Community Healthcare Trust(US:CHCT)2025-10-29 15:02Financial 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] - Quarter-over-quarter, total revenue grew by 1.1% when normalizing for a $1.7 million reversal of interest receivables in Q2 2025 [10] - Funds from operations (FFO) rose to $13.5 million in Q3 2025, a 5.7% increase from $12.8 million in Q3 2024 [13] - Adjusted funds from operations (AFFO) increased to $15.1 million, a 3.1% year-over-year growth [13] - The AFFO dividend payout ratio remained strong at 85% [14] Business Line Data and Key Metrics Changes - Occupancy decreased from 90.7% to 90.1% during the quarter, but leasing activity is expected to increase occupancy by 50 to 100 basis points by year-end [5][6] - The 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% [7] Market Data and Key Metrics Changes - The company is seeing attractive opportunities in the market with cap rates in the 9%-10% range [17] - The company is focused on capital recycling to fund acquisitions without increasing leverage [20] Company Strategy and Development Direction - The company is being highly selective in acquisitions and is focused on capital recycling to fund new investments [17][20] - The strategy includes disposing of non-core properties to focus on better buildings and markets [36] - The company aims to maintain modest leverage levels while pursuing growth opportunities [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the leasing activity and expects a positive impact on occupancy and revenue in 2026 [31] - The company is actively pursuing multiple plans to ensure stable rent from the behavioral health tenant [27] - Management is cautious about the timing of the acquisition related to the behavioral health tenant, indicating it may close in Q1 2026 [26] 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 a property sale with an expected gain of approximately $11.5 million in Q4 2025 [8] Q&A Session Summary Question: Acquisition pipeline and funding - Management indicated that the acquisition pipeline remains attractive, but they are being selective due to current stock prices [17] Question: Impact of asset sales on leverage - Management clarified that they do not expect to increase leverage significantly and plan to match dispositions with acquisitions [20][21] Question: Behavioral health tenant rent payments - The tenant previously paid approximately $800,000 per quarter but only paid $200,000 in the current quarter [25] Question: Timing of acquisition closing - Management hopes to close the acquisition by year-end but realistically expects it to occur in Q1 2026 [26] Question: Plans if the acquisition falls through - Management is exploring multiple paths to ensure stable rent from the tenant [27] Question: Impact of redevelopment properties on earnings - Significant leases from redevelopment properties are expected to commence in 2026, contributing to earnings growth [29]