Global Medical REIT Inc. Q1 FY2025 earnings call

• Portfolio occupancy was 95.6% with a weighted average lease term of 5.6 years and portfolio average rent coverage ratio of 4.4x in the first quarter. - Completed the first tranche of a previously announced $69.6 million five-property medical facility acquisition, with the remaining two properties acquired subsequent to quarter end. - Completed the sale of two medical properties, generating $8.2 million in gross proceeds and $1.4 million in aggregate gain. - Nominating and Corporate Government Committee is in the process of selecting a new CEO, expecting to have a new CEO in place by June 30, 2025, with Jeff Busch transitioning to Chairman.

At the end of the first quarter, portfolio occupancy was 95.6% with a weighted average lease term of 5.6 years and portfolio average rent coverage ratio of 4.4x. For the first quarter, net income attributable to common shareholders was $2.1 million or $0.03 per share compared to $800,000 or $0.01 per share in the first quarter of 2024. FFO attributable to common shareholders and non-controlling interest in the first quarter was $0.20 per share and unit, down $0.01 from the prior year quarter. AFFO attributable to common stockholders and non-controlling interest was $0.22 per share and unit, down $0.01 from the prior year quarter. Last year, the company entered into a purchase agreement to acquire a five property portfolio of medical facilities for $69.6 million at a 9% cap rate. In the first quarter, the first tranche of three properties was closed for $31.5 million, and the remaining two were acquired subsequent to quarter end. During the quarter, the company completed the sale of two medical properties, generating aggregate gross proceeds of $8.2 million resulting in an aggregate gain of $1.4 million.

Reaffirming full-year 2025 AFFO per share and unit range of $0.89 to $0.93. Guidance assumes no additional acquisition or disposition activity other than what has been either completed or announced and no additional equity or debt issuances other than normal course revolver activity. AFFO guidance excludes one-time expenses related to the CEO succession plan.

• Impact of tenant bankruptcies, such as Prospect Medical Group's situation, which is factored into guidance but is not a significant component. - Volatility in real estate market conditions affecting property values and leasing. - Interest rate changes impacting debt servicing costs.

Q: Can you talk about the potential timeline and amount of rent that you'd expect to collect upon re-leasing the East Orange facility?

A: The first step is converting sub tenants, working on budget preparation and tax reassessment. Encouraged with activity, not expecting dramatic change in next few months but feeling optimistic to build NOI back up by year end.

Q: Is it fair to assume there's nothing in guidance related to releasing the East Orange facility and about other Prospect facilities?

A: The impact of Prospect is factored into guidance, not a significant component of the outlook. For Vernon properties, no indication of lease rejection yet.

Q: Curious about the CEO successor and strategic options?

A: Always evaluate strategic options, in process of evaluating multiple candidates for CEO successor, expect to have final candidate soon.

Q: For the $250,000 collected from Prospect, when was it reported?

A: $150,000 in the first quarter and $100,000 in the second quarter.

Q: Outlook for dispositions and capital markets activity?

A: Ongoing discussions about dispositions, near term no planned sales. Actively discussing financing with lenders to update and extend facility.

Q: How are you thinking about the dividend and sustainability with CapEx?

A: Dividend discussion held off until knowing strategic direction, CapEx guidance factored into AFFO guidance.

Q: Insights on first quarter retention and future volatility?

A: First quarter retention lower than typical, 80% of non-renewed square feet progressing to releasing, expect volatility in occupancy percentage with factors like acquired vacancy and expiring leases.

Q: How high are you willing to take leverage for acquisitions?

A: Not looking to take leverage much higher than current level, target leverage 40% to 45%, willing to go above for good opportunities.

Q: Opportunities in Heitman JV and update on other Stewart assets?

A: Actively looking for opportunities for Heitman JV, working to lease 23,000 square feet of former Stewart assets by June 30.

Q: Update on policy impact on tenants?

A: Portfolio is relatively recession proof, tenants like Medicare not affected much, collected 99% rent during pandemic.