Earnings call transcript Q1 2023

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Operator

Welcome to Community Healthcare Trust’s 2023 First Quarter Earnings Release Conference Call.

On the call today, the company will discuss its 2023 first 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, May 3, 2023 and may contain forward-looking statements that involve risks and uncertainties. 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 X being reproduced posted written be participants approximately permission. for will in recorded made This call and company’s An distributed

ahead. Now the like to go to over Dupuy, of would Community Trust. Please call CEO Healthcare I David turn

David Dupuy

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

team with heartfelt company’s and but Tim’s others. to and His Leigh the colleagues I On our will family many CHCT had to Officer received calls, is expressing that call legacy our founder, the CEO, the me I Wallace. leader on mentor being many their and with remembering top-notch Chief also for Asset grateful me am he I’ve look have but e-mails and Management. of The of leadership loss and and built fortunate great and of now forward letters employees an quarter lead. received Ann I was mindful support friends friend Tim company’s new Accounting carrying and Tim EVP Chairman CEO. investors, Directors, a a support to a I Tim. Board from and emotional our as Stach, the from today and difficult of be missed, the am and of Tim Meyer, presence incredibly sympathy

and were and with an report released announcement supplemental earnings Our data night filed last X-K.

Our report filed XX-Q on Form quarterly was last night.

investor a extraordinary fill an first these and how I events am The still posted quarter addition, while executive, accounting team delivering to our our In everyone our the website night. tenants continued updated left on presentation shareholders. and last challenges teams void of and by our good the proud was step responded required Tim. to of to service for to asset up the management growth

and acquisition good continue and are activity. pipeline see our steady at We seeing to acquisition build. stable we continues XX.X% was Occupancy activity to leasing

slightly term our hospitals weighted is And Everest Our clients, operations X to X.X our rehab from LifePoint of February. another inpatient in X.X of remaining buildings. lease Rehabilitation these now the tenant of average its years. one X in new LifePoint On declined Health to front, sold

Everest from buildings and and $XX.X first completion purchase a returns acquired were X purchase to definitive we to total XXX,XXX of We under properties million has X XX.X%. price anticipated price of leases X.X% approximately quarter, this credence a company and returns leased X.X%. for The an The future XXX% for XXXX million. approximately acquire $XX.X of believe feet X.X% to expected with of of of aggregate upon approximately buildings gives can the LifePoint annual quality running agreements through expected purchase properties In Medicare transaction, this Everest of operations. and part with As licensure. square the properties

expected agreements with signed company these close properties signed quarter. company the quarter and completion in expected of properties on now this investment after for acquired on three The The to these and $XXX.X million. XXXX, to these and expects aggregate and to Everest we be second sale and is XXXX XXXX. properties investments an on X XX.XX%, throughout could performing return currently The close agreements additional due and has diligence for to expect occupancy range purchase up

We under have returns out XX%. properties properties X% many to on of with term have review continue several to and sheets indicative

ATM of availability we the dividend we equates we to dividend and banking our $X.XX We to and our expect raised for on This opportunistically our and and $X.XX to have dividend fourth proud quarter utilize anticipate through raised it access share, having facilities since be equity continue our declared our the markets. say acquisitions per to every continue Also, common fund the an enough our to share. IPO. relationships per strategically to we quarter annualized to to credit

to care That the items cover, to so off Ann Leigh takes discuss hand of I to wanted I’ll numbers. things the

Leigh Ann Stach

pro the in grew sequential from ‘XX period for $XX.X million, basis, have of the million quarter a you, the increased everyone. had of representing million the quarter, an that in XXXX year. report quarter. fourth pro growth good total forma Thank first same X.X% additional $XX.X to acquisitions Dave, the quarter growth. of total to the Revenue if on and million revenue over $XX.X first occurred XXXX first forma I’m $XXX,XXX the morning, On day last by revenue was in all first total to representing quarter first of XXXX, pleased the $XX.X XX.X% of would quarter

XX.X%. increases of from in in expense to as due taxes property properties quarter From expenses as well XXXX normal was in quarter-over-quarter XXXX million period occurring acquired million fluctuations expenses other The property an of in and property expenses perspective, first on increase to mainly increased $X.X to fourth from the operating or operating $X.X period. the quarter

million from amortization, $XX.X $X.X the G&A Mr. of first unvested for amortization Wallace’s accelerated increased non-cash million accelerated quarter – quarter-over-quarter excluding accelerated this the amortization X.X%. million. G&A included $X.X shares increased G&A $XX.X XXXX sequentially. million to of totaling This or

This annual increase million to by was well interest $X or from professional added compensation million primarily expense of associated as as $X.X G&A in from credit Mr. interest increases salary the Also, $XXX in million in were with Wallace. basis, the which increased fees December increases passing Increases in facility in refinancing in net well of ‘XX loans term on as XX.X% to increases a we rates. sequentially. as due driven

million share was On quarter of of diluted of per operations, accelerated first to quarter in million totaling first the from or Funds XXXX. compared XXXX. per unvested a includes of $XX.X the FFO, as shares Mr. the per in of for quarter XXXX in XXXX of non-cash the first the million, basis, $X.X share first to $XX.X FFO amortization which was $X.XX diluted $X.XX quarter FFO share Wallace’s compared

the year-over-year. straight-line first first first or stock-based of the $X.XX XXXX share increased to basis, growth. The $X.XX including Wallace’s compared by non-cash the per X.X% adjusts rent XXXX first Mr. per $X.XX. shares compensation, shares $XX.X quarter growth accelerated in recognized quarter of totaled per quarter a On with AFFO unvested share of which of in X.X% the Wallace’s diluted of million in share diluted FFO amortization XXXX or funds the from ‘XX Adjusted amortization diluted million from unvested and AFFO, quarter of share for in reduced operations, Mr. or $XX.X per

$X.XX share. on $X.XXX, FFO increase X% representing diluted a basis Finally, of XXXX basis down by share quarter on the was and a per per for fourth $XX.X a sequential million,

for $XX.X On first pro quarter, first a occurred or perspective. if day to acquisitions total by pro That’s quarter on about of million all numbers forma first perspective, have would per forma a share. of increased the of the the diluted have $X.XX the I $XXX,XXX AFFO all approximately

Operator, session. are start ready we the to question-and-answer

Operator

Instructions] with Please go Our is Rob from [Operator Janney. question first ahead. Stevenson

Rob Stevenson

million completion ‘XX, properties the ‘XX terms breakdown in the breakdown and Good you ‘XX of $XXX guys how taking morning. and of expected terms totaling Dave, to does needing possession in of nine of fund?

David Dupuy

Yes.

Thanks in today have Based would we XXXX, the this then close close And we and question. information we – those information and we’re for to of Rob. the expecting close the in two on year. to in based are three XXXX. today, remaining good the have expecting four on facilities morning, So

Rob Stevenson

million And are those they roughly, of $XX any it, Okay. sort million, Are assets? all of $XX outsized? call

David Dupuy

done past. range are what Yes, they the all with we’ve consistent in that in

Rob Stevenson

how then where Everest quality to LifePoint used be? to credit at the compared guys And of you Alright. Okay. look do

David Dupuy

did My guess large sponsor. I private take-private LifePoint exploring the is a an looks a of transaction obviously deal. Look, few is XX LifePoint the equity their think to IPO Apollo over to next will years out Apollo be ago, get as months XX

operations pickup a of we the credit perspective. locations gives and we – like the it’s in And of it I prepared remarks, said in think quality the credence to the the really our I Everest. from frankly, think buildings, think it

Everest, about at think this But Everest, our for think transaction. we partnership what a it are validates validates great it. folks is doing. they also we’re and So really the very excited it Obviously, with we

Rob Stevenson

back Where last these are then properties of days? the of rates coming sort one across the what’s low you the trend half these $XX acquisitions? cap And pipeline like year? four What million it of And desk for It quarter terms the on Okay. looks first for was Xs. me. then your for days seeing that are in

David Dupuy

the really seeing up trends really other the those or little perspective, rate that are might consistent for with shorter-dated there X.XX%, opportunities Usually, see to it, properties will down XX.XX% right with – a as consistent of Occasionally, higher. story such of some general, those in cap And we we’re the that fairway to us. It’s in bit call range. north X% associated that XX%. make from our range. is a But XX% leases dynamic middle

opportunities. so we yields, And after and go continue those those attractive to will are

Rob Stevenson

Okay.

and ballooning much the So expand other banks from about rate with you haven’t a point. pricing beyond seen XX% really and on what’s these big that cap – days at capital the going this sources any to

David Dupuy

for X.XX% look asset and the I That’s to middle to drive to to again, right. to yield that my people extent of an down look, can. is a continue not north to the yield is that XX.XX% try XX.X% obviously we That’s it best the sell. But we they’d going But the we’re that And right would have range, while look think right. fairway. of guess hold think to

Rob Stevenson

Okay. the morning. Perfect. Thanks. this Appreciate time

David Dupuy

Thank you. Great.

Operator

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

Alexander Goldfarb

Hi, good obviously, Tim. and on yes, morning condolences

So Dave, you fill. big got to shoes

David Dupuy

that. appreciate I

Alexander Goldfarb

can that live channel snarkiness, can of Tim’s part that you Hopefully, on. way some

two here. So questions

First, such. had what of were with I in obviously Tim work feel guys the sort developers either to know was a have centric and rebuild, long and cyclical to that you will the out there, – tenured rebuild relationships really a the business, the big team. serial that or started – team be relationships not lot you he there will Do the that’s mean, just acquisitions and of are But Tim, the especially company maintained? need word, some – guys Or to bridge had really like but that bad relationship? you you a

David Dupuy

couple Alex, question. Listen, that. Appreciate would No. great a about A of say I things it. that’s

all, Tim. the and it say Paige broker the I a team of and and really First who’s Tim’s some of working around relationships. included types on relationships, focus lot entire included of myself. those engaged still actively It was the originating was broker that and instrumental would more included But transactions

was And a and relationships so business. I we’ve the very doing obviously, those is most good we I frankly, from that one perspective, done of that Tim because on and perspective, brokered important, broker are relationships. making but relationships the from those had out in And laser-focused so client institutionalized. that had was And sure our job the reaching my think

our think work sure done that brokers of the a we’ve with last real over the the and knew – with had, reaching continue has job been is really missed months a X reengaging making to some that think do that out, Tim deal what going the that’s we’re so lot we I a of to successful. mean they beat. I parameters hasn’t And of did that and with grow I flow business consistent good

Alexander Goldfarb

Okay.

the you seeing is hit and the developers I of back serial smaller two getting it’s and One, some this case, that’s And The the is sort or you second guys because of and the of it’s pref is development for any developers are pulling opportunity more the like their businesses, versus more put back that of this out buying going you making harder guess back them capital? the increases funding bank on or banks to the small credit, practices proceed see on are or do upfront if end? with doing parts. to mezz to local out question sort where

David Dupuy

had well make that as or out and a buyers was all sense. sudden, seeing of anecdotally a cap cap of are some that rate who We the there deal rate under hearing doesn’t as the of like X%, X.X% that some developers control

in a see deal to or on interest interested. they they so ultimately, close very I reach to can of we we precious, best out are capital. us and isn’t where want capital they And as that not our on position that that mean to the we’re us. yields generate perhaps And if can and we view

like best we is develop. the through feel client that so relationships to that And do opportunity we

tell And so you, forward. I will continuing push we’re to

not were a is and We have in the think that continue of to which and in the we talked to that so talked space, rehab ago we or a have expensive all expensive many will beyond, to at offering to behavioral so today. that appeared space year the operators, we dialogue. operators, X% XX%, have inpatient capital We sudden,

news look them taking to guess operations. and of would of dialogue transaction as potential – like a is, what we general, I we idea with not folks the open banks continue se. the Never the actual you developers when and to type then will itself, getting And but the are owners, source say at in that working that tell and most fund every it for our so per deal I and have is for providing never, we with good ready owner-occupied presents of is and it out those opportunity capital

Alexander Goldfarb

pref getting So not clear, in or Dave, mezz to are the you business. be guys interested into

assets end, correct? back at completed want the to buy only You

David Dupuy

That’s correct.

Alexander Goldfarb

Thank you. Awesome. Okay.

David Dupuy

Alex. Thanks

Operator

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

Michael Lewis

you. Thank

am for worked than the with with first earnings I on daily so loss. all And So, us interacted things, the on first for without sad basis, call call My sorry I say to my him extend of I I kind the have going all, of to of first, to or this structural it’s more Tim. a him. history maybe especially everybody question, who the but not that would extent of on been Tim’s other maybe And strategy that in wonder the result can. any which important an update as to you company. stock, company changes the search they CFO you paid a passing? to be has the And at if of sympathies

David Dupuy

we and for the thanks miss your And note. his presence question appreciate kind really that Michael, and we miss appreciate Tim words. it’s and –

on CFO focused As search, for very the we are getting that done.

spot, three my work. months both in last roles challenging. It’s imagine, lot been the of might you those As has a juggling over of

I think will And having we so dialogue what can are And onboard. tell good candidates. near-term with hopefully those result the you is, somebody that, we in qualified getting

candidates. search to in us our of take driver let As discussing search going we always room as all of level, it’s stock. our think of in we, that as and Board and shareholder-centric at for said be approach CFO compensation maintain our launch for kind we we question, that and firm, a important the not sole are the sitting this compensation have XXX% it the the drive But I very

considered. candidate candidate. important a finding that understands that and to the of versus going how over we do preclude that time right And means that, part open are person what we from that, going cash being be of candidate that’s not while or that significant are to operate, amount away to if some we take So, we stock, it’s that best

the that think CFO all I at say So, or search. answers I the least can questions about

a a it’s As has roadmap it for on it’s replicatable. really when last this I Tim on relates was business, have leave this and to that Tim consistent, business, call, medical good said our our focus as and developed

we niche the the team how think We place we our in And business. We works. like in this a about our ourselves way that created investors have for have a nice go understands got marketplace.

I plans so to And near-term don’t that. have change any

and think since has it’s it’s inception the XXXX. us – I a strategy in operating good well served company’s

us. set continue that being some So, Tim to principles of we forth will with forward for guiding push those consistent

Michael Lewis

Great. me. Thanks. And then more just for one

or occupancy are you maybe maybe do your for say, quality buying it’s they because and stress asked portfolio, of of worth last portfolio XX% about those on reason. portfolio other access already of about, some regional of what’s and what some of for that cap of to bottom through have not rates more well-occupied more the couple you going What capital there bit any local and or owned been to and banks. You thoughts like years, to is have said, that in maybe acquisitions while, bottom X%, with the largely high underperforming improved People I underperformers? up it’s and thing. have of the sort in think or you have the X% a I maybe on imagine the But the have tough stuff the a call assets. the quite it’s the recently any

David Dupuy

always I think where them want buildings of level to. that is going there aren’t to you some performing be

us more in that think successful those what I want than will is projects it look to evaluate extent do yielding to that years, portfolio. we us reluctant and to at the selling we will historically. we And take doing yield very projects redeveloping at in get doing occupancy look general, at those the have or was those allows say, Tim buildings a properties, able a are a empty X I going year up. makes know to had that. what those been for sense if we for we But buildings to them get – is and been have I Michael, where way the to

decided recycling potentially that think at this buildings look but certainly look capital, we look to some a nothing at incumbent this point, on team good take it. at been has I at will and those it’s of

Michael Lewis

you. Thank Great.

Operator

Kammert with Please from ISI. go Instructions] The ahead. Jim next [Operator Evercore question is

Jim Kammert

agreement did credit takeout prepared a the I I in also timing was centers. and profile see some for operator. Thank color apologize, the curious dialysis provide have into investor to you. you presentation perhaps just on the Good could agreement cover of Hi. in you about if development remarks morning. entered you more the a that I And that or

David Dupuy

our an a Hi outstanding while. have while Jim. sheet – sheets an of raised Those with company. is to who just a a equity No, operate in that some that ago credence dialysis the term that overall a – that a was, I who agreement that footing have financial lot now. term has to year was have again, for that like think private gives buildings. been And financing has and We been for and actually a tenant tenant had we we outstanding their tenant that really centers we client for think some existing been provide good ability handful

recognizable it’s So, equity a private firm.

those are – we that term so And business. term that hopeful in results some sheet sheet

say looked of most have own a at been at What is the of acquisition, there that. of deals the will We estate just business of not real part I transactions. has reality been of the terms looking of or as couple the have to focus in they

there on ramping that could a development think the as growth projects, been they to up And in so very still private involved – result, which involve an some us as those focus hasn’t in side. on But quickly in as that on I opportunity to term focused is possible. sheet. for going get – equity estate are real us

primary over are year. last focus rightfully they so been that’s the at acquisitions so looking their And and

are goals whether We are their and development some can how be firm meeting growth sense a get of what be to to next going helpful. with equity there there better that week and opportunities we are more actually private

place relationship have after better while has that sheet that now. been will a So, that in for meeting, I term and color some but

Jim Kammert

but a color never sort for lease are agree of years. resolution. Got to mistake, you you could, been foreseeing have X Any waiting curious then terms My in of sort the mounting portfolio, next And have in sort expirations to and of coming it. of on a if rent just roll your you coming what you the provide want of operating don’t up renewals? words or amount I I turning of in can you roll I mouth, the are flattish. just got know the expected movement, kind put up on down?

David Dupuy

of our have have in I has and have experience our portfolio been bit. very in where what we think specific right general, a some On markets, we – it’s average, that of is market is. market down been we markets, our little been our up some about

relative to the don’t specifics. Tim’s don’t or occupancy we last X.X improving expect But has years a to And at any Tim, great leasing these add team you over so down so. the And if team a and done more material know, leases. job I roll want

Tim Meyer

a as that have Yes. going I pipeline some sits executing. successful to we where we where but leasing have we like the roll from like are been mean we some We have are we natural tenants and very are plan perspective. with and off, the we flow what

are So, we the perspective are rate we is what from about very pipeline and where portfolio. as a in well the excited seeing retention

Jim Kammert

you. Thank Terrific.

Operator

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

David Dupuy

Great. the June. out. any upcoming Thank for the to interest to appreciate questions. seeing everyone’s free additional to you. NAREIT there Thanks the forward and have, look Look on in everybody We in feel you company reach is forward questions if everybody

Operator

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

disconnect. may You now

Community Healthcare Trust (CHCT) 3 May 232023 Q1 Earnings call transcript