Global Medical REIT(US:GMRE)2023-08-03 15:19Financial Data and Key Metrics Changes - The company achieved a 7.9% year-over-year increase in total revenues to $36.4 million, driven primarily by the timing of 2022 acquisitions [14] - Net income attributable to common shareholders for Q2 2023 was $11.8 million or $0.18 per share, compared to $2.2 million or $0.03 per share in Q2 2022 [50][69] - FFO in Q2 was $0.21 per share, down $0.03 from the prior year quarter, and AFFO was $0.23 per share, down $0.02 from the second quarter of last year [51][69] - Interest expense increased to $8.5 million in Q2 2023 from $5.4 million in the comparable quarter of last year, reflecting higher average debt balances and an increase in average borrowing rate from 2.97% to 4.39% [6] Business Line Data and Key Metrics Changes - The portfolio consists of gross investments in real estate of $1.4 billion, with 4.8 million total leasable square feet and 97% occupancy [5] - The company sold a 4-property medical office building (MOB) portfolio in Oklahoma City for gross proceeds of $66 million at a 6.5% cap rate, resulting in a gain of $12.8 million [49][56] - The company acquired 2 medical office buildings in Redding, California for $6.7 million with a 7.6% cap rate [52][55] Market Data and Key Metrics Changes - The transaction market for target medical facilities remains constrained due to higher interest rates and a wide bid-ask spread [55] - Cap rates have continued to drift higher, with current rates for preferred asset types being north of mid-7s [11][59] Company Strategy and Development Direction - The company aims to reduce leverage to a target range of 40% to 45% and is actively engaged in the market for potential acquisitions once cost of capital improves [17][37] - The company is focused on maintaining a diversified portfolio of high-quality medical office properties and is exploring development financing and joint venture opportunities [56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating current market challenges and capitalizing on opportunities as they arise [1] - The company is prepared to resume acquisition efforts once market conditions normalize and cost of capital improves [37] - Management noted that the stability of the diversified portfolio and ample liquidity allow for a patient approach in the current market [58] Other Important Information - The company has generated proceeds of $70.4 million from dispositions through June 30, 2023, and closed on the sale of a medical office building in North Charleston for an additional $10.1 million [53] - The weighted average interest rate on debt was 4.09% as of June 30, 2023, with approximately 88% of debt now being fixed rate [63] Q&A Session Summary Question: Is the $90 million sales target still appropriate? - Management confirmed that they would consider exceeding the $90 million threshold if the right opportunities arise [3][10] Question: What are the common themes among the assets being sold? - Management indicated a focus on single-tenant and clean assets, with a preference for higher acuity assets to increase the MOB footprint [4][26] Question: How extensive is the tenant watch list? - The watch list is very limited, with properties performing well and no significant issues expected [72] Question: What is the current acquisition pipeline? - The company is actively looking at deals but is waiting for better pricing before proceeding with acquisitions [20][59] Question: How are lease expirations being managed? - Management noted that there are no significant move-outs expected and that negotiations for lease increases are ongoing [61]