CHCT - Earnings call transcript Q3 2021 | Community Healthcare Trust Incorporated

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Operator

Welcome to Community Healthcare Trust 2021 Third Quarter Earnings Release Conference Call.

On the call today, the company will discuss its 2021 third quarter financial results. It will also discuss progress made in various aspects of its business. [Operator Instructions] The company's earnings release was distributed last evening and has also been posted on its website, www.chct.reit. The company wants to emphasize that some of the information that may be discussed on this call will be based on information as of today, November 3, 2021, and may contain forward-looking statements that involve risk and uncertainty. materially set differ statements. in may results from forth those such Actual

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

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

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

Tim Wallace

for conference Thank joining for morning. third today quarter you Good XXXX call. our us

upfront I is as like Executive David President, On head Officer; Atlanta Stach, there I'd cloud fan, new Financial a and moment resident apologize be the our because Tim Asset Atlanta the and time, Braves Dupuy, Chief Management. some for in a and -- today today. today call longtime Vice with to Officer; me our could issues because take Dave's is Meyer, Accounting Chief And our Leigh Ann the first

night their get and to on Braves before so Dave congratulate victory want his And we Atlanta started. I last

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

that operations an the have a want quarter expense historically points line both slow operating there a are a questions. hopefully And answer As few in little the We out-of-budget from and some case, been cover acquisition items property third will the I upfront was of standpoint. has item. couple to can

were utilities the This due third this heat summer. wave is parts the to in budget covered quarter. higher the that First, country than significantly of

Second, rates. are of property high related taxes were because stances aggressive local unusually and reassessments many tax municipalities to taking

advised to increase anticipate consultants our for we Our the they put of quarters were most, for over reimbursed quarter We months. few the not these several third these that expense needed so all of next through expenses the year, for the adjustments accruals properties. but on as us several into reimbursements being operating work

us On G&A dollars position the couple we of should going thousand that forward. a year a this quarter front, eliminated save a hundred

several deferred closer another to compensation. write getting the still have vesting our until left legal rules are we be. will the dividends takes also of on us which pay is how made Since amortize we back believe That with, This of the retire, to is can more are cash However, to is forcing of several to cash period more ability we us straight-line best dividends accounting dollars number even can out current million over another over of we is with. to the several amortization than raises vesting. the deferred $X.X is adjusted million would contractual no it the rent, us retiring for stock $X though there was measure of This off this deferred pay compensation though then. retire having amortization us time not the are compensation next us that having to rules This compensation. amortize we be of make which legal the metric we operation the of related to is deferred funds no contractual holding expense us subject requirements, we future intention just deferred issue the accounting compensation, than acceleration even year. and can thousand hundred change of from related to year This adds as because reason consideration

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

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

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

this The under expected purchase the X.X%. and X November properties return an quarter of on for X annual purchase acquired property Upon totaling the XXXX anticipated an close performing has approximately XX,XXX a X.X%. returns expirations property purchase company square price and X, acquisition, approximately of for far company aggregate currently is X.X% these So feet properties in diligence approximately million. definitive due million, lease to $XX.X the XXX% company expects leased through approximately to of has with through The of price agreements fourth expected $X.X a quarter. was and

occupancy on of sale to We completion return acquired agreements to we last should discussed up for expected the XX.XX%. aggregate million. an be definitive these $XX quarter and investments signed X expected range The also have for and after purchase properties investment

X XXXX close quarter in expect and of of first We these XXXX the X other on and the into properties XXXX to period. through

XX XX sheet term $XX anticipated that signed of made is up approximately It approximately the investment. new be these properties investments over the months. will had next we for new million and to another addition, In

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

we the This at activity common remaining be annualized lease we stable the say to declared to for since last IPO. dividend by equates as up, are activity encouraged to than see relatively $X.XXX average part I just on quarter approximately we per years. per cover. to proud to care same and Our of X items I share. the On have of an dividend our our front, slightly And raised third has takes our continue less was wanted believe raised providers. health another the and term $X.XX is of Leasing Occupancy care dividend every quarter it share. the picked quarter. I that we weighted

the things hand to to cover numbers. So Dave off will I

David Dupuy

to was of XXXX on million total forma representing by third of a million the Good first have Braves. report last year. the growth. quarter third am in $XX.X second of Go third million third quarter, Great. pro and Revenue quarter the day an all third pro everyone, would million $XX.X representing acquisitions revenue if On XX.X% had total of X.X% pleased $XX.X from revenue Tim. XXXX, Thanks, grew to forma morning, occurred quarter the $XXX,XXX same basis, to $XX.X XXXX the quarter. I that in XXXX a of sequential the growth quarter for total over period in the the additional increased

increased $X.X or million mentioned X.X%. Tim quarter. to comments, from in operating expenses quarter-over-quarter his the $X.X third in increased million As Property expenses

in by the in expense the primarily increase $X.X discussed, As utilities expense. taxes property million increases third increased operating and for property expenses or quarter-over-quarter driven to $X.X is quarter million G&A from Tim XX.X%.

for noncash approximately increased write-off $XXX,XXX onetime was G&A this mentioned this inflated by However, in of of have increase as related compensation quarter-over-quarter. the part previously, elimination position. X.X% Tim expense, Adjusted to would noncash the a deferred

On new our items are supplemental I'd to materials. including in like now the a topic expense, couple compensation of of we stock-based disclosure highlight

to of on mix cash addition Page G&A and now as noncash, revenue. a of those including are First, between X, percentage in disclosing items we the

quarter-over-quarter will between X% that ranged You and revenue few the last portion of quarters. down and X% has cash trended the note has

Second, compensation The of in amortization the our amortization the compensation. detail table included shows GAAP deferred page disclosing G&A. required more of around we on Page stock deferred at X, bottom the are

in of acceleration why stock-based example also is dates eligibility this driven compensation mostly adds extend believe And in we back increase show is that based to mentioned vesting This dates. years. legal future acceleration our legal G&A. his amortization Tim amortization funds to performance. operations, the in another measure periods We comments, the deferred retirement This will which compensation, included deferred from the show continue rent adjusted as the legal by into and best is of way -- actual stock-based beyond the straight-line eliminates on vesting compensation

year-over-year. the XXXX FFO period rent was totaled growth from funds XXXX rates the million $X.XX last a Meanwhile, third as or per the Finally, million of flat a report stated quarter quarter $XX.X by million interest in or from XXXX XXXX third diluted in share third from an On $XX.X to $X.X operations, and of from $XX third $X.XX the year. increased to revolver. same share remaining from adjusts diluted compensation, of basis, slightly in third million XXXX quarter share XX.X%. I'm to or for XX.X% that pleased in per of increased of $X.XX second sequentially. diluted for per increased Adjusted This of over stock-based funds or the of straight-line quarter XXXX, in to of million in quarter third per slightly basis, $XX.X X.X%. for increase XXXX, earlier, million, driven the FFO, was increase the interest X.X%. quarter which share $X.X On quarter with quarter expense per of compared $XX.X XXXX $X.XX our essentially third on FFO higher share from AFFO the the million third the XX% of diluted increased share to XXXX in per quarter representing growth operations,

all XXXX million, from approximately the of of a on for Danielle, ready to was I second we And with a pro would question-and-answer third forma AFFO the basis. first from representing AFFO of pro third million. are forma on a by if growth acquisitions numbers have quarter X.X% day sequential the session. $XXX,XXX Finally, perspective. quarter, occurred $XX.X perspective, the to quarter start all That's total increased have $XX.X a

Operator

comes ahead. go Evercore. Please question from first from The McGrath Instructions] Sheila [Operator

Sheila McGrath

wonder a term partner. any there Tim, relationship? other if just you release actually with that in the investor deal? sheet, that's the partners to or dialysis I are closer finalized other And your mentioned discussions being beyond deck, in -- the

Tim Wallace

going it to over unlike Is the That bill? purchase a to facilities rehab next going Yes. able sale pieces agreements to This is pieces, though, basically those were we do to finalized XX in of all where is months. simultaneously. come and being inpatient almost in one closer come the

continuing or there, at anticipation So I that's mean, my be Dave sudden up and And a there's to answer all there's going is say is, not anticipation. not one balance And of going of Dave discussions. my we're with we're least, to shouldn't next yesterday several got -- be out to I tee out the not of was not one with that several to no, yes, trying those that week. that's going those XX -- to another -- have to bring fruition. are we've

Sheila McGrath

position Management, the more then -- that new a bigger that And is that. detail of the And company is size is company? at driven little Asset one just the the on Head by of or just a

Tim Wallace

President now now. for that Vice President, kind we a part and recognition was bigger Senior doing of we're gave years. been of is him Vice with what couple the us it He in of a to has promotion Tim Executive a

the grow, what is we we're piece significant a of asset piece As management doing.

Sheila McGrath

a And quarter, my question. slated into mentioned to million $XX last month fourth close. you We're

the that Just wonder, are any in fourth in hit quarter? potentially transactions works could there other

Tim Wallace

Well, million. we've closed already $X.X

the million probable. with very but total think of invested, is, the million would that an it's up we've $XXX little that bit us million the the say. what put There's other I'm we that we to or much lumpy is assurance. business. the I it's and a we quarter So see, totally to $XXX and we've questioned that, what the of shy $XX.X we -- possibility but for one whatever agreements how sale say people as the brings in have the shy, not stuff, which and at it but and several notes what fourth $XX.X that's a with for already, going of announced not million, it's year, but it's And purchase And say, range about closed

Operator

from Sandler. comes next The go ahead. Please question from Alexander Piper Goldfarb

Alexander Goldfarb

earlier to especially what celebrate congratulations in Dave, be you victory. sweet Must Atlanta, with a baseball this happened to year.

has tremendous comp created stock. Obviously, back Tim, all a guys been and something the So and that IPO, separated been to from since has peers the as a fairness, going your you you an stock has hard as and it as to hallmark comp. have think just Dave stock you expense it's of of definitely alignment well interest. expect for because the who in you of to But work as others not yourself,

have you didn't to cash. have you that If pay

is So least FFO I a NAREIT conflicting at -- but has know metric. it's was

Tim Wallace

address me like the yes, fault concept you because -- for that that, it a look let is, second just it an Alex, if is expense. that just at in

However, it's being are that stock expense have outstanding. a for we not we cash getting it dividends, and because affects already

-- So shares. is stock already the the it's diluting

experience amortizing looking shares diluting by at is a So that and into like hit. both double the stock

Alexander Goldfarb

$XXX,XXX as -- me a look with you mentioned hit do G&A that some Dave, you first double accelerated I on outsized that be the to side be expect operating onetime the fourth New third an -- can adjusting and There some compared appropriate the that expense the and is, about to really given third taxation, should there items like also for on is Like, was the quarter, fourth ask quarter as run that in let can Living quarter? think how to feel for the we question the I the we G&A. reimbursed model, there in But we you our think this sympathize. items rate? expenses the time? were York were seems it quarter, What

David Dupuy

we obviously called inflated Yes. truly position, here because say G&A. that the thing it is $XXX,XXX would of was the a that out key elimination an and I

amortization bit I think proxy has on And good been X% X% look a I but G&A trends, in in if down, impacting think perspective. I disclosures seeing of last you we've a to the X, you we've just portion how several is pointed little quarters. is the that as the what the us portion, for Page the cash of from trending cash out over at see of kind then general, additional a acceleration noncash been think,

the So good I be. should where combination we'll a think give of of two those things you sense

Tim Wallace

that. the I'd at quarter when you out that look $XXX,XXX of third -- for And take the

David Dupuy

Right. And

Alexander Goldfarb

the then And side? reimbursement

David Dupuy

that Yes. fluctuates quarter-over-quarter. In side, the property operating bit a little expense

And went and it's the when when so it a pay It's basically the timing little little differences go between just -- from bit. have Could bit? down we a get it dollars up to expenses It might. tenant. we

a you ball, I up you at ultimately, what getting we -- And So to I so give feel crystal quarter-over-quarter. about I those it's specific X% those term, a long and have reimbursed. don't look over can't answer. think But you'll good expenses go down if the see, X% it

Alexander Goldfarb

the then second And

Tim Wallace

the line because that's obvious item. where a real property look the in Alex, foot out and On operating X expense I'd will what in taxes because that, increase called on the or property property from an all it's at quarter is is model income. of quarters a And combined like be outsized last operating expenses utilities reimbursements per standpoint, there square reason something we basis this such was the because not the

people to it's wanted sure of onetime operating reimbursed. should kind we the that some that So items in property make get expenses understood

Alexander Goldfarb

$XXX maintain that something that $XXX million. and at increase then million $XXX and X%, question, you you have sense to the disciplined $XXX to I the it And is impact, said before, in could to are maybe the acquisitions, that you've try guys go more million accounting given still amazing to and million, to but second I -- you would and bigger instead point targeted what make Tim, understand of think like

out not up blowing it bit it little it a stepping but of offset given little up step help to a et comp expense bit, cetera. FASB, accelerated of some the the mandates obviously, So retirement

see is up as little So maybe bit? the acquisition would that pace something you that a stepping possible,

Tim Wallace

at we been have last building stuff X say for mean, think, have to mean been me if targets. X, I We've let of We straight. doing, the years, numbers Well, I the not been the accounting -- X good can. last fixed and having start what buy couple the we We're that what I best years we've doing producing been since years we've this. inception. X has be been pretty years, and producing, afraid over don't to look been that with things amortizing numbers quicker. we accounting to good will has We we've profit anywhere you our $XXX be and adding between accretive. as cost our sheet. $XX from, -- gross it it think assets average increases can opposed And have comfortable million, we're million our of our balance looking the is we that the goal weighted acquisitions time, that run and they something look -- I over and we're larger I the to to for, get think, income acquire spread investments reduce capital to will mean, to

Operator

The from ahead. next from comes Truist. Lewis question Please Michael go

Michael Lewis

not you you the stuff the New Mets now but get put it I first guess required term as that's of And the sheet Is uncertainty rate under be that is SunTrust, My dialysis about I else? Braves of think related the Truist, question, an term think know on or think, the employee to centers. fan anything the the of the million what's to term the as close York I $XX begs typical for to question know, -- as the Dave I here, I press slide well. we're when sheet? deck transaction release. and sheet happy in

Tim Wallace

or and closed the and the going like owned closing. the shows don't I agreements, opposed this then history, we've that in things that there's X think sale X. agreement, sheets, that as standpoint, we're agreements. and I in don't signed not things it sale as view day We likely and provide signed -- file from That's good, pretty is looking haven't sheets, land, the agreements we likely included that purchase Michael, term And good. we to would been we a if we keep but our which sale right, anticipating that other signed than -- due that make something purchase get a less it's to on from On is point -- I years sign not sheet, it's things closed out. X where probably we mean, last the quite term only term purchase with something purchase from But we SEC. diligence at as historical is sure us side up with sales SEC and in that why, a to get a the

deck slide the is is is something stuff other with stuff the that file SEC. that we the provided and So

Michael Lewis

supplemental, know out were that that of is to little $X of is year-to-date suggested You the this pace. made table, bit when little running of but not those a do deals, pointed maybe million we line at no your I more failed consider are in in to operating Those we a bit over that other the what Tim, and acquisitions property you Could investments, talk a you the included you correctly you course. now. the no think interest investments behind about returns potential investment the types year

types talk of about a you little could So those just investments? bit

Tim Wallace

loans each. existing that like and they are various to are of we two now typically All decide million relationships $XX we'll I for -- guess good they're of we those we right. Well, But look have at reasons. are right tenants businesses existing do with or that that around clients, them both and those basically with

generate anticipate Dave looking to make I outstanding to years, X XX% X XX% So to right. million. total Correct? they'll that at And there's XX% $XX returns. generally be we XX% this I sure They I'm for to think. returns. get of a

David Dupuy

Yes, I right. think that's

Michael Lewis

anticipate would you they up? of So as like that more those do just deals? any one-off be Or a come

Tim Wallace

we overall good not them, if mean that it on relationship shy It's we and good not that makes we for market, from an basis something but something us. it's think sense for I away

Michael Lewis

for the these yield and on of the nice upon because we which you beginning lastly, visibility close 'XX, expectation, high. and just investors, deals they're 'XX provide and timing to guess, are is analysts occupancy of then good and And that I sir. have beginning there set on Yes, us, for amount the between the

I once opportunities So kind maybe to do that forward they're become those the return of programmatic those can for are have X there kind talk of of things completed, on of think and been there similar thing? a these if to about Do investments? of a you kind that like risk a potential basis any out little there's add know while. to types

Tim Wallace

X was X it before with? had a that actually, already we client with, done Well,

David Dupuy

Tim Wallace

basically, with. made And kind actually they got our X on are -- a call of them and profit sold was and a of They it. those finished serial beforehand couple big we them entrepreneurs. what

or have have teams we're that we're that anticipating -- I they And that the the a once -- them a sell people months, get larger And anticipating run looking may entity. of sold to it's we're have completed, them. sell X couple and say to company at I used so And say management basically, -- almost a within company. years, say buy now it already But -- I properties. would within they to we they'll

So this. mezzanine a piece reward, they a in bit by doing risk, a like to again, them quick quicker the one But client environment, names want very the change little started It all with we're to before a thing. lot copy them done. which where functioning today's it's X, addresses, it's the be next basically, the just do to documents, we've when and get PSA, we copy done them the these because and basically for is gets

lot it's a they on easier more have their growth. so lot to ability them, a plan And

good operating in had people better operate as they ability but We And our have people a operations. operating lot credit better them, plan growth. the if more even to they we've sell

a win-win. to yes, type several relationships. of trying And we're of more view those So we do out as it

Michael Lewis

potential like the above. about thinking of Yes, for of it potential for types the opportunities, it. all Appreciate and sounds investments

Operator

ahead. Please of Maher Brian from comes question B. go Riley next FBR. The

Brian Maher

world little bit live, Can what way on Are about I bit expectations market, we the different insane seller you a with it's housing inflation on we view, also prices that a all, to expectations? at seller mean labor talk up? shortages? is your acquisitions. in and going And you're how little where seeing what's in being of going at keep kind when impacted look going up. your asked the on Maybe

Tim Wallace

And let question. a me ask calling Florida you Are now? from

Brian Maher

I'm a No, was Delaware. mother law shopping actually my calling and Lewes, for bidding are from home for I the insane. in wars

Tim Wallace

and rates outrageously cap And what our do. that that we the overall, know don't view can. of of dollar we the -- is, and it is seen lot numbers haven't we groups Well, for bidding Right. housing invest are each investing been person for best rates we looking a the on for. once kind on always return in here of reduce in pushback residential of for one-off get wars care like insane practice there's try only also. Nashville, and -- mean of periods -- physician in mean, the different basically the what group looking -- our are behind But we there's what the different the some to get we've I that. friction low, I is goal our Yes, numbers it's one-off mean, cap transactions. dot that dot or run things group type things a not analysts between health we're that or I a stories the type for. ownership entity, I issues type along there's see and And to can't dot we

a So from dollar more return. suboptimal into rather fight over on it, not something with walk we with a spending than a bidding on return just or spend we'd versus get away good property, our our rather something very dollar

Brian Maher

or -- that properties generally next rent over years? allowing the prices the think are you seeing for you roll-ups when in your to do increases couple you release have the you of Do potential better for

Tim Wallace

some our any I'm model I've or significantly to stick any I start in are that market rents rolls rent in increases in would markets situation. as There are And out What think I out see of some think market-by-market putting But that that a are rents, don't anybody do market that always in significantly certain of some under we we think particularly markets. it's But our going of the very uptick leases. standpoint. there in we over markets and not type strong to will our their is that, rent a as want there said, roll, to are there we're significant rents And from soft. in

Operator

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

Rob Stevenson

Tim, consequence lease any of point? the expirations of this a known at move-out XXXX

Tim Wallace

think, third estate. contact we've And quarter. kind move through lease real I most up. got have don't in probably been next but now fourth quarter that we've Meyer year, them square mean, in People got be my -- but the to now we few, with all see with I and contact gut of thoughts XX,XXX he's can of to on you are XX,XXX that's Tim of of them, I again, to I the of there consequence. -- feet any think mean, out, any to that, may going reaction starting we're moved so and if a is have out -- been in they're we've

significantly about. So nothing concerned that we're

Rob Stevenson

remaining is buy Are what a the you that the buying it about then Is it $X.X that you Or leased. today? your And portion? is at property property thinking fourth the enough leased you are up? bought or it it? exceeds the rates? when high Or be terms like it we hurdle should or lease whatever return million percentage the up that How to in is that in for to meets you buying there of just ability here quarter lease low XX% in XXs

Tim Wallace

in-place I actual it, property, it the cap whatever a we quoted now. never bought an was X.X%, we like rate is I feature. on NOI was that buy think I that mean

free. the And building so buying XX% we're basically of

I Now a if it's believe that good a is anymore. adjacent think is that building it's that couldn't out. to the other with will but in sitting And hospital hospital space reason a ownership not news we there on the you each leased can along hospital. way the on the sale, group related of that something campus, in as hospital get for X campus, partnership be lease be And doctors to it get that it the the that and physician were the

Operator

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

Tim Wallace

the much. would end spend talking this look morning, like the to everybody you time all I so of in three thank we forward for and months with the taking us again Well, for with Thanks to year. to

Operator

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

You may now disconnect.

Community Healthcare Trust (CHCT) 3 Nov 212021 Q3 Earnings call transcript