CHCT - Earnings call transcript Q4 2020 | Community Healthcare Trust Incorporated

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Operator

Welcome to Community Healthcare Trust 2020 fourth Quarter Earnings Release Conference call.

On the call today, the company will discuss its 2020 fourth quarter financial results. It also will discuss progress made in various aspects of the business.

Following the remarks, the phone lines will be open for a question-and-answer session. The Company’s earnings release was distributed last evening and has also been posted on its website, www.chct.reit. XX, emphasize on of based risk this as today, to may information on and wants contain of discussed may be call February 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

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

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

call would CEO the I Trust Now like Tim to over Wallace, Inc. Mr. to turn of Community Healthcare

Timothy Wallace

today XXXX fourth our conference joining quarter for Good us morning, for thank and year-end call. you and

our is Dupuy, Accounting today with Chief Officer; the On our me Ann Dave Chief and Financial call Officer. Leigh Stach,

report, busy annual night. also Form an X-K, from last released acquisition and We was earnings - As from operations quarterly standpoint is with both night supplemental an last filed standpoint. had normal and announcement data and our our XX-K filed a an report actually well, were quarter, our process, on our and report

obligatory some providers patient reduced by COVID pandemic, visits. discussion. have procedures saw COVID-XX the of Healthcare impacted the been number and/or Now

back are to pre-pandemic of our basically operations tenants’ most However, levels.

rent remaining tenants company $XXX,XXX. the less XXst, than December deferral had representing two agreements of As with

Company’s history. shape Our in best are receivables the been the in they have

has great Our relating management a to group job asset done COVID-XX.

Now items. normal on to more

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

the issued through its at proceeds received million sales $XX.XX stock fourth price per ATM of XXX,XXX X.XX% Company shares We share. at of the gross average approximately current net During quarter, approximate an an yield. equity XX.X program of

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

expirations approximately XXth, lease an So approximately $XX.X XXXX. far with has square properties four aggregate this were million. quarter, the for XXX% through properties acquired leased purchase totaling price XX,XXX company acquisition, February of the Upon feet through

million company a three The In aggregate in expected for to addition, $XX.X second and credit properties two and and X.X% loan of quarter. the these has term under line to X.XX%. expect due of in close agreements $X company up of the provided the an on properties. company The to revolving the purchase aggregate a $X definitive properties million approximately of late price expected first currently is approximately purchase to million early or the performing quarter returns diligence either tenant

having credit ATM utilize strategically our continue of out We under the several anticipate on enough continue sheets on availability facilities X% We to our fund opportunistically and we and term XX%. many with the to to equity markets. to properties access to have have expect returns properties acquisitions, review to anticipated

COVID-XX. time for due the almost Occupancy somewhat caused at as weighted was challenges muted for Our term to eight over flat years. average basically was leasing moved years remaining quarter by first the lease activity X.X the

and of part encouraged share. This another providers. dividend annualized common our it every care are IPO. we that per wanted our On I to we the per for of $XX.XX the equates since raised of to healthcare see on an the items dividend share, numbers. proud I raised quarter front, activity to will things believe be off fourth However, by have quarter and cover, declared to to the I the say our I we dividend we cover hand to to Dave so takes $X.XX continue

David Dupuy

the of X.X have line first fourth year-over-year in the XXXX quarter, increased see in total in the Despite Meanwhile, the the basis, the the $XX.X X.X increased an was revenue in million on strong representing we of fourth total revenue expenses are I’m XX.X%. million good to the XX.X%. $XX.X the the our was or million in over forma on same growth property and business. XXXX compared revenue period versus XX.X% by continue we experiencing if a XXXX, the representing XXXX a Tim, in headwinds XXXX. over day during to forma From million revenue quarter, for quarter. XX.X from morning, with increase associated growth for prior XXXX, property growth operating million fourth XX.X is $XX.X approximately for in of for XXXX million pleased The the operating perspective, year. fourth pro everyone. had report XX% total expense in to of growth XX.X XXXX And expenses period-over-period. XXX,XXX fourth XXXX million quarter Thanks, operating And expenses with fourth total quarter in from additional quarter million an acquisitions or that would total occurred pandemic, in grew the million to XXXX to pro $XX.X to property

deferred Interest year-over-year in of XXXX G&A the rates compensation in amortization we XXXX were from XXXX million X.X to to costs level. Increases and leverage declined in quarter, facilities. a our in X.X million X.X million XX.X%, during X.X X.X in the expense million XXXX. the resulting the year, coupled XX.X%. our and driven The bank capitalization from in increases increased was debt the tier for in or the X.X%. total And increased For G&A expense notably, million to XXXX attractive in from by million pandemic, or decrease fourth employee-related new improved in cuts XXXX interest or a in in XXXX primarily under had Fed in conservative profile, to effects with year, in more our related to X.X pricing of very XX.X%, G&A

increased XX.X income in net XXXX in from or XXX.X%. million million Our XXXX X.X to

million XXXX the For quarter, income X.X to in or XXX%. net X.X million in XXXX from grew

leverage expense quarter growth fourth these and XX.X% annual adjusted quarterly XXXX, respectively. are in of to If attribute the the platform. We you income recognized income net for the the results our have developing tax been would in XX.X%, we operating strong deferred and

perspective. XX.X the pleased share if fourth Adjusted funds the approximately XXXX. fourth from pro I’m stock-based report AFFO the to in $X.XX $X.XX X.X to operations, straight-line have AFFO, all of the diluted in first quarter, would funds on And share That of from XXXX day or increased $X.XX acquisitions X.X a ready perspective, per to occurred we or numbers XX.X question-and-answer million, the million is quarter the forma of all and for a session. or in fourth Finally, or per from increased million which $X.XX per share rent diluted to compensation forma increasing grew pro from fourth per quarter million that quarter total operations XXX,XXX share adjusts XXXX. diluted in XX.X from from to $X.XX the by for fourth million have I a to share. are Nick, start quarter a of AFFO XXXX

Operator

First of Instructions] Piper from question ahead. go [Operator Please Alexander comes Goldfarb Sandler.

Alexander Goldfarb

First know, return of you congratulate and - have the publicly, chart Tim, is the impressive. came say it XXX% you that total all, but me in you supplemental to pretty to for that

to on So have you I to that. questions team and ask. kudos do your two

bit specific some guys something planned? around this or increasingly are is, loan acquisitions property credit, more more can this give a of then you made see you line the more a other and that bit the on not little to or you have the the something tenant First properties, two this bought, we where term basically and to color going the if whether you with is that on loan of that nature a just color is

Timothy Wallace

Sure. And something it Alex. situation. not of kind a you is for This generally. No, is the special thanks say are question, going to

several We what have in The We this team. had properties with process projects three our little what And like They had got properties, a hit were is two area several doing. the like the or they one the when geriatric pandemic are. hit. in psych They tenant. pandemic. management bit. are growing that portfolio before they the We

most vaccinated potential have this where at population looked we all has basically, tenant they so vaccinated. their their point, patient At been staff are. and population, population been And of

think a different they out they to but going of extremely to situation well. stage. are quite bank kind And bank their the because come not have small are outgrown big we So in they

saw are you company, little numbers, excellent if levered. So overall we it. look probably the making us is some on it as be a over one the we them, an for because opportunity times a win-win for this based And to returns at upon

unique every you one to we not we situation. it So is make stuff you day. levered anticipate can where a time But and like two making. to something that is what really returns situations do It going like times you see is are

Alexander Goldfarb

to point, to are use it tenants willing step what that seem to in to sheet like been from bridge does more But have time-to-time balance then And you returns? the through. your

is part time-to-time? of then? what it that the And seem use So: does returns do of one, your sort two, are like arsenal it from you

Timothy Wallace

the try call it. that Well, we the manage would something feel one I I that it I Refinance. do. of know mean mean, things that I that arsenal. us made we is comfortable this of AMG mean doing I part to don’t

no now while, them for down a got they put on prepayment. set have million, it we amortizing, self to there’s loan So that XX paid and but

amortizes it but anticipation two pay So we with will kind off they which getting it forget it The year think something. X% or if a they on accrual have or think pay terms and got it I and don’t a it is end current sitting exactly, in I five-years X% amortizes, over the and loan a up But is that off. there. bank I paying this, early, a of

David Dupuy

right. is That

Timothy Wallace

paid they five-years. two. we term over amortizing the will have say But this. or a The still only is drawn And let be anticipate in me it -. it off So is year thing

David Dupuy

XXX,XXX on revolver. the

Timothy Wallace

a significantly the we ever mean, revolver on drawn. couple – being XXX,XXX the I and don’t Yes. anticipate like of revolver, and

Alexander Goldfarb

or properties the with there substance health, mental you everything abuse seeing COVID, it like in really then And Are translating second question your opportunity is you developer a read for all area need is just and seeing would that press investment guys, is you business seem we a but that. not headlines, for for with to your huge seeing partners, that in huge presales the whether it as Okay. is, or of are existing something yet? with as that press, of it gets growth it lot far

Timothy Wallace

problem it this to the care through before what with description, cut we question pandemic, Obamacare the coming benefits from And the a it if been to then is basically autism which the and things. psych because said had acute several you answer under-bedded is, to and have It way about acute as is with it to inpatient was psych were Well, were beds ‘XXs the you reimbursements behavioral because as everything benefits. covers such tenant is to the geriatric psych. back wide opioid had was growing talking have short-term of just

is opportunities sort there are ones behavioral, from back (Ph) pandemic standpoint. well opioid seen of long-term legs, that and snack a XX-months at this, really the time, last the over been which say it of which And So through [psych] see been doing have and has of thrown of different the has have I have some facilities cetera. lot to has XX-months. few thrown all biggest we at coming problem lot And our the valid, money billions years. areas to of Federal a dollars administration situation for ones last are over the our But multiplied will et And that. trying

Alexander Goldfarb

you Thank Tim. Okay.

Timothy Wallace

Alex. you Thank

Operator

you. Thank

McGrath Sheila Evercore. go from ahead. is question Next Please of

Sheila McGrath

net balance good Tim Dave, or the at morning. is threes. in very operating Yes the strong debt-to-EBITDA sheet

up leverage what higher that bringing wondering target Just level And is? this bit envision year? you do a little your

Timothy Wallace

the is And basically capital And wanted our since long-term, levels the with not then changed what significantly XX% leverage to be public. as surprised we you on you going to the relates Well, see sheet. debt overall to target XX% to now. said is It are you of be increase became side if low that as haven’t our the but increase I’m say to if amount it of us XX% be percentage see equity. you XX% change the we should to surprised amount raise be to debt. going our we balance being we booked shouldn’t overall, we not

Sheila McGrath

Okay. million bit a Great. on little And then clarity XX more just year. this closings the

probably quarter. you first said think I

Just are if complete? insight those potential give on timing us a little more bit almost

Timothy Wallace

now Our parties best of is wants the parties is on the first And one of estimate close the right there transaction several month. that are that it the in to happening.

April not point. And either So April We close or it that hopefully, but could probably Xst, be we control Xst. are think, on March will Xst this at March Xst. in of it

Sheila McGrath

me. question last And Okay. for

bumping IPO. quarter the every You of have dividend track great, record the a since consistent

ratio conservative, you I payout guess, flow retaining for pretty Now are your investment. cash is some

if or you Just consistent entertain larger the with quarter is payout increase? since on every plan dividend a modest you would conservative the being increase curious if

Timothy Wallace

Obviously, of good projections cash our plenty board that topic approach discussion, we make likelihood meeting, internal the next is and our that that always to the then the Board. a dividend. that on pay to we payout is topic for up this of sure year, and I But we size come there the will want ratio quarterly a there maintain to is a basis, if conservative will to as but bump of did last say the meet at increase

Sheila McGrath

you. Thank great. Okay,

Timothy Wallace

Sheila. Thanks

Operator

you. Thank

Crossett question Nate Please is of from go Berenberg. ahead. Next

Nathan Crossett

on of would Hey question right year? announced, kind a Maybe just funnel have consistently that anything this pipeline the outside already you can the of good targeted is size had what now? what acquisition morning you us that the size guys. and years. been Are yields. of last just for you It above the then several help pricing kind And has deal seeing change range X% of

Timothy Wallace

should you we the much. know - now Well, to so around, boring are Nate, us that change we by this company know enough don’t

acquisitions, for goal to target a million still Our year. $XXX $XXX million

always said lumpy. is have We it

it is Sometimes year. in the early lumpy

the million. lumpy for $XXX to is it $XXX late is million But goal year. shoot Sometimes in to our

million. any like But in kind we Now year, maybe given what say model our in. XXX is it would to that and spot to is sweet of everybody

return. don’t below anything anything X% below to return we have relates returns, never it As done doing a and anticipate a X%

that covers We Like So don’t said, that. boring. I change kind we lot. are a of

Nathan Crossett

Well, the well. doing stock is

XX%, So threshold want bound Healthvest go and certain tenant willing boring is impact to X%. Everest good. What a don’t about that just would would what that is above there concentrations. acquire? be the upper is over, on you I think, Is you to

Timothy Wallace

what and XX%. ditches us been guidelines geographic that will the investment be beginning puts the over kind basically, of tenant in between have We in have that place ever And in - keeps us tenant segment both diversification. is since on no that diversification diversification, says industry

being big tenants with client. I a good million. the XX very good last lumps. we operator them are They are I U.S. and like deal Healthvest don’t we think actually, they was double-digits. did been mean, Now has

So they are a big lump.

XX%. up to diversification. ended over that. don’t good but manage good manage that to they sometimes turn try We we from So want tenant do, that to down just do being clients, projects We

yes. But see about as again, Hopefully, in portfolio. good the tenants. So I is are XX% high will as happen would you say they

them down So sometimes. it really hard is to turn

Nathan Crossett

how year, those is flattish discussions, one. I we are That just guess, spreads, of Okay. one helpful. going maybe be for with last kind it tenants? expirations assuming should the Lease then And renewal are this or

Timothy Wallace

is we plus minus always or the And market still at that rate. is the is basically, mean, portfolio, see feel the you feel, said increase. a that the are like, if of I market X.X% way happening maybe rate that of is most have type we that look Yes. and we that we we way inflation-based X%, basically renewals

have us like or see are So got that we say going to renewal increases X% that. you anything

Nathan Crossett

Thank is helpful. That you. Okay.

Timothy Wallace

Nate. Thanks

Operator

Thank you.

National from ahead. go comes Please Mehta question Gaurav of Next Securities.

Gaurav Mehta

could the that if your hi any vacancy about is there of have Question vacancies opportunity your then Yes, the good largest I where some portfolio hoping up? you morning. portfolio. on and fill in of talk was in you that to some

Timothy Wallace

Is to any there opportunity what?

Gaurav Mehta

portfolio? To your the in maybe occupancy increase

Timothy Wallace

success tell that. through that property management year. I have We a having and because day. year, interest on operating lease space lot to me our their getting more already talking to leasing try the business, to managers pandemic asset every leasing in providers space. are much group asset healthcare was this mean, didn’t Last pretty tough, The is and less providers additional they on leasing bandwidth enough healthcare focus

are will But came to occupancy of you leasing. what pretty in pickup through a if think we we pandemic just all the that overall, see on people’s look that So I a basis, year-to-year consider that if hopeful lot done we we occupancies, and good. our you at look has a

Gaurav Mehta

Okay. you, is that all had. I Thank

Timothy Wallace

Thanks. Alright.

Operator

Thank you.

Baird. Next from Amanda Sweitzer question Please go ahead. of is

Amanda Sweitzer

start guys. on detail additional acquisition any portfolio activity. just recent in some GenesisCare did transaction wanted near-term? morning do Can Good Thanks. you to of about? how your opportunities the come see I acquisition, some additional portfolio the And on you then the provide transaction

Timothy Wallace

went Well, putting, don’t GenesisCare, of by We healthcare XXst much This in I about shakeup. portfolio Australian through million because there don’t it $XXX platform expand there if of oncology. necessarily generally is it backed the into company is I to but management think, it. century an was their went They bankruptcy. They basically, a GenesisCare And the don’t KKR. know generally, that we was look know like. is a Good morning. stuff kind history you for unique acquisitions, that situation.

stuff, actually in Operating it lives of here. Franklin provided GenesisCare So Chief some Officer the unique

hopeful But client. we a to unique develop a some been have looking situation, to with transactions. into of are of have dialogue So it him, not trying we personal portfolio to them able is do size and are kind we and

Amanda Sweitzer

helpful then I the to you more secondly, of the a you? bit increase kind expect just increase question, of see an there other in in is That broadly. acquired but some market the may your are figured. year And result M&A get sector any hypothetical investment this quality, benefit in a what Do in and of the liquidity in kind ways with some credit and of tenants potentially of healthcare and increased

Timothy Wallace

activity investments, the market we of XX-months our several and some a have several you lot anticipation that. XX-months, do has the been the particularly our of in of seeing acquisitions. There a consolidating Actually, to kind would But anticipate that have clients, investments, it been was our different quiet, last we are with we a areas lot in that over been in yes, and been profits of with not has the that lot for but time. in, of do involved that, is lot happen of a anticipate the now And point at that of happening.

Some it but have happen will overtime, than others thought, is of we would believe. happening we sooner

Amanda Sweitzer

is me. time. Thanks. I That appreciate the from it

Timothy Wallace

Amanda. Thanks

Operator

you. Thank

go is Please Rob of Stevenson Next from ahead. question Janney.

Robert Stevenson

guys. take the where is would back Do want rent. The Tim, inpatient roughly upper of to that Hey you exposure boundary facility to in an your have annualized behavioral diversification XX% aggregate? commentary. acute now you

Timothy Wallace

of that property terms do it say a I on with I nice to else us very we it never we is now. wouldn’t anything do a for right now, but very but good never, range. won’t I be kind it say mean to would that hitting say will have this,

David Dupuy

pipeline we you other think also active as right such down. that see and we as now, I in come is through that our that we will would also sectors I move is, what are very But say pipeline,

Robert Stevenson

incremental that the next acquisition are is is helpful. That G&A I And then, to run expected year? how levels? increase generally material about Dave, you volume over the company over any you need and thinking handle Okay. mean, XXXX

David Dupuy

add But have we the that is yes, to and will we powers the asset platform. there big we other the as team really we to reality to accounting size, a needs it selectively the the incrementally to are I our in grow don’t want our folks incrementally certain seeing add know staff management of think that to gotten to we You the are within one business is, of platform are have to going order team. and in have

as our And what is I see so growth. think relative historically to continue G&A to has and it will growing you not especially revenue fast as

is So would I that you. how guide

Timothy Wallace

discussion it. it And I XX% recently put in on compensation. our cash in The to with deferred thing our amortization One would I too, our the not was never you I is that had a just because now, would Yes. point like of e-mail of look, shares is number from in that, if G&A calculation. supplemental like in are fourth on but that everybody out to that remind we to But one an stock-based shares the compensation. There that quarter already outstanding of effect compensation. analysts

have So in basically, that accounted shares. our of is that why the never compensation because cash by outstanding in a is is situation best and will the we already that reasons think effect AFFO far one stock-based measure the

Robert Stevenson

Okay. close mean the And just Dave, then, I loop.

or the are your individuals need of be from compensation additions in? this pay you maybe supplemental those of terms may any need sort of year, is to the year that and bring lines along there will early employee to you that median going higher the more of sort next In

David Dupuy

No.

I it employee. track think so next find of would what the sort over median our year, you with along

Robert Stevenson

Okay. thanks. guys, helpful

Timothy Wallace

you. Thank

Operator

Bryan go FBR. from Riley Maher B. [Operator is Instructions] Next question ahead. Please

Bryan Maher

Good morning.

thought at two I the you on down and it occupancy. look transcript about when quarter. it the third earnings call, XX One for Just in But mentioned that go questions. the we only know went think you I quarter quarter. bps in Is with color in properties up can you leased, were that degradation. considering the the the occupancy there? us a with little the share any bought XXX% quarter there fourth back were you surprised pop And would fourth we back

Timothy Wallace

back had a and surge the then the all the we pandemic, third providers of virus things pulled little surge with started to bit, quarter we a a Basically, loosen in talking up sudden when call, in. in were but had

So very an I lowest comfortable where to And definitely annual our in mean, our that like again, it we effect. leases for overall, we with this history year an environmental feel X% is. occupancy was release type releasing the need And or are at the have from standpoint.

out the have providers it. group like asset is as we on we And So stuff of management can kind very on it. planned we focused on focused as leasing feel keep long

Bryan Maher

Great. here to other state. people And then changed quo? all there as in on press from or to to that tax you relates the moving of assets want Northeast, your still it down the out with view at and this where look in low is Florida status at Has it all

Timothy Wallace

at how actuality not much in this how reality point about. I’m Yes. that is to something or that talk the in is needing basically much press sure and

far, much. So is doing be process. of significant, to But that haven’t early mean, it it it. in seen people we to lot and the very I a have would it make

haven’t we that. far, so seen And

a good have mixture. We

the to states think in XX in are Midwest it We I from Southeast or now, Southwest. the Everything is. mostly the

I you Florida, are If think, Texas, some our states. biggest Ohio, of look,

would And similar very mean, continuing. anticipate something probably so I I

Bryan Maher

my it is heading many real. assure my friends sold can you having colleagues, house Well, New and like South, I and of that Jersey

Timothy Wallace

on the four now, XX Well, good. snow except on right but. degrees inches are there for we and now, is down, ground Come right like

Bryan Maher

Thanks Tim.

Operator

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

Timothy Wallace

you like for and interested, thank and support, thanks would call quarter. everybody in with we on the continued for and and a to we being time will spending Bye. Thanks. us Thanks, talk the Nick, to

Operator

concluded. now you attending presentation. today’s has Conference Thank for

disconnect. now You may

Community Healthcare Trust (CHCT) 17 Feb 212020 Q4 Earnings call transcript