CHCT - Earnings call 4 2023 | Community Healthcare Trust Incorporated

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Operator

Welcome to the Community Healthcare Trust's 2023 Fourth Quarter Earnings Release Conference Call.

On the call today, the company will discuss its 2023 4th 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, February 14, 2024, and may contain forward-looking statements that involve risk and uncertainty. Actual results may differ materially from those set forth in such statements.

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

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

I to Now Dupuy, over CEO to Community conference Dave the Healthcare Trust. like of turn would

David Dupuy

morning. for our call EVP for call our Management. Thank Officer; and Asset you is Bill Stach, Officer; joining you Chief conference Meyer, Tim and quarter Accounting Thank of Xth Monroe, Financial today good Leigh us on me XXXX today Ann much, very Chief with Great. our the our

data on released our report and night and last furnished Our announcement report on earnings Form supplemental with along XX-K. X-K, were annual Form

updated standpoint, slowed a but an to our an was operations an perspective. website was addition, investor In posted quarter bit presentation from last night. The busy fourth acquisition from

the plan no X date, is assigned the to occur XX.X%, slightly is lease assignments the effective to lease to while GenesisCare XXXX. expect leases slightly remaining GenesisCare terms. to be the report changes the company first quarter buyers, weighted of has remaining of buyers, of pleased February met or of leases assignment the with assumptions X from obligations X X.X to expected to term increased am its material to reorganization XXXX. To in to XX% substantially keep expected with Our and date through has the we I due the the of occupancy remaining declined our X during company, on The all GenesisCare closed separate lease years. the with average first to and quarter. that payment

X to to relates it above that at are Fort into and recycle facility. sale and we properties, capital the sale properties. to for price carrying under be vacant agreement Myers or lease that GenesisCare value, As activity The agreement sale for is is us allowing its new MOB good the a continues Asheville income-producing seeing definitive

bankruptcy team proud protracted, GenesisCare was to how are process we with properties our these the outcomes. While managed successful our

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

these XX.X%. Subsequent For properties with entered $X.X running leased the feet XXX,XXX of acquired annual long-term acute December million. year, a of X care returns $XX.X price which XX.X% and X land to parcel through XX, for for with an of we close and of price to X.X% to acquired agreements a purchase XX of approximately We XXXX purchase leases million, for lease in of purchase aggregate X.X% aggregate price and were definitive square lease hospital aggregate expects total we on X of new returns XXXX X.X%, anticipated company purchase is company performing in the due expected returns a a diligence and to into $XX.X few with months. has under million, expiration annual properties next X.X%. The the and properties an currently approximately expected

on to sale investment and return an range these completion of $XXX.X The X aggregate for purchase be agreements after properties million. definitive expected for expected signed acquired and investments have also should We occupancy an throughout on properties provide and remaining expect in X.XX%. To properties these to with XXXX, XXXX. to closing of X timing the from these X transactions, XXXX the of close X.X% X on we update

are XX%. many returns review under activity out seeing properties have of term several with sheets very indicative continue and properties X% on and We to good have acquisition to

January year's shareholders. Under XXX% of the on previously period made company's with Given XXXX. will and levels, access XX% mentioned limit relationships updates a with based advisory capital to topic, from designed the I we to on previously, proceeds also enough at These during fund on another such to compensation selected XX% to X, a the equity and our sources availability on interest sufficient for combined sales address issues based be updates percentage growth company's of traditional changes be under retirement individual annual and metrics and of eligibility. will our the the modest earlier, program, acquisitions, programs, maximum say-on-pay our Board were Compensation leverage of company's Updates specific compensation duration which will restriction raised on continued deferral through approved filed the credit and throughout were opportunistically XXXX. On included our anticipate utilize maintaining were while that facilities on based vote metrics company details XX% expect Fort the banking strong like asset having Myers capital X-K metrics. alignment attractive last of incentive property XX% markets. These the ATM to to alignment yields the from provide we from Committee Form strategically

long-term Executive threshold, plan period long-term our XX% all representing Officers' levels. and compensation, maximum measurement target X-year grants RSU incentive a transitioned representing and we performance Finally, targeted which of grants forward-looking performance-based time-based utilize RSU incentive with to of XX% the

wrap for are our ____ and to takes a raised I filed beyond. and our $X.XXXX I which equates wanted statement, care opportunities dividend every proxy up, since the of March, fourth items declared will we quarter detailed will review share an Our raised program. To to cover. compensation We the in to the our to share. CHCT provide have $X.XX of and excited we XXXX am it proud common about of That dividend IPO. be dividend in for ______ our see per per This annualized quarter

So I discuss to will numbers. the hand off to Bill things

William Monroe

perspective, periods. General operating provide expenses XXXX, $XXX,XXX Thank X after of expenses by I changes of expense months was $XX.X report will I'm Fort fund $X.X quarter-over-quarter approximately during associated of increase operating compensation million quarter fourth the and professional discussed in $X.X you, our in same compensation now $X.X increased plan an quarter million, X.X% growth of $XX.X slightly of revolving Myers from expense million quarter. From the on increased to annual acquisitions. grew financial the period more borrowings Interest third the fourth last to the in year. When our due total acquired the design deferred million to achieved GenesisCare XXXX, with and earlier. under increased primarily quarter performance. approximately fourth negatively the as details expense facility quarter-over-quarter Dave total quarter in the a fees in we million that of quarter administrative $XXX,XXX from to and XXXX pleased by $X properties revenue our representing reimbursement the compared property by driven third noncash XXXX Dave. third growth in XX.X% of loss over the total fourth quarter $XX.X million, result revenue expense of quarter-over-quarter, to to revenue rent to growth although the million in in XXXX by credit revenue impacted receiving of fourth higher quarter to our the

share. I'll XXXX $XX.X by common $XX.X X.X%, over quarter XXXX, the periods, in to $XX.X from totaled funds from On $X.XX AFFO And quarter decreased basis, quarter fourth diluted in quarter from these of in per periods, a XXXX million FFO adjusts concludes GenesisCare of basis Myers million FFO million million of rent begin impact the to in FFO On that operations. FFO stock-based Fort to the declined a basis, the AFFO quarter in decreased common funds fourth of million year-over-year. compares $XX share X.X% diluted increased did per Moving growth $XX.X a million question-and-answer $X.XX from which to per the a session. slightly straight-line on X.X% our And both or over the prepared from from ready operations, note share. Adjusted from to sequentially. That third growth these or in the and XXXX. to Operator, $XX.X XXXX are quarter-over-quarter fourth year-over-year. the for fourth remarks. declined on compensation, of AFFO, AFFO basis of share revenue and in quarter-over-quarter XXXX. loss quarter per from fourth which now or $X.XX third $X.XX we quarter

Operator

[Operator Goldfarb. Instructions] Alexander Our first comes question from

Alexander Goldfarb

MOB lease, needs the be being you lease. someone that's you say being quickly, just else office Genesis, Dave, that's did final lease, by to the not process office the on that piece the say the in remaining taken of or resolved? the Did

David Dupuy

the MOB, property, got the -- or be property that good are at continues So Asheville for that continuing traffic we've and sale lease, to facility. we

on hopeful sale lease. But that report And so to remain we here or have to soon. something for we're continues that

And as well so that we're folks as space. talking to both interested buyers in leasing

Alexander Goldfarb

you that out like number Okay. were downside, like dealt But Or case? whole And with the it no there's worked some landlord is something as any guys real of keeping where no of Is economic -- loss because to the then have sounds over missing you sounds shareholders. there way made here, anticipate. credit guys other a impact? There's like economic time like is in sort you these guys just it would. issues there everything

David Dupuy

obviously, rejected as mean, leases with of I get situation. when it X GenesisCare Well, don't what we like we happened those the

as a the So it bankruptcy of the leases assets. as sort of I'm a with the of we protracted was process, number X of But different bankruptcy as of buyers proud were the about, these talked situation, rejected X handled you way tell, got we've of GenesisCare can process. our team part

of about the would say The were at to point. that. write-off take over. level rejected sale, are an one is happy that And asset so process, held a aren't what we for that part X transitioning aren't, which having X that We're at as on leases this is a essentially the is I

look capital And that into so us. properties to recycle income-producing we new for

CHCT. this the process of great And situation dealing So as ABR we're a of in but is for this the part with we overall, think I look, process, some outcome. lost

Alexander Goldfarb

$XX. second, just around you did issue ATM then some guys And Okay.

I about year, it low where sort think think you funding higher. around are guys levels? obviously, But thinking sounds you like it you're is and funding we to ATM of stock of balance the about these over comfortable Or you ATM credit. sheet next used you higher, maintaining some everyone issued acquisitions still issue wants as the said if Historically, leveraged you line issuing that how is?

David Dupuy

shares proceeds at for that And issue I higher in price Look, are still certainly tell will could share quarter, I love would that you mindful a at price. last of into is. us, average it investing shares transactions share sold those accretive in Yes. acquisitions, think we we're new but very our price share we if those what where we

so goes price not active we consistently, down, in ATM. share be as to the very if we're the And are going

share got up, where we've is price As And our ATM ATM. goes active it. the isn't facility is, credit price in to the share the the going like the that forced be to revolving we capacity we more aren't use under we're so good when news

based that, sell. property as thing we strategically for share We've going that on is, mention we've price other mindful is where Myers sell. got Fort be we're got and to just asset that will to going would we're the sale would the we're of another to say I be held the that. And looking going issue I to So shares always,

sales some we we're the also And as issuing asset under and ATM. that the that we'll to consideration will available contribute so have these take of capital into shares us, to

Operator

with Next question Janney. comes Stevenson Rob from

Robert Stevenson

bank Can you more disposition there bit Just sell is sort of I now? X currently talk are vacant. to an acquisitions? of the about you than Myers Is given opportunity today, the that cost the Fort But question. little for you a guys that mean, follow-up for to a market how issues guys your debt, frozen on would sale and market the fund of market is cost given disposition Alex's assets obviously, held characterize here equity right

David Dupuy

by imagination. don't of market is stretch Look, frozen I properties for think the the selling any

market I the Myers of indicative situation is. think Fort where the sort of is

will so ask And we from to we And want get people time questions do that. happy if about sell buildings. and we're time us to

have, that and up asset is nice, our so we our option we point, an assets based haven't We can on -- X% attractive is certainly, have consider. Again, to we've those that it's grow XX% And yields. taken listened things. considered to to -- but this we sales, doing something we any that to preference

to the we going option we're sales, but so the our an I of through ATM, consider. certainly think primarily And asset this option consider It's facility certainly have. -- but at through that have we're funds to and look credit we raising looking an it's and to have that's at looking at option always point, not anything that we

Robert Stevenson

you strength said wall, operator where the out guys likely to GenesisCare year thinking assets on viewing of are then might days, all where be ago? bankruptcy. can bit properties ago operator a you bit where as a And about months was done talk operator to GenesisCare strength, in a about others those How and strength-wise sort GenesisCare potentially versus Okay. little guys well terms when Are the flat going be are you a a was before the better? what hit it versus X hit they is of little year were you of the and to XX XX fall or in this where are where signed before

David Dupuy

operate that Look, with we feel leases in about the -- also X these the good facilities. And stay are we to to of GenesisCare. very coming going are operators

new GenesisCare think into GenesisCare as move the that sort we deleverage. is of So they viable and

that think are got seen not say away operator. that as balance, really the We've operators about we existing for are would and I just now their single bodes markets, on well So to the on a and from that if what be in we're properties. based excited we've diversifying operators stronger, strong, strong individual going portfolio

Robert Stevenson

Okay. for And then me. the last one

the from going X in a $XXX later, are later modeling X needs the pricing larger X less from the X XXXX. From within earlier, both have the -- On line $XXX capital weighted. to 'XX, are by And in be -- in end you that's most properties of are X price about these that there's couple among expected close standpoint, and some guess or needs with comments million talked the prepared million a the back to in X perspective, to much perspective? a ones or we the $XX be of aware that roughly of capital divided more those average million I

David Dupuy

No.

great So question. that's a

is to hospitals close. So one of going those

is facilities One on close of those to year. in rehab early inpatient going this

year, estimate. is is $XX And going one other The this a good are right late dollars it, third to around would quarter, be Consider I those later call that. that unit million average. per

Operator

Kammert with Next Jim comes question Evercore. from

James Kammert

alluded I lingering is, wondering, some could second markets? is color mean calling new widening, those And in credit or pipeline perhaps. opportunity existing I'm you other just kind around, David, I think more that tenants/owners relationships of mentioned given your part you XX%-type are CHCT X% the opportunities. or words? of in just more returns. said, the the those challenges curious, you to to And put I shadow Would -- said was are of activity

David Dupuy

would client-type to a dialogue talking folks good opportunities. them. as those We've that the We're where get more about and I yield opportunity we relationships. we've are by to where talk have -- that obviously, And as we're we good relationships, to I certainly set, about get deals an dialogue and got we everybody a additional can those expanded Those specifically folks say so of point encouraged of active, for and have we're best that push yielding assets, is using to and it's is mix. think, part and and client have so -- wanting a client also more been higher-quality to say really potential new client try to on got to we're seeing some through knows, we X we prospects I couple we're relationships. but relationships. And gotten us. we're good looking partner business can But we haven't to with -- What also -- is talking would relationships

that with And consistent to volume in both higher and attractive broker past. market, prospects in just What on the and like mix, of what say I facilities would of are yields that we've getting is of types us so of we pricing we're about in terms the excited in that also of market. sort the seen a the opportunities, those types it's seeing the of we're but side. But client

think us that, we yield So an will, time, that for over acquisition standpoint. more opportunities from

James Kammert

my to just dwell please. to Back Very question. one for helpful. edification, upon, Genesis, And not own second

think talked You X use for purposes? pleased to if deals are properties? any a you're might that about to be change the operators how Or similar the the operators. of you just are new But I'm does business out and the about in that play Just then the trying going with very have going imply reusing to remaining the within? curious the -- fungibility undertaken they that would that assigned, assets be insight?

David Dupuy

No. essentially consistent of with radiation all Yes. operating purpose. going type oncology to They're be

use actual at And is not facilities the so of all. the changing

me, so a an got there that it was indicates just that to and business, And right good you've hands. sort business not in attractive of the

And current are it we're going now about in and oncology-type to you've business. regional practice excited operators operating because radiation a markets be that that if similar so these strong are got anything,

Operator

Next Golladay question Baird. with comes from Wes

Wesley Golladay

loan to Can do line the from fund the debt at in of moment? the perspective? you interest it talk have any about term look Or how credit? you you business Would be a another

David Dupuy

revolving We credit are using facility. our on focused

on that have over facility. $XXX million We available

the we markets. for current debt of We have all on great state that Certainly, facility. stay support from banks our

is least rate to the hopefully, obviously, needs, flexibility interest the year later a utilizing so the a decline, it But little that's benefit year we'll bit this looking of at higher that where our environment, debt is at maybe the we're loans, at term to cost other than facilities. we're in which And current provides revolver stable and what looking kind But ago. was from. for And today. financing flat starting

Wesley Golladay

Okay. that the to the number you for And reimbursement lower believe called do you, in the then the a I reimbursement GenesisCare, quarter? had GenesisCare being bit have you little total you happen to or either out component

David Dupuy

look what number. is and supplemental Myers with up our you and do obviously can the look Yes. property What Fort you rent at monthly come kind a of can is at

third of the of rent quarter, reimbursement months There of in And not the reimbursement quarter, can So that third we but ______ some isn't now, received $XXX,XXX. call $XXX,XXX, that the quarter, for obviously fourth X kind obviously was quarter. did a also the you then months couple some we at those impacted in which receive as also fourth visible, opposed of of as that we're in expense fourth in the loss we expenses ourselves in quarter. least having obviously, reimbursed to that the paying

as sequential where -- to the came see up _____ impact, from. year of at look that added you you kind those all XX can So so quarter-over-quarter or

Operator

The question Oxford comes next Colliers. from with Barry

Barry Oxford

one. quick Real

You the about XX-year or kind debt. this you might money you talked where long-term priced banks any Have X- for juncture? particular talking be of to guys are of guys at

David Dupuy

we Barry, now have we where under availability not our near-term and having the maturities. any are with right revolver

maturity XXXX. not Our until of next is March

and where at over experienced pricing outlook, the some an XX least at we that look don't rate to in since continue markets taking next seem and immediate everyone this months we XX, We into have to at And And when favorable point, those of of and the we we environments. last it's environment. harder more a interest stable look interest is of rate the be ours. Again, think in feel interested that a a like look, rate is. that would different hope think maybe has subsided more focus we as I have not at financing it's later I a year, year need, environment. monitor the But some we headwinds interest be more

Barry Oxford

the your care of it, it's point. In same teams is we care, management look, the acute to thing. those a or asset the there? there type makes that Or closer other buy? board pipeline, to across in sense for of one Right, it assets MOBs classes? take echo Is what kind a particular Is facilities. That what of of kind acquisition are long-term at look the of weight normally

David Dupuy

roughly side I physician things. It's really across, to little -- around or more being characterize of is you of opportunity clinic, actually MOB variety can behavioral similar call more rehab side from to it, a is XX% the a it's kind but or half of our the -- everything bit too. of So client Barry And really would set, maybe of what and the that's, minus. of plus patient And been pipeline which the other pipeline dialysis includes type single-tenant and then

So today that's kind we're of that the mix seeing.

like good think of expect mix XXXX. continue sort we mix general that, will in that of and type, so property a And we into mix. that We it's

Operator

Cox The Markets. next from Capital question comes with Ethan Brown

Ethan Brown

to that of I being I just pretty AFFO. when flat per a at kind more on metric we to has moderate base time look rate. year at asset ask wanted third when of when basis, the question a I we're at continued relatively that grow up about coming high-level of a share our on -- mean, a

AFFO that do you leverage at share? of about driving how operational do think And per regain So point metric? just some internally you to what that drive

David Dupuy

What back been that the in operating years, a look step over last I would increasing in and interest you tell rate couple you take environment. environment at the been it's is of an we've if

same focused we've rather focused even that and assets, meaningfully. time, we're we're on that on has laser of period how compressed And AFFO. number. during That's rewarded so our growing acquiring internally, unfortunately, been very spread all though We're

of period pretty rates But XX- during have that XX-month up unfortunately, interest time. gone significantly to

acquisition been result lot impacted FFO a -- that. have that through a moved and AFFO would as that have would of flown our so have growth And that of lines

about. as the going assets look, interest of I those yields, are. and long attractive looking AFFO like there. look to anything very own returns are period attractive they But on and we're to yields yields declining, push time, at excited think, long very that on going are FFO. incredible to trying and term. we're Bill We're long-term find continue those to and to rates going think for on that time, So these we're acquisition as And referenced, over opportunities a I to again, because, base of leveraging acquisition-by-acquisition and you wanted to there's then the they of an very basis. Bill, start stabilize, I know mention to going focused we're And look asset maximize you're closely we growth an if see to feel don't

William Monroe

No, covers it. I that think

Operator

The next comes Lewis Michael question from Truist with Securities.

Michael Lewis

goes a ATM price this this you a have wondering maybe better? In an was selling question reason sales the of an as I'm capital just think the first idea sort should a equity sell either and back characteristics might would of some we vacant source if are around as about but or, just then of building of the you from consensus And that stock other of isn't price realize been maybe to issued the case, asset what equity your think right is capital. but words, replacement potential you asset some for assets. sell? asset that My NAV. I soft, sales strategic is if a to special talked I

attractive as is If your if vice equity that sell make you more can the acquisitions, soft, are versa apt not to ATM assets piece And your good. make equity cost acquisitions? stock are or price for I'm sorry, of continue up is that dispositions you to

David Dupuy

book business. very growing our on are focused of We

sell, it may or a handful we in I a find but plan in properties aren't no a that. longer attractive us, the extent, that that there of strategic always specific don't sell have focus don't portfolio. from we to there's sense say, for whatever properties feel perspective. whether consider are we and said, have be that evaluating we if a an us. But strategic are not makes we that may We our option we are sort place, general, evaluate for Now don't where in think And to would certainly noncore -- for place reason, of plan an would properties ATM think be to we are it very to

alternatives of being we're a open focused million there. availability strategic to and I with the $XXX to ATM, end sell ultimately we've of what certainly sales think very our capital our and before going more we to asset already need beyond day, at think to the with we I the opportunity identified. assets to closely good we're do. But revolver, that's extent what at But got think I the look resources good we've be under again,

Michael Lewis

is of it. pushback these it anything confirm Got Okay. or your deal? there's confirm confirm just to just And projects. nothing, a I the And quarter then pushed of a want acquisitions. in, acquisition development couple gets to big timing Is timing, on it back just yield kind no a locked the whether not? issues or on those

David Dupuy

a now of being back issues projects for than have pushed variety reasons. little are bit closed another with they operator. other on simultaneously a been no the There are projects No. Those

added market projects And take they and about before. to pre-COVID. development found longer of so talked is bit what These we I coming a the little coordinating you COVID, come than to and that have little a -- this time. closing bit And has of then out did Michael,

but of kind And so that's we're the that's of reality unfortunate, what seeing.

Michael Lewis

this question year? the expensing you'll statement it then And It income little real far the right? it. and as like statement significant sure, or there guess lastly change investing sounds about in total a from Got a income Okay. change, comp the is... I this cash me, I is going but it will not structure the is for flow, the any structure comp to there's is, maybe comp the but make change any material low be schedule on portion, we to the cash impact be of this be wanted the impact and -- on just talked in before, as more

William Monroe

there's Michael, with you couple what officer we're align our the of I As a to value to would compensation common of here, play is right? things stock. executive mentioned, at continuing point on Dave focused

compensation. officer a the stock the so the reduce But continuing will salary compensation. program, in annual being compensation incentive of have our matching, And alignment large and our to executive part of interest reduction

as Now doesn't compensation exactly work accounting always does.

And that will expensed part of so that year. being the be is now paid of compensation kind in because some immediately compensation and cash, during the of

of on with the And add program. compensation, to that compared total of the again, reduction impact. stock back you'll the something It's less reduced So the compensation, so It's of in income by will an see to compensation, matching right? will interest obviously, you because being have offset statement. see alignment AFFO cash an of

each statement. We see call offset something that will in which And go don't more quarter in but detail also movements on something or first the we March. believe our our it's material explain but as it's some it's detail overall AFFO on we'll obviously into proxy, other, be to going you filed more FFO, can they conference in to well. So gets income

Operator

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

David Dupuy

to just we I support, has for everybody thank I hope great And want joining everyone and us. a appreciate everyone's day.

Operator

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

You may disconnect. now

Community Healthcare Trust (CHCT) 14 Feb 242023 Q4 Earnings call transcript