CHCT - Earnings call transcript Q1 2019 | Community Healthcare Trust Incorporated

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Operator

Welcome to the Community Healthcare Trust 2019 First Quarter Earnings Release Conference Call.

On the call today, the company will discuss its 2019 first quarter financial result. It will also discuss progress made in various aspects of its business. following the remarks, the phone lines will be open for question-and-answer session. The company's earnings release was distributed last evening and has also been posted on its website, www.chct.reit. X, emphasize in of based risk this as today, to may information on and wants contain of discussed may be call May uncertainty. company that that the some that information forward-looking The statements and involve XXXX, will be Actual may statements. from forth in those results set materially such differ

MD&A regarding filings. as these its required earnings in future by company law. of discussion you as its a except obligation forward-looking statements factors and uncertainties, to may SEC new or should development statements, the as forward-looking well in review undertakes no For whether be otherwise, risks information, the The result risk and company's its disclosures update release of as

company's available the A release, for the of property company. its archive advised reconciliation An available not in permission. During participants is and This without is otherwise or All is which the call is being between written recorded playback XX GAAP this call, be of distributed the the call measures. will X earnings company website prior company's on this the the conference are discuss call purposes. its posted reproduced may that be made for website. financial approximately and or days recorded on Investor will Relations non-GAAP

President Now and Healthcare Community of turn Chairman, call the like Incorporated. Chief I Trust to would Executive over to Officer Wallace, Timothy

Timothy Wallace

for quarter our Good morning, first today you everyone, XXXX us thank call. joining and conference for

Dupuy, mostly mode new Chief Stach, Barnes, first our for Chief Officer, and Chief On Dave Accounting the with the Operating Officer; is call our today. who Leigh in Ann today our me be Page time, listen-only will Financial Officer;

XX-Q night an announcement normal released was process, also data night. followed last Form quarterly our X-K, with is and supplemental report were and on our our filed As earnings report and last

to an situation. Before get into the like update normal would Hospital I to our give we topic, Highlands

operator old operator. preparing new is operator has of an facility licenses transactions. operator transfer transitioning types a customary related and asset to currently these signed a items and The with of for purchase the The continue the Highlands. the process and of process agreement for new new the managing We of new operator agreement, and in is management

indicated with As new transfer operator last we signed have a I quarter, of to the a contingency. lease subject licenses

cash same We operator from the Highlands as the expect to were from substantially the getting flow forward the be new from operator. we old going

since in $X.XX we have Highlands we February, We in January, have the to FFO rent collected receiving. roughly the rent payments quarter drag were on because first been and to for $X.XX a collecting interest yet we monthly equivalent provided not fees situation believe, related Obviously, professional were addressed up we contingencies such we there that the think outcome can. what as are now, might Highlands. but could to we best be our occur than different significantly various the that have

more onto topics. mundane Now

we active ATM an place. know, you As have program in

through first credit The facility quarter, interest credit million agreement $XXX $XXX rates million due facility its And provides $XX end existing a a rate in to into the revolving a in due the of $XXX term in a that an at including it and Also million, at interest $XXX of XXXX, leverage blended per the due the feature, add first ability the allows $XX current approximately XXXX and million consist During received of term up to loans. additional net million term a approximately of borrowings total share. rate $XX and issued shares in gross quarter, proceeds average accordion million We price current its sales ATM yield. stock XXX,XXX common 'XX. loans at program XXXX. $XX.XX $X.X X.XX% equity The of through amended The fixed on million the increasing loans, facility, facility. loans. entered revolving facility of an company the X.XXX%. March on swap term resulting matures company of of for the credit it in company to million fund The and

the feet for square $XX.X X.XX%. were of of through quarter, with of acquired X to annual approximately a anticipated properties approximately leased These we with total During XXX% price and a XXXX XX,XXX leases X% purchase running million. properties returns

is we purchase of total So with feet price of have million. a of return The far a which this property through approximately anticipated annual runs XXXX for X.XX%. XX,XXX and square property quarter, acquired XXX% approximately leased, $XX an X

acquired XX%. purchase million. In investment addition, The range and be occupancy return to should agreements these we up and from continue to to additional aggregate on properties definitive expected completion sale under expected $XX after have X investments of

have to we our will we in ATM have continue continue quarter and and an This share. to On I on outstanding since have the dividend to it of $X.XX wanted care We stable And and quarter, Occupancy I of but share. during proud per fund was for front, the we quarters. all seeing raised several have with start to I continue anticipate that occupancy every in IPO. to common be of in another $X.XX strategically our sheets say availability believe next takes we start review, to cover. increasing to our the many returns raised to items anticipated term the the we we front level dividend to equity we of our to believe dividend enough quarter few equates a per properties declared first access annualized leasing our that to however, are acquisitions, the the seeing We it place, X% markets. XX%. opportunistically utilize under the revolver lot anticipate now activity having

things off Page So quarter, covering to next last the cover will I'll hand the Starting numbers. time, the for numbers. to be Dave

Page Barnes

forma to $X,XXX,XXX approximately per total $X share compensation, and consist plus adjusts amortization income $XX.X million company company's in were XXXX. in rental straight for million over pro appreciate $X.XX XXXX increased have $X.XX to quarter FFO, $X.X or the a first to day diluted for million $XXX,XXX the Total ready portfolio the the estate XXXX of XXXX. pro am first same from have pro pro I million of $X.X of ended forma I under additional forma and versus $XXX,XXX revenues and of the quarter, a expenses first net a revenues Again, all depreciation $X.XX have quarter, pro total for first first million AFFO XXXX I quarter. first the a debt have share. $XX.X quarter Total of AFFO, and by by versus XX, increased the interest reported per was I $X,XXX,XXX. by performance would million That's the for all occurred quarter. in income million. if On stock-based $XXX,XXX Thank, forma $XX.X an occurred March or which to million XXXX. of increased amortization first period from number rents for same of for on pleased just a AFFO mark acquisitions for just leased. day share first period adjusting the quarter total $X.X basis, Operator, $X,XXX,XXX for a for all all that. a XXXX for day On net if first forma The $X.X period a $XX.X the Depreciation the of million occurred basis, quarter $X.X first period on for first versus approximately and amortization Tim. outstanding XXXX believe expenses for for line of review financial quarter, $X.X under of forma total to we're over first basis, the the the the XXXX. $X.X quarter per in for administrative of total the quarter the of same was by the of on would The quarter, million, the first standpoint. million. the versus XXXX. the XXXX acquisitions had net for quarter the on were the XX.X% entire income General of real expense for quarter the acquisitions quarter Q&A. of $X.XX if pro million first for would Funds depreciation were increasing first the same operations, approximately

Operator

McGrath We Sheila ISI. will comes now begin go the ahead. question with Q&A session. from Evercore Instructions] The [Operator first Please

Sheila McGrath

how Good those in investment was also, kind might I yield wondering million on under additional out that through ventures. is Yes. with underway that's have you morning. And on acquisitions shake assume agreement, timing? opportunities? the other insight XX%. any Any discussions program-type program The of terms of $XX your I

Timothy Wallace

I or Probably, anticipate. is quarter Good few morning a X quarters, Sheila. next in we may The properties Yes. the... over million $XX X be X the basically, that guess

Page Barnes

quarter. Fourth

Timothy Wallace

In Okay. quarter? the fourth

the right, Page? quarter in the fourth, that in X and I'm at Page. of the So like looking X third, in Is next X year. first

Page Barnes

Probably, yes.

Timothy Wallace

Okay.

Page Barnes

Probably.

Timothy Wallace

we possible initiated properties, more types discussions end it we more as have operators some could those quarter properties. to end types will programmatic but at with that up closing existing people -- we the it's of And those likely yes, for with X quarter, next the discussions have be relates and this quarter. of of It's X on the additional additional of

the see provides we and again, future. a the as to good transparency provides that pipeline So into something that view

Sheila McGrath

But professional run the Is through plan year? a terms quick that for in rate? guidance rate? run assuming that good quarter a you additional do the first you provide a of have fees any extra the just And of Okay. I'm follow-up in quarter. G&A. on rest Or that ran hiring could like

Timothy Wallace

people years. hiring is our it the be I a through guidance more a are ramp-up. mean, the rest think slow continuing again, We will couple of I

But from You're are the $XXX,XXX it pretty quarter it's and you fess additional first decent of there, numbers. running then through number. out ramp correct, up back professional kind significant probably there a if

take sitting have and hires, related in in hires new go things electing the of this, Dave all to our at state table, new but -- also the that is ahead do to of to several I'll his compensation One also. and to stock and mean it our are elected like of I early

has the first that muting a of it interest alignment so it like year provides we in when effect So much. that

Sheila McGrath

you. Okay great. Thank

Timothy Wallace

Thank you.

Operator

The next ahead. Barry Davidson. D.A. question go with from comes Please Oxford

Barry Oxford

offering Good are best in the adjusted it and of to of acquisitions the your property type? at, right risk morning. looking return ones which you're the now opinion kind properties guys. comes that When type Thanks on healthcare

Timothy Wallace

to Barry, to were all the of to acquire X% It's -- by like X, we programmatic the clinic, we $X of got approach to off -- package and to get And returns tell cap we million we our decent can million see that with really the of the like operators obviously we is a X, thing a from industry -- intend X, million $X we're we've rate. from the properties good to above do that we clients diversification types, diversification going-forward they that property do physician is and X the the standpoint, seeing fairly type, segment property and maintain on able on. at We're together. that we can property basis. the say hard big $X the type, market to our because continuing properties We

Barry Oxford

at not I you Great, enough necessarily? months, over the the or you look equity to what great. does execute XX next ATM Thanks. provide want When

Timothy Wallace

exactly quarter. we're this ATM to and a little We're quarter, more fourth did first still the in ear. is. sure we in in the bit by little So a that that And -- approach not bit not new best did way playing we the how We're approach.

do I do Because might like depending hour where last follow-on everybody the third day, upon to offering. like beaten large the into probably see about it's a that a $X quarter want we don't think a small overnight got I get or upset in or how the place got fourth us trading the it. to in feels. it and I extremely down knows have $X one, -- stock last You

Let's it just that put way.

in the follow-ons, out. the So quarter up. get we're the stock going plan to large quite beat be ATM having can third might acquisitions do these the or not to But fourth away where upon how enough depending try from to stay

Barry Oxford

That guys. sense. Okay. of make floor. amount I'll leave tremendous the Thanks

Timothy Wallace

you. Thank

Operator

comes next Drew Babin with The question Baird. go from Please ahead.

Drew Babin

Hey good morning.

Timothy Wallace

Good Drew. morning

Drew Babin

quick for picked year occupancy your quarter a addressed maturities all, obviously, first the And Looks maturities a addressed. Just lease like the margin. maybe with than of in on quarter. more this up of first were question

rest negotiations or those I far some hoping So just can have you've as how you give of was and on maybe where in gone the second quarter year. so renewal as may rents to had the color occupancy new far trend the rents

Timothy Wallace

we're earlier, the in we leasing a signing we X where indicated on line. we've program lot future. into and with dotted It's the very are are reaches having I discussions actually as way between discussions. of the And a comfortable But think I got our good actually leasing year. leasing quarters out -- currently

already So through the quarter and test talked we've people first of to year. next

go the did that from down X years IPO. when We have leasing roll seen we ago

think roll for of XX%, I XX%. years the the couple annual first was

you Now would is year, like anticipate which next the portfolio look we're what -- XX% at down years, a we to if having like we did. it's relatively a couple

So we about yet this We to going. of feel care year. leasing how leses very the have good is take some did

increases market, pretty is significant probably we to we roll. As I we rate, decreases down, it we've like those portfolio relatively as anticipate rent our at overall, don't -- think it's feel summer or any overall, rates relates summer said always in up, and much what is

Drew Babin

And And I the be guess about against I or the more was Thank might net lingering second broader you And accounting kind on you. in my that? quantify question terms amount or you is, that be, going can beyond That's more can might any Highlands. owe they one the there would just on of aggregate. payment forward assume legal fees helpful. we of rent that then I into anything or recouping $XXX,XXX. think, My hoping quarter that? timing guess in of just question

Timothy Wallace

all we the lease we're had We The the anticipate in quantification new same type I involved and your answer anywhere the did yet, don't stake the have off I And top I I to a close. with of gulp, fees negotiations that because we between estimate the some I'm there's million. probably my second stuff. agreement would is the some always haven't the to timing $XXX,XXX think And as -- legal for mean, hate we transition to always, probably, when of being but happens the sure quarter, day, quarter back. it's there collected wouldn't depend the of licenses on them actual somewhere legal I get $X things I that -- the sure hate seen that it the and are the like numbers are would anticipate fees, I'm lingering XX big all is, of I first would this. the the level. and XX months number but close pretty mean beyond to transfer have and ground head, when an over but put I way agreements bag. going next and structured. a give and the on it's the months, the we'll in say, but of from

Drew Babin

Okay.

conservative So front? that we keep the on assumption pretty it's

Timothy Wallace

surprise. Yes. If that'd good I'm surprised, we sure get be not a

Drew Babin

Understood. Thank you very much.

Operator

from Alexander Please O'Neill. The with ahead. comes question next Goldfarb Sandler go

Alexander Goldfarb

good Hey there. morning down

Timothy Wallace

morning. Good

Alexander Goldfarb

morning. Good

quick few a Just questions here.

anything as half could wouldn't First, risk? that the there any this is the the year? in to see Like of operator, why reason is the close anything replacement, -- is there going Tim, there on Highlands transition second on this with new what's at you be

Timothy Wallace

we frame. fashion indicative are never say seeing, happen people forward everything And any things we'll But we healthcare, mean, it's would it keep there's and orderly from given so I everybody people. Alex, different, would I hearing what's I anticipate. know. in why we're that is mean that this essence, to happening, cetera. that can has I happening it always the the state, talked mean at But moving talked if in et it's closing. a will onboard think is any and issues we're let has that time operator guaranteed understands to new all the everything We the that hear acquisition, that is

Alexander Goldfarb

Drew's Okay, following okay. question on or comment. And then up

rent. $XXX,XXX You just press said, referenced or is from -- in there correctly, only heard $XXX,XXX $XXX,XXX or $XXX,XXX uncollected the of $XXX,XXX if I the release, of sort you January. But

$XXX,XXX, if didn't is it pay? $XXX,XXX, that else what -- that it hear correctly. didn't So But they that is else what maybe including I

Timothy Wallace

fourth rest hear or $XXX,XXX that its $XXX,XXX but did correctly, the quarter. from You of the

Alexander Goldfarb

spoke Okay. recapped it's last that from that's year. million, I that final you loan the is, to That's Can are this pay back, thinking may look you then still Or you that give us an $XX last think outstanding? likely? question you hospital helpful. call, if something guys update the about stay on And guys will year later is

Timothy Wallace

think I think going that current in Page mean they're has et let and them EBITDA, payments last my then times EBITDA got, My Page understanding mean let still the it payments. like cetera. their up. on -- They're fashion. rate like the is But report some down. I from him all on had makes million -- and They the it. -- they was which that last X an I'll And follow discussions. of understanding things proceeding I paid are their they're principal a earnings -- address run well quality again, I $XX ahead. -- Actually, I'll leverage.

are. very Page? comfortable with we're where we So But,

Page Barnes

proceeding They still think how we'll but form now Yes. they goes. to e-stock. I me probably they're process indication -- program the their quarter They that gave was for, third right on an are see is to hoping what projecting are

Timothy Wallace

leave it coverage. At and very this nice very point, it's must good interest out assume a rate because I they'll

So...

Alexander Goldfarb

perspective, did -- there. I you like that of away. QX, great end just the that. a But of should like obviously, at about Tim, sort No, goes it we a sounds modeling be job look, It sounds from thinking

Page Barnes

like this are Alex, always to slow happen. I'm just that concerned always deals

Alexander Goldfarb

excellent. Thank enough, Fair you.

Timothy Wallace

Thanks Alex.

Operator

The Janney. Stevenson go next question Please ahead. Rob from with comes

Rob Stevenson

in vacancy disposing those sort of of is where questions you a lease aggregated? back portfolio. status-wise them? answered. about have either And in little the assets? getting asset or and are bit up Tim, XX% talk roughly just so Which of can my Most that there's you But Thanks. -- been Where

Timothy Wallace

one -- the mean to note, we one -- can't almost if Well, the right, found biggest freebie up, X% because the took back building. I remember. just we bankruptcy in X% vacancy then -- I money. And it's financing. that our one in that it earning like lease X% Alex where was this -- we single we is And is way the one that's that basically the a provide the overall we're or return. that X.X% of it's like structured that Is with

what process. than our going is. So be what we longer taken -- but it that's is it anticipated, to but It's

we've to it. no Houston, others, The We've there's property it's of large mean one it's been -- got basically, square -- XX,XXX, pieces got feet vacancy. in and I XX,XXX had

So XXXX of foot XXXX leasing a or we've stuff it couple leased. got got I'm it's up, activity by XXX% based we properties that the that one of set being should what out, told is leases think filled else those, tenant and would all, on there. Trying out but later square in it -- got we've et of year. all but the should moved this place. the we And upon to what We've year, now. cetera, -- be, are And end see

a a we of difficult. of good place, again, kind makes any activity which thing, one a we've lot little in of bit but -- leasing more it So a whole got space good There's lot going on. not it's

Rob Stevenson

on the asset. So leasing you're at this point, up playing

So for of is anything point? sale there sort this at earmark

Timothy Wallace

one lower sell there what to now probably that's for, that's we've I'd the like out about $XXX,XXX on. $XXX,XXX an There asset offer that. to like it than is They're one had only that but

Rob Stevenson

Thanks Appreciate Okay. it. guys.

Operator

Nate ahead. Crossett go with Berenberg. Please

Nathan Crossett

my thanks Hi for question. taking

for go get Is to to Kindred. for curious you acquisition now level certain Just won't on tenant? that Humble brings a you one the there X% over thoughts concentration tenant your

Timothy Wallace

that guidelines investment got restricted We've us. Yes.

we X that LTAC an hospital. Kindred I don't different asset than any getting and Kindred is tenant. one rehab groups it's markets, anticipate one more X no to with it's different of close it's -- but and one because think XX%, hospital, an inpatient is

So another that. some I'd we more. Kindred do until grow facility right But we we probably with feel fairly say now, comfortable won't

Nathan Crossett

is, it raise the you shares? amount Okay. if quickly of do And limiting stock ATM. then the trading that ATM of the can on my on the just the the just you liquidity one question Or... the on find based need you is And volume

Timothy Wallace

from we can it lean ATM And in without $X too anybody don't million I that. were funds quarter. -- mean sure in felt probably exactly we they I it again, like we leaning on the much. obviously, I a feel I really didn't pressed how much haven't I do so that, I'm if the mean, the raised, and of trailing gotten wanted we a haven't but to quarter on But like -- responses raise quickly, know, like wouldn't lot we not that first we any

change? try the Now that we intending I'm in would quarter, if million right sure, trying but I'm to not not that now. to $XX do I'm do

So...

Nathan Crossett

that's you helpful. and Maybe just maybe stay Yes. and that leverage And how like the on won't to the the then maybe year. should by what you level go can remind -- in of would out range us end above shake

Timothy Wallace

XX% said book we've to that internal got we've leverage limit cap. Well, a on debt

and is we're we to manage to low mid-XXs, ATM Our best long-term in to as goal that try use to the going can. the

probably not XXs mid- managing to now, think right going but I in we'll above. work we're the go and we're through to that, upper

internal what XX%, limit. to. limit, I we've and to that's bank that's got the -- close I'm sorry. we're we No, -- think to that stick XX%, our XX% intend

Nathan Crossett

if on then we it, with last going I'm the Highland? issues Okay. are -- but outside other I aware sorry that just be and of should And missed there any what's tenant one one, of

Timothy Wallace

None about. basis that XXX obviously, close tenants. -- and we're I mean think XXX we're it's concerned -- got I we've to

some on So we a is tenants fashion form tenant I mean, who's this That estate. you I happens. rent. -- some in or the got But again, always square we've some Florida, mean real have -- XX,XXX foot in behind got that's

that that a And where profile-type like mean and other know assets large asset we facility. Highlands of high concern. of that any a large -- I have have don't have So a that, we that much is was profile obviously would

Nathan Crossett

much guys. very Thanks helpful. That's

Operator

Bryan Please from FBR. Maher with comes B. go question ahead. next Riley The Instructions] [Operator

Bryan Maher

Yes. Good morning.

missed know is Is but -- about asset But this, lease if the and you've it, tenant? new stated. comparable? comparable, are talked you I I Highlands apologize what the rents with the this I have the and On term

Timothy Wallace

years. XX Yes,

Bryan Maher

And who assets such a with XX% give would that you us then in a environment why type on to looking pay they else of rate, acquire an low rate? get question color better somewhere interest cap cap little or just another you're that Like the rate? lower with can couldn't on this financing

Timothy Wallace

It's bit. EBITDA, Basically, providers about our -- type I do our the of approach the provide we've mean due construction And to where We there's their Bryan, it. same It's a same HealthSouth million all operator, old with and will of to basically, or the out these they seamless the an Encompass. -- from companies, part the a as stuff, of quite worked programmatic are ex this utilize to is it's particular actually, sold company of that talked grow allow And Page arrangement what the now, rehab provider. it's for It's now EBITDA company sold whatever basically, they're management a a it that sell what healthcare them we to They're do, inpatient provide a they large financing. they want once. they've million they The got say, company, particular This using they diligence, -- stuff. HealthSouth, EBITDA, same already one like million point banks type to of team or an that banks, that $XX -- a has where company. can surveys, And lot -- of that experience. grew our same -- $XX done financing. the the of of, known banks a construction company. EBITDA $X it

in programmatic it to saved have it, it's it's basis, bank We're of it a We if that and a longer, them of and these a occupancy, to sign doing takes -- to In the sure assets. making for on one-off lot cash. these it of of have the it it. do one lot it markets they the then greenfields upfront this is operator. makes lot So and out risk those and approach. a through kills from each -- off on going a buy and we a constructed responsible way, completion go finance The less

that's couldn't they it of one. than psych guy So mean get guy could We're equity. lot their do want it years to turns can sold if they're of provides previously basically it this their -- Encompass. a inpatient spread Site Fresenius able reduced and got to whatever it goal what who to do tip [Indiscernible] et and a doing maybe, Universal before than costs, to cetera, is on you and but it higher is have the the you a because internal I X them otherwise, return third He a up, out be with -- kind on seamless we we're doing got earlier cheaper what psych in capitalize is and and that significantly a approach, rate they they're it much others. being out their of around. they're cost this then to factored the time to program is his where company this get with with anyway, into cheaper easier -- trying quicker But it that client or forget sold they And X We've Health. [Indiscernible] it. fourth sold behind we're dialysis and of that a that were the or end, acquirer. I done for basically, the he turns to rationale several got site basis gives acquisition people large in DaVita client. because them And paying Solutions to the own, -- it doing And sooner. for We've an them it the actually it's not we who's a one-off a we've step-up

Bryan Maher

guarantees I And are own a process? guys putting up their those are typically up and loans follow-up are XX%. up But there's cash? just the they XX%, and How money kind all these How much stuff. much of putting understand development of that. putting on during other as bank they XX%,

Timothy Wallace

helpful Maher Bryan That's Thank - XX%.Q you.

Operator

back conference over session. This I turn Timothy any concludes remarks. the to closing would for Wallace question-and-answer to the like

Timothy Wallace

hopefully, all coming and we And so New Thanks asking listening appreciate you questions. see of you Again, York. and in a us today to probably Nareit lot out at much.

Operator

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

You disconnect. may now

Community Healthcare Trust (CHCT) 9 May 192019 Q1 Earnings call transcript