $X.X Germantown, to optics million a is the office our to purchaser million, XXX% for potential the in million. Tennessee, XX% occupancy. our second quarter, full to this closed we building tenant, contract Ohio, weighted cap price to acquired of gross at building in tenant's the rate purchase Ohio far building including: due occupancy and million XX,XXX-square-foot due Bob? in of a subject target million over the very results. strategic call properties resulting regarding Belpre, contract in as dispositions, remain XXXX, Additionally, campus. an comfortable so million, average financial quarter, price property plans in Toledo, in receiving of We mentioned, at I'd estimated Subsequent medical this regards the $XX.X quarter acquisitions turn properties building are X.X% sale for medical cap With purchase acquisitions in and the portfolio of of in market $XXX of and have at to million we sold conditions. building Jeff far discuss with the like rate with and cap July, price to an $XXX a end, Bob Wisconsin, in over of currently office $XX.X of for purchase on for a close or of properties gain and closing customary million to financing X.X%. rate X currently $XXX so period and to price we under conditions. office upbeat the diligence under an of With remain aggregate a year. confident to $X.X of contract X.X%

Robert Kiernan

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

million quarter costs were in depreciation compensation both expectations. year to current prior million the larger G&A the year and the were was our due with second million, our amortization quarter compared for to quarter operating due expenses $XX.X expenses and increase total that $X XXXX of $X.X were our Within The were primarily our million with second stock portfolio. XXXX higher to G&A note the prior the in and costs quarter for and $XX.X line quarter of cash expenses $X.X in Our G&A quarter. expenses, our million.

the between Looking G&A a of continue our to continue remainder ahead, expenses portfolio. million size basis $X.X the $X.X our to we during XXXX we increase to on expect million of even as quarterly be and

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

Regarding million the $X.X to accounted gross of basis. company the related to relates quarter properties Approximately to XXXX on amount revenue for and where cash a $X.X remainder expenses a second the relates recognized net leases expense million of expenses, vacancies recovery leases. half comparable these and

$X.X this in quarter X.XX% up in X.XX%, Our year. second of first weighted quarter reflects slightly of expense borrowing only of million cost the the a from interest average

second share XX% and second $XX.X quarter X.X%. million, rates, per we're On to $X.X average XXXX, of based to compared in be increase to and quarter compared the unit, second increases XXXX. and from our or $X.XX weighted the basis, quarter the unit share million Looking AFFO X.X% to $X.XX and second in or the $X.XX to of XXXX. to year quarter, per share was $X.XX the $X.XX the to quarter cost for compared stockholders FFO our $X.XX the share to of Net income up share and per and common share attributable the in in unit quarter up XXXX million up per XX% to FFO quarter a second $XX.X AFFO of quarter. to was ahead between per per was third $X.X on unit recent prior second forecasting borrowing per our was share was and second million in

to the on Moving balance sheet.

proceeds the As $X.X $X.X of price ATM up million $XX.XX gross $XXX year from XXXX, of share. is through of in issuances quarter, million gross billion, to we equity, approximately investment per was real at a which Relative earlier. XX, generated average an estate June our second in

Tuesday, mature January the on leverage million June our SOFR-based $XXX Monday, At XX, support. loan conversion under the in all of starting commenced X-month approximately the spread million loan In that to XX delayed we XXXX, adjustment XXXX connection our term had we term XXXX As current thank XXXX swaps January the enhances new amendment, credit and SOFR Jeff lastly, million new of the associated XXXX, add on our X through continued extend facility our amendment mentioned, maturity X, $XXX maturity options; facility interest group that be rate new of component X.XX%. on and a in including forward revolver draw basis loans, XXXX, to like August gross our component $XXX our with entered liquidity to and At with the that's company-controlled this This of loan October a component will on financial rate convert we debt. amended to extension to and loans. will fix with LIBOR-based for interest and term of flexibility, with at point X.XX%. loans SOFR-based February bank their into I'd the

capacity XX.X%, Our current $XXX new rate unutilized is $XXX a interest million, leverage and loan. and term The facility million credit consisting our weighted the $XXX was borrowing of X.XX%. was million revolver average under delayed capacity draw of ratio

call the our remarks. and debt, look overall open are strategy new with we This pro concludes to on now forma Additionally, the to well continue our is of acquisition remaining prepared of progress Operator, assuming you strong, the X.X questions. for Overall, term execute and years. to positioned business weighted loan our please our sharing term we average balance is forward through the the believe year.

Operator

Instructions]. [Operator

comes from Wurschmidt KeyBanc. question first of the with Our line Austin

Austin Wurschmidt

going team confident ability towards and is fairly of upper the ratio seem your migrate your goals presumably that to you the for the threshold hit target. of year, Jeff, to the in sort but acquisition that leverage

on willing debt to of just the I'm push how fund leverage guess you I up future end range. are and So primarily acquisitions that high curious

Jeffery Busch

Bob?

Robert Kiernan

Yes. I'll start Austin. this,

we've XX% that opportunistic of patient in the to still we just and target now, we're leverage So have comfortable being with a market that above But target can place little been of in being about a we're that we're kind the moving XX%. acquisitions. the or and for and evaluating We our options target last of conditions above moving in bit our forward. temporarily run largely months higher. type for And this leverage same few market

to to opportunities good sell to present changes have ability side things as extent the in We assets make and the on portfolio the the themselves. take really we acquisition see just opportunities really

this be So term, we're points. of at in higher. environment to type But comfortable little kind a being of longer looking certainly, we're leverage bit lower an

Austin Wurschmidt

sort you manage assets the to are marketing the match-fund, any any potential of less remain guys currently And able I favorable? of capital Understood. -- today be activities guess, sort markets environment to future if

Jeffery Busch

interested We in assets an we I buy interesting now, been part. to a groups we assets. assets. have have always It's Yes. some and always wanting groups our of our lot are of guess that have

that we favorable want the future, groups were assets, other if in as buy to some as it. there's we're may And not

we We sold look last but that. reason. do we at quarter, So look at that do X partly that,

Austin Wurschmidt

Belpre, was kind currently asset of you Are remarketing Ohio the that terminated?

Jeffery Busch

actually is a We our sort That's did it's cap have now. that it on them. tremendous center, own. that back no. we great as rate things expect cancer easier is for want The return that I -- to come very right of asset. part only rate their favor to because with and at that the of them. more love them it's No, they We cap to point do strategic to a them personally for and building and some is

to come it them a than to we profit did But as them really, a as favor expect do more I So back.

Operator

Our next of from Berenberg. the Connor question Siversky comes line with

Connor Siversky

the debt portion stack, I'm curious swaps. loan similar rate asked, what Just these question on of applies correct? only in Austin line the a just so interest That term the to

Robert Kiernan

Connor. Yes,

So today. June about capacity kind at XX, at our with -- we you if where talked think about of we were

would a have than pro fixed the If about the you and look a basis, our kind on bit little would forma of remainder of at be on more revolver floating. and would XX% we debt be

Connor Siversky

portion so Okay. term just can these of right? this And use we're on you draw delayed acquisitions, future clear, fixed to finance the acquisitions, loan

Robert Kiernan

be, point to swaps, to January of its on the plan then starting Right, would February debt term course. end that at those loan on we'll again, the quarter. be And we'll element the in third draw We of X, or maturity with from of some our fixed through forward there XXXX.

Connor Siversky

of it's to million. I anything And mean, in think $XXX sitting you consideration seek then in at Okay. that terms I And the here about do the revolver rate of then balance, balance down? I forward bring there curve, mean, to is

Robert Kiernan

loan Well, I the mean, down. so it term will bring

-- that's primary loan straight will that bring away. down that the the so term thing. And So

fixed bit a have current from more XX% is other at the you currently. lever more than debt raising But we'll perspective, So that again, a little equity. at be the --

Connor Siversky

just Okay, okay. need together. those All I right. pieces put to

Operator

Instructions]. [Operator

the from question line of comes next with Hecht Our JMP Securities. Aaron

Aaron Hecht

there any there term restricted you get the -- towards thresholds? are as draw covenants certain Is that, that loan are on leverage related new questions. Piggybacking delayed with

Robert Kiernan

Aaron. No,

delayed any right an was our changes facility existing There loan to done as covenant term this. credit credit in changes draw to no with the significant to this. -- There connection no were with in just facility. connection are spreads amendment our to credit changes really the So

of an add-on credit facility. it just, again, was and expansion just the So an really

Aaron Hecht

move to going a full to sounds the it you're like over And loan. term balance

million. think it I $XXX was

will off it how take term work? creates and and that on revolver capacity that just facilities. You Is the more facility, the that the the loan on put credit that

Robert Kiernan

Exactly.

Aaron Hecht

that? was that got In rate what you cap on sold the in MOB you terms guys of the Tennessee,

Robert Kiernan

build. a looking the looking I primarily, And to not Aaron, from lease Germantown -- was for tenant driven to that I'll were and -- a land opportunities the other facility this in this purchased actively but XXXX, is that was actually facility. sale was was in expiring here. tenant facility and very had they The start mean, at their to far

when them for -- a us this so the quarter, second there was us. in And an during got discussions we for with return the good opportunity to sell late into at

the the -- from issue, it was -- situation a on was just was cap solid It primary potential on tenant but strategy sale. and the case. from sales sale, was a was more from strategy there perspective, the win-win a and this think for was property. I a it to a a really, it a vacancy was as cap us for So cap rate in pretty And type X really a rate, us it that the

Aaron Hecht

And then last the one, asset... there's

Alfonzo Leon

going Xs. was going high that. about the to just cap rate the in, was add that in Sorry I

Aaron Hecht

you some that had one. was leasing through asset the Last activity. just and guys There purchased upside

rate of look you you expecting types cap rate for the yield the going of you of more going to that as enhancement occupy deals space? kind think -- are What was I these X.X%. forward? And are

Jeffery Busch

We that. look upside. type seem deals these when more there. to X% of we answer I'll be Yes, buy to out And about value get

-- was again Now deal This an not we're X.X%. I'm we them earlier doing did. at not that

we X were. strategy doing ability the low assets, really to we're quality by a be we need to cap those still something to a needed Xs bring as say, be, there's the able in moving we those and goes, at to assets and be of improvements looking are we're X.X% that just and of markets, future marketing moving some need possibly and we're for, Fairfax the not groups to is super finding new finding one opposed really are a our sometimes, just up So we properties top want -- in do but we the as we a MOB-focused where don't the the others hospital buy quality look stronger properties let's that strategy, some to to strategy And of management type are -- right, one eight really -- like that One, again. asset they got we're situation. and in as properties, up vacancy. that It above. quality a But future buy an it rates -- But the of

have So don't figuring good therefore, they on books. even quality though vacancy rate, a and their temporarily. a put product we'll want We're to it's it's at it

a occupancy have pretty We good rate.

we with then up, so back take get and to where could it some we'll back vacancy want occupancy. And we up to if we fill be

Operator

Baird. line the with from comes question next of Dave Rodgers Our

Unidentified Analyst

is This Rodgers. Have place in briefly recently in know seen in leasing with you about space Daniel of the the here you those talked Hogan vacant with and leasing markets acquired assets? Dave that changes I velocity any you acquired. the those

Jeffery Busch

Absolutely. we better like happening good got, rates. is a around we property than Yes. business type The a start owner lot relationship will of our pay whole. a assets But in given come there's what's long certain rates and was because things activity expected. the on that It's in with of interesting the and market. expect He been seeing everything wasn't on going I brokers also these. wouldn't given it personally very time, I've we're this getting else, very better in inflation them

but So for do this point, It's the a came we're great and market. the we say the because People of extra occupancy put these time about opportunity us. basically really We of up. doing it's lot worth in to won't get you there. to that we're lot have in, really We complained a did given a market, lobby. starting

Unidentified Analyst

assets the Great. is for you're of opportunities? acquiring or viable pursuing or still there types the looking change then just in And any any follow-up, just

Jeffery Busch

assets the But add, we're there into look X a similar get the returns value or quality to mid-Xs have eight. we've we and that to now able Xs we out we the We quality what been element buy better in where with possibly high MOBs assets, buying main or and risk-adjusted part. is for buy then primarily

comfortable numbers right always very So the be we our same now. being capital cost strategy, we just to feel of to be about moved accretive -- accretive we've up very reflect and to wanted

Operator

a is question line next the Connor Our question Siversky. follow-up from of

Connor Siversky

asset degree the of cap are for I'm IRFs? of X segments. rate whether Page it's presentation, movement a different portfolio or the class, curious, seeing at looking considering MOBs just you different I'm particular any like,

Jeffery Busch

Alfonzo?

Alfonzo Leon

Yes.

between there hasn't IRFs, has be would market on specifically So price say a expect than I much just been been far. more MOBs in I there that's thus would been really -- to there's mean, there I but the been discoveries on too and similar change, MOB tested IRFs.

in been for any at rehab really the a waves think market May where And will market to potentially there isn't of hospitals periods even there don't lot really frequently, come you hospitals rehab it's only since started very it, they and If about to come that months. be look and changing. usually

been existing by So And going development couple there's different I've but thus far. up-and-running a -- to that on the be more not development hospitals seen, which it's on rehab driven factors. side, pricing is

say. right So as it's to and now, of yet as of hard

Connor Siversky

Okay. something on And some this look lock maybe equation? would opportunities then mentioned. were if I of earlier, GMRE the the that but development opportunities missed in Are portion apologies and value-add these fund yields to the

Jeffery Busch

profile. That's that's a keeping low-risk yield looking and for We're possible. higher possible,

activity very so I things opposed want about on maybe away And But a lot we're I'm being good to But we're look adds value confident interesting want -- do work came sure value you right we have are to the The a difficulty. like in. cautious therefore, they and mean, to and as pretty this also make few, Fairfax. do I that. do feeling The to add. us. at with very

Connor Siversky

just what estimates right Got $XX a wondering is around it, promise, understood. considering And last could maybe I NAV mean, thought just Assuming a share noncore the not sell share. under price bring that consideration? I off buyback right consensus for now, you assets it me, there. leverage up. fund the is and is to But Where X

Jeffery Busch

against goes need really grow. strategy. We not it to because our It's totally

historically went we when went $X we the to in over billion, size for and can reasons: then we different bigger it we sort get an get saw when we we saw we -- So advantage compressors $X of need get, X to we under one, especially other are, when billion. it multiple what grow multiples

hold at can't hold some could us Some and that level. us

was back over So billion. we keep need goal get $X need We first to growing. to

not The the market other terribly goal away. we're bonding far is to and get into

So can to of will million a do nice. our we that if be $XXX continue growth year,

going like a really So look doesn't do it to we're buyback.

Operator

question from another is Our follow-up next line Wurschmidt. the question Austin of

Austin Wurschmidt

if to could the as X speak I you'd it leasing to Westland specifically of this backlog think, the year about assets, you sort curious and just early potentially talked of those where relates the or re-leasing more Melbourne, same-store later was I Derby, and next.

Robert Kiernan

Yes, sure. Sure, Austin.

So range. through Derby that, that's won't with it the a with working respect just as we've There's But there's annual to and it's as the Melbourne, up progress to just getting much to that. idea there's more next work it with report a XXXX. year -- and we've else. right is through got really of respect get a good had with tenant about there's of on new year. really, as been would the a With with we're occupancy courts the still building we're building become to on. that to million it's working tenant into there. now. it's and there, the with XX% visibility again, XX,XXX-square-foot like again, progresses $XXX,XXX XX%, court $X XX% And rent come been respect system the early at square that. those that it's year And some visibility in property some occupancy much that where -- of in in quarter got this nothing reasonable XX,XXX And And feet dispute report to point. into that stabilized -- towards we've this And Westland, And it's the there anything been new kind nothing traction into progress. a fourth the into the of But annual is dispute good really to expect assets, more good

it -- making again, of with side can but it as legal I kind when move be think you're can things of it, we of on progress, we're with lot slowly. a -- the dealing

Austin Wurschmidt

X that just lease-up And cap the of line that stabilization? to sort yield? the the then Toledo deal. And clarification achieve on Does rate, the X.X% expect time include does to you what's stabilized

Robert Kiernan

rates is mean, today. start. cap the I'll that there in Well, I what's place

Alfonzo Leon

in And much investors tenants lease-up, terms having TIs a give I properties that of are Toledo. in they're finding -- able that's terms how owned -- it's we're that and mean, where mean, I to constraint are in the Yes. what not by are case of the institutional they're

So we're quality of pretty institutional -- that the should optimistic and improvements, property where given be, with in in asset. up coming that capital with for mindset owner line with lease an will TI and it the the

Austin Wurschmidt

last Got you on later the it. the redeemable are preferreds And then just here could X. Bob, give us latest quarter? that thoughts this

Robert Kiernan

Yes.

that's in -- redeem there's optionality in not no preferred. environment, thinking are near with I we're that So But something current here the positive. currently, we us month, the moves the about mean, plans to the -- term. to starting the next which a is

Operator

this questions no closing There I'd floor are turn comments. back further time. the for to over to at management like

Jeffery Busch

to Have to you and quarter. next the like look of Yes. good everybody thank I'd to the end talking summer. a forward at

Operator

teleconference. today's concludes This

at your day. lines for Thank disconnect this participation, and have your You a wonderful you may time.

Global Medical REIT (GMRE) 4 Aug 222022 Q2 Earnings call transcript