CHCT - Earnings call transcript Q3 2024 | Community Healthcare Trust Incorporated

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Operator

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

On the call today, the company will discuss its 2024 third 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 risk this as today, to may information on and wants contain of discussed may be call October 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

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A release, the its reconciliation available in During is which is between GAAP this call, the measures. will X earnings company on discuss its posted website. financial and non-GAAP

this website being not will the are call of Relations Investor be available participants without for Call This otherwise or made the permission. and days recorded the of distributed be conference that archive prior company. company's purposes. reproduced may call the call is playback for written XX advised property approximately company's An the or is recorded on

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

David Dupuy

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

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

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

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

full Milton. Helene and Carolina Western Tennessee North experienced and in will for and Numerous recovery. flooding even people impacted Florida, were and devastated Many that months unprecedented by have require East Hurricanes damage businesses and severely

fortunate of our damage we the tenants trees did storms. from other outages, encountered not properties downed power Although were and that some our sustain inconveniences,

will million $XXX support but facility achieving bank maturity go more group, stability extended our strength increased we to gives his to we all overall into credence its our announced, the the of Bill from previously pleased revolving date successfully was in X pricing. with of $XXX detail As while credit and very years, CHCT. million, which are lower remarks,

on wanted to a hospital our of geriatric provide psychiatric I of Also, representing an approximately tenant rent update XX,XXX and who feet a the X is square operator, $X.X total properties, of base million. in

Although processes interest staffing, has we consulting are tenant, team from hospital not the and and stabilized controls. improved rent and costs yet operator's receiving the reduced

are October. improved we a in result, census seeing As

the parallel to Although not the to in dialogue under we as know to soon do yet tenant and us may paths our timing to pursue consultants, and the operator we'll and continue with notes. we We its rent and all multiple continue interest able active payments receiving or to as evaluate possible. begin available amounts remain pay, be leases options

see good decreased related to in As the portfolio. XX.X% lease expirations, other leasing our business, quarter to the activity couple during the terminations components but we and of from occupancy to for XX.X% a of continue the

portions the when X in tenants completed. renovations In or significant with is renovations properties have addition, of significant long-term are we or that redevelopment place or redevelopment undergoing them

to projects X expect first We quarter the these leases of of XXXX. commence their during

And XXX% property million with years. approximately for $X.X approximately slightly is purchase price physician acquired term X.X%. decreased remaining Our a weighted from XXXX. an during expected one years we the lease lease clinic expiration in leased quarter, a The X.X return average to and X.X of of

returns million. on purchase X.X%. company's range expected expected under for We The purchase have price X to from agreements $X.X properties investments definitive aggregate these X.XX% an of

in to quarter these on expect the fourth XXXX. of close properties We

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

to equity price. ATM not at last access did depressed quarter, share currently sell Despite we our our having

evaluating low coupled opportunities, share we our the and selected from capacity sufficient revolver near-term anticipate increased Given price, acquisitions. fund having are would asset capital actively recycling capital sales, we with to

uses will Going while levels. forward, including, modest we leverage maintaining share best authorized, if capital, repurchases, evaluate the of all our potential

dividend raised per our annualized our $X.XX and to To of equates wrap proud common since for This quarter IPO. our we raised third up, declared $X.XXX dividend share. the to are have we dividend per it an every quarter to and share,

care items takes discuss off so of to the numbers. things hand will I the to cover, That I to wanted Bill

William Monroe

Thank you.

quarter our of the turn third during I to X successful I that financials, on Dave will ago refinancing our highlighted remarks. weeks expand credit Before facility his closing

we pricing debt of X.X% upcoming of was The also were revolver while upsize XXX purpose to X the But or pricing. drawn result new million set and existing banks The routine points transaction with reducing maturities. at X-year, SOFR today. bank, plus revolver is support extension from a able its new strong current a approximately our XX with $XXX basis

new continuing capacity our provides of upsized revolver borrowing us modest with importance While million currently, profile. our we $XXX in of believe approximately the available leverage

allocation purposes flexibility this leverage, us depending our timing enhanced dispositions for on recycling the and to do but equity use price. capacity share to acquisitions, it upon as we increased not execute capital so it completing sustain relates to does plans capital of And issuing to give closing borrowing plan

psychiatric million of third revenue the annual out-of-period to our X%. X.X% in provide will in our XXXX million of from year. last tenant. quarter-over-quarter of second the geriatric we Total compared of When hospital XXXX those total the details $XX.X the out-of-period had revenue million of performance. to was is second same the it to that quarter of XXXX, period $X.X I approximately total over of important adjustments the financial reversal and in representing rent quarter third interest more remember growth now from the to third growth on approximately for $XX.X quarter Normalizing $XX.X quarter quarter grew million revenue related XXXX, in adjustments,

property From to quarter-over-quarter repairs a operating summer primarily expenses HVAC result utilities the in an perspective, by of months. approximately as expense increased hot $XXX,XXX $X and caused seasonal million, increases expense by

the credit from of acquisitions to from in administrative XXXX the $X.X in expenses to of increased quarter quarter and XXXX. due $X.X and second the in fund quarter million XXXX General to second million quarter the the slightly third increased facility in of our revolving borrowings million million of Interest XXXX expense under to increase in third $X.X $X CapEx.

per XXXX. in common increased FFO quarter from And second FFO quarter-over-quarter of in share. was $X.X basis, increased share the diluted the third $X.XX quarter On million periods, over a these Moving to funds on operations. to from per from by million basis XXXX. FFO million $XX.X $X.XX of a $XX.X

totaled share. operations, which second the On $X.XX stock-based rents million straight-line a to increased in $X.XX from And million basis, compensation, $XX.X or AFFO, per share quarter Adjusted for third common quarter per of of XXXX. XXXX. from increased the these periods, $XX.X and AFFO over on adjusts from funds in a quarter-over-quarter AFFO basis diluted

only well I'll ratio a Finally, XX%. remains payout with again dividend covered that of highlight our current

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

Operator

Mitchell first question [Operator Sandler. Connor Piper comes Instructions] from Today's with

Connor Mitchell

tenant you if the any or wondering little that geriatric a know you bit more could bit, more on provide touched popped quarter. I guys just the up on color prior a issue but it in

that do Just outstanding? this from at getting might leases to Just returns maybe you about your how any to able confidence provide was any if in backfilling loan the expect guys open, additional you them, you any color time. feel level be

David Dupuy

the repair the And relationships key will everybody said prepared the the think And Connor, about into these on last they've have payments and several been of talked improve census calls rent that as months. and of It's previously, census. to in I sources knows, sustained consistent resource able for one and as level thanks referral -- on as of translate admissions over interest -- consultants question. we're to -- about I focus the remarks, CHCT. work we've and lot a things done excited my is we've to

So we feel the business. about the that good we're in seeing trends

parallel call, we're is other number And of combination interest at tell the to a have also as mentioned operators. you call, with think on in been multiple to quarters. have There inbound going of opportunities we get performance this I resolved, I a inbound of these in interest, from the can our of operator, I coupled last couple on As mentioned facilities the sort what paths. of we're looking

based do on from But being a they and tricky that those a rent of rent census and and we're continued will amounts because But that and is the that interest strong the that. interest yet. able to and little gotten the interest of expect, today in -- do timing we be company rent haven't rent seeing we the to predict position occupancy,

Connor Mitchell

as just course. reminder And of this outstanding any just could then And give tenants guys a to of if well. there's has on up, Yes, loans list since other occurred. that just if a issue the up other have might Yes. watch popped to tenants reminder, maybe you us then of follow kind as any

maybe remember X that just as but I were million, please. $X aggregate reminder for think or a an $X there well, of on I million

David Dupuy

that in on month-over-month we list thanks. have XX change those currently are are Yes, going XX tell our what's list. you other that no the -- top there our watch are I of no XX on to can watch portfolio. and There tenants, on depending tenants

the have an one We've operator. consistent. outstanding relates rehab small to a loan little your over to million another as And $X a it to question got million then of an loans of behavioral got $X We've to inpatient facilities. the been we've And loan outstanding, health pretty $X.X facilities. outstanding operator other million got operator loans on

levels very, at point. very modest So loan this

Connor Mitchell

development mentioned of stock upsized the there. work, just to putting think guys Appreciate as would capital guys maybe Okay. then the kind Kind price lower curious, and you right you of you gears. color revolver, the switching again, maybe just a having think about now, And about position discussed to maybe leverage moment? that's about or at without at and putting really to of, capital the profile just the more the projects your like work dialysis stock clinic think looking source

David Dupuy

Yes.

opening do an update on So mentioned I I the generally was redevelopment in our of one remarks things projects. the

like we of of X we embedded projects portfolio. is returns the projects to of and in almost those do sort you on acquisitions first good projects, the during our acquisitions. have those to come generate think on Three as online thing We to, as we expect these quarter, those are right a expect we And now. alluded which ongoing similar

something we're that's so focused on. And

I extent with with them, dialogue And companies have would will continue it. estate something that do say the they're we their that to to operating most in the activity dialysis hasn't that in standpoint. with on and has have a had Yes, do of place. of operator specifically been to LOI real associated them market, from we development we the look acquisition

So they there the they've had been not done been that haven't active, -- acquisitions a haven't that it's real component. estate haven't but

term do that haven't we anything so it sheet. been And to relates as able to

over-lever noncore that are So as growth. going -- internally. assets portfolio. real And way acquisitions but opportunities estate in not provide of our plenty returns fund to well. And to business, continue fund good and we investing on capital think also, have we're We although the at our to revolver for we capacity focus some as goal our selectively yes, to on continuing to to a as look us recycling use the is can again, mentioned I

Operator

question next from Rob Stevenson The with Janney. is

Robert Stevenson

the the rent? and the just million $X.X tenant, on geriatric is rent notes? is Or on interest that that Dave, the

David Dupuy

rent. That's just

Robert Stevenson

the they on that you What's of And notes interest you when how that? that the should total add sort per not getting? on year much the be is you're paying to

David Dupuy

basis, annual It's million of it per $X.X about an $X quarter. be kind On about million. would

Robert Stevenson

full remind was me last month tenant? of payment Okay. And for this can you then the when

David Dupuy

I back in got payments think we and partial February. January

Robert Stevenson

Okay.

been full 'XX? So would have in the last month sometime

David Dupuy

Yes, right. that's probably

Robert Stevenson

should about the Okay. is off you're that we to possible how in How be the of of And terms expecting X material impact? then the X earnings first -- redevelopment ABR thinking come that quarter, online the projects leases in that?

David Dupuy

disclosed pickup not of we've something part disclosed, haven't we a us. historically, Rob, meaningful that. the -- but And it's so going for that's be to

I a into expect kind that to the quarter. be think of first tailwind

timing. it is the some of And just

think X projects online, come quarter online But but at in all going terms beginning. come plus -- annual of throughout the $XXX,XXX about We expect it's not those of the could and you it to it's rent. that will of

Robert Stevenson

you Okay. anticipate for had That's And very you anything you mentioned anything Do closing helpful. currently year-end? then dispositions. or by under sale have contract

David Dupuy

facility. small about have contract we would not for that's $XXX,XXX, a by year-end. very, And small, facility we close and do. but We that have It's material, we very expect to so under it's one

Robert Stevenson

one last the then And Okay. me. for

million, -- the those was the quarter. of pipeline fourth in to think I properties you have, guys $XXX.X that X expected one for the that close previously

looks Now 'XX. delay a Was a What that fourth it's from Was like that and/or going it be occupancy? end? that sort of pushout pushed to in your on out quarter? construction the

William Monroe

on a Rob, their side. it's Bill. was pushback It

Just being in and accreditations hurricanes Medicare and Florida moving have little things are as some they were come approvals through the getting bit of there, and that a slower.

the property down well a approval did the slowed but process little So has the through hurricanes, bit.

year. of estimate instead we so quarter, being of quarter in next to it kind now And first the fourth mid late

Robert Stevenson

close ability stuff? on have do you And to of any on the delay end the that your Okay. timing

William Monroe

our No, not end. on

Operator

Truist with The Lewis next from Michael Securities. question comes

Michael Lewis

the percentage. quarter? Did material a income in that collect lease fee sounds So termination movement leased It should come the third the you back like addressed you in bit.

David Dupuy

Michael, I appreciate the question.

occupancy with which all that the has tenant, over on property, year. reduction years. to So And there's going some We did cash paying not tenant is that the and related last prepay incentives lease nearly X been which of to one paid be termination us. in to for rent for a negotiate basis quarter-over-quarter

and payment to to going monthly get plus -- there. going they're building paying in get long-term ultimately, tenant re-leased -- a interest So and new us be we're to that payments

good we us. So a for this is think outcome

some termination your paid will and agreement. And monthly so on question, yes, fees fees, there based lease was termination ongoing termination answer be this there to lease

Michael Lewis

listed we of your And last then X properties, as total noticed Okay. was that representing quarter Lifepoint XX.X% rent.

This happened to numbers your quarter, just like related X of it the a property, X.X% what what properties, in about, of looks this only rent. we total or Lifepoint talked Is there? kind

David Dupuy

side, the property. their venture properties. a longer they on are primary Lifepoint, where in tenant different into Yes, joint no that entered

of reduction And so same operations, Lifepoint the so a but same and rent, terms, a in our change concentration. ownership in

Michael Lewis

sort see. me, of Anything sell, rates selling selling bottom portfolio? you the then types on just lastly Just going to Are might are to be be? off dispositions. you of what the looking I And about of what for you representative could that's you'll facilities some about say portfolio? that? Or you the anything the stuff talked say could of you more cap be

David Dupuy

Yes.

areas at broadly for looking mean, I So think we're I speaking, Michael, recycling. a couple of

but mentioned, First, fit and smaller probably amounts buildings, of significant as to they're be than buildings not have going less we raise that tend think of do markets, may a a group in XX capital. you be and long-term these for I the less-attractive to not portfolio,

properties, currently our selectively have AFFO very those But at rates. a grow we to attractive very strong very both could and of group sales we larger goal per we're performing And is of sell those exploring much Look, groups. share. cap do broad of ultimate

where sales to have are business do of that we the that sure pipeline in get from gain about facilities those those a we so and rifle be gains on be those make any the -- might shot And reinvested strategic into and would very place. acquisition based selling we able

so at look, we our to -- shares ATM And current this price. want raise don't share at

And so this an shares on we're more can want we we regular-way it, start basis. at share until price a looking where the get and issuing we alternative as

Michael Lewis

that's never think below, never cap bought company a I you're guess I X% is rate. still this true, Yes. bought below anything anything

on properties, I or So spread guess. is, the of cost cost but equity equity the it what that the wondering cost property, difference I the just was and depends the of between and selling --

David Dupuy

terms to is depends a huge we of trading. there's based the properties actual individual it believe the stock it that of our on property. Yes, as -- in where value relates And disconnect no, currently

on strategic, And so we confident invest selective very, basis. a feel do and that those at could attractive, very -- sales very do cap assets we good but the regular-way that in we rates higher-yielding asset some very use to

Operator

is question from with next Kammert Evercore. The Jim

James Kammert

that rate Dave, equity realistic cap basis implied maybe finish topic, type XXX you can mean, on the point if between on XXX disposition could. to last and we rates? do cap talk today we or think spread Just about I

David Dupuy

sure. a for say good I'd that's range,

James Kammert

tremendous Okay. all look, credit, expanding extending a you That's did good helpful. the And qualitatively, those job of attributes. more in then line on

group, reflect lenders, looked what Just lender were how at attributes do for to they if Just you us, together? the will, what curious the this that you attracted they think allowed CHCT. if you you underwriting, pull

David Dupuy

But a overall. see see But buildings. portfolio portfolio They and portfolio of jump Bill the great -- of start portfolio of at maybe by got see modest we've we and, job. They got Bill, I'll diversified performance large, our is and And coverage. a Well, want. way that a strong banks buildings those the in. performing the we did aren't almost I -- XX overall, look Yes. the dividend We've or leverage. performing the They XXX XX well. think

And of of so track of gave through resolved, a issues bank think, But group position record successfully to jump being great frankly, of credit those performance in. tenant and our confidence overall CHCT. and, the that able in leverage, the getting modest a history from perspective, work strength Bill, I deal and

William Monroe

rates will agree benefit from I never good are rate to And hurts, all we of right? Obviously, I starting in having Yes, from that. are mean decline. those. environment that. look, an we timing benefit would interest where with Banks interest will

all the so and and of modest about, our also. Dave timed transaction performance, diversification leverage talked and strong, history And as we I think well

Operator

Colliers. Oxford from is with question next The Barry

Barry Oxford

are list kind comments mentioned tenants Real your were that? of opening Of it one-off watch the Barry, look, tenants on is care? XX that type you your on particular none you particular a watch of the top in there that is quick, Or the health or it's is related situations, it concerned that than property to just, about, is causing list. a more

David Dupuy

for the that is Barry, I we tends situations nothing that any -- the No, would We anyone's seeing sector Yes. in are we latter. it question. to thanks that. we it be it's specific into, But situations, and attention broadly tenant-by-tenant run appreciate definitely idiosyncratic call to.

Operator

This session. to call the like I closing concludes over management remarks. turn any would question-and-answer now for back to the

David Dupuy

look thanks, and interest questions Well, soon. again very we business, everyone's good and everybody, the the in forward to talking for

Operator

conference The you participation. concluded. has for now Thank your

now You disconnect may your lines.

Community Healthcare Trust (CHCT) 30 Oct 242024 Q3 Earnings call transcript