GMRE - Earnings call 3 2023 | Global Medical REIT Inc.

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Operator

Greetings, and welcome to the Global Medical REIT Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve, Investor Relations. Thank you, sir.

You may begin.

Stephen Swett

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

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

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

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

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

Jeffrey Busch

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

produce weighted strong quarter with portfolio to a at of X.X continues portfolio the lease and years. results average of occupancy high-quality Our and the end term XX.X% consistent of

was quarter per During share ratio a in building than of from per receiving million. Year-to-date, of the $X.XX X.X% office the $X.XX the share under medical proceeds gain third gain including in quarter common the to or to variable third $XX.X resulting XXXX. FFO resulting in generated debt we leverage $X.X the down million a which included our $X.XX from compared North the XXXX quarter AFFO in sale the interest share unit, and AFFO quarter of from and third both a or of ratio of elevated to down million year. And per end and in pay quarter an was per dispositions our shareholders gross year. of using due Carolina rate, was at in from South have to third gross our at sale the rate rate $X.X income for unit in XX% $XX $X.X $X.X was million million of $X.X last the the quarter, property, we of North from and $X.XX million $X.XX interest increase down in proceeds gain the current million indebtedness, total rate FFO sold environment. of reason of primary $X.XX third just decline debt the quarter cost XX.X% to quarter and a share for The last the property Charleston, our net proceeds of attributable the a cap located of the and X variable reducing more net Charleston

criteria no acquisition, that investment align and resources standards. and to with identifying time continue quarter, the we we dedicate our During although properties had prudent to underwriting

want attractive pleased and market, more that our our contributions discuss results. current disciplined see we I would our for to accretive the our third will to am assets market focusing to the that, to in in earnings. Overall, on with be our I As over Alfonzo remain we high-quality turn quarter the to approach, hard pricing start their to disposition and call in detail. our With thank work entire and conditions more team activity acquisition results

Alfonzo Leon

market interest be to assets Thank number rates you, bid-ask higher and spread. for continues Jeff. The a of with a transaction target restricted wide our

a number about disciplined see investment We are continue we our process. but of to opportunities,

Although brokers this wide groups, range complete we we a corporate actively with any acquisitions in not did sellers. and engage physician of quarter, continue to

selling seize evolve, some The to and particularly to ready when we challenges face are closely. potential if as refinancing opportunities it tracking market are continues consider We they mortgages. owners may their

completed Jeff of mentioned, building the a X.X%, we a for a receiving We sold $XX.X a in third gross in Carolina in generated we gross we Charleston, As have weighted proceeds medical these proceeds quarter, total that X $XX.X North with that office dispositions now gain million. cap located at of rate an properties average resulting at pleased very With sale, million. of experienced in executing level million this the have South X.X%, interest of were investor rate $XX.X cap X aggregate aggregate dispositions. in of of

an our faced up and and acquisition we cap involved predicting are markets and are prepared and the influence Given our equity once current ramp to in our capital. activity the resume. their valuations on challenges normalize with the provide in our cost with continued when Nevertheless, acquisition of efforts generally cost we will uncertainty of capital, actively spread relative market rates to attractive equity markets, are

stability have our time, high-quality liquidity. our to office of staying portfolio patient of medical ample the of along properties, due with benefit During diversified we the this

remain improving and we confident scale, approach, will we deal potential our The applicable. With improved significantly to unit has our capacity such and buyers opportunities structure they always, to to current with As in capital align our that navigate to in seek challenges arise. the use from with shifting landscape competitive a access buyer's continue of for will XXXX to when we expect and advantages, leverage market as seller's capital. opportunities market access to investment continue and to capital as a structures investment OP this and strategy leverage capitalize market, on

like I'd results. to discuss turn our Bob the to over now financial call Bob? to

Robert Kiernan

Thank rent quarter, GMRE's contractual by year revenues leasable by total included quarter, feet, $X.X impact last X.Xx dispositions. XXXX of the increased of average years coverage our compared our average XX.X% driven $XX.X excluding estate investments total you, the portfolio, and XXXX, real portfolio of a escalations. In to continues Alfonzo. At gross primarily third acquisitions the leases, our lease driven our resilient and slightly to the rent and portfolio consistent by On billion third as million, property demonstrating quarter partially of million produce offset its third weighted to to the as basis, same-store new of results, consisted quarter of our the $X.X in revenues of third cash-based compared of leases. foundation. of weighted X.X up well occupancy X.X% were rent performance the or solid end timing our estimators X.X% $XXX,XXX with term, square

the quarter were prior million and to expenses. expenses $XX million total $XX.X G&A expenses third compared increased due for Our in primarily increase year operating was the quarter. This to

so XXXX as $X interest in million it's third in the rate of continued compared in have was high incorporated year accomplished we the the Our last results comparable our deleveraging far into expense quarter million to despite and quarter interest the $X.X environment.

our In August, of points leverage. reduced that our improved as basis a by result particular, beginning XX in note early pricing credit facility

costs third expenses swaps, our range In quarter the expenses, addition, quarter costs our $X.X G&A in periods. G&A our our and $X.X the to points in XXXX loan to million rate we early cost compared reduced million on Within third quarterly replacing interest of our that $X.X $X August, forward and $X.X quarter maturity G&A $X.X of starting of XXXX. million interest were be on certain the by compensation which our XX basis G&A effective, a quarter continue cash of expenses million to the became note in were million $XXX the in to prior expect basis. million in million. Currently, swaps compared current of stock term

to the these in year our expenses period. quarter, were portfolio in the compared changes the prior for the since in by expenses increase million driven the third with quarter prior operating $X.X year million Our $X.X comparable

represent estate-related largest of real expenses. that the taxes operating component Note our

leases. Regarding revenue $X.X recognized expense these gross expenses, company where million million third quarter related net the to of a amount to related $X.X and leases comparable recovery

XXXX. quarter common or year prior to the per attributable or $X.X Charleston quarter of in gain included the on $X.XX sale income for stockholders on share $X.X third third $X.X building share million gain Net quarter in million compared medical office million. $X.X sale was income to per for North the Net $X.XX of and the current a the a included of of million

third $XX.X quarter unit million the quarter and $X.XX XXXX. of or to $XX.X million $X.XX the unit third unit share share million quarter per in of FFO in unit the per or to compared AFFO quarter million was or and share XXXX. compared the or $XX.X third in share $X.XX third in per was and and $X.XX $XX.X per

the to sheet. balance Moving on

was of activity. of our As million in our down the gross XXXX, $X.X reflecting about September which year, billion, real estate start from XX, investment the is $XX disposition

years. with At was a of weighted XXXX, end, quarter weighted XX% debt, we total ratio XX, was of rate X.XX%. interest As X.X XX.X% our average was gross remaining debt of September and fixed million of leverage our had rate average our term debt $XXX

during in X.XX%. our now our by facility As credit points at margins reduced and I the margin the our at X.XX%, mentioned, SOFR lowered now leverage are our XX margins revolver ratio, quarter, loan with term SOFR basis we on with

square the under XX% are to that under to to $XXX the of end. and expiring activity not any With date XXX,XXX this the quarter unutilized or ATM related facility the quarter feet ABR. we've XX% common that shares our We is we'll expiring based on our subsequent Lastly, did of issue retain lease year the stock currently, as respect of we capacity projecting noted expirations, current borrowing program credit million. during

approximately expect year with occupancy to end XX.X%. We to the

Our our regarding XXXX lease in with experience is expirations. lease general, outlook and consistent good XXXX expirations on very

of conclusion, of to balance we sharing we well the look available conditions, our conditions liquidity market to forward restart during and strategy our completed to believe as portfolio $X are uncertain $X.X million. year, Currently, come. and of site lease and we're expenditures through portfolio million expect renewals the was improvement in up, building XX, be approximately lease during primarily spend to improvements related remainder we additional September projecting associated capital million $X tenant approximately with normalize to Regarding these progress the XXXX. In we cash the our to quarters expenditures growth on in as strong positioned with to our look ample us and and the

our concludes for open Operator, call This prepared questions. the remarks. please

Operator

Our KeyBanc [Operator Wurschmidt first Austin question comes Instructions] from with Capital Markets.

Austin Wurschmidt

kind can last you're provide of days just additional breadth to that the opportunities all on on that it that meet mentioned or remains volume some the having has wide, from underwriting so? at that And detail the criteria. spread but bid-ask deals Alfonzo, of you you of narrowed XX or conversations XX

Alfonzo Leon

Sure.

there's bit. are a much accept increasing of coming we also to change buyers lot XX, by varied lot significant reluctance happened So than a of And see -- spread the make there was it a But are that doesn't what's has pretty sellers has month to market, started a there's acknowledgment a pretty we've quite It by coming coming realistic. -- has a wasn't about month. deals there month, wide year beginning bid-ask year. pricing. -- quality started average. sellers There's amount. XXXX who and at market XX a are with from who to -- That's sorry, the as been that stretch There well. the more was improved the . What's The in been narrowed that lower pretty meaningful the pricing now changing has over quality is sense. capitulation had where is changed of

of coming reasons. to some I variety there's for have of the market sell sellers think to a

out Some term. of include that's financing it of running

the they despite sell increase despite to why reasons Some had in people rates. of pricing. There's in high developers it of product just market want cap that increase still is are who coming a the lot to

just pretty point, It's very deals So compelling. is seem move really And has forward. the hasn't been for bid-ask our anything getting there to to vantage hasn't yet bit. of quite where that stock spread irregardless that better. interesting. our that's From been a opportunities mean are our compelling really us price like catching beginning there's I improved eyes be there super

direction. in right that for what market the we've hasn't in moving been compelling. like what's the But so the trend past is the And been and months, -- seen several what's

Austin Wurschmidt

wall a or guess, maturities as mean, as like are as sort and maturities relates next there see can of in willing you that think of follow-up, sellers of you're of that into expecting it greater drip a year? seem to period you're increase you negotiate. upcoming saying, opportunities? continuous I of Are So more a wall or to you I facing is deals kind an -- they're towards looking more of even a

Alfonzo Leon

Sure. Yes.

it So definitely, of short a of than I'd has has but unless hard a offering just unique anything wall, roll, very wall the to depends is rent finance with, on very any location. say, quality building, that that the X and now less location, right years

no finding bids walled is short cases, And and so any some a offering bids. that not in has many

is there where a discount at were year get there ago. opportunities in and a pretty go they significant properties so And to to

we've a been the rent good a attractive risk that so those that the opportunities. a pretty at spread. looking to been that right profile have buildings, has profile hasn't has have still number ones of has offering roll that any there bid-ask fair good date, yet right a that are And the right there's rent quality But And wide that mix really for do roll. the do

people year. there's market so been of sidelines. the of half for year. in market they think have I'd And for There in you now acknowledgment I into at deals been were the for have better say had by rewarded were XXXX, being rewarded the first not the that the the than beginning getting on And investors the

comfortable are I Fed a to to to change. market whether back lot and meaningfully? going is of where for I approaching in think a it going that's point lot -- the But do are is it it's start has more what I pushing not starting to And on think expectations XXXX. a we hinged going into of to the or investors what's do store -- think feeling more for

Austin Wurschmidt

willing right be some to ], discount you I [ for the on for risk discount? Would right guess, that wall take leasing more limited the

Alfonzo Leon

underwriting hinged our of Yes. that And of lot renewal is a on the probability.

the given opportunities felt And so but given in renewal that it very going very was given strongly there that the some be tendency. we've past was case context, pursued the have property, a been where very, to we the walled, was where short the that the just high,

with And roll we quality yes, the a property if so high there's has that probabilities would very and right mix, sufficient discount, the then rent pursue. renewal a right

Operator

next from Our BMO comes Markets. question Juan with Capital Sanabria

Juan Sanabria

what's you I curious guys $XX million. maybe initially side that are you disposition the left believe thinking on were targeting? Just

disposition/deleveraging? how still So is to I just wanted about move to contemplated as that or 'XX confirm you into you're thinking if

Jeffrey Busch

right around got We're before. really get -- the the possibly market we're we'll I'm got that pricing so bit pretty to a doubtful -- has some we looking sold. changed since sell more, but We pricing that good we

million. likely more million at $XX $XX we're to and stay So

Juan Sanabria

the of just feeling cetera. acquisitions Okay. that from What little multi pricing to single comfortable on target acquisitions? cap yields where a rates, tenant looking bit from are expectations towards higher skewed you're deals. curious for you maybe sellers' adjusted more And et rates it more is And has or then or kind

and most kind could when restarts? of you you little of color the where if us just feel If comfortable give a acquisition

Jeffrey Busch

has time. XX% the be that's like to us #X and quality Okay. before last of we same the it we given has do have periods to rule occupancy . anything, property, it the in to be a of and accretive property

it's the like very capability tenants. of multiple of do groups the competitive tenants just not a interesting managing have that because multiple we be don't lot So because can

in the accretive more Xs. using of at on criteria leverage, we be so to expect hoping we'd decently the basically reducing and the second Single in, #X we're cost portfolio. And to do tenant, depends is the of debt I'm It it's we in our maybe I element on really the to equity but -- competitive, XX% get is Xs, has debt the average. time that it XX% process but the the be have in come is what

that So it so but several work criteria there's process looking to definitely we're -- on, there's accretive. has to a have be we

Juan Sanabria

Bob, gave think 'XX. then I And parameters, think general some you about Great. I

So of if and there, occupancy I'm should the for how into kind if 'XX next X the about over me think we leases. expectations think maybe just or so, correct some I you quarters nonrenewals had can quarter, expect maturities on in upcoming wrong you fourth

Robert Kiernan

Yes, Juan.

we XXXX, our we this our did to right how -- quarter we as to to XX.X% very in And tracking expect occupancy ballpark. that looking renewals around yes, look then in So similarly be at really right be that fourth year. we're to ahead

on Somewhere in as XX% now. on that range we look feet XX% and at right type both square to XXXX ABR

And an in could XX%, this down, I think XX% absorption on side. it it high it feel be would think very are as a confident of -- so depends trend what overall a maybe that low for from floor, maybe -- would be as we XXXX. trending ticked But the if in occupancy, it we how on where

Operator

Rob Our next from with question comes Janney. Stevenson

Robert Stevenson

harder, Can to follow you today? mean up seeing last that I demand same tenants? space vacancy how years, in and from terms for the Just the expansions for backfilling talk relative incremental easier few much last you're of about about is to it demand the on question.

Jeffrey Busch

We're feel bit filling challenging even better vacancy. little It Yes, last some I be than may ones. would year. we finding back in say we a keep tenants,

medical this that X the some much have always of have I not doing for mean sitting have that they smaller years. been is growing. been You year. couple with challenging, expansion. I'm that solved ones office we're -- encouraged We a

seeing of they leasing lot But a been capital of it's them that long because are we're I cost But longer our we now. term, we've that were small. right think finding term, up.

the I'm We replacement. thing. same going encouraged leasing. then hear the we relatively hear of forward, So out and somebody a about And quickly very is moving who

in lose relatively tenants, the some terms. to fill I seems we XXXX okay If be that that So up do in quickly. market expect we'll them

Robert Stevenson

resolved helpful. process Okay. yet? that is Has Genesis ongoing? think Care That's asset. might a of you been that Or have still I And small as

Robert Kiernan

quarter. out whatever have was didn't significant I was Rob, really to the Genesis. in mean fourth have, We I moving something did any think, exposure, that we

And so on nothing -- there's our portfolio. perspective really from impact material an nothing

Robert Stevenson

Bob, than the we to and guess, that alternatively should impact me acquisitions, is when the -- I any else about going that thinking be positively there away anything of models? rates, over leads quarter our either other And earnings-wise from third dispositions in or or negatively higher Okay. factoring carrying that's into

Robert Kiernan

I really, bridge the quarter. the nothing No, to fourth significant, if third

expectations I The think don't end occupancy the the mentioned, the back teed think I think really for anything after predictably. very relative if very from third dispositions, up, are nothing kind you going quarter is we of to of from I a otherwise, trend from where was I there's too that to rent unusual And and the our really perspective a interest consistent an flow, perspective the trends year. perspective, -- But unusual expected. think,

Robert Stevenson

that, up the in off of quarter? the how during quarter recognizing the happen, wind when And of Okay. much third sale did the did you NOI

Robert Kiernan

Just month it that of really... -- X was

Operator

Our Baird. Kubicek from with Alex next question comes

Alexander Kubicek

that relating expiring basis leases. points is to of The one first XX

will escalators lease XX% curious renewed able of space with that those of be you're of get XX% what to tenants mentioned today? kind and You the ABR,

Jeffrey Busch

are inflationary lease our really expenses net averaging X.X% net, net. triple get the -- most X.X% they're net triple portfolio we absolute paying . our but so been expenses Remember beyond that. our with of absolute properties Most We've of of the on escalators.

Alexander Kubicek

now? from the of Is beginning year to that all changed at the X.X%

Jeffrey Busch

overall going Yes. Actually, I portfolio around about was of our we're it's the and running X.X%, been renewal seeing piece. in type now mean up X.X%

Alexander Kubicek

are question to is, list? Second how there performing? the your change are And tenants watch any

Robert Kiernan

changes yes, solid real had relative year. to tender performance. been the We've a last no Yes, there's significant tenant -- over performance no

notable. nothing So

Alexander Kubicek

relationships to Good how comes pipeline right. much ones? me last investment is All -- from for new versus one the existing hear of

Alfonzo Leon

mean a say, pretty pretty net a it's I of don't but wide new average, we we And sources. that. precise have X/X from is varied. data about I see I'd cast on -- on what

Operator

Bryan Riley next B. comes Securities. with Maher from Our question

Bryan Maher

Just X Jeff for Maybe for quick or Bob. ones me.

before, with know in it again, to On quarters and asked FAD XXXX [indiscernible] worse, questions And that not line thought we acquisitions prior the the this relative XXXX. accretive dividend, dividend a get that dividend? payout it make organically Board there, the or and that that if at that levels. improves is FFO shareholders and out at but the from lot -- you I I elevated suspect that, safe Is holds only advisers but current your gets better, we the $X.XX of ratio

Jeffrey Busch

is Yes. Board. I'm the and This Jeff, on also

do still we the So it expect and the dividend. safe costs the exceeding But I'm in to Board dividend. sort move year anything with we're get Yes. I possibly the not now something up here. debt We but to in year wild. are the properties future. does down of our there's a our want that I bottom could increases every increases expect -- so too feel gets either, change discussion it. -- the And dividend. sold going with immediate okay think we brought unless debt no we be variables with wouldn't what of totally every Ever for hit out additional think a our bunch We We

Bryan Maher

seem to that just to at all? Great. units? taking somewhat continue me, for What's you're maybe to Has for tone And to going one in regard? they sellers, receptive Alfonzo, potential do talking on be that when OP changed

Alfonzo Leon

Sure.

they California by in done about REITs, me. reason also It of up state specific it's the And is for specific that's and some homework highly find OP of down OPs, were talking OP, REITs. it curious unit already for be we've a thinking we time really had -- It to to shares, With predict. planning to there's estate curious context about that them, always been a physicians, had is on think the hard like I dependent might with lot physicians. it that the that. I success the a were

we explain -- didn't And pretty we walk I what knew -- or they they much were we had much that so wanted. to there mean, through. wasn't

it's so of mentioning not a we a to with make think sense. to really and makes it that forward point are product And with we And lot familiar people with exchange whenever properties. a it's are hard of it for an predict. move But comfortable their want

Operator

have We you of session. This our concludes end reached participation. conference. the your Thank for today's question-and-answer

You your disconnect may lines at this time.

Global Medical REIT (GMRE) 7 Nov 232023 Q3 Earnings call transcript