Yahoo Finance Global Medical REIT Inc (GMRE) (Q1 2024) Earnings Call Transcript Highlights: Strategic ...
Net Income: $794,000 for Q1 2024, compared to $673,000 in Q1 2023.
Earnings Per Share (EPS): $0.01 for Q1 2024, consistent with Q1 2023.
Funds From Operations (FFO): $14.9 million or $0.21 per share in Q1 2024, slightly down from $15.1 million or $0.22 per share in Q1 2023.
Adjusted Funds From Operations (AFFO): $16.5 million or $0.23 per share in Q1 2024, up from $16 million or $0.23 per share in Q1 2023.
Total Revenue: Decreased by 3% to $35.1 million in Q1 2024 due to property dispositions.
Total Expenses: $32.8 million in Q1 2024, down from $34.5 million in Q1 2023.
Interest Expense: $6.9 million in Q1 2024, reduced from $8.3 million in Q1 2023.
General & Administrative Expenses: $4.4 million in Q1 2024, up from $3.8 million in Q1 2023.
Portfolio Occupancy: 96.4% with a weighted average lease term of 5.8 years.
Rent Coverage Ratio: 4.8 times for Q1 2024.
Acquisition: Entered into a purchase agreement for a 15 property portfolio for $81.3 million, fully occupied under triple net leases.
Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Global Medical REIT Inc reported a high portfolio occupancy rate of 96.4% and a weighted average lease term of 5.8 years, indicating stable tenancy.
The company announced a significant acquisition of a 15-property portfolio of outpatient medical real estate for $81.3 million, which is fully occupied and leased under favorable triple net or absolute triple net leases.
Global Medical REIT Inc maintained a strong financial position with net income attributable to common shareholders increasing to $794,000 in Q1 2024 from $673,000 in Q1 2023.
The company has a robust pipeline for acquisitions, actively engaging with various groups to identify opportunities, which positions it well for future growth.
Global Medical REIT Inc has managed to reduce total expenses in Q1 2024 to $32.8 million from $34.5 million in the prior year quarter, reflecting efficient management and cost control.
Negative Points
The Funds From Operations (FFO) per share decreased slightly from $0.22 in Q1 2023 to $0.21 in Q1 2024, indicating potential challenges in income generation.
One of the tenants, Steward Health Care, filed for Chapter 11 bankruptcy, which could impact the company's rental income as they represented 2.8% of the annualized base rent.
There is uncertainty in funding the newly announced acquisitions, with potential reliance on selling assets or market conditions that could affect the company's financial strategy.
The company faces a challenging debt refinancing market, which could impact its ability to secure favorable refinancing terms for its existing debt.
General and Administrative expenses increased in Q1 2024 to $4.4 million from $3.8 million in Q1 2023, primarily due to higher noncash LTIP compensation expense.
Q & A Highlights
Q: Good morning, everybody or Tom, just wondering wanted to hit on the acquisitions. So you've lined up the acquisitions at this point and are now contemplating funding plans. But I guess how willing are you to wait and sort of speculate on the capital markets and the transaction market just given the volatility that we've seen? A: (Jeffrey Busch - Chairman, President, CEO) You're absolutely right up right now, we're really pleased with this acquisitions. These fit exactly what we like in our portfolio, our triple-net absolute net MOB style acquisitions. We're going to be patient on. We do we could sell assets. I wouldn't do it today. I think we need to see a stabilization. We're not doing any fire sale of assets, and we're basically we could sell assets and be accretive.
Q: So as of now just I understand, would you just put these on your line and funded that way? And then sort of when these close decide kind of what the ultimate funding plans is just trying to understand sort of the time line of some of the acquisitions versus, you know, when you intend on funding? A: (Jeffrey Busch - Chairman, President, CEO) The acquisitions it could go on our credit line temporarily. But we do have things that we've put up for sale, which should match some of this at least the earlier ones. So it's a combination. You're actually right is a combination of sale and a combination of on possibly increasing, unless you know, the equity markets improve substantially, but we're just not.
Q: And what's the cap rate on that deal? A: (Alfonzo Leon - Chief Investment Officer) It's approximately 8% and this is a portfolio that we source off market.
Q: Good morning, guys. Just to follow up on the acquisition or any of the tenants existing tenants, or are these going to wind up being new tenants for the firm? A: (Alfonzo Leon - Chief Investment Officer) It's a mix, but it's a mix. And but yes, it's a mix of new existing and new fit.
Q: Okay. And then the I think, Rob, you said that 86% of the Stuart rents were in the Beaumont asset. How many other assets are there in the portfolio and what are those relative to the Bulmahn assets? A: (Robert Kiernan - Chief Financial Officer, Treasurer) Sure, Rob, there there's five other leases. There's six leases in total and the total square feet on the non-Wal-Mart Is around 36,000 square feet and the monthly rent on those other assets is around $69,000, $70,000 of monthly rent from those assets.
Q: You mentioned potentially selling some assets to fund the acquisition. What type of cap rate are you looking at for the disposition? A: (Alfonzo Leon - Chief Investment Officer) So we're looking at them. We're trying to get the best pricing we can. And so we're looking for things in the low sevens.
Q: It sounds like you have demand. So assuming they say they reject the lease in a few months yet you have a tenant close to signing a deal upon a rejection of the lease and then you build out the space for a few months? Or just trying to get a sense of how long you can based on the demand that you're seeing for the space, how long can you help how quickly you can re-lease the space. And in the meantime, yes, it could be taken up a little bit of the OpEx costs over the near term for a few months? A: (Alfonzo Leon - Chief Investment Officer) Short again. And so it's always hard to predict, but I mean, the interest was quick. And so as you know, shortly after the announcement was made that the facility was available we got interest from a number of parties that expressed strong interest and see you in the conversations went up pretty quickly as well on it.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
