Chiron Real Estate Inc. Q4 FY2025 earnings call

• Mark Decker discussed the company's new mission of delivering value at the intersection of care, capital, and real estate, referencing Greek lore. The team has rewritten the playbook to prioritize earnings growth, with progress including establishing a long-term strategy, comprehensive portfolio review, appointment of Alex Wilburn as Portfolio Manager, and analysis of the medical office market. They are exploring senior housing, with an active adult investment in Minneapolis as an example. The company sold an early vintage medical office and plans to dispose of approximately $250 million of assets for capital recycling. - Robert Kiernan provided quarterly highlights on FFO, core FFO, same-store cash NOI, net debt, and dividend transition, and shared 2026 core FFO guidance.

NAREIT-defined FFO per share and unit was $0.97 for the quarter. Core FFO (previously referred to as AFFO) was $1.16 per share and unit. Same-store cash NOI, including all assets owned by Chiron for at least 15 months, increased 5.4% year-over-year and 2.9% sequentially. Net debt to adjusted EBITDA REIT was 6.2x for the quarter, a reduction of 0.7x from the prior period due to recent preferred equity issuance. The company is transitioning to a monthly dividend with no change to the annual $3 per share rate. Initial 2026 core FFO guidance range is $4.30 to $4.45 per share and unit, including $0.36 of anticipated headwinds from balance sheet fortification efforts.

• Initial 2026 core FFO guidance range is $4.30 to $4.45 per share and unit. - Guidance includes $0.36 of anticipated headwinds due to balance sheet fortification efforts in the back half of the prior year. - Guidance does not reflect speculative acquisition or disposition activity.

• The medical office market has been in a bear market for years related to interest rates, with potential for 2% to 3% rent growth being sub-inflationary. - Uncertainty in the timing and outcome of asset dispositions and joint venture discussions. - Risk associated with entering the senior housing business, including the operating intensity and potential for mistakes in choosing partners.

Q: Congratulations on laying out the new strategy and thesis. The big question is about why Chiron is positioned to execute over and above peers in seniors housing, focus on product side, and disposition timing and yield.

A: Mark Decker discussed competition on delivering value, focus on independent and assisted living, memory care avoidance, and plans for inpatient rehab facility JV and MOB sale timeline.

Q: When did strategy shift discussions start and impact on earnings from executing strategy.

A: Started in August with RCLCO evaluation, multi-month process, and potential earnings impact from selling legacy assets and recycling into senior development.

Q: On investment team for senior side and approach.

A: Using current investment team, focusing on regional/single-market operators with good track record and newer assets.

Q: Portfolio allocation between medical office and housing, focus of acquisitions, and cap rates.

A: Allocation dictated by opportunity set, focus on SHOP currently, cap rates similar but growth different.

Q: Active adult entry, preferred return, and medical office update.

A: No preferred return on Minneapolis investment initially, but goal for future, Steward bankruptcy impact on assets.

Q: Watch list and other risks.

A: White Rock is a focus, no other major watch list items