Global Medical REIT(GMRE) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Presents unaudited condensed consolidated financial statements for Global Medical REIT Inc. as of June 30, 2025, including balance sheets, statements of operations, equity, and cash flows, with detailed notes Condensed Consolidated Balance Sheets Total assets increased to $1.30 billion by June 30, 2025, while total liabilities rose to $771.9 million, leading to a decrease in total equity from $555.9 million to $525.0 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Investment in real estate, net | $1,204,159 | $1,161,995 | | Total assets | $1,296,959 | $1,256,486 | | Credit Facility, net | $698,832 | $631,732 | | Total liabilities | $771,938 | $700,570 | | Total equity | $525,021 | $555,916 | Condensed Consolidated Statements of Operations Net income significantly improved to $0.59 million in Q2 2025 from a $1.95 million loss in Q2 2024, driven by property sales gains, with total revenue increasing for both three and six-month periods Statement of Operations Summary (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $37,969 | $34,241 | $72,587 | $69,360 | | Total Expenses | $37,541 | $32,810 | $69,739 | $65,615 | | Gain (loss) on sale of properties | $207 | $(3,383) | $1,565 | $(3,383) | | Net Income (Loss) | $585 | $(1,952) | $4,322 | $362 | | Net (Loss) Income per Share | $(0.01) | $(0.05) | $0.02 | $(0.04) | Condensed Consolidated Statements of Cash Flows Net cash from operating activities was $34.4 million for H1 2025, while investing activities used $66.4 million and financing activities provided $32.3 million, resulting in a net cash increase of $0.28 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $34,411 | $33,221 | | Net cash used in investing activities | $(66,449) | $(931) | | Net cash provided by (used in) financing activities | $32,322 | $(31,196) | | Net increase in cash | $284 | $1,094 | Notes to the Unaudited Condensed Consolidated Financial Statements Detailed notes disclose accounting policies, property portfolio changes, debt structure, and equity, highlighting a five-property acquisition, three dispositions, a $900 million credit facility, and interest rate swaps - During H1 2025, the company acquired a five-property medical real estate portfolio and completed three property dispositions, resulting in a net gain of $1.6 million50 52 - The company has a $900 million unsecured syndicated credit facility, with $702.6 million outstanding as of June 30, 2025, and is actively discussing refinancing Term Loan A, maturing May 202662 63 67 - Nine interest rate swaps with a combined notional value of $500 million hedge interest rate risk on term loans, fixing the SOFR component at 1.36% for Term Loan A and 2.54% for Term Loan B73 - For H1 2025, total dividends paid were $30.5 million on common stock, LTIP Units, and OP Units, and $2.9 million on Series A Preferred Stock80 83 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, noting revenue growth from acquisitions offset by dispositions, the impact of interest rates and wage inflation, a $69.6 million five-property acquisition, $9.6 million in dispositions, and a dividend reduction to $0.15 per share, with non-GAAP reconciliations Executive Summary Rental revenue increased YoY due to acquisitions, with AFFO per share at $0.23 for Q2 2025, while the Board reduced the quarterly common stock dividend to $0.15 per share, and the real estate portfolio reached $1.5 billion in gross investment value Key Performance Metrics | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Rental Revenue | $37,880 | $34,214 | $72,475 | $69,283 | | Net (Loss) Income per Share | $(0.01) | $(0.05) | $0.02 | $(0.04) | | FFO per Share/Unit | $0.20 | $0.20 | $0.40 | $0.41 | | AFFO per Share/Unit | $0.23 | $0.22 | $0.45 | $0.46 | | Dividends per Share | $0.15 | $0.21 | $0.36 | $0.42 | - In H1 2025, the company acquired a five-property portfolio for $69.6 million and completed three dispositions for gross proceeds of $9.6 million155 156 - On May 28, 2025, the Board reduced the quarterly common stock dividend to $0.15 per share from $0.21 per share150 Consolidated Results of Operations Q2 2025 total revenue increased by $3.8 million to $38.0 million due to acquisitions, but total expenses rose by $4.7 million from G&A, operating, and interest costs, while net income improved significantly due to property sale gains - Q2 2025 revenue increased by $3.8 million YoY, primarily from acquisitions completed after June 30, 2024166 - Q2 2025 General and administrative expenses increased by $1.4 million YoY, mainly due to the former CEO's separation agreement and higher non-cash LTIP compensation167 - The company recorded a gain on sale of investment properties of $0.2 million in Q2 2025, compared to a loss of $3.4 million in Q2 2024174 Liquidity and Capital Resources The company's short-term liquidity needs include debt service and operating expenses, with active negotiations to refinance its $350 million Term Loan A by Q4 2025, supported by a dividend reduction and $177 million in unutilized Credit Facility capacity - The company is actively discussing refinancing its $350 million Term Loan A, maturing May 2026, with expected completion in Q4 2025194 - The quarterly common stock dividend was reduced from $0.21 to $0.15 per share to strengthen the balance sheet and improve dividend coverage195 - As of August 4, 2025, the company had $177 million of unutilized borrowing capacity under its Revolver203 Non-GAAP Financial Measures This section defines and reconciles non-GAAP metrics like FFO, AFFO, and FAD, reporting Q2 2025 FFO per share at $0.20 and AFFO per share at $0.23, along with EBITDAre and Adjusted EBITDAre for evaluating operating results and debt capacity FFO and AFFO Reconciliation (per share/unit) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net (Loss) Income per Share | $(0.01) | $(0.05) | $0.02 | $(0.04) | | FFO per Share/Unit | $0.20 | $0.20 | $0.40 | $0.41 | | AFFO per Share/Unit | $0.23 | $0.22 | $0.45 | $0.46 | Adjusted EBITDAre (in thousands) | Period | Adjusted EBITDAre | | :--- | :--- | | Q2 2025 | $26,046 | | Q2 2024 | $23,984 | | H1 2025 | $50,247 | | H1 2024 | $48,758 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk on its variable-rate debt, with a $202.6 million unhedged Revolver portion, where a 100 basis point SOFR increase would decrease annual cash flow by $2.0 million, mitigated by interest rate swaps - The company's main market risk is interest rate changes on its variable-rate debt223 - As of June 30, 2025, the company had $202.6 million of unhedged variable-rate debt, where a 100 basis point SOFR increase would decrease annual cash flow by approximately $2.0 million225 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025230 - No material changes were made to internal control over financial reporting during the quarter232 PART II OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings, nor is it aware of any threatened litigation that would materially adversely affect its financial condition or operations - The company is not presently subject to any material litigation234 Item 1A. Risk Factors This section supplements prior risk factor disclosures, emphasizing potential adverse effects of global trade disruptions, including U.S. international trade policy changes, tariffs, and retaliatory actions, on the company's performance - A new risk factor highlights that global trade disruption, tariffs, and bilateral trade frictions could adversely affect the company's performance236 Item 5. Other Information This section details recent tax law changes from the OBBBA, signed July 4, 2025, affecting REITs by increasing the TRS securities asset test to 25% and making the 20% deduction for qualified REIT dividends permanent - The OBBBA, signed July 4, 2025, increased the REIT asset test limitation on TRS securities from 20% to 25% of total assets, effective for taxable years after December 31, 2025240 - The OBBBA also made the 20% deduction for qualified REIT dividends permanent for non-corporate taxpayers240 Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents