Global Medical REIT(GMRE) - 2024 Q3 - Quarterly Report

Ownership and Structure - As of September 30, 2024, the company owned 92.51% of the outstanding common operating partnership units of its Operating Partnership[122]. Revenue and Income - The company derives revenues primarily from rental and operating expense reimbursement payments, with most leases being medium to long-term triple net leases[123]. - Total revenue for the three months ended September 30, 2024, was $34.3 million, a decrease of$1.2 million compared to $35.5 million in the same period in 2023[155]. - Rental revenue for the three months ended September 30, 2024, was$34.175 million, down from $35.487 million in 2023, representing a decrease of approximately 3.7$3.391 million, compared to $4.833 million in the same period in 2023, a decrease of 29.9$103.6 million, a decrease of $4.5 million compared to$108.1 million for the same period in 2023[169]. - Net income for the three months ended September 30, 2024, was $3.4 million, down from$4.8 million for the same period in 2023, a decrease of $1.4 million[167]. Funds from Operations - FFO attributable to common stockholders for the three months ended September 30, 2024, was$0.19 per share, down from $0.22 per share in 2023[1]. - AFFO attributable to common stockholders for the three months ended September 30, 2024, was$0.22 per share, compared to $0.23 per share in 2023[1]. - Funds from operations (FFO) attributable to common stockholders for the three months ended September 30, 2024 was$13.7 million, compared to $15.3 million for the same period in 2023[200]. - Adjusted funds from operations (AFFO) attributable to common stockholders for the three months ended September 30, 2024 was$15.3 million, compared to $16.5 million for the same period in 2023[203]. Debt and Financing - As of September 30, 2024, total debt was$628.875 million, with a weighted average interest rate of 3.79%[139]. - During the nine months ended September 30, 2024, the company borrowed $82.8 million under the Credit Facility, resulting in a net amount borrowed of$27.4 million[145]. - Net borrowings on the Credit Facility increased total liabilities to $678.0 million as of September 30, 2024, compared to$661.9 million as of December 31, 2023[182]. - The weighted average interest rate of debt for the nine months ended September 30, 2024 was 3.93%, down from 4.22% for the same period in 2023[175]. - As of September 30, 2024, total fixed debt amounted to $514.5 million with a weighted average interest rate of 3.18$221 million as of November 5, 2024[190]. - The company complied with all financial and non-financial covenants under the Credit Facility as of September 30, 2024[192]. - The maximum consolidated unsecured leverage ratio required under the Credit Facility is less than 60%[192]. - The weighted average maturity of the company's fixed debt was 2.1 years as of September 30, 2024[194]. Operating Expenses - Operating expenses for the three months ended September 30, 2024 were $7.4 million, an increase of$0.2 million compared to $7.2 million for the same period in 2023[159]. - General and administrative expenses for the nine months ended September 30, 2024 were$13.4 million, an increase of $0.8 million from$12.6 million in the same period in 2023[170]. - Interest expense for the nine months ended September 30, 2024 was $21.1 million, a decrease of$2.8 million from $23.9 million in the same period in 2023[174]. - Interest expense for the three months ended September 30, 2024, was$7.236 million, slightly higher than $7.170 million in the same period last year, indicating an increase of approximately 0.9$80.3 million, with an aggregate annualized base rent of $6.4 million[141]. - The company completed five acquisitions and three property sales during the nine months ended September 30, 2024[180]. - The company reported a total investment in real estate of$1.436 billion as of September 30, 2024, with 4.8 million net leasable square feet[140]. Cash Flow - Net cash provided by operating activities for the nine months ended September 30, 2024 was $49.5 million, a decrease from$50.3 million in the same period of 2023[195]. - Net cash used in investing activities for the nine months ended September 30, 2024 was $26.4 million, compared to net cash provided of$70.7 million in the same period of 2023[196]. - Net cash used in financing activities for the nine months ended September 30, 2024 was $22.0 million, down from$127.9 million in the same period of 2023[197]. Economic Environment - The Federal Reserve increased the target range for the Federal Funds Rate from 0.25% – 0.50% in early 2022 to 5.25% – 5.50% as of August 2024, impacting borrowing costs[132]. - In September 2024, the Federal Reserve lowered the target range for the Federal Funds Rate by 0.50% to 4.75% - 5.00%, marking the first rate reduction in four years[133]. - The one-month term Secured Overnight Financing Rate (SOFR) decreased to 4.85% as of September 30, 2024, following the Fed's rate cut[134]. - Healthcare wage inflation remains a concern, with increased labor costs for healthcare systems due to reliance on higher-cost contract nursing labor[136]. Corporate Strategy and Sustainability - The company’s strategy includes investing in off-campus medical outpatient buildings and small to mid-sized healthcare facilities in secondary markets[124]. - The company is focused on corporate sustainability and social responsibility, integrating ESG practices into its operations[126]. - The company continues to explore ways to mitigate climate risk in its acquisition strategy and asset management[130]. - The company aims to provide stockholders with reliable dividends and stock price appreciation through its investment strategy[124]. Risk Management and Controls - The company maintains effective disclosure controls and procedures as of September 30, 2024, ensuring timely reporting of required information[212]. - There were no changes to the internal control over financial reporting during the most recently completed fiscal quarter that materially affected its effectiveness[214]. - The company is not involved in any pending legal proceedings that would materially affect its financial condition or results of operations[215]. - Management does not expect that the disclosure controls and procedures will prevent all errors and fraud, acknowledging inherent limitations in control systems[213]. - The company may enter into additional derivative financial instruments to mitigate interest rate risk on future borrowings, without engaging in speculative transactions[210]. Interest Rate Sensitivity - As of September 30, 2024, the company had $119.8 million of unhedged borrowings outstanding under the Revolver, with a variable interest rate of 4.85$1.2 million annually, while a decrease of 100 basis points would increase cash flow by the same amount[208].