6 Common and Preferred Dividends • Net income attributable to common stockholders was $0.7 million, or $0.01 per diluted share, as compared to $2.7 million, or $0.04 per diluted share, in the comparable prior year period. • Funds from Operations ("FFO") of $15.1 million, or $0.22 per share and unit, as compared to $16.0 million, or $0.23 per share and unit, in the comparable prior year period. • Adjusted Funds from Operations ("AFFO") of $16.0 million, or $0.23 per share and unit, as compared to $16.8 milli ...

Global Medical REIT Inc. (NYSE:GMRE) Q4 2022 Earnings Conference Call March 1, 2023 9:00 AM ET Company Participants Steve Swett - Investor Relations, ICR Jeffrey Busch - CEO Alfonzo Leon - CIO Robert Kiernan - CFO Conference Call Participants Austin Wurschmidt - KeyBanc Capital Markets Juan Sanabria - BMO Capital Markets Rob Stevenson - Janney Montgomery Scott Bryan Maher - B. Riley Securities Aaron Hecht - JMP Securities Operator Greetings and welcome to the Global Medical Fourth Quarter 2022 Earnings Call ...

PART I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) GMRE is an internally managed REIT acquiring and leasing healthcare facilities, with a **$1.5 billion** portfolio as of December 31, 2022 [Organization and Business Strategy](index=5&type=section&id=Organization%20and%20Business%20Strategy) GMRE operates as an internally managed UPREIT, investing in healthcare properties, primarily medical office buildings, under triple-net leases - GMRE is an internally managed REIT that acquires and leases healthcare facilities, conducting its business through an UPREIT structure[20](index=20&type=chunk)[21](index=21&type=chunk) - The company's investment strategy targets medical office buildings in secondary markets, facilities serving the aging population, and opportunistic acquisitions such as acute-care hospitals and behavioral health facilities[22](index=22&type=chunk)[25](index=25&type=chunk) - Most properties are leased under single-tenant, triple-net leases, though the portfolio is expanding to include some multi-tenant properties with gross or modified gross lease structures[23](index=23&type=chunk) [Corporate Responsibility and External Factors](index=6&type=section&id=Corporate%20Responsibility%20and%20External%20Factors) The company prioritizes ESG, monitors climate risks, and faces financial impacts from rising interest rates and COVID-19 related labor costs - The Board of Directors leads ESG efforts through a dedicated committee, focusing on strategy, stakeholder communications, and compliance[25](index=25&type=chunk) - Rising inflation in 2022 led the Federal Reserve to increase interest rates, causing the one-month term SOFR (the reference rate for the company's credit facility) to rise from near **0%** to **4.5%**, significantly increasing interest expense[29](index=29&type=chunk) - The COVID-19 pandemic has caused labor shortages and increased labor costs for healthcare systems, particularly hospitals, which could impact tenants' financial stability[31](index=31&type=chunk) [Property Portfolio Overview](index=9&type=section&id=Property%20Portfolio%20Overview) As of December 31, 2022, GMRE's portfolio comprised 189 buildings with **$114.5 million** in annualized base rent, primarily medical office buildings Portfolio Summary by Property Type (as of Dec 31, 2022) | Type | Leasable Square Feet (LSF) | % of LSF | Annualized Base Rent (ABR) (in thousands) | % of ABR | | :--- | :--- | :--- | :--- | :--- | | Medical Office Building (MOB) | 3,670,193 | 75.0% | $77,570 | 67.8% | | Inpatient Rehab. Facility (IRF) | 547,007 | 11.2% | $20,083 | 17.5% | | Surgical Hospital | 174,984 | 3.6% | $6,731 | 5.9% | | Other | 503,451 | 10.2% | $10,085 | 8.8% | | **Total** | **4,895,635** | **100.0%** | **$114,469** | **100.0%** | Geographic Concentration (as of Dec 31, 2022) | State | % of LSF | % of ABR | | :--- | :--- | :--- | | Texas | 14.9% | 17.6% | | Florida | 11.5% | 10.3% | | Ohio | 8.5% | 8.3% | | Oklahoma | 4.0% | 6.4% | | Pennsylvania | 5.8% | 6.2% | | Arizona | 3.8% | 5.7% | | Illinois | 6.3% | 5.7% | | Other (28 states) | 45.2% | 39.8% | Significant Tenants (as of Dec 31, 2022) | Tenant | % of LSF | % of ABR | | :--- | :--- | :--- | | LifePoint Health | 3.2% | 6.6% | | Encompass Health Corporation | 5.2% | 6.4% | Lease Expiration Schedule (% of ABR) | Year | % of ABR | | :--- | :--- | | 2023 | 6.6% | | 2024 | 13.7% | | 2025 | 7.7% | | 2026 | 9.9% | | 2027 | 10.6% | | Thereafter | 41.5% | [Recent Developments and Market Opportunity](index=11&type=section&id=Recent%20Developments%20and%20Market%20Opportunity) A tenant's bankruptcy was resolved, and the company has pending acquisitions and dispositions, driven by an aging population and healthcare decentralization - Tenant Pipeline Health System, LLC filed for Chapter 11 bankruptcy in October 2022 but assumed its lease at the White Rock Medical Center as part of its reorganization plan, effective February 6, 2023[44](index=44&type=chunk) - As of February 24, 2023, the company had one acquisition under contract for ~**$6.7 million** and two properties under contract for sale for ~**$11.6 million**[45](index=45&type=chunk)[46](index=46&type=chunk) - Key market drivers for the company's strategy include the aging U.S. population increasing healthcare demand and the decentralization of healthcare services away from large hospitals to smaller, specialized facilities[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) [Competition and Regulatory Environment](index=12&type=section&id=Competition%20and%20Regulatory%20Environment) GMRE faces intense competition for acquisitions and its tenants operate in a heavily regulated healthcare industry with reimbursement pressures - Competition for medical office buildings has increased significantly since the COVID-19 pandemic, as real estate investors seek reliable returns, driving up prices[55](index=55&type=chunk) - Tenants' revenues are highly dependent on government programs like Medicare and Medicaid, which are subject to ongoing pressure to reduce reimbursement rates[57](index=57&type=chunk)[58](index=58&type=chunk) - Tenants are subject to complex healthcare regulations, including the Affordable Care Act and fraud and abuse laws like the Anti-Kickback Statute and Stark Law, violations of which can result in severe penalties[59](index=59&type=chunk)[62](index=62&type=chunk)[67](index=67&type=chunk) [Human Capital](index=16&type=section&id=Human%20Capital) As of December 31, 2022, GMRE had 29 employees, with **34%** women and **31%** ethnically diverse individuals - As of December 31, 2022, the company had 29 employees, with a workforce composed of **34%** women and **31%** ethnically diverse individuals[70](index=70&type=chunk)[71](index=71&type=chunk) [Item 1A. Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) The company faces material risks from tenant financial health, rising interest rates, portfolio concentration, and REIT status compliance [Risks Related to our Business and Healthcare Facilities](index=18&type=section&id=Risks%20Related%20to%20our%20Business%20and%20Healthcare%20Facilities) The company's revenue depends heavily on tenant financial health, with risks from economic downturns, regulatory changes, and geographic concentration - The company is dependent on its tenants for revenue, and their ability to pay rent is subject to a wide range of business, economic, and regulatory risks[77](index=77&type=chunk) - As of December 31, 2022, the top three tenants (LifePoint Health, Encompass, Memorial Health) accounted for approximately **18%** of the portfolio's annualized base rent[79](index=79&type=chunk) - The company has significant geographic concentration, with approximately **18%** of its annualized base rent derived from Texas and **10%** from Florida as of year-end 2022[93](index=93&type=chunk) - Leases representing **6.6%**, **13.7%**, and **7.7%** of the portfolio's annualized base rent are set to expire in 2023, 2024, and 2025, respectively[91](index=91&type=chunk) [Risks Related to our Financings](index=28&type=section&id=Risks%20Related%20to%20our%20Financings) The company is exposed to interest rate risk from floating-rate debt and relies on external capital, with debt agreements containing restrictive financial covenants - The company is exposed to interest rate risk from its unhedged floating-rate debt. The rapid increase in inflation during 2022 led to a material increase in borrowing costs as the One-Month Term SOFR rose from just over **0%** to **4.32%**[107](index=107&type=chunk) - Debt agreements require compliance with financial covenants, such as maintaining specific leverage and coverage ratios. Breaches could lead to default and acceleration of debt[108](index=108&type=chunk) - The company relies on external capital to fund future needs, as REIT distribution requirements limit the ability to retain cash from operations[112](index=112&type=chunk) [Risks Related to the Healthcare Industry](index=30&type=section&id=Risks%20Related%20to%20the%20Healthcare%20Industry) The healthcare industry faces adverse trends, regulatory uncertainty, and reimbursement pressures, which could negatively impact tenants' profitability and ability to pay rent - Adverse trends in the healthcare industry, such as changes in service delivery, provider competition, and regulatory uncertainty, may negatively affect tenants' businesses[114](index=114&type=chunk)[115](index=115&type=chunk) - Reductions in reimbursement from third-party payors, including Medicare and Medicaid, could hinder tenants' ability to make rent payments[119](index=119&type=chunk) - Tenants may be subject to significant legal actions and government investigations, which could expose them to substantial liabilities and affect their ability to pay rent[121](index=121&type=chunk)[122](index=122&type=chunk) [Risks Related to the Real Estate Industry](index=32&type=section&id=Risks%20Related%20to%20the%20Real%20Estate%20Industry) The company is subject to real estate market fluctuations, illiquidity, and potential asset impairment charges, which are beyond its control - Real estate investments are subject to risks and cyclical fluctuations in value and demand, influenced by economic conditions and interest rates, which are beyond the company's control[123](index=123&type=chunk) - The illiquidity of real estate could limit the company's ability to promptly sell properties in response to changing economic or investment conditions[124](index=124&type=chunk) - The company periodically evaluates its assets for impairment, and a determination of impairment would require an adjustment to the net carrying value of the asset, potentially affecting financial results[127](index=127&type=chunk) [Risks Related to Our Structure](index=33&type=section&id=Risks%20Related%20to%20Our%20Structure) GMRE operates through an UPREIT structure with potential conflicts of interest, stock ownership restrictions, and reliance on key personnel - The company conducts all operations through its Operating Partnership and relies on distributions from it to pay dividends and meet obligations[128](index=128&type=chunk) - The company's charter restricts any stockholder from owning more than **9.8%** of any class of its stock to maintain REIT qualification, which may deter changes of control[137](index=137&type=chunk) - The company's success depends significantly on its key personnel, including its CEO, CFO, and CIO, and the failure to retain them could adversely affect the business[151](index=151&type=chunk) [Risks Related to Our Qualification and Operation as a REIT](index=41&type=section&id=Risks%20Related%20to%20Our%20Qualification%20and%20Operation%20as%20a%20REIT) Failure to maintain REIT qualification would result in corporate taxation, requiring annual distribution of at least **90%** of taxable income and adherence to complex asset tests - If the company fails to qualify as a REIT, it would be taxed as a regular corporation, which would substantially reduce funds available for stockholder distributions[152](index=152&type=chunk)[155](index=155&type=chunk) - To maintain REIT status, the company must distribute at least **90%** of its REIT taxable income annually; failure to do so would subject it to corporate income tax[157](index=157&type=chunk) - Compliance with REIT asset tests (e.g., at least **75%** of assets must be qualified real estate assets) may require the company to liquidate otherwise attractive investments[159](index=159&type=chunk)[160](index=160&type=chunk) [Item 1B. Unresolved Staff Comments](index=50&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[180](index=180&type=chunk) [Item 2. Properties](index=50&type=section&id=Item%202.%20Properties) This section incorporates by reference the information provided under "Our Properties" in Item 1 of the report - The information regarding the company's properties is incorporated by reference from Item 1 of this Annual Report[181](index=181&type=chunk) [Item 3. Legal Proceedings](index=50&type=section&id=Item%203.%20Legal%20Proceedings) The company states that it is not currently involved in any pending legal proceedings that would have a material adverse effect - The company is not involved in any pending legal proceeding or litigation that would be likely to have a material adverse effect on its financial condition or results of operations[182](index=182&type=chunk) [Item 4. Mine Safety Disclosures](index=50&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[183](index=183&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=51&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE under "GMRE," paid a **$0.21** quarterly dividend in 2022, and outperformed benchmark indices from 2017-2022 - The company's common stock is listed on the New York Stock Exchange under the ticker symbol "GMRE"[186](index=186&type=chunk) Quarterly Dividend Per Share | Fiscal Year | Quarterly Dividend per Share | | :--- | :--- | | 2022 | $0.21 | | 2021 | $0.205 | Cumulative Total Return Performance (2017-2022) | Index | 12/31/17 | 12/31/22 | | :--- | :--- | :--- | | Global Medical REIT Inc. | $100.00 | $166.49 | | S&P 500 Index | $100.00 | $156.88 | | MSCI U.S. REIT Index | $100.00 | $119.87 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses 2022 financial results, including revenue growth, increased interest expense, acquisitions, liquidity, and non-GAAP reconciliations [2022 Executive Summary](index=54&type=section&id=2022%20Executive%20Summary) In 2022, GMRE's rental revenue increased, FFO and AFFO per share grew, and the company expanded its portfolio through acquisitions and a credit facility amendment Key Financial Metrics (Year Ended Dec 31) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Rental revenue | $137,167 | $115,804 | | Interest expense | $25,230 | $19,696 | | Net income per share | $0.20 | $0.19 | | FFO per share and unit | $0.92 | $0.90 | | AFFO per share and unit | $0.98 | $0.95 | - During 2022, the company completed 14 acquisitions for an aggregate purchase price of $148.9 million[201](index=201&type=chunk) - In July 2022, a medical office building was sold for gross proceeds of $17.9 million, resulting in a gain of approximately $6.8 million[202](index=202&type=chunk) - The company amended its Credit Facility, adding a new $150 million term loan (Term Loan B), extending the revolver's maturity to August 2026, and transitioning from LIBOR to SOFR-based loans[204](index=204&type=chunk) [Trends and Critical Accounting Estimates](index=56&type=section&id=Trends%20and%20Critical%20Accounting%20Estimates) Positive trends include aging population and outpatient shift, while negative trends involve high interest rates and inflation, impacting critical accounting estimates - Positive operational trends include an aging population driving healthcare demand and a continuing shift towards outpatient care[210](index=210&type=chunk) - Negative financial trends include the increased interest rate and inflation environment, which has raised the company's cost of capital and reduced its ability to acquire assets[210](index=210&type=chunk) - Critical accounting estimates requiring significant management judgment include the allocation of purchase price for real estate investments, assessing assets for impairment, and determining the collectability of revenue[214](index=214&type=chunk)[217](index=217&type=chunk) [Consolidated Results of Operations](index=61&type=section&id=Consolidated%20Results%20of%20Operations) Total revenue increased by **$21.4 million** in 2022 due to acquisitions, but expenses also rose significantly, leading to a slight increase in net income after a larger gain on sale Comparison of Operations (in thousands) | Item | 2022 | 2021 | $ Change | | :--- | :--- | :--- | :--- | | Total revenue | $137,283 | $115,936 | $21,347 | | Operating expenses | $25,188 | $15,488 | $9,700 | | Depreciation & Amortization | $56,723 | $46,875 | $9,848 | | Interest expense | $25,230 | $19,696 | $5,534 | | Gain on sale of investment property | $6,753 | $1,069 | $5,684 | | **Net income** | **$19,996** | **$18,342** | **$1,654** | - The increase in revenue was primarily the result of rental income from facilities acquired during 2022 and a full year of revenue from 2021 acquisitions[229](index=229&type=chunk) - The increase in interest expense was due to higher average borrowings and increased interest rates during 2022. The weighted average interest rate of debt was 3.43% in 2022 compared to 3.06% in 2021[234](index=234&type=chunk)[235](index=235&type=chunk) [Liquidity and Capital Resources](index=63&type=section&id=Liquidity%20and%20Capital%20Resources) The company manages liquidity through cash flow, debt financing, and equity issuances, utilizing interest rate swaps to hedge its **$500 million** term loans - Short-term liquidity requirements include interest expense, G&A, operating expenses, acquisitions, and distributions[242](index=242&type=chunk) - The company's Credit Facility consists of a $350M Term Loan A, a $150M Term Loan B, and a $400M Revolver. As of February 24, 2023, there was **$245.0 million** of unutilized borrowing capacity[250](index=250&type=chunk) - The company uses interest rate swaps to hedge interest rate risk on its **$500 million** of term loans, fixing the SOFR component through their respective maturities[205](index=205&type=chunk)[253](index=253&type=chunk) Cash Flow Summary (Year ended Dec 31, in millions) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $76.5 | $69.0 | | Net cash used in investing activities | ($137.3) | ($194.7) | | Net cash provided by financing activities | $62.4 | $127.7 | [Non-GAAP Financial Measures](index=66&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures like FFO, AFFO, and EBITDAre, used by management to evaluate operating performance FFO and AFFO Reconciliation (Year ended Dec 31, in thousands) | Line Item | 2022 | 2021 | | :--- | :--- | :--- | | Net income (loss) | $19,996 | $18,342 | | Less: Preferred stock dividends | (5,822) | (5,822) | | Depreciation and amortization expense | 56,611 | 46,764 | | Gain on sale of investment property | (6,753) | (1,069) | | **FFO** | **$64,032** | **$58,215** | | Adjustments (Straight-line rent, stock comp, etc.) | 4,012 | 3,146 | | **AFFO** | **$68,044** | **$61,361** | FFO and AFFO Per Share/Unit | Metric | 2022 | 2021 | | :--- | :--- | :--- | | FFO per share and unit | $0.92 | $0.90 | | AFFO per share and unit | $0.98 | $0.95 | EBITDAre and Adjusted EBITDAre (Year ended Dec 31, in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | EBITDAre | $95,196 | $83,844 | | Adjusted EBITDAre | $101,258 | $90,325 | [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=70&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk from variable-rate debt, which it mitigates using derivative instruments like interest rate swaps - The primary market risk exposure is interest rate risk from variable-rate debt[268](index=268&type=chunk) - As of December 31, 2022, the company had **$145.7 million** of unhedged variable-rate debt. A **100 basis point (1.0%)** increase in SOFR would decrease annual cash flow by approximately **$1.5 million**[270](index=270&type=chunk) - The company uses derivative financial instruments, including interest rate swaps, to mitigate interest rate risk on future borrowings[272](index=272&type=chunk)[273](index=273&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=72&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements, notes, and the independent auditor's unqualified opinion [Report of Independent Registered Public Accounting Firm](index=73&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued an unqualified opinion on the financial statements and internal controls, identifying real estate acquisition valuation as a critical audit matter - The auditor, Deloitte & Touche LLP, issued an unqualified opinion on the company's financial statements and internal control over financial reporting[279](index=279&type=chunk)[280](index=280&type=chunk) - The acquisition of real estate assets was identified as a Critical Audit Matter due to the significant estimates and high degree of auditor judgment required to evaluate the reasonableness of management's assumptions for purchase price allocation[283](index=283&type=chunk)[284](index=284&type=chunk)[287](index=287&type=chunk) [Consolidated Financial Statements](index=76&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of **$1.39 billion**, total liabilities of **$744.2 million**, and net income of **$20.0 million** for 2022 Consolidated Balance Sheet Highlights (as of Dec 31, 2022, in thousands) | Account | Amount | | :--- | :--- | | Investment in real estate, net | $1,285,959 | | Total assets | $1,393,261 | | Total debt, net | $694,119 | | Total liabilities | $744,196 | | Total equity | $649,065 | Consolidated Statement of Operations Highlights (Year ended Dec 31, 2022, in thousands) | Account | Amount | | :--- | :--- | | Total revenue | $137,283 | | Total expenses | $124,040 | | Net income | $19,996 | | Net income attributable to common stockholders | $13,320 | | Net income per share - basic and diluted | $0.20 | [Notes to Consolidated Financial Statements](index=81&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies for asset acquisitions, debt, equity, and stock-based compensation, including the **$900 million** credit facility and preferred stock terms - All 14 property acquisitions in 2022, totaling approximately **$148.9 million**, were accounted for as asset acquisitions, with transaction costs capitalized[307](index=307&type=chunk)[345](index=345&type=chunk) - The company's debt is primarily composed of a **$900 million** unsecured syndicated credit facility, which includes **$500 million** in term loans and a **$400 million** revolver[357](index=357&type=chunk) - The company has **3.105 million** shares of **7.50%** Series A Cumulative Redeemable Preferred Stock outstanding with a liquidation preference of **$25** per share[381](index=381&type=chunk) - The company grants time-based and performance-based LTIP unit awards to employees and directors. As of Dec 31, 2022, total unamortized compensation expense was approximately **$4.5 million**, to be recognized over a weighted average of **1.4 years**[396](index=396&type=chunk)[413](index=413&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=111&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[427](index=427&type=chunk) [Item 9A. Controls and Procedures](index=111&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and the independent auditor concluded that the company's disclosure controls and internal controls over financial reporting were effective as of December 31, 2022 - Based on an evaluation as of December 31, 2022, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[428](index=428&type=chunk) - Management concluded that the company's internal controls over financial reporting were effective as of December 31, 2022[432](index=432&type=chunk) - The independent auditor, Deloitte & Touche LLP, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2022[435](index=435&type=chunk) PART III [Items 10-14](index=114&type=section&id=Item%2010%2C%2011%2C%2012%2C%2013%2C%2014) Information for Items 10-14 is incorporated by reference from the company's definitive Proxy Statement, to be filed within 120 days after fiscal year-end - Information for Items 10 through 14 is incorporated by reference from the company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders[445](index=445&type=chunk)[446](index=446&type=chunk)[447](index=447&type=chunk)[448](index=448&type=chunk)[449](index=449&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules](index=115&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including detailed real estate portfolio data and corporate governance documents - This section lists all financial statements, schedules, and exhibits filed with the report[452](index=452&type=chunk) - Includes Schedule III - Consolidated Real Estate and Accumulated Depreciation, which details the cost basis, additions, and accumulated depreciation for each property in the portfolio[453](index=453&type=chunk)[454](index=454&type=chunk) [Item 16. Form 10-K Summary](index=122&type=section&id=Item%2016.%20Form%2016.%20Form%2010-K%20Summary) The company indicates that there is no Form 10-K summary - None[463](index=463&type=chunk)

Table of Contents Forward-Looking Statements Blue Sky Vision – Grand Rapids, MI | --- | --- | --- | --- | --- | --- | --- | |-------------------------------------------------|-------|-------|-------|-------|-------------------|------------------| | | | | | | | | | Gross Investment in Real Estate (billions): | $1.5 | | | | | | | Number of Buildings: | 189 | | | | | | | Number of States: | 35 | | | | | | | Weighted Average Portfolio Cap Rate: | 7.8% | | | | | | | % of Health System or Other Affiliated Tenants ...

[PART I FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Global Medical REIT Inc.'s unaudited condensed consolidated financial statements for Q3 and nine months ended September 30, 2022, detailing financial position, performance, and cash flows [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$1.41 billion** as of September 30, 2022, driven by real estate investments, with corresponding increases in liabilities and equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Investment in real estate, net | $1,300,237 | $1,199,748 | | Cash and cash equivalents | $3,199 | $7,213 | | Derivative asset | $36,926 | $1,236 | | **Total assets** | **$1,406,749** | **$1,263,485** | | **Liabilities & Equity** | | | | Credit Facility, net | $634,898 | $514,567 | | Notes payable, net | $57,918 | $57,162 | | **Total liabilities** | **$742,165** | **$625,908** | | **Total equity** | **$664,584** | **$637,577** | | **Total liabilities and equity** | **$1,406,749** | **$1,263,485** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenue increased to **$35.4 million** in Q3 2022 and **$101.0 million** for the nine months, with net income significantly boosted by a **$6.8 million** property sale gain Statement of Operations Summary (in thousands) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $35,406 | $29,983 | $100,977 | $85,593 | | Total expenses | $32,130 | $24,615 | $89,582 | $72,738 | | Gain on sale of investment property | $6,753 | $— | $6,753 | $— | | Net income | $10,029 | $5,368 | $18,148 | $12,855 | | Net income attributable to common stockholders | $8,057 | $3,689 | $12,952 | $7,997 | | EPS – basic and diluted | $0.12 | $0.06 | $0.20 | $0.13 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased to **$58.2 million** for the nine months ended September 30, 2022, while investing and financing cash flows saw changes due to acquisitions and equity offerings Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $58,233 | $51,684 | | Net cash used in investing activities | ($135,842) | ($166,740) | | Net cash provided by financing activities | $78,445 | $116,172 | | Net increase in cash | $836 | $1,116 | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies, property portfolio changes including **14 acquisitions**, debt structure with an amended **$900 million** credit facility, equity, and lease accounting - The company is a Maryland corporation primarily acquiring and leasing purpose-built healthcare facilities. As of September 30, 2022, the Company was the **93.97%** limited partner of the Operating Partnership[31](index=31&type=chunk) - During the nine months ended September 30, 2022, the company completed **14 acquisitions**, all accounted for as asset acquisitions. Gross investment in real estate from these additions totaled **$155.4 million**[54](index=54&type=chunk)[55](index=55&type=chunk) - The company has an amended and restated **$900 million** unsecured syndicated credit facility, consisting of **$500 million** in term loans and a **$400 million** revolver. As of September 30, 2022, the net outstanding balance was **$634.9 million**[65](index=65&type=chunk)[69](index=69&type=chunk) - The company utilizes interest rate swaps to hedge its interest rate risk on its Term Loans. As of September 30, 2022, the fair value of these swaps was a derivative asset of **$36.9 million**[84](index=84&type=chunk)[90](index=90&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, strategic objectives, and market trends, highlighting revenue growth from acquisitions, increased expenses, liquidity, capital resources, and non-GAAP measures [Overview and Strategy](index=27&type=section&id=Overview%20and%20Strategy) The company operates as an internally managed REIT, focusing on acquiring and leasing healthcare facilities in secondary markets, while emphasizing its commitment to ESG principles - The business strategy is to invest in healthcare properties operated by profitable physician groups or healthcare systems, aiming for reliable dividends and stock price appreciation[154](index=154&type=chunk) - Investment focus is on medical office buildings in secondary markets and suburbs, which are believed to be overlooked by larger REITs but offer similar tenant credit profiles[160](index=160&type=chunk) - The Board of Directors leads the company's ESG efforts through a standing ESG committee, overseeing strategy, policies, and stakeholder communications on ESG matters[157](index=157&type=chunk) [Executive Summary and Recent Developments](index=29&type=section&id=Executive%20Summary%20and%20Recent%20Developments) Key developments include **14 acquisitions** totaling **$148.9 million**, a property sale generating a **$6.8 million** gain, and a tenant's Chapter 11 filing with expected rent collection - Completed **14 acquisitions** for an aggregate purchase price of **$148.9 million** during the first nine months of 2022[168](index=168&type=chunk) - Sold a medical office building in Germantown, TN in July 2022, receiving **$17.9 million** in gross proceeds and recognizing a gain of approximately **$6.8 million**[169](index=169&type=chunk) - On October 3, 2022, tenant Pipeline Health System, LLC filed for Chapter 11 bankruptcy. The company believes it is probable that it will collect all rent payments due under its lease[174](index=174&type=chunk)[175](index=175&type=chunk) [Consolidated Results of Operations](index=32&type=section&id=Consolidated%20Results%20of%20Operations) Q3 2022 revenue increased to **$35.4 million** due to acquisitions, but income before property sale gain decreased due to higher expenses, with net income boosted by a **$6.8 million** gain Q3 2022 vs Q3 2021 Results (in thousands) | Account | Q3 2022 | Q3 2021 | $ Change | | :--- | :--- | :--- | :--- | | Total revenue | $35,406 | $29,983 | $5,423 | | Total expenses | $32,130 | $24,615 | $7,515 | | Income before gain from sale | $3,276 | $5,368 | ($2,092) | | Gain on sale of investment property | $6,753 | $— | $6,753 | | Net income | $10,029 | $5,368 | $4,661 | Nine Months 2022 vs 2021 Results (in thousands) | Account | Nine Months 2022 | Nine Months 2021 | $ Change | | :--- | :--- | :--- | :--- | | Total revenue | $100,977 | $85,593 | $15,384 | | Total expenses | $89,582 | $72,738 | $16,844 | | Income before gain from sale | $11,395 | $12,855 | ($1,460) | | Gain on sale of investment property | $6,753 | $— | $6,753 | | Net income | $18,148 | $12,855 | $5,293 | - The increase in interest expense for Q3 2022 was due to higher average borrowings and increased interest rates, with the weighted average rate rising to **3.65%** from **3.04%** in Q3 2021[187](index=187&type=chunk)[188](index=188&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is sourced from operations, debt, and equity, with **$243.8 million** unutilized credit facility capacity as of November 1, 2022, and interest rate swaps used to manage risk - Short-term liquidity requirements include interest and principal payments, G&A expenses, property operating expenses, acquisitions, distributions, and capital improvements[209](index=209&type=chunk)[216](index=216&type=chunk) - As of November 1, 2022, the company had **$243.8 million** of unutilized borrowing capacity under its Credit Facility[215](index=215&type=chunk) - The company uses interest rate swaps to fix the SOFR component on its Term Loans. Total fixed debt was **$558.4 million** at a weighted average interest rate of **3.75%** and a weighted average maturity of **4.0 years** as of September 30, 2022[220](index=220&type=chunk)[222](index=222&type=chunk) [Non-GAAP Financial Measures](index=38&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like FFO and AFFO to evaluate performance, with Q3 2022 FFO per share at **$0.23** and AFFO per share at **$0.25** FFO and AFFO Reconciliation (per share and unit) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | FFO per share and unit | $0.23 | $0.23 | $0.70 | $0.67 | | AFFO per share and unit | $0.25 | $0.24 | $0.74 | $0.71 | EBITDAre and Adjusted EBITDAre (in thousands) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | EBITDAre | $24,654 | $22,140 | $70,191 | $61,964 | | Adjusted EBITDAre | $26,026 | $23,572 | $74,783 | $66,996 | [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The primary market risk is interest rate risk from variable-rate debt, with **$144.7 million** unhedged as of September 30, 2022, mitigated by derivative instruments - The primary market risk exposure is interest rate risk from debt used to acquire facilities, particularly borrowings under the Credit Facility[237](index=237&type=chunk)[238](index=238&type=chunk) - As of September 30, 2022, the company had **$144.7 million** of unhedged variable-rate debt. A **200 basis point** increase in SOFR would decrease annual cash flow by approximately **$2.9 million**[239](index=239&type=chunk) [Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting - The Principal Executive Officer and Principal Financial Officer concluded that as of September 30, 2022, the company's disclosure controls and procedures were effective[243](index=243&type=chunk)[245](index=245&type=chunk) - No material changes were made to internal control over financial reporting during the third quarter of 2022[247](index=247&type=chunk) [PART II OTHER INFORMATION](index=41&type=section&id=PART%20II%20OTHER%20INFORMATION) [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material litigation nor aware of any threatened litigation that would materially affect its financial condition - The company is not presently subject to any material litigation or aware of any material threatened litigation[249](index=249&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021, were reported - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021, were reported during the nine months ended September 30, 2022[250](index=250&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[251](index=251&type=chunk) [Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, credit agreement amendments, and Sarbanes-Oxley certifications - Key exhibits filed include an amendment to the Second Amended and Restated Credit Agreement and certifications from the CEO and CFO pursuant to Sarbanes-Oxley Sections 302 and 906[256](index=256&type=chunk)

Financial Data and Key Metrics Changes - The company reported an 18.1% year-over-year increase in total revenue to $35.4 million, primarily driven by acquisition activity [6][18] - Net income attributable to common shareholders for Q3 2022 was $8.1 million or $0.12 per share, compared to $3.7 million or $0.06 per share in Q3 2021 [6][22] - Funds from operations (FFO) for Q3 was $16.2 million or $0.23 per share, consistent with the previous year [23] - Adjusted funds from operations (AFFO) increased to $17.1 million or $0.25 per share, up from $16.4 million or $0.24 per share in Q3 2021 [23] Business Line Data and Key Metrics Changes - The company completed 5 acquisitions in Q3 2022 for a total investment of approximately $51 million, with a weighted average cap rate of 7.1% [8][13] - The portfolio consisted of gross investments in real estate of $1.5 billion, with 4.9 million total leasable square feet and 96.8% occupancy [18][24] - Same-store revenues, excluding cash basis leases, increased by $344,000 or 1.4% compared to Q3 2021 [19] Market Data and Key Metrics Changes - The acquisition environment has slowed significantly due to rising interest rates, impacting the marginal cost of capital for buyers [7][13] - The company noted a widening bid-ask spread in the market, with potential sellers adapting gradually to the new interest rate reality [7] Company Strategy and Development Direction - The company is conducting a strategic review to identify properties for potential sale, focusing on those where value has been added since acquisition [10] - Proceeds from any sales are expected to be used to reduce outstanding debt and increase available capital for future acquisitions when market conditions improve [10] - The company plans to be selective in pursuing incremental acquisitions until cap rates better reflect the higher cost of capital [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's positioning despite challenging market conditions, indicating a belief in the potential for future acquisitions as the market stabilizes [28] - The management team highlighted the importance of maintaining a strong balance sheet and the need to pay dividends while seeking accretive growth opportunities [49] Other Important Information - The company expanded its credit facility with a $150 million term loan and entered into interest rate swaps to fix the interest rate on the new loan [9][25] - As of September 30, 2022, the company had approximately $703 million of gross debt and a leverage ratio of 47.6% [26] Q&A Session Summary Question: What is the long-term debt target in relation to asset sales? - Management indicated a target of 40% to 45% leverage, with potential sales expected to help achieve this goal [31][32] Question: How has the cap rate changed across the portfolio? - Management noted that the market has seen a general increase in cap rates by 75 to 100 basis points across the board [39] Question: What is the status of the pipeline health systems and their rent payments? - Management stated that while a tenant is undergoing bankruptcy, they do not expect the lease to be rejected and anticipate normal payment resumption [41] Question: How does the company view its preferred stock in the capital stack? - Management acknowledged the preferred stock as a consideration for potential repayment but emphasized the need to balance leverage and pricing grid impacts [45] Question: What is the strategy for acquiring assets with lower occupancy? - Management highlighted their strong asset management capabilities, allowing them to lease up properties effectively after acquisition [52]

www.globalmedicalreit.com NYSE: GMRE Wake Forest Medical – Winston-Salem, NC Atrium Health – Winston-Salem, NC Third Quarter 2022 Earnings Supplemental Table of Contents | --- | --- | |-------------------------------------------------|-------| | | | | Table of Contents | | | Company Overview | 3-5 | | Select Quarterly Financial Data | 6 | | Business Summary | 7 | | ESG Summary | 8 | | Acquisitions | 9 | | Portfolio Summary | 10-11 | | Top 10 Tenants | 12-14 | | Debt and Hedging Summary | 15 | | Total Capita ...

[Report Information](index=1&type=section&id=Report%20Information) This section provides essential filing details, stock information, and outstanding share count for Global Medical REIT Inc - Global Medical REIT Inc. filed a Quarterly Report on Form 10-Q for the period ended June 30, 2022[1](index=1&type=chunk) Trading Information | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common Stock, par value $0.001 per share | GMRE | NYSE | | Series A Preferred Stock, par value $0.001 per share | GMRE PrA | NYSE | - The number of shares of common stock outstanding at August 1, 2022, was **65,518,306**[5](index=5&type=chunk) [PART I FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements and related notes, along with management's discussion and analysis of the company's financial performance [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This chapter contains the company's unaudited consolidated financial statements for the periods ended June 30, 2022, and December 31, 2021, including balance sheets, statements of operations, comprehensive income, equity, and cash flows, along with related notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This table presents the company's financial position, detailing assets, liabilities, and equity as of June 30, 2022, and December 31, 2021 | Metric | June 30, 2022 (thousand USD) | December 31, 2021 (thousand USD) | | :-------------------------------- | :----------------------- | :----------------------- | | **Assets** | | | | Investment properties, net | 1,272,559 | 1,199,748 | | Cash and cash equivalents | 5,873 | 7,213 | | Restricted cash | 8,327 | 5,546 | | Derivative assets | 16,583 | 1,236 | | **Total assets** | **1,357,266** | **1,263,485** | | **Liabilities** | | | | Credit facility, net | 602,987 | 514,567 | | Notes payable, net | 56,687 | 57,162 | | Derivative liabilities | — | 7,790 | | **Total liabilities** | **708,157** | **625,908** | | **Equity** | | | | Total equity attributable to Global Medical REIT Inc. stockholders | 634,012 | 622,785 | | Non-controlling interests | 15,097 | 14,792 | | **Total equity** | **649,109** | **637,577** | | **Total liabilities and equity** | **1,357,266** | **1,263,485** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This table details the company's revenues, expenses, and net income for the three and six months ended June 30, 2022, and 2021 | Metric (thousand USD) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----------------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Rental revenue | 33,679 | 28,200 | 65,530 | 55,525 | | Other revenue | 18 | 61 | 42 | 85 | | **Total revenue** | **33,697** | **28,261** | **65,572** | **55,610** | | Total expenses | 29,863 | 24,097 | 57,453 | 48,123 | | **Net income** | **3,834** | **4,164** | **8,119** | **7,487** | | Net income attributable to common stockholders | 2,236 | 2,553 | 4,895 | 4,308 | | Net income per common share – basic and diluted | 0.03 | 0.04 | 0.07 | 0.08 | | Weighted average common shares outstanding – basic and diluted | 65,507 | 61,194 | 65,405 | 56,956 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This table presents the company's net income and other comprehensive income components, leading to total comprehensive income for the three and six months ended June 30, 2022, and 2021 | Metric (thousand USD) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----------------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Net income | 3,834 | 4,164 | 8,119 | 7,487 | | Other comprehensive income: | | | | | | Increase in fair value of interest rate swap agreements | 5,770 | 804 | 23,163 | 4,435 | | **Total other comprehensive income** | **5,770** | **804** | **23,163** | **4,435** | | **Comprehensive income** | **9,604** | **4,968** | **31,282** | **11,922** | | Comprehensive income attributable to common stockholders | 7,658 | 3,311 | 26,665 | 8,482 | [Condensed Consolidated Statements of Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This section outlines changes in the company's equity, including net income, stock issuances, and dividend payments, for the periods presented - As of June 30, 2022, the company's total equity was **$649,109 thousand**, an increase from **$637,577 thousand** at December 31, 2021[18](index=18&type=chunk) - In the first half of 2022, net income was **$8,119 thousand**, net proceeds from common stock issuance were **$9,979 thousand**, and fair value changes in interest rate swaps increased accumulated other comprehensive income by **$23,163 thousand**[18](index=18&type=chunk) - During the first half of 2022, the company paid **$27,492 thousand** in dividends to common stockholders and **$2,911 thousand** to preferred stockholders[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This table summarizes the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2022, and 2021 | Cash Flow Activities (thousand USD) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----------------------------------- | :----------------------- | :----------------------- | | Net cash provided by operating activities | 39,919 | 33,076 | | Net cash used in investing activities | (102,394) | (115,971) | | Net cash provided by financing activities | 63,916 | 84,512 | | Net increase in cash and cash equivalents and restricted cash | 1,441 | 1,617 | | Cash and cash equivalents and restricted cash at end of period | 14,200 | 12,370 | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [Note 1 – Organization](index=9&type=section&id=Note%201%20%E2%80%93%20Organization) This note describes Global Medical REIT Inc.'s corporate structure and primary business activities of acquiring and leasing specialized medical facilities - Global Medical REIT Inc. is a Maryland corporation focused on acquiring and leasing specialized medical facilities to healthcare systems and physician groups with leading market shares[29](index=29&type=chunk) - The company conducts its business and holds facilities through its Delaware limited partnership subsidiary, Global Medical REIT L.P., owning **93.97%** of the operating partnership interests as of June 30, 2022[29](index=29&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=9&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods applied in preparing the financial statements, including asset acquisitions, revenue recognition, and derivative instruments - The company accounts for all facility acquisitions as asset acquisitions, as the vast majority of fair value is concentrated in a single or group of similar identifiable assets[35](index=35&type=chunk) - Primary revenue sources include rental income and expense reimbursements from lease arrangements, with fixed annual rent escalations recognized on a straight-line basis[37](index=37&type=chunk) Cash and Cash Equivalents and Restricted Cash | Metric (thousand USD) | June 30, 2022 | June 30, 2021 | | :-------------------- | :------------- | :------------- | | Cash and cash equivalents | 5,873 | 5,821 | | Restricted cash | 8,327 | 6,549 | | **Total cash and cash equivalents and restricted cash** | **14,200** | **12,370** | - As of June 30, 2022, the fair value of the company's interest rate swap derivative instruments was a **$16,583 thousand** asset, compared to a net liability of **$6,554 thousand** at December 31, 2021, primarily used to manage interest rate risk on floating-rate debt[46](index=46&type=chunk) - The company has elected to apply the hedge accounting practical expedients in ASU 2020-04 related to reference rate reform, addressing the transition from LIBOR to SOFR[53](index=53&type=chunk) [Note 3 – Property Portfolio](index=12&type=section&id=Note%203%20%E2%80%93%20Property%20Portfolio) This note details the company's property acquisition activities and commitments for capital improvements, along with a breakdown of lease intangible assets and liabilities - For the six months ended June 30, 2022, the company completed **9 acquisitions** with a total investment of **$101,562 thousand**, including land, buildings, site improvements, tenant improvements, and acquired lease intangibles[54](index=54&type=chunk)[56](index=56&type=chunk) - As of June 30, 2022, the company's total commitments and obligations for capital improvements on existing facilities amounted to approximately **$24,183 thousand**[58](index=58&type=chunk) Lease Intangible Assets and Liabilities | Lease Intangible Assets and Liabilities (thousand USD) | June 30, 2022 Net | December 31, 2021 Net | | :-------------------- | :---------------- | :---------------- | | Assets: | | | | In-place leases | 50,489 | 46,889 | | Above-market leases | 20,063 | 16,208 | | Leasing costs | 26,079 | 24,588 | | **Total assets** | **96,631** | **87,685** | | Liabilities: | | | | Below-market leases | 7,903 | 8,128 | [Note 4 – Credit Facility, Notes Payable and Derivative Instruments](index=15&type=section&id=Note%204%20%E2%80%93%20Credit%20Facility%2C%20Notes%20Payable%20and%20Derivative%20Instruments) This note provides details on the company's credit facility, notes payable, and derivative instruments used to manage interest rate risk - As of June 30, 2022, the company had a **$750 million** unsecured syndicated credit facility, comprising a **$350 million** term loan and a **$400 million** revolving credit facility, with a **$500 million** accordion feature[65](index=65&type=chunk) - In the first half of 2022, the company borrowed **$92.5 million** and repaid **$5 million** under its credit facility, resulting in net borrowings of **$87.5 million**[71](index=71&type=chunk) - The company has entered into interest rate swap agreements with a total notional amount of **$350 million** to hedge interest rate risk on its term loan and plans to transition LIBOR-based loans to SOFR-based loans[90](index=90&type=chunk) Notes Payable | Loan Type (thousand USD) | June 30, 2022 | December 31, 2021 | | :-------------------- | :------------- | :------------- | | Notes payable | 57,217 | 57,769 | | Less: Unamortized debt issuance costs | (530) | (607) | | **Notes payable, net** | **56,687** | **57,162** | - As of June 30, 2022, the weighted average interest rate on the company's debt was **3.14%** with a weighted average term of **3.79 years**, compared to **2.87%** and **4.28 years** respectively at December 31, 2021[96](index=96&type=chunk) [Note 5 – Equity](index=19&type=section&id=Note%205%20%E2%80%93%20Equity) This note details the company's equity structure, including preferred stock, common stock issuances, and operating partnership units - As of June 30, 2022, and December 31, 2021, the company had **3,105 shares** of Series A Cumulative Redeemable Preferred Stock issued and outstanding, with a liquidation preference of **$25 per share**[97](index=97&type=chunk) - In the first half of 2022, the company generated net proceeds of **$10,104 thousand** from the issuance of **598 thousand** shares of common stock at an average price of **$17.15 per share**[107](index=107&type=chunk) - As of June 30, 2022, there were **1,667 OP units** issued and outstanding, with a total value of **$8,480 thousand**[109](index=109&type=chunk) [Note 6 – Related Party Transactions](index=21&type=section&id=Note%206%20%E2%80%93%20Related%20Party%20Transactions) This note discloses transactions with related parties, specifically receivables from LTIP and OP unit holders - As of June 30, 2022, amounts due from related parties totaled **$337 thousand**, primarily consisting of reimbursable taxes paid on behalf of LTIP and OP unit holders[111](index=111&type=chunk) [Note 7 – Stock-Based Compensation](index=21&type=section&id=Note%207%20%E2%80%93%20Stock-Based%20Compensation) This note describes the company's stock-based compensation plans, including the 2016 Equity Incentive Plan and various LTIP awards - The 2016 Equity Incentive Plan aims to assist the company in recruiting and retaining employees, board members, and executives, with **1,108 shares** of common stock remaining available for grant as of June 30, 2022[112](index=112&type=chunk)[113](index=113&type=chunk) - In the first half of 2022, the company granted time-based LTIP units, including final awards from the 2019 Long-Term Incentive Plan (**163 units**), 2021 Annual Incentive Plan (**91 units**), 2022 Long-Term Incentive Plan (**75 units**), and annual awards for independent directors (**32 units**)[114](index=114&type=chunk) - The company also approved performance-based LTIP awards, including annual and long-term awards, with vesting contingent on specific performance metrics and service requirements[115](index=115&type=chunk) - For the first half of 2022, the company incurred **$2,576 thousand** in stock-based compensation expense, with an estimated **$6.9 million** of unrecognized compensation expense expected to be recognized over the next **1.9 years**[129](index=129&type=chunk)[130](index=130&type=chunk) [Note 8 – Leases](index=23&type=section&id=Note%208%20%E2%80%93%20Leases) This note provides details on the company's leasing activities as both a lessor and a lessee, including rental income and future lease obligations - As a lessor, the company leases facilities to tenants for fixed monthly payments, with leases classified as operating leases and an average remaining lease term of approximately **10 years**[134](index=134&type=chunk) Lease Revenue | Lease Revenue (thousand USD) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Operating lease rental income | 33,679 | 28,200 | 65,530 | 55,525 | | Of which variable lease income | 1,920 | 1,534 | 3,867 | 2,908 | - As of June 30, 2022, the company's total future annual cash flows from non-cancelable operating leases amounted to **$829,298 thousand**[139](index=139&type=chunk) - As a lessee, the company has seven buildings located on land under operating ground leases, with a weighted average remaining term of approximately **40 years**, and an operating lease liability of **$3,112 thousand** as of June 30, 2022[140](index=140&type=chunk)[141](index=141&type=chunk) - In the first half of 2022, the company's rental income was derived from **114 facilities** leased to **228 tenants**, with no single tenant accounting for more than **10%** of the company's rental income[142](index=142&type=chunk) [Note 9 – Commitments and Contingencies](index=25&type=section&id=Note%209%20%E2%80%93%20Commitments%20and%20Contingencies) This note addresses the company's current legal and environmental commitments and contingencies - The company is not currently facing any material litigation, nor is it aware of any threatened litigation that could significantly adversely affect its financial condition, results of operations, or cash flows[143](index=143&type=chunk) - The company is unaware of any environmental liabilities at its properties that could materially impact its financial condition, results of operations, or cash flows[144](index=144&type=chunk) [Note 10 – Subsequent Events](index=25&type=section&id=Note%2010%20%E2%80%93%20Subsequent%20Events) This note discloses significant events that occurred after the reporting period, including credit facility revisions, new swap agreements, and property sales - On August 1, 2022, the company amended its credit facility to add a **$150 million** delayed draw term loan, extend the revolving credit facility maturity to August 2026, and convert all LIBOR-based loans to SOFR-based loans[145](index=145&type=chunk)[149](index=149&type=chunk) - On August 2, 2022, the company entered into a **$150 million** forward interest rate swap agreement, fixing the SOFR portion of the new term loan at **2.54%** until January 2028[147](index=147&type=chunk) - In July 2022, the company sold a medical office building in Germantown, Tennessee, for gross proceeds of **$17.9 million**, with an estimated gain of **$6.8 million**[148](index=148&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This chapter provides management's narrative explanation of the company's financial condition, changes in financial condition, and results of operations, aiming to enhance understanding of financial information and provide insights into profitability and cash flow volatility [Special Note Regarding Forward-Looking Statements](index=27&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This section cautions readers that the report contains forward-looking statements, which are predictions about future events or trends and should not be relied upon as forecasts - This report contains "forward-looking statements" involving predictions about future events or trends, which should not be relied upon as forecasts of future events[151](index=151&type=chunk)[152](index=152&type=chunk) - Actual results may differ materially from forward-looking statements due to various factors, including tenant defaults, rising interest rates, acquisition difficulties, macroeconomic and geopolitical factors, COVID-19 impacts, ability to comply with debt covenants, declining rents or increasing vacancies, and changes in healthcare laws and policies[152](index=152&type=chunk)[157](index=157&type=chunk) [Objective of MD&A](index=28&type=section&id=Objective%20of%20MD%26A) This section explains that the MD&A aims to provide a narrative explanation of the financial statements, offering management's perspective and insights into the company's profitability and cash flow quality - The MD&A aims to provide a narrative explanation of the financial statements, enabling investors to view the company from management's perspective, enhancing overall financial disclosure, and offering information on the quality and potential volatility of the company's earnings and cash flows[158](index=158&type=chunk) [Overview](index=28&type=section&id=Overview) This section provides a high-level description of Global Medical REIT Inc. as an internally managed REIT operating through medical facility acquisitions and leases, utilizing an UPREIT structure - Global Medical REIT Inc. is an internally managed REIT operating by acquiring medical facilities and leasing them to physician groups and regional/national healthcare systems[156](index=156&type=chunk) - The company employs an UPREIT structure, owning **93.97%** of the common operating partnership units (OP units) of its operating partnership as of June 30, 2022[156](index=156&type=chunk) - Company revenue primarily derives from rent and operating expense reimbursements, with most leases being medium-to-long-term triple-net leases containing contractual rent escalation clauses[159](index=159&type=chunk) [Business Overview and Strategy](index=29&type=section&id=Business%20Overview%20and%20Strategy) This section outlines the company's business strategy of investing in medical office buildings and other decentralized healthcare facilities, focusing on serving an aging population - The company's business strategy involves investing in medical office buildings and other decentralized healthcare service facilities, particularly in secondary markets and major market suburbs, to serve the needs of an aging population[160](index=160&type=chunk)[166](index=166&type=chunk) - The company also pursues opportunistic acquisitions, including certain acute care hospitals, long-term acute care facilities, healthcare system corporate offices, and behavioral and mental health facilities[166](index=166&type=chunk) - The company's investment portfolio includes both single-tenant triple-net lease properties and multi-tenant gross or modified gross lease structured properties[161](index=161&type=chunk) [Corporate Sustainability and Social Responsibility](index=29&type=section&id=Corporate%20Sustainability%20and%20Social%20Responsibility) This section highlights the company's commitment to environmental sustainability, social responsibility, and strong governance practices, overseen by a dedicated ESG committee - The company integrates environmental sustainability, social responsibility, and robust governance practices into its business, with a Board-level ESG Committee overseeing ESG strategy and policies[162](index=162&type=chunk)[163](index=163&type=chunk) - Through tenant outreach and data collection, the company continuously improves and expands its corporate sustainability efforts, submitting its 2021 GRESB Assessment report on July 1, 2022[164](index=164&type=chunk) - In 2021, the company launched a successful rideshare pilot program providing medical facility transportation in the Phoenix metropolitan area, with plans to continue and expand the program in 2022[165](index=165&type=chunk) [Climate Change](index=30&type=section&id=Climate%20Change) This section addresses the company's approach to climate change, including monitoring climate risks, assessing carbon emissions, and exploring mitigation strategies - The company takes climate change and its associated risks seriously and has begun monitoring climate risk factors across its portfolio[167](index=167&type=chunk) - During the acquisition due diligence phase, the company utilizes third-party engineering consultants for utility and energy audits, collecting energy consumption data to assess facility carbon emission levels[167](index=167&type=chunk) - The company is exploring methods to mitigate climate risks in its acquisition strategy and actively seeks ways to incorporate renewable energy and reduce energy usage through proactive asset management to lessen climate impact[167](index=167&type=chunk) [Impact of COVID-19](index=30&type=section&id=Impact%20of%20COVID-19) This section discusses the ongoing impact of the COVID-19 BA.5 variant on the company's and its tenants' operations and the uncertainty of future effects - The continued spread of the COVID-19 BA.5 variant has prolonged the pandemic, leading to a surge in infections and ongoing disruptions to the operations of the company, its tenants, and consultants[168](index=168&type=chunk) - While the company has managed these disruptions to date, it cannot predict the future impact of the current BA.5 variant and potential future variants on its tenants and business[168](index=168&type=chunk) [Executive Summary](index=30&type=section&id=Executive%20Summary) This section provides a high-level overview of key financial and operational metrics for the company, including revenue, expenses, and portfolio details | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----------------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Rental revenue (thousand USD) | 33,679 | 28,200 | 65,530 | 55,525 | | Depreciation and amortization expense (thousand USD) | 14,036 | 11,427 | 27,215 | 22,280 | | Interest expense (thousand USD) | 5,401 | 5,020 | 10,202 | 10,057 | | Net income per common share | 0.03 | 0.04 | 0.07 | 0.08 | | FFO per share/unit | 0.24 | 0.22 | 0.47 | 0.44 | | AFFO per share/unit | 0.25 | 0.23 | 0.49 | 0.47 | | Dividends per common share | 0.21 | 0.205 | 0.42 | 0.41 | | Weighted average common shares outstanding | 65,507 | 61,194 | 65,405 | 56,956 | | Weighted average OP units outstanding | 1,668 | 1,753 | 1,670 | 1,759 | | Weighted average LTIP units outstanding | 2,523 | 2,166 | 2,410 | 1,990 | | Total weighted average shares and units outstanding | 69,698 | 65,113 | 69,485 | 60,705 | | Metric (thousand USD) | June 30, 2022 | December 31, 2021 | | :-------------------- | :------------- | :------------- | | Investment properties, gross | 1,444,565 | 1,343,003 | | Total debt, net | 659,674 | 571,729 | | Weighted average interest rate | 3.14 % | 2.87 % | | Total equity (including non-controlling interests) | 649,109 | 637,577 | | Net rentable area (square feet) | 4,681,725 | 4,343,467 | [Our Properties](index=31&type=section&id=Our%20Properties) This section details the company's property acquisition activities and the composition of its investment portfolio as of June 30, 2022 - In the first half of 2022, the company completed **9 acquisitions** totaling **335,907 square feet** of rentable area, with a total contractual purchase price of **$98.1 million** and total annualized base rent of **$6.9 million**[172](index=172&type=chunk) - As of June 30, 2022, the company's portfolio comprised **114 facilities** with a total rentable area of **4.7 million square feet**, total annualized base rent of **$109.1 million**, and a gross real estate investment of **$1.4 billion**[172](index=172&type=chunk) [Capital Raising Activity](index=31&type=section&id=Capital%20Raising%20Activity) This section summarizes the company's equity capital raising efforts, including the launch of its 2022 ATM program and proceeds from common stock issuances - In March 2022, the company launched its 2022 ATM program, allowing for the periodic issuance and sale of up to **$300 million** of common stock[173](index=173&type=chunk) - In the first half of 2022, the company generated gross proceeds of **$10.3 million** from the issuance of **600 thousand** shares of common stock at an average price of **$17.15 per share**[174](index=174&type=chunk) [Debt Activity](index=31&type=section&id=Debt%20Activity) This section details the company's debt-related activities, including borrowings and repayments under its credit facility - In the first half of 2022, the company borrowed **$92.5 million** and repaid **$5.0 million** under its credit facility, resulting in net borrowings of **$87.5 million**[175](index=175&type=chunk) - As of June 30, 2022, the net balance of the credit facility was **$603.0 million**; as of August 1, 2022, unused borrowing capacity under the revolving credit facility was **$123.3 million**[175](index=175&type=chunk) [Recent Developments](index=31&type=section&id=Recent%20Developments) This section highlights key events occurring after the reporting period, such as credit facility amendments, new swap agreements, property sales, and pending acquisitions - On August 1, 2022, the company amended its credit facility to add a **$150 million** delayed draw term loan, extend the revolving credit facility maturity to August 2026, and convert all LIBOR-based loans to SOFR-based loans[176](index=176&type=chunk)[178](index=178&type=chunk) - On August 2, 2022, the company entered into a **$150 million** forward interest rate swap agreement, fixing the SOFR portion of the new term loan at **2.54%** until January 2028[177](index=177&type=chunk) - In July 2022, the company sold a medical office building in Germantown, Tennessee, for gross proceeds of **$17.9 million**, with an estimated gain of **$6.8 million**[180](index=180&type=chunk) - As of August 1, 2022, the company had **four acquisitions** under contract with a total purchase price of approximately **$49.8 million**[181](index=181&type=chunk) [Trends Which May Influence Our Results of Operations](index=32&type=section&id=Trends%20Which%20May%20Influence%20Our%20Results%20of%20Operations) This section discusses both positive and negative trends that could impact the company's future operating results, including demographic shifts, interest rate changes, and market competition - Positive trends include an aging population (rapid growth in the 65+ demographic), a continued shift towards outpatient care, and consolidation among physician practice groups and hospitals[183](index=183&type=chunk) - Negative trends include a rising interest rate environment (Federal Funds Rate increased three times, anticipated further SOFR increases potentially leading to an approximate **$2.6 million** annual increase in interest expense), increased competition for acquisition opportunities, the ongoing impact of the COVID-19 pandemic, and changes in third-party reimbursement methods and policies[183](index=183&type=chunk)[187](index=187&type=chunk) [Critical Accounting Estimates](index=33&type=section&id=Critical%20Accounting%20Estimates) This section explains that management's application of GAAP requires judgment, estimates, and assumptions, which are regularly re-evaluated and could impact financial statement presentation - Management's application of GAAP accounting policies requires judgment, including making estimates and assumptions based on the best available information, experience, and reasonable assumptions[185](index=185&type=chunk) - If judgments or interpretations of facts and circumstances differ from actual results, it could lead to a different presentation of financial statements, with estimates and assumptions regularly re-evaluated by the company[185](index=185&type=chunk) [Consolidated Results of Operations](index=33&type=section&id=Consolidated%20Results%20of%20Operations) This section analyzes the company's revenue and expense changes for the three and six months ended June 30, 2022, compared to the same periods in 2021, primarily driven by portfolio expansion [Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021](index=34&type=section&id=Three%20Months%20Ended%20June%2030%2C%202022%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202021) This section compares the company's financial performance for the three months ended June 30, 2022, against the same period in 2021, highlighting changes in revenue, expenses, and net income | Metric (thousand USD) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change | | :-------------------- | :----------------------- | :----------------------- | :------- | | Total revenue | 33,697 | 28,261 | 5,436 | | Operating expenses | 6,000 | 3,303 | 2,697 | | Depreciation expense | 9,898 | 8,292 | 1,606 | | Amortization expense | 4,138 | 3,135 | 1,003 | | Interest expense | 5,401 | 5,020 | 381 | | Net income | 3,834 | 4,164 | (330) | - Total revenue increased by **$5.4 million**, primarily due to rental income from facilities acquired after June 30, 2021[189](index=189&type=chunk) - Operating expenses increased by **$2.7 million**, mainly due to higher reimbursable property operating expenses[191](index=191&type=chunk) - Net income decreased by **$0.4 million**, despite increased revenue, due to higher operating, depreciation, amortization, and interest expenses[197](index=197&type=chunk) [Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021](index=35&type=section&id=Six%20Months%20Ended%20June%2030%2C%202022%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202021) This section compares the company's financial performance for the six months ended June 30, 2022, against the same period in 2021, detailing changes in revenue, expenses, and net income | Metric (thousand USD) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | Change | | :-------------------- | :----------------------- | :----------------------- | :------- | | Total revenue | 65,572 | 55,610 | 9,962 | | Operating expenses | 11,372 | 6,991 | 4,381 | | Depreciation expense | 19,300 | 16,140 | 3,160 | | Amortization expense | 7,915 | 6,140 | 1,775 | | Interest expense | 10,202 | 10,057 | 145 | | Net income | 8,119 | 7,487 | 632 | - Total revenue increased by **$10.0 million**, primarily due to rental income from facilities acquired after June 30, 2021[199](index=199&type=chunk) - Operating expenses increased by **$4.4 million**, mainly due to higher reimbursable property operating expenses[202](index=202&type=chunk) - Net income increased by **$0.6 million**, driven by revenue growth, partially offset by increased operating, depreciation, and amortization expenses[207](index=207&type=chunk) [Assets and Liabilities](index=36&type=section&id=Assets%20and%20Liabilities) This section provides an overview of the company's balance sheet, highlighting key assets like investment properties and changes in cash and total liabilities - As of June 30, 2022, the company's primary asset was investment properties, net, at **$1.3 billion**, with liquid assets mainly comprising cash and cash equivalents and restricted cash totaling **$14.2 million**[208](index=208&type=chunk) - Cash and cash equivalents and restricted cash balances increased to **$14.2 million**, driven by credit facility borrowings, net proceeds from ATM equity offerings, and net cash provided by operating activities, partially offset by real estate acquisitions and dividend payments[209](index=209&type=chunk)[210](index=210&type=chunk) - Total liabilities increased to **$708.2 million**, primarily due to higher outstanding net borrowings, partially offset by a decrease in derivative liabilities[210](index=210&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's short-term and long-term liquidity needs and its strategies for meeting these requirements through various funding sources - Short-term liquidity needs include debt interest and principal payments, general and administrative expenses, property operating expenses, property acquisitions, dividend distributions, and capital and tenant improvements[211](index=211&type=chunk)[218](index=218&type=chunk) - Long-term liquidity needs primarily encompass acquisitions, property capital and tenant improvements, scheduled debt maturities, general and administrative expenses, operating expenses, and distributions[212](index=212&type=chunk) - The company expects to meet its short-term and long-term liquidity needs through operating cash flows, debt financing, equity securities offerings, OP unit issuances, and property dispositions and recapitalization transactions[213](index=213&type=chunk) - As of August 1, 2022, the company had **$273.3 million** in unutilized borrowing capacity under its credit facility, including **$123.3 million** under the revolving credit facility and **$150 million** from the new term loan[219](index=219&type=chunk) - The company has entered into interest rate swap agreements to manage interest rate risk and plans to convert LIBOR-based swap agreements to SOFR-based swap agreements[222](index=222&type=chunk)[226](index=226&type=chunk) [Non-GAAP Financial Measures](index=39&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and presents non-GAAP financial measures such as FFO, AFFO, EBITDAre, and Adjusted EBITDAre, which management uses to assess operational performance and debt service capacity [Funds from Operations and Adjusted Funds from Operations](index=39&type=section&id=Funds%20from%20Operations%20and%20Adjusted%20Funds%20from%20Operations) This section defines FFO and AFFO as non-GAAP metrics considered important by management for evaluating the company's operating performance - FFO (Funds from Operations) and AFFO (Adjusted Funds from Operations) are non-GAAP financial measures considered by management as important supplemental indicators of the company's operating performance[233](index=233&type=chunk)[236](index=236&type=chunk) FFO and AFFO | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----------------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Net income (thousand USD) | 3,834 | 4,164 | 8,119 | 7,487 | | FFO (thousand USD) | 16,387 | 14,108 | 32,368 | 26,801 | | AFFO (thousand USD) | 17,563 | 14,998 | 34,390 | 28,553 | | FFO per share/unit | 0.24 | 0.22 | 0.47 | 0.44 | | AFFO per share/unit | 0.25 | 0.23 | 0.49 | 0.47 | [Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre and Adjusted EBITDAre)](index=40&type=section&id=Earnings%20Before%20Interest%2C%20Taxes%2C%20Depreciation%20and%20Amortization%20for%20Real%20Estate%20(EBITDAre%20and%20Adjusted%20EBITDAre)) This section presents EBITDAre and Adjusted EBITDAre as key metrics for evaluating the company's core operating performance and debt service capacity - EBITDAre and Adjusted EBITDAre are important metrics used to evaluate and compare the company's core operating performance and debt service capacity[238](index=238&type=chunk) EBITDAre and Adjusted EBITDAre | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Net income (thousand USD) | 3,834 | 4,164 | 8,119 | 7,487 | | EBITDAre (thousand USD) | 23,271 | 20,611 | 45,536 | 39,824 | | Adjusted EBITDAre (thousand USD) | 24,965 | 22,370 | 48,756 | 43,424 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This chapter discloses the company's market risks, primarily interest rate risk, and outlines strategies for managing these risks, including the use of derivative financial instruments - The company's primary risk is interest rate risk, stemming from debt used to acquire medical facilities, including borrowings under its credit facility[240](index=240&type=chunk)[241](index=241&type=chunk) - As of June 30, 2022, the company had **$260.1 million** in unhedged floating-rate borrowings; a **100 basis point** increase in LIBOR would decrease the company's cash flow by approximately **$2.6 million** annually, while a **100 basis point** decrease would increase cash flow by approximately **$2.6 million** annually[242](index=242&type=chunk) - The company's interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to reduce overall borrowing costs, potentially through fixed or floating rate borrowings and the use of derivative financial instruments like interest rate swaps and caps[243](index=243&type=chunk)[244](index=244&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) This chapter reports on the effectiveness of the company's disclosure controls and procedures and any changes in internal financial reporting controls - As of June 30, 2022, the company's Chief Executive Officer and Chief Financial Officer evaluated and concluded that the company's disclosure controls and procedures were effective[246](index=246&type=chunk) - Management does not expect that disclosure controls and procedures or internal controls will prevent all errors and fraud, as control systems can only provide reasonable, not absolute, assurance[247](index=247&type=chunk) - There were no changes in the company's internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[249](index=249&type=chunk) [PART II OTHER INFORMATION](index=42&type=section&id=PART%20II%20OTHER%20INFORMATION) This section includes disclosures on legal proceedings, risk factors, equity sales, defaults, and other miscellaneous information [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) This chapter states that the company is not currently involved in any material legal proceedings and is unaware of any legal threats that could significantly adversely affect its financial condition or results of operations - The company is not currently involved in any pending legal proceedings or litigation, nor is it aware of any governmental agency considering litigation against the company or its properties that could materially adversely affect its financial condition or results of operations[251](index=251&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This chapter indicates that there have been no material changes to the risk factors disclosed in the company's annual report on Form 10-K filed on December 31, 2021, for the six months ended June 30, 2022 - For the six months ended June 30, 2022, there have been no material changes to the risk factors disclosed in the company's annual report on Form 10-K filed on December 31, 2021[252](index=252&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This chapter states that the company has no unregistered sales of equity securities or use of proceeds to report - No unregistered sales of equity securities and use of proceeds to report[253](index=253&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This chapter states that the company has no defaults upon senior securities to report - No defaults upon senior securities[254](index=254&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This chapter states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[255](index=255&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) This chapter states that the company has no other information to report - No other information[256](index=256&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This chapter lists the exhibits filed with the Form 10-Q report, including company articles, stock certificates, executive certifications, and XBRL data files - Exhibits include articles of incorporation, amended articles of incorporation, specimen common and preferred stock certificates, CEO and CFO certifications, and Inline XBRL data files[257](index=257&type=chunk)[259](index=259&type=chunk) [Signatures](index=44&type=section&id=Signatures) This chapter contains the signatures of Jeffrey M. Busch, CEO, and Robert J. Kiernan, CFO, certifying the submission of this report - The report was signed by Jeffrey M. Busch, Chief Executive Officer, and Robert J. Kiernan, Chief Financial Officer of Global Medical REIT Inc. on August 5, 2022[264](index=264&type=chunk)[265](index=265&type=chunk)

Global Medical REIT, Inc. (NYSE:GMRE) Q2 2022 Earnings Conference Call August 4, 2022 9:00 AM ET Company Participants Stephen Swett - ICR Jeffery Busch - Chairman, President & CEO Alfonzo Leon - CIO Robert Kiernan - CFO & Treasurer Conference Call Participants Austin Wurschmidt - KeyBanc Capital Markets Connor Siversky - Berenberg Aaron Hecht - JMP Securities Operator Greetings, and welcome to the Global Medical REIT Second Quarter 2022 Earnings Conference Call. [Operator Instructions]. As a reminder, this ...

www.globalmedicalreit.com NYSE: GMRE Second Quarter 2022 Earnings Supplemental Three and Six Months Ended June 30, 2022 Corporate Information and Analyst Coverage Executive Team Jeffrey Busch Chief Executive Officer, Chairman and President Alfonzo Leon Chief Investment Officer Danica Holley Chief Operating Officer Bob Kiernan Chief Financial Officer and Treasurer Jamie Barber General Counsel and Corporate Secretary Board of Directors Jeffrey Busch Chief Executive Officer, Chairman and President Henry Cole L ...