Global Medical REIT(GMRE) - 2019 Q3 - Quarterly Report

PART I FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements, management's analysis of financial condition and operations, market risk disclosures, and internal controls for the period Financial Statements (Unaudited) Unaudited financial statements for Global Medical REIT Inc. as of September 30, 2019, reflect substantial growth in assets and revenue, primarily due to property acquisitions and increased debt Condensed Consolidated Balance Sheets Total assets grew to $812.3 million by September 30, 2019, primarily from real estate investments funded by liabilities and equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2019 | Dec 31, 2018 | Change (%) | | :--- | :--- | :--- | :--- | | Investment in real estate, net | $781,715 | $616,925 | +26.7% | | Total assets | $812,318 | $636,099 | +27.7% | | Credit facility, net | $363,242 | $276,353 | +31.4% | | Total liabilities | $440,875 | $336,349 | +31.1% | | Total equity | $371,443 | $299,750 | +23.9% | Condensed Consolidated Statements of Operations Total revenue for Q3 2019 increased 29.9% to $18.2 million, with nine-month revenue growing to $50.3 million, boosting net income Statement of Operations Summary (in thousands, except per share amounts) | Metric | Q3 2019 | Q3 2018 | YoY Change | Nine Months 2019 | Nine Months 2018 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Rental Revenue | $18,117 | $13,995 | +29.5% | $50,093 | $38,790 | +29.1% | | Total Revenue | $18,195 | $14,003 | +29.9% | $50,275 | $38,817 | +29.5% | | Total Expenses | $15,887 | $12,230 | +29.9% | $43,462 | $33,760 | +28.7% | | Net Income | $2,308 | $1,773 | +30.2% | $6,813 | $5,057 | +34.7% | | Net Income Attributable to Common Stockholders | $770 | $286 | +169.2% | $2,201 | $632 | +248.3% | | EPS (basic and diluted) | $0.02 | $0.01 | +100.0% | $0.07 | $0.03 | +133.3% | Condensed Consolidated Statements of Comprehensive (Loss) Income A $62,000 comprehensive loss for the nine months ended September 30, 2019, resulted primarily from a $6.9 million loss on interest rate swaps - A significant decrease in the fair value of interest rate swap agreements, amounting to a loss of $6.9 million for the nine months ended September 30, 2019, was the primary driver of the total comprehensive loss, compared to a minor loss of $109,000 in the same period of 2018[17] Condensed Consolidated Statements of Equity Total equity grew to $371.4 million by September 30, 2019, primarily from $96.8 million in common stock issuance, offset by dividends and comprehensive loss - The company issued 10,284 thousand shares of common stock during the first nine months of 2019, raising $96.8 million in net proceeds[20] - Dividends paid to common and preferred stockholders during the nine months ended September 30, 2019, totaled $21.0 million and $4.4 million, respectively[20] Condensed Consolidated Statements of Cash Flows Net cash from operations increased to $26.7 million, investing activities used $182.7 million for acquisitions, and financing provided $157.0 million from equity and debt Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $26,681 | $19,100 | | Net cash used in investing activities | ($182,674) | ($136,431) | | Net cash provided by financing activities | $156,976 | $114,039 | | Net (decrease) increase in cash | $983 | ($3,292) | Notes to the Unaudited Condensed Consolidated Financial Statements Notes detail accounting policies, $182.9 million in property acquisitions, credit facility amendments, ASC Topic 842 adoption, and equity transactions - During the nine months ended September 30, 2019, the Company completed 13 property acquisitions, all accounted for as asset acquisitions, adding $182.9 million to its gross investment in real estate[48][49] - On September 30, 2019, the company amended its Credit Facility, increasing the term-loan component to $300 million and adding a new $150 million accordion feature[82] - The company adopted the new lease accounting standard, ASC Topic 842, on January 1, 2019, resulting in the recognition of a right-of-use asset of $3.1 million and a lease liability of $2.4 million as of September 30, 2019[43][46][148] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes revenue and expense growth to property acquisitions, funded by $102.8 million in equity and increased borrowings, with FFO/AFFO per share at $0.54 - During the nine months ended September 30, 2019, the company acquired 13 properties for an aggregate purchase price of $180.7 million, increasing its portfolio to 63 facilities and gross investment in real estate to $830.4 million[180] - The company raised $102.8 million in equity during the first nine months of 2019 through an underwritten public offering ($80.3 million gross) and its at-the-market (ATM) program ($22.0 million gross)[181][183] Non-GAAP Financial Measures (per share and unit) | Metric | Q3 2019 | Q3 2018 | Nine Months 2019 | Nine Months 2018 | | :--- | :--- | :--- | :--- | :--- | | FFO per share and unit | $0.19 | $0.20 | $0.54 | $0.56 | | AFFO per share and unit | $0.19 | $0.20 | $0.54 | $0.56 | Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate exposure on variable-rate debt, with $197.2 million unhedged, though the $300 million Term Loan was fully hedged post-quarter end - The primary market risk exposure is interest rate changes on variable-rate debt, including the Credit Facility[241][242] - As of September 30, 2019, a 100 basis point increase in LIBOR would result in an approximate $2.0 million annual decrease in cash flow from the $197.2 million of unhedged variable-rate debt[243] - Subsequent to the quarter end, on October 3, 2019, the company entered into additional interest rate swaps, effectively hedging the entire $300 million Term Loan and fixing the LIBOR component at a weighted average of 2.17%[244] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal control over financial reporting - The Principal Executive Officer and Principal Financial Officer concluded that as of September 30, 2019, the company's disclosure controls and procedures were effective[246] - No material changes were made to the internal control over financial reporting during the third quarter of 2019[248] PART II OTHER INFORMATION This section addresses legal proceedings, risk factors, equity sales, defaults, mine safety disclosures, other information, and exhibits Legal Proceedings The company is not involved in any material legal proceedings or aware of any threatened litigation with a material adverse effect - The company reports no material pending legal proceedings[250] Risk Factors No material changes to previously disclosed risk factors were reported for the three months ended September 30, 2019 - No material changes to risk factors were reported for the three months ended September 30, 2019[251] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities were reported during the period - None[252] Defaults Upon Senior Securities No defaults upon senior securities were reported - None[253] Mine Safety Disclosures This item is not applicable to the company - Not applicable[254] Other Information No other information was reported for the period - None[255] Exhibits This section lists exhibits filed with Form 10-Q, including credit facility amendments and officer certifications