Financial Data and Key Metrics Changes - Cash NOI for Q1 2025 was $41.2 million, a slight increase from $41 million in Q4 2024, driven by contractual lease escalations and a recent acquisition [12] - AFFO for Q1 2025 was $29.4 million or $0.53 per diluted share, down from $30.2 million or $0.54 per diluted share in Q4 2024, primarily due to increased interest expenses [13] - AFFO decreased 23.1% compared to Q1 2024, largely due to nonrecurring fees and bankruptcies impacting cash NOI [14] Business Line Data and Key Metrics Changes - The weighted average remaining lease term is over 9.5 years with average annual contractual rent escalations of 2.2%, providing predictable long-term revenues [9] - The company maintained a 96% lease rate, unchanged from the previous quarter [23] Market Data and Key Metrics Changes - The company completed two acquisitions totaling approximately $59 million in March and April 2025, expanding its footprint into Tennessee and Delaware [19] - The Knoxville Healthcare facility is fully leased to a joint venture with investment-grade rated partners, while the Dover facility is also fully leased to a similar joint venture [20] Company Strategy and Development Direction - The company focuses on acquiring health care properties, which are seen as essential and non-discretionary, providing a stable investment opportunity [7] - The management emphasizes a disciplined investment approach, navigating macroeconomic uncertainties while seeking accretive acquisitions [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current economic challenges, including inflation and potential recession, but believes the company's focus on health care properties positions it well for long-term success [6][11] - The demographic shift towards an aging population is expected to drive increased health care spending, benefiting the company's portfolio [10] Other Important Information - The company has over $598 million in liquidity available for future acquisitions, supported by a new $600 million revolving line of credit [16][17] - The credit loss reserve increased by $171,000, related to the company's mezzanine loans, reflecting a qualitative assessment under GAAP [31][32] Q&A Session Summary Question: Update on Stoughton property - Management engaged a broker to solicit bids for the sale or lease of the Stoughton property, with more interest in sales for multifamily use, potentially involving demolition and entitlement processes [27][29] Question: Update on mezzanine loan investments - The company has funded amounts related to the mezzanine loan for the inpatient rehab facility and expects both loans to be fully funded by Q3 2025 [30] Question: Impact of credit loss reserve - The credit loss reserve is a required GAAP reserve for loans receivable, assessed qualitatively each quarter, and is related to the two mezzanine loans [31][32] Question: Investment pipeline and cost of equity - The company sees opportunities to acquire between $150 million and $250 million of real estate under normal conditions, but is cautious due to current market uncertainties [35][38] Question: Minimum yield for acquisitions - The company targets a cap rate of 6.5% to 7.5% for quality acquisitions, depending on property type and sponsorship quality [42] Question: Improvement in EBITDARM coverage - The improvement in EBITDARM coverage was driven by properties moving up in coverage levels, with a significant portion of the affected ABR being investment-grade rated [44][46] Question: Borrowing costs for future debt - Current borrowing on the revolving line of credit is at 5.57%, with plans to explore longer-duration fixed-rate debt in the future [48][50]

Financial Data and Key Metrics Changes - GAAP net income for the year ended 2024 was $42.7 million or $0.75 per diluted share, compared to $24 million or $0.42 per diluted share for the year ended 2023, indicating significant growth [22] - Cash NOI for the fourth quarter was $41 million, a decrease of 4.3% from $42.8 million in the same period in 2023 [22][23] - AFFO for the fourth quarter was $30.2 million or $0.54 per diluted share, compared to $32.7 million or $0.57 per diluted share during the same period in 2023 [24] Business Line Data and Key Metrics Changes - The company executed renewal leases and lease modifications for over 1.1 million rentable square feet, representing approximately 20% of the total real estate portfolio [15] - The weighted average lease rate increased by 50 basis points to 96% compared to 95.5% at the end of the third quarter [17] - The overall portfolio EBITDARM coverage ratio improved to 5.3 times, with only 1.8% of ABR coming from reporting obligors with EBITDARM coverage ratios below one time [10][18] Market Data and Key Metrics Changes - The company increased exposure to investment grade and rated tenants to 66.9% since the fourth quarter of 2023 [11] - The company noted a lack of new healthcare real estate development, creating a stickier leasing environment [7] - The company is particularly focused on opportunities within the Sunbelt region, also referred to as the "Smile States" [20] Company Strategy and Development Direction - The company aims to enhance the diversity, quality, and size of its healthcare real estate portfolio through strategic acquisitions and capital allocation [7][9] - The company plans to continue executing on its growth strategy in 2025, with a target to grow enterprise value by approximately 7.5% to 15% per annum [33][35] - The company is focused on long-term net lease investments in strategic locations with reliable tenancy sponsorship [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the improving credit metrics of tenants and the overall health of the healthcare industry [44] - The company anticipates attractive opportunities in the transaction market, despite a higher interest rate environment [20][21] - Management highlighted the importance of maintaining a strong and low to moderately leveraged balance sheet for future growth [27] Other Important Information - The company successfully resolved all exposure related to Genesis Care by re-leasing or selling all 17 assets owned [12] - The company announced a change in the frequency of distributions to stockholders from monthly to quarterly, effective in 2025 [28] - The company has seen a material change in its shareholder base, becoming more institutionally diversified [13] Q&A Session Summary Question: What is the 2025 guidance? - The company indicated a target to grow the enterprise roughly between 7.5% and 15% per annum, with a focus on disciplined growth and accretive assets [33][35] Question: What is the expected mix between loans and acquisitions in 2025? - The majority of transaction volume is expected to be acquisition fee ownership, with some opportunities in loans to fill gaps in development budgets [36][39] Question: Are there any known credit issues or tenant move-outs? - The company reported only one small tenant left, maintaining a high renewal rate and improving credit metrics across the portfolio [42][44] Question: What drove the timing of the Post Acute Medical lease extension? - The extension was driven by a proactive approach and a strong relationship with the tenant, providing them with more certainty as they grow their business [51][52] Question: What is the outlook for the Stoughton facility? - The company is actively marketing the Stoughton property for sale or lease, with interest in both residential and healthcare uses [60][61] Question: Where are the best acquisition opportunities currently? - The company sees attractive opportunities in inpatient rehab and outpatient medical facilities, as well as potential in micro hospitals and urgent care facilities [62]