Community Healthcare Trust Inc Q4 FY2024 earnings call

• Busy Q4 operations with selective acquisitions; year-end occupancy at 90.9% and weighted average remaining lease term at 6.7 years.
• Acquired 3 physician clinics in Q4 for $8.2 million, 100% leased with leases through 2029 and 9.4% annual returns. Yearly acquisitions: 9 properties, 261k sq ft, $72.1 million, ~99.3% leased with leases through 2039 and 9.1%-9.75% annual returns.
• Two properties under $33 million purchase agreements, 6 properties under $146 million signed agreements to close through 2027.
• Geriatric psychiatric hospital tenant: received small payment in Q1 2025, tenant evaluating strategic alternatives.
• Increased revolving credit facility to $400 million, extended maturity, no debt maturities until 2028; no ATM shares issued last quarter due to low share price.
• Filed S-3 amendment and new shelf registration; raised Q4 dividend to $0.4675 per share, annualized $1.87.

In the fourth quarter, total revenue was $29.3 million, compared to $29.6 million in the third quarter. Property operating expenses decreased to $5.5 million from $6 million quarter over quarter. General and administrative expenses were $4.8 million in Q4 2024 vs $4.9 million in Q3 2024. Interest expense increased to $6.4 million in Q4 2024 from $6.3 million in Q3 2024. Funds from operations (FFO) in Q4 2024 was $12.7 million, a 14.5% decline year over year. Adjusted funds from operations (AFFO) was $14.6 million in Q4 2024, same as Q3 2024, and down 9% from Q4 2023. AFFO per diluted common share was $0.55 in Q4 2024.

• Expect closing of $33 million properties (behavioral residential and inpatient rehab) by end of Q1 2025.
• Anticipate closing 6 properties with $146 million investment throughout 2025-2027 with 9.1%-9.75% returns.
• $120-150 million annual acquisition target remains, focused on accretive AFFO per share deals; capital recycling and share price considered for financing.

• Uncertainty with geriatric psychiatric hospital tenant's financial stability and strategic alternatives, impacting rent and revenue.
• Low share price affecting ATM share issuance for capital allocation.
• Leverage and capital allocation risks related to balancing acquisitions, dividends, and share repurchases.

Q: Connor Mitchell asked about the geriatric patient behavioral tenants' timeline, potential backfilling of spaces, and CapEx needed.

A: Dave Dupuy said they received a small payment in Jan 2025, tenant can pay $100k-$200k per quarter; tenant evaluating strategic alternatives, with better sense in coming quarters.

Q: Michael Lewis asked about funding near-term acquisitions, Q1 closings, dividend coverage, and occupancy.

A: Dave Dupuy said closing $33M properties in Q1; $120-150M annual target remains, focused on accretive AFFO; dividend coverage confident with resolution of geriatric issue and acquisitions; occupancy expected to stay in 91%-93% range with redevelopment tailwind.