Chiron Real Estate Inc. (XRN, GMRE, XRN-PA, XRN-PB Q1 FY2024 earnings call

• Actively seeking properties meeting investment criteria; entered into a purchase agreement for a $81.3 million 15-property outpatient medical real estate portfolio, closing in 2 tranches. - First quarter net income, FFO, and AFFO figures provided. Total revenues decreased 3% due to dispositions; total expenses decreased due to dispositions and lower interest expense. - Gross investment in real estate was $1.4 billion as of March 31, 2024; total gross debt was $624 million with a weighted average remaining term of 2.7 years, 84% fixed-rate debt. - Steward Health Care represented 2.8% of annualized base rent; receivables from Steward totaled approximately $500,000.

At the end of the first quarter, portfolio occupancy was 96.4% with a weighted average lease term of 5.8 years and a portfolio average rent coverage ratio of 4.8x. For the first quarter, net income attributable to common shareholders was $794,000 or $0.01 per share compared to $673,000 or $0.01 per share in Q1 2023. FFO in Q1 2024 was $0.21 per share and unit, down $0.01 from Q1 2023. AFFO was $0.23 per share and unit, unchanged from Q1 2023. The company entered into a purchase agreement for a 15-property outpatient medical real estate portfolio for an aggregate purchase price of $81.3 million, closing in 2 tranches in Q3 and Q4 2024. Steward Health Care filed for Chapter 11 bankruptcy, representing 2.8% of the company's annualized base rent, primarily in a facility in Beaumont, Texas.

• Will be patient with funding acquisitions, considering sale of assets and capital market conditions; the 15-property portfolio was too good to pass up. - Weighted average maturity of debt is 2.7 years; will be patient on terming it out to see interest rate trends. - Potential acquisition pipeline of $50 million to $100 million in 2025.

• Steward Health Care bankruptcy impacts 2.8% of annualized base rent, primarily in Beaumont, Texas; actively pursuing re-leasing. - Market volatility affecting capital markets, transaction market, and funding plans for acquisitions.

Q: On acquisitions, how willing are you to wait and consider funding plans given market volatility?

A: Jeffrey Busch said they're patient, will consider selling assets and capital markets, the portfolio was too good to pass up.

Q: Detail on the 15-property portfolio?

A: Alfonzo Leon said it's 12 MOBs and 3 behavioral facilities, 6.1-year weighted average, 84% investment grade, 60% physician credit, price per sq ft ~$320, cap rate ~8%.

Q: Steward re-leasing timeline and carry costs?

A: Alfonzo Leon said strong interest, conversations positive, but hard to predict timeline; facility is a premier surgical facility in Beaumont.

Q: Disposition cap rate for funding acquisitions?

A: Alfonzo Leon said looking for low 7s cap rate.