Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Global Medical REIT Inc (GMRE, Financial) reported a high occupancy rate of 96.1% with a weighted average lease term of 5.6 years, indicating strong portfolio stability.
- The company successfully closed on a significant acquisition of a 15-property portfolio, enhancing its asset base with high-quality outpatient medical facilities.
- GMRE maintained a disciplined approach to balance sheet management, issuing 1.2 million shares of common stock to generate $12 million in gross proceeds.
- The company secured a new 15-year Triple Net lease with CHRISTUS Health at its Beaumont facility, replacing Steward Health Care and ensuring continued rental income.
- GMRE's asset recycling strategy resulted in the sale of two medical facilities, generating $12 million in gross proceeds and a gain of $1.8 million, supporting financial flexibility.
Negative Points
- Net income attributable to common shareholders decreased to $1.8 million or 3¢ per share, down from $3.1 million or 5¢ per share in the same quarter of the previous year.
- Total revenues for the third quarter decreased by approximately 3.7% compared to the prior year, primarily due to lower occupancy and tenants being placed on a cash basis.
- The company faces challenges with increased mortgage rates, which have tempered demand and affected acquisition opportunities.
- GMRE's leverage ratio increased to 44.1%, with a potential rise to 46% by year-end if no asset sales or equity raises occur, slightly above the target range.
- The company incurred significant capital expenditures, including $900,000 in CapEx for the Beaumont facility, impacting cash flow and financial resources.
Q & A Highlights
Q: When considering funding options, which do you view as more attractive today: equity or dispositions? How much do you have left to fund to sustain your leverage target?
A: Robert Kiernan, CFO: We ended the quarter at a leverage of 44%. Without asset sales or equity raises in Q4, we'd end the year at 46%, slightly outside our target range. We're not uncomfortable going above this range temporarily. We have potential sales opportunities and would consider tapping equity markets if favorable.
Q: Are there any assets you're currently marketing, and how have interest rates affected buyer interest and cap rates?
A: Robert Kiernan, CFO: We are considering assets for sale, and there is pressure on pricing due to evolving market conditions. Alfonzo Leon, CIO: Optimism about rate cuts increased interest, but recent mortgage rate hikes have subdued it. The market is sending mixed signals.
Q: How comfortable are you moving forward with additional deals before funding the announced acquisitions?
A: Alfonzo Leon, CIO: We evaluate our portfolio regularly for potential sales and consider market conditions. We focus on acquisitions step by step, ensuring we align with our financial strategy.
Q: Can you provide details on the states where the new assets are being acquired?
A: Alfonzo Leon, CIO: We are keeping the states confidential during due diligence for confidentiality purposes. More details will be provided as we progress.
Q: What is the plan to fund the portfolio deal and future acquisitions? Will you raise debt as well?
A: Jeffrey Busch, CEO: We plan to fund through dispositions and equity. We raised $12 million in equity last quarter and have sales in process. We may temporarily exceed our debt target but focus on equity and dispositions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
