Community Healthcare Trust(US:CHCT)2023-08-02 18:09Financial Data and Key Metrics Changes - Total revenue increased from $24 million in Q2 2022 to $27.8 million in Q2 2023, representing a 15.6% year-over-year growth [24] - Property operating expenses decreased by approximately $100,000 quarter-over-quarter to $4.8 million [25] - General and administrative expenses decreased from $16.2 million in Q1 2023 to $3.8 million in Q2 2023 [25] - Adjusted funds from operations (AFFO) totaled $16 million in Q2 2023, up from $15 million in Q2 2022, marking a 7% growth year-over-year [27] - FFO grew from $2.2 million in Q1 2023 to $15.9 million in Q2 2023, with per diluted common share increasing from $0.09 to $0.62 [53] Business Line Data and Key Metrics Changes - Occupancy increased slightly from 91.6% to 91.7% [13] - Weighted average remaining lease term declined from 7.4 years to 7.1 years [13] - The company has three properties under definitive purchase agreements for a total expected purchase price of $16.1 million, with expected returns of approximately 9.2% to 10.3% [14] Market Data and Key Metrics Changes - Genesis Care, a tenant, filed for Chapter 11 bankruptcy, affecting approximately 3.1% of the company's gross real estate properties [11][19] - The company is monitoring the Genesis Care bankruptcy and its potential impacts [12] Company Strategy and Development Direction - The company aims to continue acquiring properties, with eight additional properties under review for an aggregate expected investment of $191 million [22] - The company plans to opportunistically utilize the ATM to access equity markets [48] - The management is focused on maintaining a strong capital structure while evaluating acquisition financing options [36] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for healthcare properties despite the Genesis Care situation, indicating a belief that there will be a buyer for the spaces [32] - The company is seeing more opportunities for acquisitions with less competition, which is viewed as a positive tailwind for the business [40] - Management noted that the issues with Genesis Care are primarily related to its capital structure rather than the underlying assets [77] Other Important Information - The company declared a dividend for Q2 2023, raising it to $0.4525 per common share, equating to an annualized dividend of $1.81 per share [23] - The company incurred property damage due to vandalism at a vacant property, estimating a casualty loss of approximately $1.6 million, but received insurance proceeds totaling $2.3 million, resulting in a net casualty gain of approximately $700,000 [45] Q&A Session Summary Question: Update on Genesis Care's bankruptcy and lease rejections - Management confirmed that Genesis Care still has the opportunity to reject leases until the bid submission deadline on September 22, with results expected in early October [30] Question: Concerns about vandalism at properties - Management stated that the vandalism incident was unusual and occurred at a vacant facility, emphasizing that security measures are in place for empty buildings [33] Question: Credit watch list and tenant concerns - Management indicated that the credit watch list includes a few tenants, but there are no significant concerns beyond Genesis Care [34] Question: Acquisition pipeline and competition - Management noted that there is less competition for acquisition opportunities, which is favorable for the company [40] Question: Utilization of Genesis Care properties - Management confirmed that the asset management team has verified that Genesis Care properties are operational and providing healthcare services [71]