CHCT - Earnings call transcript Q4 2021 | Community Healthcare Trust Incorporated

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Operator

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

On the call today, the company will discuss its 2021 fourth quarter financial results. It will also discuss progress made in various aspects of its 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 risks 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

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

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

Tim Wallace

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

President, Asset Stach, On our Vice Timothy Chief and the Chief Accounting Meyer, Dupuy, our Financial Officer; call me our Leigh Ann Dave with today is Executive Management. Officer;

from and annual with were standpoint. operation earnings last standpoint a acquisition Form our was report slowed an The also was released announcement little and X-K, normal last our data is busy an our quarter As report fourth and night. from XX-K an filed on and process, filed night supplemental

in long-term significant redevelopment We them of place or redevelopment that have undergoing with or properties different renovations renovations are when is tenants X or the done. significant portions

pickup over Our activity. occupancy up has edged a XX% we have in leasing seen and

by healthcare are we activity on see part of We encouraged the the providers.

asset while maintaining Our control have tenant to satisfaction. attempting busy managers expenses, been

Our years. term lease stable than remaining weighted at was X less just average relatively

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

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

X million has our invested bring for few to in X.XX% addition, of an X.XX%. million company $XX.X total the in to of currently anticipated expected to next to $XXX.X definitive properties properties returns purchase and year aggregate agreements approximately close purchase in million. under approximately The price XXXX, $XX.X and performing these expects months. expected is diligence due return company In The approximately investments receivable with we the for XX% notes

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

through We XXXX, XXXX of these to the into first of and expect on half close the in XXXX. properties one and X other

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

the expect several We properties to our to of credit front, with and utilize enough We sheets strategically acquisitions, facilities X% another This for ATM it continue our and access fund to On term have $X.XXXX to XX%. to dividend returns to the quarter our our share. opportunistically share. equity availability say dividend per many markets. to properties have of quarter common raised analyze review having we on anticipate under on raised the items I continue be anticipated to continue declared our every we takes dividend and an And wanted have IPO. believe of to since cover. equates I proud I that out we to the fourth $X.XX per care

off things hand cover I’ll So to numbers. Dave the to

Dave Dupuy

perspective, was was the a $XX.X of everybody. occurred additional the quarter. to expense from of pro XX.X% if increased growth fourth total and versus million $XX.X revenue million compared XXXX $XX.X on for operating XXXX, flat. quarter the had I was total the representing for total or forma report approximately $XX.X to an period good million the XXXX, the XXXX quarter revenue total fourth forma XX.X% am revenue day in XXXX same XXXX, morning, while million of to quarter, year-over-year $XX.X fourth over of basis, the in And XXXX the prior would first Meanwhile, pleased million in Tim, acquisitions From for XXXX XX.X%. all on Thanks, property to fourth over in expenses have $XX.X $XX.X increased an quarter $XXX,XXX by that growth a million for revenue representing pro million quarter-over-quarter year.

quarter, in is fluctuations normal with $X.X million occur expenses not expenses property on property operating the property that operating Sequentially, a quarter-over-quarter. to some true-ups fourth in flat During The result XXXX. of XXXX in quarter. at quarter decreased tax property decrease expenses period the the as expenses that million million in in in compared operating quarter-over-quarter in our the the in well same third fourth from fourth buildings did of the remained quarter as operating quarter, $X.X repeat third property $X.X

flat the remaining sequentially. while $X.X $X.X in in $X.X XXXX in the For million G&A $XX.X quarter, year, fourth increased million from million or XX.X%. XXXX G&A million XXXX or increased XXXX In to from in to XX.X%,

million or increased year, in however, cash in $X.X the XXXX to For from XX.X%. approximately $X,XXX,XXX G&A XXXX

increased XX.X%, increases in by driven quarter, G&A $X.X in X.X% compensation fourth or the to higher our expenses cash $XX.X X.X%, related million in details non-cash were on a million quarter-over-quarter. to decreasing in new XXXX G&A employees, posted to from to our while $X.X approximately bank in $XX for in While expense debt, in to into loan flat while for amortization expense tier in million grid. XXXX Interest related website Increases XXXX expenses. added a our Please interest March as of year the [ph]. which schedule and pricing remaining incremental to report, more cash with in INEOS compressed increased X-K XXXX some million term from filing quarter-over-quarter. moved X amortization where supplemental including refer XXXX G&A us our information our of issuances, included in of a we the The compensation, $X.X year-over-year Page refinancing, increase deferred million stock and or for XX, versus also

to total year, the debt XX.X%. net our at remained capitalization For conservative

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

quarter, or fourth million income And $X.X grew XX.X%. from or to the XXXX grew $X.X XXXX million XX.X%. million $X.X in sequentially, to million in For net income from $X.X net

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

Operator

session. Evercore Please ISI. We ahead. [Operator McGrath Sheila begin question question-and-answer with the will from Instructions] is first now go Our

Sheila McGrath

still sheet. the is good and Tim, presentation, your mentioned in Yes, you entity the the remarks dialysis prepared term a that in strategic partnership with morning.

final a be that. wondering has you what that close are to to pretty on for happen and Just contract,

Tim Wallace

quarter. we private gone They’ve totally by end anticipate will the that actually a close been first the through raise equity of

that, right some So documenting after we’re we’ll hopeful actual be properties.

So not their there’s that. do that strengthening just And sheet it, to anything wrong it’s and they them ability to with balance happy are we’re their for it’s grow.

Sheila McGrath

And of balance What operate this a what to kind is on equation under? the leveraged Okay, great. conservative. every introducing your year? the to is your then very debt metric prefer that And sheet by you metrics view little is more bit

Tim Wallace

$XX we on million We’ve to of preferred ATM. to term the access through did XX% said fourth facility. equity the not are XX% the from the And debt range we that term piece year in end to our add credit in did is last we capital quarter, the that, the the beginning long and markets our low

a is range in feel be where revolve to little view So we’ve our we to still very But to grow kind of that again, or and long-term that’s XX% let bit. comfortable. XX%

Sheila McGrath

you. Okay, great. Thank

Tim Wallace

Sheila. Thanks,

Operator

Goldfarb next question is from The Please go O’Neill. Sandler ahead. with Alexander

Alexander Goldfarb

Good morning. morning down good Hey, there.

Tim Wallace

Good morning.

Alexander Goldfarb

questions. X So you? are how Hey,

obviously how about getting landlords areas? example. real are for First, apartments, estate power and talking Yeah, inflation, certain in everyone then pricing retail is for certainly

growth are renewal? by assets the seek you doesn’t target you across translate look you dynamic inflation or assets, the the same driven inflation where to accelerating properties rent is see to rent dynamics on different do rents that As growth? own, directly will the you Or where necessarily market get the that the

Tim Wallace

the is from think healthcare they’re they’re properties renew inflation properties lower against is supply is the now inflation have not experiencing. both from by fighting bumps, inflation chain our standpoint that the provider that ways, of of base. higher but that properties, I or are rates labor inflation inflation feeling in our also to the majority the shielded And – I Yeah, of cost inflation. when mean right what the And we’re going we’re kind

leasing my basically It’s to you standpoint? do second, a look have somewhat standpoint, the our not not neutral. a at relates as – From overall just additional then view any and of positive. a we’re negative. inflation I’ll It’s So a for is, is seeing Tim what from comments

Tim Meyer

that’s think subject that because substantial I other on and had mentioned. And side, as that some pretty have are we and pressures, operators is which were systems to floors, and – No, have CPI you’ve flip accurate, then on seen health the standard. caps both ceilings but large increases the some

Alexander Goldfarb

right. All

Okay.

quarter range. sort question investment fourth XXX-ish so the than almost the into of grown Okay. X last slower you is, times credit And you that, since company approach. obviously completed being The then Tim, about which you IPO, a million to that little guys more has mentioned order my in second your mentioned remains on target year. is But went transactions, or

or to increasing growing in So just maybe at increasing maybe what company? on – are adding, – growing million another your overall five-fold, not growth the but the by it it complement somewhat at $XX thoughts

Tim Wallace

several Well, down in substantially. one of aspects company to other there’s cost been growing, has mean, capital changed, the our I to gone that’s addition is

the and company, look weighted cost and portfolio yield has difference we at of capital. cost that cost average the substantially. you spread weighted of that down gone to when much rather average not our between what of average our we started manage the And and, do, was If try capital capital we weighted our

margin, produce we a can could we then. higher volume So a higher and on lower than a FFO rate

to basis comfortable a manage to feel and and with. growth So AFFO makes managed trying sense and to to growth, that we us want do that to we that is on we’ve FFO

when there’s I’ve the the a low end lumpy of always, we’re that So our able that be end And we said growth changing it be to as on current that AFFO built come is. we this feel don’t we’ve business, long still as see renovating, above instead like our what of the to very we sometimes along, is the existing can we’re time as XXX obviously REIT feel of the investment produce XXX, portfolio comfortable produce profit also. portfolio to our out is XXX. range. spaces, can and to XXX, FFO be a that average bring investment we’ll of some But that I’ve these or the healthcare the XXX we range, significantly high all to I with we profit the like on XXX can. we as from business lot margins it’ll re-leasing said we’ll feel that they’ll plan But and redeveloping, sometimes of of into a that adds

standpoint So right we investment a for to bump now. it we probably don’t just reduce and to return a range our pressure feel we see of of up, If it from lot we that target the up. bumped don’t have need

Alexander Goldfarb

Tim. you, Okay. Thank

Tim Wallace

Thanks.

Operator

go The Menges next question ahead. is from B. FBR. Riley Please Kyle with

Kyle Menges

little do more And you $XX one a half on is This property, million. first Are I you think Brian. in I you then to all close Kyle for on about acquire the provide the morning. plan same they that was Good of if could on detail size? mentioned X curious year? to this the for expect bit you

Tim Wallace

it’s in same ones Longview; one are in-patient They our to Bentonville, currently you – of one as you exactly properties and one walk Texas; the rehab And and have the the and the size, the hospital into or even Arkansas, and Rogers, Temple, in of Arkansas. the Airlines on of and the artwork it facilities portfolio, in down our walk looks wall. approach, other basically an their we Yes. X all one they into clients, in it’s one use Southwest operator, same

So we’re currently properties construction. doing have under them, with they and them more

has going allow I winter. relatively one experienced. down two, in that chain has slowed through because supply The little because climates of think construction first well, been that construction the the a bit, that industry there issues next are But

out next in The closed are and in the two we should first one that Texas. Cincinnati,

Kyle Menges

that should we’ve we is pretty XXXX? pretty much that then, that’s an the detail. we through for ended highest think for XX% taper occupancy move Do you And thanks years. Okay, the off Or at front, you over past of couple year, which the sustainable? expect as seen maybe

Tim Wallace

expansion increase. seeing of to been now. front lot interest couple the leasing They’ve subdued last But of hope We We see on healthcare of see the see from lot standpoint. lot We activity for very of No. that from leasing a we’re a a providers. the years activity.

blocks pricing analysis of significant several and and of et got up, tenant So large under we’ve improvements, now that cetera. fed are discussion

occupancy So hopeful we’re very increase. to see that rate

Kyle Menges

Okay. Thank you. That’s all for me.

Tim Wallace

Thank you.

Operator

with The next Please question ahead. Colliers. is go from David Toti

David Toti

Good morning, guys.

back you Just secondly, to months so? cost XX If going a kind does spread in that the looking in increase investing you Do extent? question the yields quick you’re impact or that obviously, capital underwriting some your that your the inflation and underwrite to of at that assets do aren’t the strategy? dynamic? moving, maintain next think you Are that sort of Or spreads, effectively? your issue. you collapsing can And of

Tim Wallace

do interest We cost capital, – to mean, We of we to the underwrite base. rates do to anticipate mid-term. to our over overall And of capital that can But fairly the underwrite we interest well think knew we rates near- yield capital of don’t we rates small in I underwrite anticipate a fairly piece – rise. that. interest our maintain we we inflation, do but we it’s portfolio the but rise, to cost anticipate rise,

David Toti

is the then, there impacted strategy a Okay. extent? become begin any sense? point Is to it And some external in to is reduced efforts if growth which doesn’t the compress, at

Tim Wallace

X.XX, our impacted to that X.X, cost already that. hard imagine, current I weighted yield X%. what it’s average something capital they’ve our over mean, current And gained is portfolio being of like is much. Well, it’s

I of to impacts impact mean, us. it along drastic the healthcare it the have And would gets the impacted if significantly to is, push mean, something So, thing capital say us, way. cost only has rates significantly it I’ll I other the where to

rates would in point the anticipate time So that at I cap would rise.

David Toti

Thank Great. you.

Tim Wallace

Thank you.

Operator

a question next Evercore Please with ahead. go ISI. is Sheila from follow McGrath The up

Sheila McGrath

in noticed recently? And renewal just if that portfolio. Yes. could hit how did trending is curious that I I What on rate occupancy as the that well. your you trended? comment XX% was And does

Tim Wallace

you are renewal you of… percentage the the When about talking Are about talking say rate, you rental rates?

Sheila McGrath

Oh, in tenant of the of The renewal staying place? no. percent of probability

Tim Wallace

I the looking we’ve he’s head. at now, think Tim think I down, renewals, been he’s in looking XX%, shaking his I’m but

So we’ve been life in still we the you agree? there. think the of XX%, basically Would company, for and we’re

Tim Meyer

but had just And existing along we I with not tenants Yes, renewals, of of quarter with renewals. that. agree strong those expansion a

Sheila McGrath

is leases? it inflation you’re And upon is that new you bumping bump what since – Tim, of increase it, you expiration kind average on that mentioned the the

Tim Wallace

Yeah, try fairly as maintain X%. But can said generally, not provider we’re were – push want one things the to rating beginning and we that’s that don’t who to we friendly relationship. generally, says provider I mean, from we’re up I’ve the

So generally we’re range X% to basically in the with X% renewals.

Sheila McGrath

G&A, then for of partially of in this But, items of cash you there’s amortization how if any points that Okay, guidance would maybe both the because – give any us and new was G&A And so new Dave. great. quarters? up that because to be that XXXX, And step kind amortization all the one was think schedule, was just about in place helpful? or schedule four for on stock type could to

Dave Dupuy

get is, compressed of quarter-over-quarter, the and Sheila slowly that ramp you over the so, we’ll hump [ph] it terms INEOS the the non-cash or amortization tell years X.X we can the for I schedule. probably what next in Yeah, has increased up as have

cash cash revenue, Page the basis, it’s down look is made measure; the one effort over especially you as at been when why segment the think put we we X and the trending on X, percentage of our non-cash, quarters. to versus a that supplemental reasons we’ve thing the the And last cash of to that so in that’s truly an because right

specifics So we over amount – the on increase of a like amortization increase, X.X are years that trends, next the we with until it’s that regard those that we non-cash disclosing the to get to to certainly continue yes, for it basis not expect hump. but

Sheila McGrath

Okay, great. Thank you.

Dave Dupuy

Sure.

Operator

is Truist Please The next Securities. go with question from Michael Lewis ahead.

Michael Lewis

what I home from call it little work you. of a distraction. had Thank I’ll

already you if apologize, I So these. addressed

million purchase that your you in property acquired that press on release, in expected one to release curious were had XQ million another under under for already quarter the that. and said it did third First, $XX had you was fell $X.X if a agreements just was out. if less a agreement was something close in issue, that that quarter, just the little than I volume you timing a or purchase had

Tim Wallace

work-at-home found as morning, says with one Michael. actually, we there kicked doing the another the And we covered due tenants. that existing And with a the go our we’ll The haven’t we one was but has he tenant owner this is problem question. diligence, Good that of property extraction. them. let you And difference replace that to tenant that out, has out now basically, were

put we’ve he and good tenant. into with can’t is pattern, it quality a buying we’re you tenant, if because a of says holding So hospital new supposed system it not to you it replace with kind that can

with And that, will done this. diligence due if with on the is this so it point we close all he does exception of the at

won’t. close would a he signed, we be it; doesn’t, So he he the close, and very does, we’ll can if get quick it if if lease

Michael Lewis

if to I you close There’s cost see. that? you don’t no on

Tim Wallace

No.

Michael Lewis

handful for you have think that are What’s have I exercise? attractive your you And properties are my for now options expectation called? of that those some think other properties tenant tenant then purchase you’ll Okay. Do get the with a those, question, exercisable. that

Tim Wallace

X [we we’ve got had that the away XX/XX, I negotiated really in [ph]. as first those anticipate of – of we’ve We actually in X.X] quarter. And forget don’t

only to not So think think, four, anticipation we’re you know. I now, get they that the hold, now. going it’s never those that’s anticipating not do I and right are But

Michael Lewis

away, And say mean? I what does see. you when negotiated that

Tim Wallace

the that amendment options takes lease purchase signed out. We

Michael Lewis

I right. all All Thank That’s had. it. you. Got Okay.

Tim Wallace

Thank you.

Operator

with [Operator Goldfarb Instructions] is ahead. go Sandler. from question Alexander follow-up The next a Piper Please

Alexander Goldfarb

Hey, follow-up. one more Tim, just

think Dave I OpEx mentioned expenses pressures, comments, then think I mentioned, in operating were the but flat. opening you

sheltered my increases, of over seep some Just sort are or a basically expense, guys we pressure so inflation of the that some costs? real the tenants, any there like as it’s estate you except pass-through, operating right? through tax that really for is was other should Or from first different whatever vacancy leakages are think curious year, about

Tim Wallace

what statements great which a managers I in asset my XX% that vacancy operating think But And portfolio. a was was actually, done satisfaction, to question, to they’ve we’ve the were keep the and your low directly in working answer got expenses tenant job. said hard maintain I

XX% So the a portfolio leases, have an that have then operating expenses either gross that or place, those acquisition small do some in in to don’t write leases acquired. but of doesn’t get we And and gross related of modified by paid tenants. we leases percentage we if do those. We it’s the

linkage some be could there. there So

Alexander Goldfarb

Thank Okay. That’s you. helpful.

Operator

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

Tim Wallace

and I with this we’ll X in again Thanks. months. think in morning that you spending us We interest covers see it. everybody’s appreciate time

Operator

now is presentation. for you Thank conference today’s The attending concluded.

You may disconnect. now

Community Healthcare Trust (CHCT) 16 Feb 222021 Q4 Earnings call transcript