Community Healthcare Trust(US:CHCT)2025-10-29 15:00Financial Data and Key Metrics Changes - Total revenue increased from $29.6 million in Q3 2024 to $31.1 million in Q3 2025, representing a 4.9% year-over-year growth [10] - Funds from operations (FFO) rose to $13.5 million in Q3 2025, a 5.7% increase compared to $12.8 million in Q3 2024 [13] - Adjusted funds from operations (AFFO) totaled $15.1 million in Q3 2025, a 3.1% increase year-over-year [13] - The AFFO dividend payout ratio remained strong at 85% [13] Business Line Data and Key Metrics Changes - Occupancy decreased from 90.7% to 90.1% during the quarter, but new leases signed in October are expected to increase leased occupancy by 50 to 100 basis points by year-end [5] - Weighted average lease term increased slightly from 6.6 to 6.7 years [6] - One inpatient rehabilitation facility was acquired for $26.5 million, with an anticipated annual return of approximately 9.4% [6] Market Data and Key Metrics Changes - The company is seeing attractive opportunities in the market with cap rates in the 9% to 10% range [17] - The geriatric behavioral hospital operator, a tenant in six properties, paid approximately $200,000 in rent during the quarter, down from approximately $800,000 previously [21] Company Strategy and Development Direction - The company is focused on capital recycling to fund acquisitions without increasing leverage [9][19] - The strategy includes being selective in acquisitions and focusing on high-quality assets with attractive returns [17][31] - The company plans to close on one property in Q4 2025, with additional properties closing throughout 2026 and 2027 [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about leasing activity and expects a tailwind for growth in 2026 [28] - There is a cautious approach regarding the acquisition pipeline, with a focus on maintaining modest leverage levels [9][19] - Management is actively pursuing multiple plans to resolve issues with the behavioral health tenant and is motivated to increase rent [24] Other Important Information - The company declared a dividend of $0.4750 per common share for Q3 2025, marking a continuous increase since the IPO [9] - The company expects to close on the sale of an inpatient rehabilitation facility in Q4 with an expected gain of approximately $11.5 million [8] Q&A Session Summary Question: What is the status of the acquisition pipeline? - Management stated they are being highly selective and see attractive opportunities in the market, but are cautious about issuing shares at depressed levels [17] Question: What are the expectations for the behavioral health tenant's rent? - The tenant previously paid approximately $800,000 per quarter but only paid $200,000 in the current quarter [21] Question: When is the acquisition expected to close? - Management hopes to close by year-end but realistically expects it to occur in Q1 2026 [23] Question: What is the likelihood of recovering unpaid rents from the tenant? - Management does not put a high likelihood on recovering unpaid rents but is focused on getting paid more rent in the future [25] Question: How is the company identifying assets for disposal? - The company evaluates tenant concentration, weighted average lease term, and market conditions when identifying assets for disposal [31]