GMRE - Earnings call transcript Q2 2024 | Global Medical REIT Inc.

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Operator

Greetings, and welcome to Global Medical REIT Second Quarter 2024 Earnings Conference Call. [Operator Instructions].

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

begin. You may

Stephen Swett

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

Financial forward-looking. and On which facts the Alfonzo Kiernan, use Officer; Officer; call. statements this statements by made Chief Busch note the are Chief of and Bob company forward-looking call today include Leon, on historical are Chief this are Jeff may Officer. not the Please considered conference on Executive Statements Investment call

be to Private covered the company Act intends of statements The those harbor statements. the the forward-looking provisions complying harbor in of making safe forward-looking purpose provisions. Securities by for for is these safe Reform the statement with XXXX contained and Litigation

forward-looking risks will variety including, ended Furthermore, the by XXXX, XX-K a factors statements and without affected in company's actual the the filings. may in for and limitation, materially results be company's of differ are from that and SEC year beyond those contained its control, other XX, those the December described

company events publicly a information, no new forward-looking of result statements, whether future as The to otherwise. any obligation or update assumes

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

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

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

Jeffrey Busch

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

portfolio average was of produce average of solid years. lease XX.X% coverage And X.Xx. the portfolio with continues second At results. Our weighted of to the ratio high-quality rent X.X portfolio term a end occupancy quarter, diversified

compared share the million our shareholders of net second $X.XX common per XXXX. attributable net $X.XX million $X.X or quarter, shareholders in per or For common of to attributable $XX.X was to loss share income second the to quarter

attributable and $X.XX second and interest and common our year and prior in the per $X.XX $X.XX non-controlling share down from to stockholders unit from to quarter. and was shareholders down interest the the share FFO per common attributable quarter, unit, non-controlling prior $X.XX AFFO quarter was year

the into for medical X% an to of aggregate real a During completed entered at we XX-property million purchase be quarter, portfolio agreement for of a tranches. purchase in estate $XX.X outpatient X price an cap

properties the acquiring are aggregate closed in and These quarter XX occupied leases. in of end absolute we fully Subsequent $XX.X X portfolio net July, properties property for triple tranche million. first the leased to and price an under net on purchase

to fourth have quarter the of We the the during remaining XX properties XXXX. of acquisition complete

asset are conditions. about our optimistic the are in and overall in class acquisition improvement market the with We pleased market

million rates. approximately pipeline consists Currently, at attractive $XXX of cap our investment assets of

think about portion opportunity, to As is are an our approach a sheet, our we focused fund maintaining utilizing important element we our dispositions to on growth select balance a growth. of strong prudent

asset Our property response expectations program to in be part regarding long-term of dispositions can performance. recycling or

a of of medical we medical in City, Panama in and gross we facility of the million quarter, proceeds facility that $X.X on closed $XX sale a July, proceeds. of we Indiana, the closed the generated sale Florida Mishawaka, million During on receiving in gross

assets We forward. continue sell move to we selectively as

announcement in one X.X% Texas. bankruptcy rent, the represented Steward facility quarter, of the portfolio. the items, primarily last of time terms we the Steward company's company's and in their tenant-related At Beaumont, exposure in discussed annualized In Health care of base filing,

will his our bankruptcy provide this financial regarding Prior is more the in the Steward assets was location. pursuing and and actively company this update about our at of long-term Bob relationship to re-leasing an the details announcement, at facility opportunities prospects remarks. optimistic

want to entire that, we our Overall, to thank results. Alfonzo team work I'm over turn contribution their current I pleased hard for With more in detail. market call the to with discuss and our the quarter activity and investment our results conditions to acquisition the second and

Alfonzo Leon

The of you, assets, physician which criteria actively continues Jeff. target wide our transaction range with we for identify with market progress to show acquisition to promising align corporate and investment a engaged opportunities. our Thank brokers groups, remain of signs sellers

of occupied quarter, triple medical to agreement a As and portfolio real with Jeff aggregate outpatient estate align purchase we purchase to mentioned, agreements. net net in completed for triple under These properties be in leased of our a absolute or criteria, being X XX-property price the fully into $XX.X acquire million an tranches. entered investment

to for $X.X first discussed $XX.X prudently subsequent the Jeff to second ability of fund base of the The quarter acquiring million, transaction. roughly and quarter is tranche the leasable flexibility end, properties tranche close As additional to the an earlier, close million with in expected XXXX. feet XX,XXX in aggregate of X square annualized price aggregate rent tranches we to with the us purchase X encompassing fourth provides deal completed

As reviews. a terms no subject this there is and reminder, Accordingly, customary contract currently and under is basis or at conditions all. that the on assurance of timely this the will second including deal close a company to tranche acquisition due diligence

real the this accepting where pressure due refinance indicative see increasingly cap in trends sellers funds and sell. the transaction deals higher ongoing challenges to are of market estate on as to We rate market current

hospitals lease that rating. acquired center first per rent North properties an family Regarding square clinic multi-specialty L.A. properties A rating. leased clinics in in dominant to an rate, in Minot, tranche system X XX note ophthalmology-focused regional credit with A We $X average following we with clinics county and an the Southeast Cerritos of health average Health $XXX South a X into the MSA term X medicine XX foot, price a acquired to in center Years X% cap details. the asset the of to BB lease PIH health AX rating. primary network and Trinity Health, the X leased surgery July, clinics an a and include AAX ingoing with The at bumps. average Henry care-focused X.X in portfolio hospitals weighted the an X.X% outpatient the revenue system Dakota rating, outpatient Detroit in with at X a with Carolina, Ford, multi-specialty minus clinic health million with a in the Spartanburg, leased region's and

company of property set during in to a resulting front, disposition facility we $X.X sale property the the loss million expire gross renewal the this expectations part lease in on lease $X.X tenant dispose outlook of on this million. property in end at X-property our medical portfolio originally was the for sale of was to On based year, our was a the and a Indiana, XXXX. and closed on suitable quarter, Mishawaka, finding decision The proceeds at purchased the receiving of of a of The replacement.

the in the the of at part end believe of general approximately accretively This asset sale. company sale and value can of medical facility Panama the The a a we identify million. at net $XX time sold recycling City, our gains was we quarter gross sold $X.X company. book reinvested in receiving process, After July, proceeds million of assets Florida, be by property proceeds whereby had that

investment disciplined opportunities with will align underwriting Looking in ahead, that persistent and our remain seeking and standards. strategy we

We capital to value. structures of OP to including unit unlock the potential plan deal use to leverage access and our competitive scale, drive opportunities advantages,

consists investment current to our of to care mentioned, turn discuss to Jeff million $XXX I'd the Bob? our assets. over As approximately financial now health pipeline of call like Bob results.

Robert Kiernan

escalations. In quarter the were of of leasable XXXX, gross revenues a prior total impact portfolio, decreased dispositions feet, by consistent At total term, of XX.X% X% coverage, second XXXX. X.Xx quarter the compared of Alfonzo. the investments average $XX.X due and the our end estate rent year our real XXXX, primarily you, the occupancy, Thank X.X weighted billion years approximately contractual of of X.X% weighted million X.X average $X.X included that to in lease to completed quarter in to of million second rent square

write-off of decline. facility reserves in Additionally, to the deferred contributed for $XXX,XXX our $XXX,XXX rent, tenant primarily Beaumont of rent our of and Healthcare to the of recognition Steward the related

year Total and that were interest expenses lower quarter XXXX to were disposition to due second in the primarily million for million The was the XXXX during completed transactions quarter. $XX.X compared expense. prior of $XX decrease

Our due prior to rates was in $X million quarter comparable lower $X.X compared lower our second impact to leverage, reflecting borrowings the the the expense to the borrowing million year, lower of average in quarter year period. swaps interest compared of and rate last interest

the the quarter second $X.X operating and XXXX year of expenses Our quarter. prior for million both were

compared to the net quarter of Regarding and $X.X comparable $XXX,XXX million expenses recovery leases. of the the G&A XXXX in million for leases of related expenses gross to where company quarter second quarter related million revenue expense XXXX. a $X.X XXXX were second recognized amount to second $X.X the

in $X.X quarter increase which increase the partially LTIP The million an primarily compared same decline million $X.X of XXXX noncash in a for to offset compensation from general XXXX, expense period for in expenses. corporate by second resulted the was

recognized due second on million second XXXX a the $XX.X ahead, Looking was in for of basis. per stockholders attributable quarter to of million The facility in XXXX compared net expect $X.X the of of in quarter half in quarter income $X.XX quarterly expenses per the to to sale the $X.X XXXX in was XXXX. to to the of of second $X.X million be medical Mishawaka, share attributable or G&A or second a common and range share stockholders we primarily Net our the $X.X loss Indiana. common on million million loss the $X.XX loss of

on $X.XX quarter for and and in to in million FFO $X.XX results the or or per gain properties interest The XXXX share compared per unit $XX.X was of and sale common of XXXX. the quarter second reflected of investment the million. second 'XX share a second million non-controlling unit of of quarter $XX.X $XX.X stockholders to attributable

$XX.X interest second common non-controlling was to in stockholders $X.XX share million attributable and or unit per quarter the quarter and unit share $XX.X to XXXX $X.XX of and of in XXXX. million AFFO per compared second or the

balance on Moving sheet. the to

gross in XXXX, we debt $X.X years. of total had June XX, X.X of gross As $XXX our of June At remaining XXXX, a estate term was investment weighted with real XX, million average billion.

debt At quarter end, fixed XX% of rate our total was debt.

weighted was average interest XX.X% and was ratio leverage our X.XX%. rate Our

common stock current of date to did credit in the capacity any under third under is program second our shares during issue facility as of today, million. or borrowing quarter. quarter $XXX ATM We the Lastly, the not the unutilized

consider expected be year, the to this close on to maintain are XXXX to our currently this leverage date, rate to we expiring our a range and we we're that square acquisitions have activity lease in to funding target portfolio between on later respect to As closed, for XX%. With based seek we XX% continue and as and will we our pleased our options of XX% retention XX% we renewals expirations, we towards on year's with investment are progress trending leasable feet. disciplined of

was quarter, Regarding on during the spend capital expenditures second our the million. $X.X approximately portfolio, cash

outflows through tenant June $XX year slightly expenditures capital million. half we're XXXX, XX, were for more million, million cash Year-to-date, for total approximately to of our expenditures improvements. the projecting full with Currently, that $XX related to than of $X.X capital

to bankruptcy, on rent, As and bankruptcy of has months of the Chapter mentioned, represented quarter, Steward Steward Jeff Texas. August. announced its Beaumont, received $X.X payments rent At the or file XX Healthcare for to time annualized of of base X.X% XX% during July our company related filing, the for facility the bankruptcy. in which leases company's Steward June, located million the the base Post

year, The announcement, that In company growth. second and ample look our prospects provide portfolio the options to since we solid for and foundation our the exploring liquidity half the before strong has at long-term as optimistic facility we bankruptcy at location. about remain our conclusion, future we the proactively Beaumont been a believe of this releasing

progress concludes We acquisition open for This opportunities look prepared please Operator, our questions. our and to encouraged remarks. are sharing our the forward call by you. with

Operator

[Operator Instructions].

KeyBanc the first Wurschmidt of Markets The Capital comes question from Inc. Austin line with

Austin Wurschmidt

Or is Maybe $XX investment Great on includes this was starting with hoping remaining to pipeline. property amount XX tranche the million whether the of of or million kind second $XXX the $XXX the million details just of that portfolio? top get regarding so? some additional

Alfonzo Leon

assets we've tranche. significantly improved The discussions and pipeline the that pricing. that various willing been to include pipeline The and ways pretty their is call does in there's this market in I various sellers not in the parties. pursuing are attractive stuff with mean, last since willing that second has earnings more is sell our at

Austin Wurschmidt

Alfonzo? the what's And just And close assets some these the economics that composition you'd the details deals. maybe you can of on and around expect share to timing then

Alfonzo Leon

Sure.

pursuing buildings mean are in are been that of on quality market I medical buildings has buildings. with And in office these And pipeline. medical quality office the that it's our we've our markets tenants. are been these So historically. focus like types geographically,

Austin Wurschmidt

far on kind $XXX as the to expect as that on average? you rates And of where the million, cap would shake out

Alfonzo Leon

Sure.

So and even of X% targeting rates we're that are Xs are the X% I finding caps high mean caps. that are opportunities cap in north and in the

Jeffrey Busch

Jeff. a we'll very in million portfolio, an for caps of good rates to properties, projected, X% highers I out there able just to which extraordinarily a if quality long us, we niche and opportunities to year in at like we start very is to there be and cap. there's bought higher exciting for and that. haven't said quality fall I the good $XX It's is very our there absorb, our have in This us interest that and could a add X at as that. want time, out attractive niche good time

Austin Wurschmidt

And the That's kind just side? the the pipeline thoughts side, funding about with your for program And on are what's cap assets on all asset the lastly, disposition spoke me. then building marketing acquisition Jeff, latest helpful. additional today? of rates that recycling on you That's pipeline you

Jeffrey Busch

going also equity which I is happen, really rates or side The the reason look people point but brings always which on multiple down, monitoring this now we'll X think after X but business. times, properties if that the we're -- see. the there we Fed, we sometimes do my out above agree finally the we belief could disposition, with could sell to Yes. No, of you is if to

X going the to coming down jump, for the nice it the Our a had we properties could buy. historically, market stock times very thought was really and accretive we're be

nice. it money making of raising cap and the lower possibly would So spread new a these be really selling acquire properties. and combination also rates properties to at It's

has first market that of selling is capitulated market going This there the substantially pricing sort real that sort out time is of higher. capitulated the estate the the -- has on be to of

it So us. for accretive matches to being

Operator

line Sanabria the from with comes question of Capital Next Juan Markets. BMO

Juan Sanabria

question or quarter was following the sold comment you there July for dispositions. the on the provide date, with in cap a Just rates vacancy in some upcoming you and what up second the to expiration. Could risks recognizing

Alfonzo Leon

Sure.

this of owner over we're again, the have rent So on this assets, collected just felt X from a we've I the just million $X system, cap. than Mishawaka from and for portfolio sold a for more A-rated was properties we prospect And back And is that allocated property. mind, then, of that And we it in made outperformed. property it we that other I million to the keep to to $X that of of this had be sense like an point City, And sell million. going XXXX, able and the since Panama and re-leasing in that to was million we very a we to on a portfolio. out, difficult, sell the X.X% value mean, $XX part $XX too, mean, found acquired buyer this one user was that user property. And -- roughly

on a got We renewal Las the property. Vegas XX-year

On the all have we renewal lease had and rent and expansion begin coverage. the very Oklahoma these an a with, Arizona surprise that and are a got property, strong long-term XX-year properties to property

portfolio, a well. has the underwrote portfolio And we when a package. whole, as this bought from so our very perspective, And we it as performed

Juan Sanabria

regards asset? what the the quarter accrued But Wisconsin second the rent was in with to

Alfonzo Leon

Wisconsin asset? The

Juan Sanabria

just Yes, the cap into Yes. rate. back

Alfonzo Leon

low about -- was it I is mean rate. sure. a cap double-digit north it Oh, of

Juan Sanabria

upcoming the the you of balance spoke year. expected Great. retention Bob, for And expirations on to then,

think that to have we should release? has So And that year-end? impact by per expected you about any does what before been I presumably implied some FFO with timing the share move-outs occupancy guess, or

Robert Kiernan

bringing on expirations with as I previous Sure. around -- said in the of that XX%. plus coming we've right or mean kind occupancy that calls, steady little we a XX% up bit year, to toward minus, of still the look trending half plus I as the are second mean, this we're and ahead projecting

range. above and So in XX% that that

earnings in are that term. subject much -- it that the a volatility we and we're overall, But occupancy provide sometimes timing again, an long-term rent that to from you're look a as shouldn't solid short And projecting from have perspective, or periods from free earnings there perspective, renewals from an ahead, be perspective perspective.

Juan Sanabria

And just if me, one last for don't one you mind.

expect to guess presumably, levels? the there or initial last market space, the And is much that kind does particular, assessment. of compare have your in Steward How the negative mark-to-market, to lease. release On I it, I case we could guess, -- if is if that either and you current how in positive Beaumont

Alfonzo Leon

we're [ but comparable what professions going mean, very So ], to I still it's had. be in we yes, to

Jeffrey Busch

It's want is Steward excellent property. I property comment to Yes, decent the pretty in on that just an demand.

optimistic So that's on market the that. we're about why the and releasing

Operator

Next Stevenson question comes line the with from Janney Montgomery Scott. Rob of

Robert Stevenson

hit Bob, Steward. what that far get is -- that you and didn't write-off, it for they hit of think road? from paid might the down or rent thus through $XXX,XXX something -- that What only the other Steward indicated that you to and is just August that or May gotten well on is you July is reserves June, you've as you the is deferred paid there $XXX,XXX

Robert Kiernan

well of it as though from March, Think Right. as an May expenses. exposure Rob, April, perspective as

Robert Stevenson

that Okay. April, And what's May? of cumulative the March,

Robert Kiernan

as all that keeping growth that re-leasing or just renewal now straightforward to solid incurring on be So because it facing opportunity funding compared And triple $X a expenses. having that's for the property, very delta tenant in that's million we're lease again, the opportunities. expenses was that shape net $XXX,XXX operating about we just about particularly it to -- type the reserve think

Robert Stevenson

which is you they August Are mean, moving? and this and to at I to then you're basically Or -- back it's then extent up in fast to is to And after having guess, you guys you that for get pay you paid like this process flow re-leasing how going I guys? be positive cash think order for to September that this likely to point, a Okay. October? get are the

Robert Kiernan

not terms bankruptcy they're us their clear of frame. to the how with time in process, So it's managing totally

us have up lease a -- the would where to from So bankruptcy, the point would perspective, under yet our through subsequent owe they expenses and rejected the the they not any base the and during bankruptcy to to rent would they period pursuant owe us lease. they -- project

at for that collecting of we're so clear And that final we staged can step. not move quick terms to this have to kind when off just point, us even But on side, when going with for a staged working quickly that it it's have kind are it of as process could their possibly to we that as post quicker as kind and provide of that and rent, But us clarity -- very in we the have. of more is said, -- a bankruptcy. transition as to --

that transition modest a situation period prospective things when element, or of onboard us the that current between, again, would and rent free Recognizing could be again, would tenant. we there probably a impact nature that

Robert Stevenson

health leased as quarter is to by you like It least portfolio into completed your And Trinity one from of the Trinity. #X -- of was one far second the it at Health in comments, five at I right, [indiscernible] the third heard quarter. thus acquisitions sounded if then Alfonzo's replaced tenant

million be likely the you're tenants of with other or tenants that these into come top the these by the deals? or fourth circling of or X existing will the quarter pushed to X of XX that acquisitions Any $XXX in other expected the out closings top the

Alfonzo Leon

move to meaningful XX. to going not the There's be a Yes. top

Robert Stevenson

inpatient you Can relatively -- of today then list your over that thinking That's helpful. get scope still last one you how having some more and competitors the X the talk versus couple tenant, a of tenant of me. the All watch If about Okay. weaken last the next and so? are behavioral right. others. hospital and of for with economy. quarters robust here Genesis much issues the to size starts One economy sort are expands the And Steward, quarters? geriatric tenant operators direct list cracking the what's or here, watch

Robert Kiernan

QX few care And we're continue monitor group items -- I those point, with in now, that and again, point, we is we accounting focused from been it mean had right hospital. But at that's again, at we've with. at that So don't that And this But have anything that have in we've an the Prospect about our care to talked something perspective. acute QX. forwarding deal or tenant-related we beyond quarters actively acute one to this past our Steward involved have point, Health very that, at we're actively on. again, primary

don't any any managing -- we how loans we We -- that the in or also to highlight either would portfolio. don't have have we're from not tenants

Jeffrey Busch

part system, into see mean, in those vast is MOBs we were vast, majority and portfolio after I purchase other doing well, others reimbursement surgical one strong. a of just want they've and they'd others, And like and hospital strong vast, of that's Beaumont I well. and acute vast that some billing to majority When are But of MOB like work. the The the the you absolute type very be are limited that. our triple-net the more out very there. add, that in been struggled our the portfolio. did MOBs some our a of And but change, of has business downturn, system pandemic doing

Robert Stevenson

almost and I guess medical and Alfonzo or poses pipeline of given one majority indicated $XXX in million question today the comment given then office the Alfonzo your all that, that Jeff buildings. are that that vast that

future what guys Are interested points you just risk you Or hospitals? -- requiring focus no medical at the think. you return or in doing be the all? the do and worthwhile? office, make XXX, it going to XXX that is wider just that still matter here much them a basis to immediate another Is To behavioral for health need

Jeffrey Busch

for rates private they office does equity to now. saying, that The bank The lines buy the the rates are of market higher and capitulating us substantially the are okay, sellers not has had and lot the get building. a so medical before and turned

So paid the we're we XX% private saw Right into had whether and that moved field. pandemic like find now, it we and during they then MOB did finding our open of patients equity not when started we early the the tenants again. or

can't I being I into -- but see I probably a But being the could I see medical, field, us can't in field the of can't I I Rehabs, I our say in reducing see can't triple-net early, them not -- that us and more the the we area. area. to acute absolute in possibly us never, and see going hospital got definitely exposure be MOB especially those. mean, in and we would like future. love

Robert Stevenson

time this morning. your Appreciate

Operator

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

Bryan Maher

Most already, been Steward? my on but have A get of confused. asked questions little can a of clarity I point

XXX points but July they and paid So for you're Is they that basis That's March, April the June, May. August and million haven't correct? for paid after? going

Robert Kiernan

That's correct.

Bryan Maher

physically are building? of with And out building no of back coming the that to intention they

Alfonzo Leon

part they're sure, out. Yes, the first for

I likely. part, second seem The mean, most it

Bryan Maher

Just instead of curious money. making have you fight June, and the X keep July if to in they somebody August, would if you get intention paying

Jeffrey Busch

out projected given could It's aren't feel optimistic this that rent we popular market. in very they -- the this that is haven't we

and good lease we're very it this in, a point facility. because a tenant reject like the and at to get therefore, with we'd is renting now on So new where getting the almost them

in word in such It's -- is a the but rejected hope it, the actually. of haven't as of It's confused it. moving we're their reject a of get market and using think solified we've part And optimistic the Steward, that's and they facility. good medical small quickly But [indiscernible]. it, part and be this used best when do why that we we with just I they there out bankruptcy just town they're to very this been

Bryan Maher

bankruptcy clear, reject it the the property until they currently, be and or release you operated being is so. cannot court says it To not

Jeffrey Busch

correct. is That

Bryan Maher

some for here? My I With a given short and Bob. weighted be seem quickly Okay. rates maturities, lower fairly from in down any lower. rates? the of years for rates average you that quickly little other Jeff, maybe for these have opportunity how guess, your even interest kind to move wait view to going and of question commentary, think the of with there to Or debt here come the hope is firm X.X might you Is lower to lock

Jeffrey Busch

I think [indiscernible] lower. going

I think once so. they start, points about [indiscernible] X.X or talking

I we we could go get even time have If it futures. think the there. rate out happens, good lower in So recession a will and a

Operator

teleconference. our This Q&A concludes session and today's

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

Global Medical REIT (GMRE) 7 Aug 242024 Q2 Earnings call transcript