CHCT - Earnings call transcript Q2 2024 | Community Healthcare Trust Incorporated

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Operator

Welcome to the Community Healthcare Trust 2024 Second Quarter Earnings Release Conference Call.

On the call today, the company will discuss its 2024 second quarter financial results. It will also discuss progress made in various aspects of its business.

Following the remarks, the phone lines will be opened for a question-and-answer session. The company's earnings release was distributed last evening and has also been posted on its website www.chct.reit.

XX, emphasize on of based risk this as today, to may information on and wants contain of discussed may be call July 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 in 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 All 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

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

David Dupuy

joining today our for us for XXXX conference you Thank morning. call. quarter good and Great, second

our our of Bill today Officer; me Monroe, On Officer; Meyer, is with Chief Financial Asset Stach, EVP the Accounting Leigh call Chief and Tim Management. Ann our

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

was updated our posted an website last investor night. to In presentation addition,

multi-tenanted of one filings, the certain of inpatient and CHCT our with interest is we lease tenant, it properties of a collection. our from assured has representing sole feet. were tenant lease approximately a XX,XXX in five property, tenant total geriatric and not leases six the and that square reasonably disclosed with As psychiatric hospital payments determined in

on a during this installed had time, As new XXXX, XXXX. made other a operator, more impact geriatric tenant's to psychiatric census of through revenue expanding business company cycle led process the COVID impact. In significant improved was pronounced improvements the the to management system the in tenant resulting locations, which operational plan staff a hospital And performance. census, management a and impacted business. significant a turnover the The turnaround in to hired has recent with in tenant's interest. and implement ultimately improved consistently a to resulted changes consulting Unfortunately, ability rent team operating stabilize experience decline the and tenant behavioral pay in and

have CHCT this consulting in experience we and necessary to with improve to has make confidence operations. ability team, the previous their changes

we tenant portfolio. be only compared lender. are of believe where turnaround. this detail importantly, We our let the rest progress what we also Most the tenant me and the this top is to the to more are features tenant working financial with tenant monitor with to will and impacts in review evaluate this from the discuss consultants closely the XX the Bill tenant of a unique relationship but

tenants, with tenants a we just not annualized of rent, greater in than of of investor and transparency but are top top report improve presentation, including all To data supplemental those tenants. XX our X% our now listing

significantly COVID that patient its tenant relationship of aspect I earlier geriatric impacted given this this base. tenant mentioned Another was the

credit loan CHCT when expansion had the founder helped recently and the And -- it facility. we across to CHCT's notes receivable business, a tenant's also and expanded this recently timing, During $XX.X locations. is finance tenant because also leading term million private revolving had in

inpatient to revolving relationship work unique provider far credit receivable on tenant a currently we with rehab tenant. health care conclude, million notes outstanding, and To portfolio. the consisting over and this term disorder we hospital investment our by with can loan and tenant million $X.X $XX.X to within believe returns $X.X million a our of long-term to facility other closely This largest is lending only a this acute enhance subsequent eating the mental use a coming quarters

other for the the activity slightly our see business, occupancy XX.X% to As increased of during to good and we leasing from the quarter, components in XX.X% continue portfolio.

when redevelopment we significant is Also, or redevelopment have or that to significant X.X undergoing tenants average five properties years. in X.X properties increased are with lease main or In weighted completed. portions years our place those of the long-term renovations term from addition, renovations

an we Subsequent million approximately expected XX, The a XXX% acquired June million. quarter, purchase return purchase of a a one office of annual we XXXX medical anticipated to lease of leased and approximately a with price and lease price for building into During in a the inpatient new rehabilitation in $XX.X XXXX. acquired X.X%. approximately for expiration facility second is entered We expiration with of property returns $X.X lease X.X%.

signed seven purchase has sale agreements to properties company the return of X.XX%. million. range aggregate for to definitive $XXX.X expected and The these X.X% expected from on for completion after acquired should investment Also, be an and occupancy investments

to 'XX, we out properties X% review have to returns XXXX, many to expect on one fourth close on of of and indicative sheets properties these closing We of the with with And 'XX the in six under throughout with remaining XX%. properties properties continue quarter term 'XX.

traditional at our sufficient selected attractive opportunistically capital prices. sales yields. having and banking and leverage will growth continued fund combined strategically our availability proceeds acquisitions favorable access to our With capital the our facilities the through for from ATM to markets modest sources, provide asset enough expect relationships anticipate to levels, equity we utilize share with we credit These on at

for per dividend wrap up, This per the our of second to annualized declared dividend and equates raised we To $X.XXXX $X.XX share. share. quarter to an it common

have to every our proud since quarter IPO. are dividend the We raised

of to That cover. care I takes items the wanted

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

William Monroe

provide on more details now our second I performance. financial Dave. Thank will quarter you,

quarter start Dave financials me our that inpatient behavioral Let the to geriatric the tenant to earlier. hospital by related detailing described second impacts

Rental $X.X compared the million $XX.X to first $XXX,XXX interest negatively declined revenue rents. was the of is by total million total approximately interest. negatively impact Combined, impacted of impacted by $XXX,XXX quarter rent, important second in quarter other straight-line the was Compared quarter the total by note It total declined that and which operating quarter $X.X revenue of second income XXXX, million. in $X.X to the reduced includes to second $X.X million. of geriatric to XXXX million quarter expected second second of the described, hospital reversal inpatient in these noncash tenant. $X.X of quarter quarter from by by million as items approximately in million revenue of to reversal of receive $X.X XXXX, the the of second just the I income of behavioral result only the a interest rental we approximately revenue to and Also,

and onetime to of the prior outstanding, payments amount adjustments from amounts With remaining deposits. out-of-period period net security resulting

In or loss to collateral FFO estimated the addition But AFFO. of and $XX.X This notes rent we reduced credit interest, $XX impact million is credit and an an underlying based future the continue reversals any of which loss monitor. reversals or will loss not increases receivable we recorded reserve tenant. reserve to the from net will on on reserve, million credit value income the

during quarter-over-quarter quarter operating to the increased expenses General at increased million by $XXX,XXX expense expenses. second final as of million seasonal the the expenses since expenses and fund $XXX,XXX several quarter-over-quarter to under to $X.X million acquisitions $XX.X borrowings during the $X.X administrative $XXX,XXX quarter acquisitions credit XXXX. $X a fees increased quarter-over-quarter of increased of and revolving well higher our decreased the by as first because of by $XX.X of the as to of Property week facility result interest million properties. quarter XXXX professional Moving million to had first of

and the $XX.X a from Moving a declined first the basis, the primarily straight-line AFFO, These $X.XX was XXXX. from from per interest for million second XXXX XXXX. reversals quarter to which decreases and over million described are of million million of in per common earlier. funds rent these operations. or quarter of quarter the $XX operations, totaled share. rent periods, $XX.X compensation, of second basis of result decreased funds adjusts FFO quarter-over-quarter of FFO diluted FFO the $X.X from in $X.XX stock-based Adjusted on to and share On in

the over these basis basis, decreases On are result to $XX.X of decreased quarter-over-quarter AFFO share million per $X.XX XX%. reversals of $X.XX These I'll $X.X of $X.XX, the of AFFO from earlier, from well see described in approximately quarter smaller XXXX interest was first declined and than added our and the million a periods, common of net impact on payout quarter-over-quarter current even covered $XXX,XXX also why the remains diluted and of note share. per primarily to you with that rent, straight-line that is back of AFFO rent ratio a at dividend FFO. a which

question-and-answer our concludes we the prepared Darwin, That session. begin remarks. now to are ready

Operator

[Operator Instructions] of The from comes the Rob Stevenson with question Janney. first line

Robert Stevenson

Could -- maybe what case file properties of how give has? in And how you to performing facilities these and talk sort what bankruptcy of to total in this up some others some look little represent bit tenant many leases. percentage them? a of you they And are versus about their were

David Dupuy

-- makes their this complexion us buildings with the total up tenant really -- so entire are they and the the business. hospitals that We entire a has have six is of of

paying of rent the catalyst issues census interest. and But question? in -- reduction that anyway, the in that for they've did obviously, So answer the having has your what been some been

Robert Stevenson

how the wind in are Yes. the tenant? that with would any from here follow-up be risk adjusted far? being this I would bankruptcy thus were much And in I to up at we've mean to the if pipeline where guess they revenue of acquisitions

David Dupuy

in tenant rent this acquisitions quarter. and of with associated The tenant. interest amount with $X.X approximately run no are this There pipeline a rate is million the

It's gives consultants that's that, to when a with that and the before to at this on help middle said, with intention a look, weekly our top you're is turnaround affect And them and thought familiar are allow difficult start we've consultant basis, in monitoring you progress. that but will that able exactly is, sense. turnaround that point. this of the we've us be got like paying in we our when that to I worked tenant rent on the of So should there some identify

Robert Stevenson

to here? were how was it sort long like the guys process I a Or watch basically of was to a slow guess, these get on this and mean switch. weeks was it a flipping list? couple of I And

to having problem that imagined? not much the as and are in more little out assets find on bit days warning basically, that these these to how more a get for appearing day or Just quickly you sense they're one than there's radar whether something screen, trying a difficulties you've come it's

David Dupuy

I the in while. things a relationship the the remarks, been prepared of has for one firm this Well, mentioned because for a

were financed. they new the patient watch COVID, much that during XXXX ramping up given business the the were to and on just XXXX challenges nature the they hospitals for the we two very have and the of last the for So list having geriatric base

And changes to with these fourth list census were in we the they business they list so in quarter rents well. is some and fallen very performing Then of started on watch and off very, the XXXX, and the watch some late XXXX, concerns had regard then the seeing performance. management late with

it they us came the partial but collectible. to going second list back make was rent the made ultimately, first although watch that so comfortable be the quarter. wasn't first on in quarter payments And in and to They the quarter, enough

why we so moved basis. And to that's cash them

Robert Stevenson

And how significant on anybody top list, And that today? is watch today? else, any list speaking the tenants other overall the that of of

David Dupuy

to the was tenants it than watch had list of top on XX such year list list. the diversified the before. in But similar But again, and currently. very it's our other watch about a are Genesis disappointing large of us, terms The obviously, currently we other these to tenant what today issue the on heels None very feel numbers of having we well We're get last Care beyond through these good this problems. is tenants. top is

portfolio about good the feel we overall. so And

Robert Stevenson

that in given either to forward? as going ballpark but me. for tenant. much that reductions we where future about is the the that should And to be know still just one that that, out company get Bill, of one FFO a is stuff thinking that adjusted as didn't of $X.XX other -- AFFO come rate be today quarters? for that has the per one the I last is with share is run then Or or there this added back how

William Monroe

forward, you'd that this we're say kind period back we approximately our where the is think were in run I of in expense, taken second mean as this compared kind be be. on rent Obviously, as will from the was. AFFO as basis it also to on of the AFFO charges we out quarter will payment impetus rate and the an ballpark. other interest we be be AFFO interest will increase second charges guidance, a of until but quarter-over-quarter quarter things, don't G&A, an see right move what biggest and improvement tenant, the But performance should short account I $XXX,XXX, we clearly, the from improved took of added provide of far answer $XXX,XXX into of AFFO basis to tenant.

Operator

The Goldfarb Alexander next Piper question from comes Sandler. with

Alexander Goldfarb

guys years clearly, something over, but I were these as and Genesis, recently. of the heels all tenant, not you that this obviously, these you need. casting -- took don't one, were done guys said, have done ago, But Dave, it's deals blame, you I mean not clearly deals as before on were you didn't

you underwriting, of look envelope acquisition know tenants what and want other some that that kick go, lessons or here reassessments you've Genesis history monthly acquisition at So the rent. at or or their some your payment deals existing these and Genesis in this that the hey, are you as tenant and when the have we pipeline? things learned portfolio and your are What maybe little to as light up we coming the like and of tenants terms tenants, pay out from a they look what, you seen hey, of existing of look now pipeline at you in

David Dupuy

the in tenant, that in our single have a is see Care you, won't bar tell us higher at tightened standards. just happen. I these you latest Genesis wake will say, this The of we will situation, also again, levels land I to underwriting won't

the was pay but through significant obviously, their the it, had rent unique -- who everyone at any to went So very a situation. end COVID this the of interest. was geriatric it, unique it census on we especially slip in population, a situation. all And and borrowings went from impact It through day, tenant. drove an ability And

just underwriting, forward you're And to with same our is loans levels so honestly, in single just see sync with to strategy that not going a from more the our going perspective, be not and we're to our of because rigorous going firm. diversification a as tenant

very to us. that's important and -- So

here lesson So that is sure. core a for

Alexander Goldfarb

loan the as well, not as far with went as it Genesis. it's that happened was But and -- the just bad, tenant it certainly

does deals you then doing So not mean rental just at Why a shy lend this or keep asset to to single tenant? changing? even this want also is that relationship? deals like from away portfolio purely and stick it a And why how to anything --

David Dupuy

situation every is unique. Well,

sometimes so competitive And there are reasons.

each didn't was historically, but overall good individual individual because that tenant fun for market what fun But But way. worked meaningful wasn't are to a holdco a at us, perform. deal. facilities a our that relative that as had back and -- underwrite at and to reasons what portfolio very process, in reluctant look, new a it's of deals it interest the whether day, And tenant. say, and would going overleveraged portfolio was is I to Ultimately, end going wasn't disappointed that relationship. out. or each the us largely there Genesis of And performance to to an portfolio the and drive ultimately do wanting is payment Care, from Alex, you're rent that a to deals, Sometimes important lend property the it have part we been we process, ultimately,

deals be a but because more are be to could us there to going for underwriting do we our going won't not standards to deal rigorous. I'm opportunities do portfolio say portfolio So

Alexander Goldfarb

the the $XXX Just final million million, a stock a up bit committed pipeline trading pipeline? where Or has stock how question Do is, $XXX of getting is goal the year? acquisition of that taken change sort reconsider the of back now a obviously, hit. the to you does

David Dupuy

on focused looking capital. very sources all we're of Listen, at

judicious leveraged pipeline. that we our what in this impact to definitely is what's committed all REIT AFFO to way from though be a it's even don't have performance capital, We actually, we've drive about modestly do And sheet. and going we a driving any our our as continue a balance with small are going to share recognize to price growth going think to We is FFO. perspective, in

the We the we're so other And in in how capital from can and recycling very can portfolio. do just our going strategic We our to leverage levels the just be and some banks. that, stock. borrow got we just support given than levers we've do

various in to growth. ability able we And our the access fund to positive to so our overall, very be to markets continue feel

Operator

The comes from question with Michael Truist. next Lewis

Michael Lewis

cost just one over the So investors asked And last think I one questions, of the point this months was of new that X XX% acceptable So were taken I rates. XX Alex of what XX%. down. already answer. equity is the more to tough it's it's issue the questions to shares It's to down a obviously at think cap right? at morning, no stock investments asking the has handle important or I question know another leg longer fund

that equity to want to don't a yourself kind I so if that. don't danger cost already spread access know does that here what box. because more of it. you when say could in the think you You investment lose become yield, of a answered there's prohibitive But on over I you Maybe capital put your or

David Dupuy

would accretive overall looking acquisitions. AFFO answer. acquisitions drive one growth and those make tough is company. for we're tell it I need the And Well, revenue to But what to to a you is

company and equity the doing in the ATM. highly raise we're a as in that so doing shareholders about And sensitive dilutive

I earlier, mindful be to with very mean, portfolio question, Michael, just as fund And capital I we've growth. mentioned recycling so got the of the that do terms of to -- opportunities within prior in and to some we're going some

tools will our that, And good that for us. pressure good not allow for us without to continue on that's stock. not the grow do we And AFFO it's putting so recognize toolbox We ultimately, have in other growth. to driving

don't I to Bill, there. know want you comment if

William Monroe

agree. I No,

Michael Lewis

paying these I then And they're scenario, tenant right the judge about be. that helps where think you of kind your recover, jump the or plan and or look kind to expectations doesn't the do hopefully, to Worst-case are easy gets -- I consultant to the talked mean like. relatively properties what important tenant what you sell think but worst re-tenant it's to would the of don't might case, for again.

David Dupuy

Michael, interested of So number myself we we from assets. there in this space. that answer scenario The we interested benefits the Bill are having be or one jumping businesses. of many these health value will that sector in site these operators is years potential know think obviously, in a these to short that to a scarcity be and of been without care operators, some bit tenants is we the And are operators would of a lot have And for in hospitals. little buyers is that that think services there

And the attractive would an to so individual business these in buyer. potential hospitals, be I think, again, individual

William Monroe

been the more add of landscape it is issue. believe we where local have Michael, that such that Bill. competitive do it's in not an seen execution markets there's this And and these I'll we in a operates, tenant change not

value helps we preserve the that think properties I is it. these think so about what of And as

Michael Lewis

we see this, reposition think last being with stocks I and lose the has do REITs significant to like acquisition to My able I other care do health worth, question, assets. pipeline. it's it take and the it mean, on whatever for Because don't tenants just sectors

already the already in -- deal the or I the quarter, sorry, first in first on had closed you the you the on had second mentioned call. think closed quarter quarter, that mentioned I'm you

your new the seem think So activity you on any year? last goals has And there the few months? target the Do acquisition not for pipeline you're still been for over still does full?

David Dupuy

past translate term outstanding, just in in closings where be sheets seen to remarks, are the continued seeing cetera. than little of in the in closed third -- have acquisition certainly our is prepared are target I the But reality which some activity. we've standpoint, we of still number achievable We've et schedules, We seeing in the we're good quarter, And I balance better year. do the think mentioned into slower got a certainly the deals, active still seeing vacation think it's bit said, like as not sometimes acquisition a doesn't I but an activity of that the from deals. hitting always

yes, achievable. that still that's feel So we like

William Monroe

And the that third Michael, in I'll early million $X.X we we include quarter a closed did note, here. property

the So our quarter, in in did it didn't we additional just an investor it early show property month. that second quarter we close up did numbers, closed but this presentation mention this

Operator

with [Operator Instructions] RBC from Markets. Next Capital question comes Golladay Wes

Wesley Golladay

It's the right Capital. have you include issues having you a is rent now? of Baird that the Does expiration actually When cash $XXX that tenant number? annually. million schedule, lease at look that And is

David Dupuy

to look. have I

on So in would term. that -- been is the in expired tenant leases include and that we've The with discussing XXXX. the it that's those I but of lease think between near tenant maturities the leases yes, we XXXX the have would number, those

upcoming that maturities no So tenant. with

Wesley Golladay

to they would at pay that anything paying make that. cash now, sure accounting when second -- I then you quarter? want look on did in what $XXX million And they're the incorporates the just

David Dupuy

bit, little much. not a Just

get we're expecting mean, Just they're small either. in this third some middle necessarily the meaningful the payments And quarter in not payments. turnaround. I to of

Wesley Golladay

the utilization getting probably higher, is look you term you credit, then are when looking line another that? of How at at but loan. then could the you And issue

David Dupuy

of when we group with next at of We our again, The that, those taking maturities at we the have historically. do bank maturity or within quarter. the of $XX get XXXX. a and end our so typically, million until anticipate we'd is to not revolver look that term out so success had had borrowings and under look doing those year available what March is But revolver a

that. evaluate we so continue And to

Operator

with next comes The from Evercore. Kammert question James

James Kammert

replace and tenant they're default. to the in priority a rent. under if assets, new not this meaning I desirable are a new path paying look the these for and wait question the Obviously, to lease parallel ability they're I to have presume other with tenant operator? in ] [ replacement or why in mean, them, owner? words, Do you try

David Dupuy

in XXXX Yes, of short are that and absolutely us, and try and of and perspective, looking I folks multiple do see the that perform just to replace options. given list we at back our to their operate default we how We're taking tenant wed obviously this facilities. and in have to consultants, able I fact other from a you options pay has loans on They're certainly, to want paths. tenant. with and we go outstanding will ability of this we're preserve think got the could they're them. tenant like we've said, was rent interest, these not But kind number a the we our leash. that say to we this And to think But if

we're a obviously, to tenant We But -- there. it's want that if we'll this Hopefully, we're get tenant. others. so evaluate in sure And paying we aligned. make not, it's

James Kammert

very with reconcile to prior comments, trying just I'm that's Because the that helpful.

going cycle through can any provide that it? the color salable receivable. sell reserve You've the Maybe the business if are trying seems just premise hospitals why just entire hit taken inconsistent of salable, just network such it [indiscernible] you additional you a loan of balance keep marketable If there's basically sort XX% to on understand there, these assets. the with basically these and then a against are

David Dupuy

a It's to to you I hear take. to through that you. one process those structured requires that it's go Listen, have just No. have processes pretty we and of Yes. through, go CECL you accounting

to of for value we the the with current the And given that's at so a conservative and what come look, And end business be day, up you're the trying through. went environment.

much here. And question. terms operations stabilize operations there there kind as But so the as business those value reserve. in we you're think no We of from can. we're can drive And there's is sure the to of in make we that what and trying that's value seeing the

James Kammert

was sort So you really of determination. so worked did drive your accountants with It a it and that in-house? CECL not

David Dupuy

Yes.

Operator

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

David Dupuy

operator, Listen, and has us talking everyone We and everyone, day, look joining you good forward thank to this a you, thank hope to next for quarter. morning. you,

James Kammert

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

disconnect. You now may

Community Healthcare Trust (CHCT) 31 Jul 242024 Q2 Earnings call transcript