Global Medical REIT Inc. Q4 FY2024 earnings call

• Portfolio performance: Occupancy 96.4%, weighted average lease term 5.6 years, rent coverage ratio 4.5 times.
• Acquisition activity: Acquired 15-property portfolio in two tranches (total $80.3M) at 8% cap rate, and a 5-property portfolio with first tranche closed post-year-end, expecting to complete remaining in Q2 2025.
• Disposition activity: Sold 4 medical facilities in Q4, $40.5M gross proceeds, $5.8M gain; full year 7 dispositions generated $60.7M gross proceeds, $4.2M gain.
• CEO succession plan: Announced succession plan, confident transition will be seamless.

At the end of the fourth quarter, portfolio occupancy was 96.4% with a weighted average lease term of 5.6 years and a portfolio average rent coverage ratio of 4.5 times. For the fourth quarter, net income attributable to common shareholders was $1.4 million, or $0.02 per share. FFO attributable to common stockholders and non-controlling interest was $0.15 per share and unit, down $0.04 from the prior year quarter. AFFO attributable to common stockholders and non-controlling interests was $0.22 per share and unit, down $0.01 from the prior year quarter. In acquisition activity, in spring entered into a purchase agreement to acquire a 15-property portfolio for $80.3 million, with first tranche of 5 properties closed in third quarter for $30.8 million and remaining 10 in fourth quarter for $49.5 million at 8% cap rate. Also, entered into purchase agreement for 5-property portfolio at $69.6 million (9% cap rate), with first tranche of 3 properties closed post-year-end for $31.5 million, expected to complete remaining 2 in Q2 2025. In disposition activity, completed sale of 4 medical facilities in fourth quarter generating $40.5 million gross proceeds, $5.8 million gain. Of which, $35.2 million from sale of 2 properties to joint venture with Heitman where Global Medical REIT has 12.5% ownership and is managing member.

Expect AFFO per share unit in the range of $0.89 to $0.93 for 2025. Guidance assumes no additional acquisition or disposition activity other than what has been completed or announced. No additional equity or debt issuances other than normal course revolver activity.

• Prospect Medical Group bankruptcy: Prospect had $2.4 million outstanding lease payments related to three facilities, represented 0.8% of total ABR; if leases are rejected, will have general unsecured claim.
• Potential vacancy: Expect approximately 30,000 square feet of increased vacancy once Prospect bankruptcy proceedings are complete.
• Lease expirations: While progress on renewals, estimated 70%-80% retention rate on expiring square feet, but some individual leases could impact occupancy.

Q: Juan Sanabria asked about the new Heitman joint venture, including target size, leverage, asset types, and if more Global Medical REIT assets would be contributed.

A: Alfonzo Leon said the JV is a core plus fund targeting low seven to low eight cap rates, single-tenant assets; initially seeded with some assets, goal is to grow the fund, no current plans to sell more assets into it but option exists. Jeffrey Busch added they have an option to buy back the portfolio and are more interested in outside assets.

Q: Austin Wurschmidt asked about details of assets seeded in the Heitman JV and funding remaining acquisitions.

A: Alfonzo Leon said seeded with low seven cap single-tenant assets (High Point, NC and Castro, TX). Jeffrey Busch said they could use ATM, sell assets, or adjust portfolio to improve quality.

Q: Gaurav Mehta asked about Prospect revenues, tenant mix, and leasing commissions.

A: Robert Kiernan said Prospect revenues were around $800,000 annual, not assuming reps go away; no material other tenants of concern; leasing commissions expected to be lower in 2025.

Q: Wesley Golladay asked about ABR inclusion, Beaumont tenant commencement, and acquisitions.

A: Robert Kiernan said ABR doesn't include cash basis rent; Beaumont tenant commencement in second quarter; Alfonzo Leon said when buying portfolios, cap rates considered in context, and some assets like Slippery Rock not necessarily disposed of quickly.

Q: Rob Stevenson asked about Heitman JV right of first refusal and Christus RentRamp.

A: Alfonzo Leon said no right of first refusal; Robert Kiernan said Christus RentRamp starts in second quarter, about $2.9M ABR when fully implemented.