Financial Data and Key Metrics Changes - The company reported cash NOI of $41.9 million for Q2 2025, a 1.7% increase from Q2 2024, primarily driven by acquisitions [12] - AFFO was $0.54 per diluted share for Q2 2025, reflecting a 1.7% increase from Q2 2024, despite a 2.7% decrease year-over-year due to higher interest expenses [13][15] - The liquidity position at the end of the quarter was $568.8 million, with a net debt to EBITDAre ratio of 3.6 times [17] Business Line Data and Key Metrics Changes - The average EBITDARM coverage ratio improved to 5.31 times, up from 4.64 times in the previous year, indicating stronger tenant performance [16] - The company maintained a strong tenant base, with 40% associated with investment-grade rated tenants, up from 36.4% year-over-year [16] Market Data and Key Metrics Changes - The company closed on a two-property medical outpatient building portfolio for approximately $16.2 million, enhancing its operational synergies [20] - Year-to-date acquisitions totaled approximately $75 million, with over $70 million of properties under exclusive LOI [21] Company Strategy and Development Direction - The company focuses on necessity-based healthcare solutions, aiming to capitalize on the aging population and limited competition in its markets [5][19] - A strategic decision was made to demolish the Stoughton asset to halt expense leakage and maximize future land value [10][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to grow despite macroeconomic uncertainties, emphasizing a prudent capital allocation strategy [4][11] - The company aims to maintain a healthy dividend while pursuing growth through acquisitions and share repurchases [17] Other Important Information - The board approved a three-year share repurchase program for up to $75 million, with a cap of $25 million per year [15] - The company is currently under exclusive LOI for additional acquisitions, indicating a robust pipeline for future growth [21] Q&A Session Summary Question: What types of assets are included in the $70 million LOIs? - Management confirmed that the properties under LOI are consistent with their current portfolio and have long lease durations [25][26] Question: What is the current status of the Stoughton facility? - Management indicated that the demolition process is underway and will significantly reduce carrying costs [39][57] Question: How does the company evaluate share repurchases versus acquisitions? - Management stated that share repurchases are viewed as a tool, and decisions are based on the perceived disconnect between share price and intrinsic value [30][41] Question: What are the expectations for lease expirations in the near term? - Management is optimistic about renewing nearly all leases expiring in 2025 and 2026, with only minor exposures expected [42][46]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $29.1 million, but excluding a $1.7 million reversal of interest receivable, total revenues would have been approximately $30.7 million, representing a 2.2% growth quarter over quarter compared to $30.1 million in Q1 2025 [14][15] - Funds from operations (FFO) on a diluted common share basis was $0.23, reduced by $0.28 due to one-time items, while adjusted funds from operations (AFFO) totaled $13.6 million, or $0.50 per diluted common share, also reduced by $0.06 from one-time items [15] Business Line Data and Key Metrics Changes - The occupancy rate slightly decreased from 90.9% to 90.7% during the quarter, although there was good leasing activity in the portfolio [8] - The company received $260,000 from the geriatric behavioral hospital tenant during the quarter, compared to $165,000 in the prior quarter [8] Market Data and Key Metrics Changes - The company acquired an inpatient rehabilitation facility for $26.5 million with an anticipated annual return of approximately 9.4% [10] - Six properties are under definitive purchase and sale agreements for an aggregate expected investment of $146 million, with expected returns ranging from 9.1% to 9.75% [10] Company Strategy and Development Direction - The company is focused on capital recycling opportunities to fund near-term acquisitions without over-leveraging the balance sheet [11][50] - The management is optimistic about the acquisition pipeline and is committed to closing these transactions while maintaining modest leverage levels [50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing negotiations with the buyer of the geriatric behavioral hospital tenant, highlighting the buyer's experience and resources [21][44] - The company anticipates being able to increase occupancy by 100 basis points or more into 2026, driven by a focus on improving core portfolio performance [53] Other Important Information - The company declared a dividend of $47.25 per common share for Q2 2025, equating to an annualized dividend of $1.89 per share [12] - The company recorded a $1.7 million reversal of interest receivables and an $8.7 million credit loss reserve related to the geriatric behavioral hospital tenant [13] Q&A Session Summary Question: Was the recent acquisition part of the 100 pipeline? - Yes, it accounted for the reduction from seven assets to six [18] Question: How will the remaining 25% acquisition be funded? - The company is focused on capital recycling rather than relying solely on the revolver [19][20] Question: Are there plans for other options with the geriatric facilities? - The company is committed to ensuring the transaction closes and has other interested bidders if needed [21][23] Question: Will there be significant capital needed for deferred maintenance? - Any required work on the buildings is expected to be relatively minor [26] Question: What is the expected run rate for G&A expenses? - The adjusted G&A expense, excluding one-time charges, was $4.7 million, which may serve as a good run rate [27] Question: What is the leverage metric being monitored? - The company is comfortable with current leverage levels and plans to maintain them while managing acquisitions [31] Question: How are the remaining notes receivable performing? - The two remaining notes are in good standing, and the watch list remains consistent with no new top tenants added [38][39] Question: What is the status of the new operator for the geriatric facilities? - The operator has significant experience and resources, and lease terms are still under negotiation [44][46] Question: What is the expected cap rate for dispositions compared to acquisition yields? - Expected cap rates for dispositions are in the 7.5% to 8% range [51] Question: What is the expectation for core occupancy in the coming quarters? - The company aims to increase occupancy by 100 basis points or more into 2026 [53]