Community Healthcare Trust Inc
For the period ended Jun 30, 2024. Filed Jul 30, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 30, 2024
CHCT$14.71-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-30.
0001631569-24-000042
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-30.
0001631569-24-000077
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 112 previous paragraphs and 148 current paragraphs.
69 unchanged; 34 reworded; 42 added; 9 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 4 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (42)
Current report
Loss on operating lease receivable
Current report
During the three months ended June 30, 2024, the Company determined that the collectability of lease payments on 6 leases with a geriatric inpatient behavioral hospital tenant was not reasonably assured and placed the tenant on cash basis, resulting in a reduction of rental income related to $1.9 million of lease receivables, including $0.9 million of straight-line rent.
Current report
During the three months ended June 30, 2024, the Company determined that the collectability of the term loan and revolver loan with a geriatric inpatient behavioral hospital tenant and interest payments due were not reasonably assured. The tenant has experienced challenges with patient census and employee staffing, which has impacted cash flows from operations and the consistency of rent and interest payments to the Company. During the second quarter of 2024, the Company reversed approximately $1.4 million of interest and placed the tenant on non-accrual status and also recorded an $11.0 million credit loss reserve on notes receivable with the tenant. (See Note 10 – Other Assets, net for more details).
Current report
Other operating interest decreased approximately $1.4 million for the three months ended June 30, 2024 compared to the same period in 2023 due to placing the tenant on cash basis and reversing the interest receivable due from tenant.
Current report
Property operating expenses increased approximately $0.8 million, or 16.4%, for the three months ended June 30, 2024 compared to the same period in 2023 due mainly to the following:
Current report
•Property taxes resulted in an increase of approximately $0.2 million; and
Current report
•Property insurance resulted in an increase of approximately $0.1 million.
Current report
General and administrative expenses increased approximately $1.0 million, or 25.7%, for the three months ended June 30, 2024 compared to the same period in 2023 due mainly to the following:
Current report
•The non-cash amortization of deferred compensation increased approximately $0.8 million for the three months ended June 30, 2024 compared to the same period in 2023 due to the issuance of restricted shares and the impact from the adoption of the new executive compensation program which included the grant of 3-year forward-looking restricted stock units in the first quarter of 2024; and
Current report
•An increase in professional fees of approximately $0.2 million.
Current report
Impairment of real estate asset
Current report
During the three months ended June 30, 2024, the Company entered into a contract on an asset held for sale and recorded an impairment of approximately $0.1 million. See Note 4 – Real Estate Acquisitions and Assets Held for Sale for more detail.
Current report
Credit loss reserve
Current report
Credit loss reserve totaling $11.0 million was recorded during thethree months ended June 30, 2024 related to notes receivable with a geriatric inpatient behavioral hospital tenant. See Note 10 – Other Assets, net for more details on the credit loss reserve.
Current report
Interest and other income, net
Current report
Interest and other income, net decreased approximately$0.4 million, or 59.0%, for the three months ended June 30, 2024 compared to the same period in 2023. During the three months ended June 30, 2023, the Company recognized a net casualty gain relating to a property totaling $0.7 million. During the three months ended June 30, 2024, the Company recorded into income an undistributed allowance for tenant improvements totaling $0.3 million for a lease that expired on June 30, 2024.
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
n/m - not meaningful
Current report
Revenues
Current report
Rental income increased approximately $3.4 million, or 6.3%, for the six months ended June 30, 2024 compared to the same period in 2023 due mainly to rental income on properties acquired during 2023 and 2024 resulting in additional rental income of approximately $6.4 million, offset partially by the impact of moving a tenant to cash basis in the second quarter of 2024 totaling approximately $1.9 million (including $0.9 million of straight-line rent) and approximately $1.0 million resulting substantially from lease terminations, including two Genesis Care leases with the Company that they rejected in 2023 as part of their bankruptcy.
Current report
Other operating interest decreased $1.5 million, or 71.3%, for the six months ended June 30, 2024 compared to the same period in 2023 due to placing the tenant on cash basis and reversing the interest receivable due from a tenant totaling $1.4 million in the second quarter of 2024.
Current report
Expenses
Current report
Property operating expenses increased approximately $1.7 million, or 17.6%, for the six months ended June 30, 2024 compared to the same period in 2023 due mainly to the following:
Current report
•Property insurance resulted in an increase of approximately $0.2 million;
Current report
•Snow plow and landscaping services resulted in an increase of approximately $0.2 million;
Current report
•Repairs and maintenance expenses resulted in an increase of approximately $0.1 million; and
Current report
•Amortization of leasing commissions resulted in an increase of approximately $0.1 million.
Current report
•Non-cash accelerated amortization of deferred compensation in the first quarter of 2023 for non-vested restricted common shares held by former CEO and President Timothy Wallace at the time of his passing in March 2023 accounted for a decrease of approximately $11.8 million; offset partially by
Current report
•An increase in the non-cash amortization of other deferred compensation of approximately $0.7 million for the six months ended June 30, 2024 compared to the same period in 2023 due to the issuance of restricted shares and the impact from the adoption of the new executive compensation program which included the grant of 3-year forward-looking restricted stock units in the first quarter of 2024; and
Current report
•An increase in payroll-related expenses of approximately $0.4 million for the six months ended June 30, 2024 compared to the same period in 2023 related mainly to new employees and salary increases.
Current report
•Acquisitions of real estate in 2023 and 2024 resulted in an increase of approximately $3.0 million;
Current report
Impairment of real estate asset
Current report
During the six months ended June 30, 2024, the Company entered into a contract on an asset held for sale and recorded an impairment of approximately $0.1 million. See Note 4 – Real Estate Acquisitions and Assets Held for Sale to the Condensed Consolidated Financial Statements for more detail.
Current report
Interest expense
Current report
Interest expense increased approximately $2.9 million, or 35.9%, for the six months ended June 30, 2024 compared to the same period in 2023. Interest due under the Credit Facility increased approximately $2.7 million mainly due to an increase in the revolving credit facility balance and a rise in interest rates (See Note 5 – Debt, net to the Condensed Consolidated Financial Statements), and the maturity of two interest rate swaps, which were replaced with two forward-starting interest swaps (See Note 6 – Derivative Financial Instruments to the Condensed Consolidated Financial Statements). Also, capitalized interest on redevelopment projects increased approximately $0.3 million for the six months ended June 30, 2024 compared to the same period in 2023.
Current report
Credit loss reserve
Current report
Credit loss reserve totaling $11.0 million was recorded during thesix months ended June 30, 2024 related to notes receivable with a geriatric inpatient behavioral hospital tenant. See Note 10 – Other Assets, net for more details on the credit loss reserve.
Current report
Interest and other income, net
Current report
Interest and other income, net decreased approximately $0.5 million, or 60.2%, for the six months ended June 30, 2024 compared to the same period in 2023. During the six months ended June 30, 2023, the Company recognized a net casualty gain relating to a property totaling $0.7 million. During the six months ended June 30, 2024, the Company recorded into income an undistributed allowance for tenant improvements totaling $0.3 million for a lease that expired on June 30, 2024.
Current report
(1) Net loss and FFO for the three and six months ended June 30, 2024 included the reversal of rent and interest related to a tenant totaling approximately $3.2 million, including straight-line rent of approximately $0.9 million, resulting in a reduction of FFO per diluted share of approximately $0.12 in each period. AFFO, which adds back straight-line rent, was reduced by approximately $0.09 per diluted share for the three and six month periods ended June 30, 2024.
Showing the first 40 of 42 passages. Open the source sections for the rest.
Removed paragraphs (9)
Previous report
Property operating expenses increased approximately $0.9 million, or 18.8%, for the three months ended March 31, 2024 compared to the same period in 2023 due mainly to the following:
Previous report
•An increase in property operating expenses related to snow removal of approximately $0.2 million and insurance premiums of approximately $0.1 million.
Previous report
•Non-cash stock-based compensation amortization expense decreased approximately $12.0 million for the three months ended March 31, 2024 compared to the same period in 2023;
Previous report
◦In the first quarter of 2023, the Company accelerated the unamortized remaining balance of deferred compensation for unvested shares totaling $11.8 million upon the passing of the Company's former CEO and President, in accordance with the terms of his employment agreement.
Previous report
◦Related to the new executive compensation program and the issuance of restricted stock units, the Company recognized non-cash amortization expense of approximately $0.3 million in the three months ended March 31, 2024.
Previous report
◦The non-cash amortization of the restricted shares, other than the accelerated amortization discussed above, decreased approximately $0.4 million for the three months ended March 31, 2024 compared to the same period in 2023 due to the maximum deferral percentage change discussed in the next paragraph, the reduction of shares to the vesting of shares, including the shares held by our former CEO and President, offset by the issuance of additional restricted shares.
Previous report
•Payroll-related expenses increased approximately $0.4 million for the three months ended March 31, 2024 compared to the same period in 2023. Approximately $0.3 million of this increase was related to the new executive compensation program which limited the maximum elective deferral percentage amount to 50% of salary allowed to be deferred. Also, in the first quarter of 2024, the Company paid approximately $0.1 million in payroll taxes related to the vesting of employee shares;
Previous report
Mortgage Note Payable
Previous report
The Company also had outstanding at March 31, 2024, a $4.8 million mortgage note payable, secured by one of its properties. The mortgage note amortizes monthly at a fixed interest rate of 4.98% with a balloon payment of approximately $4.8 million due upon maturity on May 1, 2024. The Company expects to fund the balloon payment with the Company's free cash flow or proceeds from the Company's Revolving Credit Facility.
Reworded paragraphs (34)
Previous wording
This report and other materials that Community Healthcare Trust Incorporated (the "Company") has filed or may file with the Securities and Exchange Commission, as well as information included in oral statements or other written statements made, or to be made, by management of the Company, contain, or will contain, statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “believes”, “expects”, “may”, "will', “should”, “seeks”, “approximately”, “intends”, “plans”, “estimates”, “anticipates” or other similar words or expressions, including the negative thereof. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. Because forward-looking statements relate to future events, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company’s control. Thus, the Company’s actual results and financial condition may differ materially from those indicated in such forward-looking statements. Some factors that might cause such a difference include the following: general volatility of the capital markets and the market price of the Company’s common stock, changes in the Company’s business strategy, availability, terms and deployment of capital, the Company’s ability to refinance existing indebtedness at or prior to maturity on favorable terms, or at all, changes in the real estate industry in general, interest rates or the general economy, adverse developments related to the healthcare industry, changes in governmental regulations, the degree and nature of the Company’s competition, the ability to consummate acquisitions under contract, catastrophic or extreme weather and other natural events and the physical effects of climate change, the occurrence of cyber incidents, effects on global and national markets as well as businesses resulting from increased inflation, rising interest rates, supply chain disruptions, labor conditions, the conflict between Russia and Ukraine, and/or new and ongoing hostilities between Israel and Hamas and the other factors described in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and the Company’s other filings with the Securities and Exchange Commission from time to time. Readers are therefore cautioned not to place undue reliance on the forward-looking statements contain…
Excerpt shortened here; the source contains the full paragraph.
Current wording
This report and other materials that Community Healthcare Trust Incorporated (the "Company") has filed or may file with the Securities and Exchange Commission, as well as information included in oral statements or other written statements made, or to be made, by management of the Company, contain, or will contain, statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “believes”, “expects”, “may”, "will', “should”, “seeks”, “approximately”, “intends”, “plans”, “estimates”, “anticipates” or other similar words or expressions, including the negative thereof. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. Because forward-looking statements relate to future events, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company’s control. Thus, the Company’s actual results and financial condition may differ materially from those indicated in such forward-looking statements. Some factors that might cause such a difference include the following: general volatility of the capital markets and the market price of the Company’s common stock, changes in the Company’s business strategy, availability, terms and deployment of capital, the Company’s ability to refinance existing indebtedness at or prior to maturity on favorable terms, or at all, changes in the real estate industry in general, interest rates or the general economy, adverse developments related to the healthcare industry, changes in governmental regulations, the degree and nature of the Company’s competition, the ability to consummate acquisitions under contract, catastrophic or extreme weather and other natural events and the physical effects of climate change, the occurrence of cyber incidents, effects on global and national markets as well as businesses resulting from increased inflation, rising interest rates, supply chain disruptions, labor conditions, the conflict between Russia and Ukraine, new and ongoing hostilities between Israel and Hamas, and/or uncertainties related to the 2024 U.S. presidential election, and the other factors described in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and the Company’s other filings with the Securities and Exchange Commission from time to time. Readers are therefore cautioned not to…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
During the three months ended March 31, 2024, the Company acquired four real estate properties totaling approximately 165,000 square feet for an aggregate purchase price of approximately $34.2 million and cash consideration of approximately $34.3 million. Upon acquisition, the properties were 98.6% leased in the aggregate with lease expirations through 2039. These acquisitions were funded through the Company's free cash flow, proceeds from equity sales through the ATM program, and the Company's Revolving Credit Facility. See Note 4 – Real Estate Acquisitions and Dispositions to the Condensed Consolidated Financial Statements for more details on these acquisitions.
Current wording
During the first six months of 2024, the Company acquired five real estate properties totaling approximately 203,000 square feet for an aggregate purchase price of approximately $57.7 million and cash consideration of approximately $57.8 million. Upon acquisition, the properties were 99.2% leased in the aggregate with lease expirations through 2039. These acquisitions were funded with net proceeds from equity sales through the ATM program and the Company's Revolving Credit Facility. See Note 4 – Real Estate Acquisitions and Assets Held for Sale to the Condensed Consolidated Financial Statements for more details on these acquisitions.
Previous wording
Subsequent to March 31, 2024, the Company acquired one inpatient rehabilitation facility for a purchase price and cash consideration of approximately $23.5 million. Upon acquisition, the property was 100.0% leased with a lease expiration in 2039.
Current wording
Subsequent to June 30, 2024, the Company acquired one medical office building for a purchase price of approximately $6.2 million and cash consideration of approximately $6.3 million. Upon acquisition, the property was 100.0% leased with a lease expiration in 2027.
Previous wording
As of March 31, 2024, our real estate portfolio was approximately 92.3% leased. During the first three months of 2024, we had expiring or terminated leases related to approximately 143,000 square feet, and we leased or renewed leases relating to approximately 184,000 square feet.
Current wording
As of June 30, 2024, our real estate portfolio was approximately 92.6% leased, excluding real estate assets held for sale. During the first six months of 2024, we had expiring or terminated leases related to approximately 269,000 square feet, and we leased or renewed leases relating to approximately 324,000 square feet.
Previous wording
At March 31, 2024, the Company had an aggregate gross investment of approximately $37.2 million in 10 real estate properties with purchase options exercisable at March 31, 2024 that had not been exercised.
Current wording
At June 30, 2024, the Company had an aggregate gross investment of approximately $38.5 million in 11 real estate properties with purchase options exercisable at June 30, 2024 that had not been exercised.
Previous wording
The Company's resultsof operations for the three months ended March 31, 2024 compared to the same period in 2023 were impacted by real estate acquisitions, the amortization of non-cash compensation, including the accelerated amortization of unvested restricted shares upon the passing of the Company's former CEO and President, the new executive compensation program, as well as other items discussed in more detail below.
Current wording
The Company's resultsof operations for the three and six months ended June 30, 2024 compared to the same period in 2023 were impacted by real estate acquisitions, lease receivable, interest and loan loss reserves related to a tenant in the second quarter of 2024, the amortization of non-cash compensation, including the accelerated amortization of unvested restricted shares upon the passing of the Company's former CEO and President in the first quarter of 2023, the new executive compensation program implemented in the first quarter of 2024, as well as other items discussed in more detail below.
Previous wording
The table below shows our results of operations for the three months ended March 31, 2024 compared to the same period in 2023 and the effect of changes in those results from period to period on our net income (loss).
Current wording
The table below shows our results of operations for the three months ended June 30, 2024 compared to the same period in 2023 and the effect of changes in those results from period to period on our net (loss) income.
Previous wording
Rental income increased approximately $2.2 million, or 8.5%, for the three months ended March 31, 2024 compared to the same period in 2023 due mainly to rental income on properties acquired during 2023 and 2024 resulting in additional rental income of approximately $2.9 million, with a $0.7 million decrease resulting substantially from lease expirations and terminations, including the two Genesis Care leases that were rejected in 2023 by Genesis Care as part of their bankruptcy.
Current wording
Rental income increased approximately $1.1 million, or 4.3%, for the three months ended June 30, 2024 compared to the same period in 2023 due mainly to rental income on properties acquired during 2023 and 2024 resulting in additional rental income of approximately $3.6 million, offset partially by the impact of moving a tenant to cash basis totaling approximately $1.9 million (including $0.9 million of straight-line rent) and approximately $0.6 million resulting substantially from lease terminations, including two Genesis Care leases with the Company that they rejected in 2023 as part of their bankruptcy.
Previous wording
•Expenses on properties acquired during 2023 and 2024 increased property operating expenses by approximately $0.6 million;
Current wording
•Expenses on properties acquired during 2023 and 2024 increased property operating expenses by approximately $0.5 million;
Previous wording
Depreciation and amortization expense increased approximately $1.2 million, or 13.8%, for the three months ended March 31, 2024 compared to the same period in 2023. This increase was comprised mainly of the following:
Current wording
Depreciation and amortization expense increased approximately $1.6 million, or 17.1%, for the three months ended June 30, 2024 compared to the same period in 2023. This increase was comprised mainly of the following:
Previous wording
•Depreciation and amortization on real estate acquired during 2023 and 2024 resulted in an increase of approximately $1.4 million;
Current wording
•Depreciation and amortization on real estate acquired during 2023 and 2024 resulted in an increase of approximately $1.6 million.
Previous wording
Interest expense increased approximately $1.1 million, or 26.8%, for the three months ended March 31, 2024 compared to the same period in 2023. Interest expense recognized on the credit facility for the three months ended March 31, 2024 compared to the same period in 2023 was higher due mainly to increases in the weighted average balance and interest rates on the revolving credit facility.
Current wording
Interest expense increased approximately $1.8 million, or 44.6%, for the three months ended June 30, 2024 compared to the same period in 2023 due mainly to increases in the weighted average balance and interest rates on the revolving credit facility.
Previous wording
General and administrative expenses decreased approximately $11.7 million, or 71.9%, for the three months ended March 31, 2024 compared to the same period in 2023 due mainly to the following:
Current wording
General and administrative expenses decreased approximately $10.7 million, or 53.4% for the six months ended June 30, 2024 compared to the same period in 2023 mainly due to the following:
Previous wording
•Tenant improvements and other capital expenditures resulted in an increase of approximately $0.3 million
Current wording
•Tenant improvements and other capital expenditures resulted in an increase of approximately $0.5 million; and
Previous wording
•Fully amortized real estate lease intangibles which generally have a shorter depreciable life than a building resulted in a decrease of approximately $0.4 million; and
Current wording
•Fully amortized real estate lease intangibles which generally have a shorter depreciable life than a building resulted in a decrease of approximately $0.7 million.
Previous wording
The table below reconciles net income (loss) to FFO and AFFO for the three months ended March 31, 2024 compared to the same period in 2023.
Current wording
The table below reconciles net (loss) income to FFO and AFFO for the three and six months ended June 30, 2024 compared to the same periods in 2023.
Previous wording
(1) In the first quarter of 2023, the Company accelerated the amortization of stock-based compensation totaling $11.8 million upon the passing of our former CEO and President, impacting FFO per diluted share by $0.47.
Current wording
(3) Net loss and FFO for the six months ended June 30, 2023 included accelerated amortization of stock-based compensation totaling $11.8 million upon the passing of our former CEO and President.
Previous wording
The table below reconciles net income (loss) to NOI for the three months ended March 31, 2024 compared to the same period in 2023.
Current wording
The table below reconciles net (loss) income to NOI for the three and six months ended June 30, 2024 compared to the same periods in 2023.
Previous wording
The table below reconciles net income (loss) to EBITDAre and Adjusted EBITDAre for the three months ended March 31, 2024 compared to the same period in 2023.
Current wording
The table below reconciles net (loss) income to EBITDAre and Adjusted EBITDAre for the three and six months ended June 30, 2024 compared to the same periods in 2023.
Previous wording
The Company’s current financing policy prohibits aggregate debt (secured or unsecured) in excess of 40% of the Company's total capitalization, except for short-term, transitory periods. At March 31, 2024, our debt to total capitalization ratio (debt plus stockholders' equity plus accumulated depreciation) was approximately 38.0%.
Current wording
The Company’s current financing policy prohibits aggregate debt (secured or unsecured) in excess of 40% of the Company's total capitalization, except for short-term, transitory periods. At June 30, 2024, our debt to total capitalization ratio (debt plus stockholders' equity plus accumulated depreciation) was approximately 38.9%.
Previous wording
The Company's Credit Facility provides for a $150.0 million Revolving Credit Facility that matures on March 19, 2026 and includes one 12-month option to extend the maturity date, and $350.0 million in Term Loans, as well as an accordion feature which allows borrowings up to a total of $700.0 million, including the ability to add and fund additional term loans. Note 5 – Debt, net to the Condensed Consolidated Financial Statements provides more details on the Company's Credit Facility. At March 31, 2024, the Company had borrowing capacity remaining under the Revolving Credit Facility of approximately $61.0 million.
Current wording
The Company's Credit Facility provides for a $150.0 million Revolving Credit Facility that matures on March 19, 2026 and includes one 12-month option to extend the maturity date, and $350.0 million in Term Loans, as well as an accordion feature which allows borrowings up to a total of $700.0 million, including the ability to add and fund additional term loans. Note 5 – Debt, net to the Condensed Consolidated Financial Statements provides more details on the Company's Credit Facility. At June 30, 2024, the Company had borrowing capacity remaining under the Revolving Credit Facility of approximately $41.0 million.
Previous wording
Subsequent to March 31, 2024, the Company acquired one inpatient rehabilitation facility for a purchase price and cash consideration of approximately $23.5 million. Upon acquisition, the property was 100.0% leased with a lease expiration in 2039. The acquisition was funded with proceeds from the Company's Revolving Credit Facility.
Current wording
Subsequent to June 30, 2024, the Company acquired one medical office building for a purchase price of approximately $6.2 million and cash consideration of approximately $6.3 million. Upon acquisition, the property was 100.0% leased with a lease expiration in 2027. The acquisition was funded with proceeds from the Company's Revolving Credit Facility.
Previous wording
The Company has seven properties under definitive purchase agreements, to be acquired after completion and occupancy, for an aggregate expected purchase price of approximately $169.5 million. The Company anticipates closing on one of these properties in the fourth quarter of 2024 with the remainder throughout 2025, 2026 and 2027; however, the Company cannot provide assurance as to the timing of when, or whether, these transactions will actually close. The Company expects to fund these acquisitions through the Company's free cash flow, proceeds from equity sales through the ATM program, and the Company's Revolving Credit Facility.
Current wording
The Company has seven properties under definitive purchase agreements, to be acquired after completion and occupancy, for an aggregate expected purchase price of approximately $169.5 million. The Company anticipates closing on one of these properties in the fourth quarter of 2024 with the remainder throughout 2025, 2026 and 2027; however, the Company cannot provide assurance as to the timing of when, or whether, these transactions will actually close. The Company expects to fund these acquisitions through net proceeds from equity sales through the ATM program and the Company's Revolving Credit Facility.
Previous wording
Subject to Company approval, we may fund or reimburse tenants for tenant improvements, which are allowed for in certain leases, of up to approximately $22.5 million as of March 31, 2024. At March 31, 2024, seven of these projects, totaling $15.8 million, represented redevelopment projects on buildings with tenants backed by long term leases.
Current wording
Subject to Company approval, we may fund or reimburse tenants for tenant improvements, which are allowed for in certain leases, of up to approximately $18.6 million as of June 30, 2024. At June 30, 2024, six of these projects, totaling $13.5 million, represented redevelopment projects on buildings with tenants backed by long term leases.
Previous wording
The Company has also entered into contracts regarding certain capital expenditures with remaining commitments totaling approximately $5.6 million as of March 31, 2024. Reimbursement of these expenditures by our tenants will be determined by each tenant's lease.
Current wording
The Company has also entered into contracts regarding certain capital expenditures with remaining commitments totaling approximately $4.5 million as of June 30, 2024. Reimbursement of these expenditures by our tenants will be determined by each tenant's lease.
Previous wording
The Company has two notes with a tenant with unfunded commitments remaining totaling $5.1 million at March 31, 2024. See Note 10 – Other Assets, net to the Condensed Consolidated Financial Statements.
Current wording
The Company has two notes with a tenant with unfunded commitments remaining totaling $4.8 million at June 30, 2024. See Note 10 – Other Assets, net to the Condensed Consolidated Financial Statements.
Previous wording
Cash flows provided by operating activities for the three months ended March 31, 2024 and 2023 were approximately $12.6 million and $12.7 million, respectively. Cash flows provided by operating activities were generally provided by contractual rents and interest on our notes receivable, net of property operating expenses not reimbursed by the tenants and general and administrative expenses.
Current wording
Cash flows provided by operating activities for the six months ended June 30, 2024 and 2023 were approximately $29.4 million and $29.4 million, respectively. Cash flows provided by operating activities were generally provided by contractual rents and interest on our notes receivable, net of property operating expenses not reimbursed by the tenants and general and administrative expenses.
Previous wording
Cash flows used in investing activities for the three months ended March 31, 2024 and 2023 were approximately $38.5 million and $28.6 million, respectively. During the three months ended March 31, 2024, the Company invested in four properties for an aggregate cash consideration of approximately $34.3 million. Also, during the three months ended March 31, 2024, the Company received payments on its notes totaling $0.9 million and funded capital expenditures on its existing portfolio totaling approximately $5.1 million.
Current wording
Cash flows used in investing activities for the six months ended June 30, 2024 and 2023 were approximately $68.8 million and $45.1 million, respectively. During the six months ended June 30, 2024, the Company invested in five properties for an aggregate cash consideration of approximately $57.8 million. Also, during the six months ended June 30, 2024, the Company funded notes totaling $0.3 million, received payments on its notes totaling $1.6 million and funded capital expenditures on its existing portfolio totaling approximately $12.3 million.
Previous wording
During the three months ended March 31, 2023, the Company invested in seven properties for an aggregate cash consideration of approximately $23.9 million and funded notes receivable totaling approximately $1.3 million. Also, during the three months ended March 31, 2023, the Company received payments on its notes receivable totaling $0.8 million and funded capital expenditures on its existing portfolio totaling approximately $4.1 million.
Current wording
During the six months ended June 30, 2023, the Company invested in 10 properties and one land parcel for an aggregate cash consideration of approximately $39.7 million and funded notes receivable totaling approximately $2.0 million. Also, during the six months ended June 30, 2023, the Company received payments on its notes receivable totaling $2.3 million, received insurance proceeds from a casualty loss totaling $2.3 million, and funded capital expenditures on its existing portfolio totaling approximately $7.9 million.
Previous wording
Cash flows provided by financing activities for the three months ended March 31, 2024 and 2023 were approximately $26.2 million and $8.4 million, respectively. During the three months ended March 31, 2024, the Company (i) borrowed $39.0 million under its Revolving Credit Facility, (ii) completed equity offerings under its at-the-market program, resulting in net proceeds, net of underwriters' discount and offering costs, of approximately $0.5 million, (iii) upon the vesting of stock-based awards for certain employees, withheld shares and paid taxes totaling approximately $0.6 million on behalf of the employees, and (iv) paid dividends totaling approximately $12.7 million.
Current wording
Cash flows provided by financing activities for the six months ended June 30, 2024 and 2023 were approximately $35.5 million and $7.3 million, respectively. During the six months ended June 30, 2024, the Company (i) borrowed $59.0 million under its Revolving Credit Facility, (ii) repaid a mortgage note totaling approximately $4.8 million, (iii) paid dividends totaling approximately $25.5 million, (iv) completed equity offerings under its at-the-market program, resulting in net proceeds, net of underwriters' discount and offering costs, of approximately $7.4 million, and (v) upon the vesting of stock-based awards for certain employees, withheld shares and paid taxes totaling approximately $0.6 million on behalf of the employees.
Previous wording
During the three months ended March 31, 2023, the Company (i) borrowed $12.0 million under its Revolving Credit Facility, (ii) completed equity offerings under its at-the-market program, resulting in net proceeds, net of underwriters' discount and offering costs, of approximately $8.1 million, and (iii) paid dividends totaling approximately $11.6 million.
Current wording
During the six months ended June 30, 2023, the Company (i) borrowed $15.0 million under its Revolving Credit Facility, (ii) completed equity offerings under its at-the-market program, resulting in net proceeds, net of underwriters' discount and offering costs, of approximately $16.8 million, (iii) upon the vesting of stock-based awards for certain employees, withheld shares and paid taxes totaling approximately $1.0 million on behalf of employees, and (iv) paid dividends totaling approximately $23.5 million.
Previous wording
As of March 31, 2024, the Company held approximately $3.7 million in security deposits for the benefit of the Company in the event the obligated tenant fails to perform under the terms of its respective lease. Generally, the Company may, at its discretion and upon notification to the tenant, draw upon the security deposits if there are any defaults under the leases.
Current wording
As of June 30, 2024, the Company held approximately $3.1 million in security deposits for the benefit of the Company in the event the obligated tenant fails to perform under the terms of its respective lease. Generally, the Company may, at its discretion and upon notification to the tenant, draw upon the security deposits if there are any defaults under the leases.
Previous wording
On April 25, 2024, the Company’s Board of Directors declared a quarterly common stock dividend in the amount of $0.46 per share. The dividend is payable on May 24, 2024 to stockholders of record on May 10, 2024. This rate equates to an annualized dividend of $1.84 per share.
Current wording
On July 25, 2024, the Company’s Board of Directors declared a quarterly common stock dividend in the amount of $0.4625 per share. The dividend is payable on August 23, 2024 to stockholders of record on August 9, 2024. This rate equates to an annualized dividend of $1.85 per share.
Previous wording
The Company’s Information Technology infrastructure is cloud-based, utilizing Software as a Service (“SaaS”) applications for substantially all of its software requirements. Management has formed an IT Committee consisting of the Chief Executive Officer, Chief Financial Officer, and the Vice President of Information Technology to review and discuss information security matters and cyber security risks. The committee meets at least twice a year and reports to the Board of Directors as needed. The Company has adopted the Center of Internet Security (CIS) v8 IG1 cyber security controls including adopting an annual information security training program for its employees. The Company has partnered with a global cyber security leader to continuously and proactively manage and mitigate the ever growing list of cyber threats. As part of the managed monitoring and remediation platform, the Company benefits from a $100,000 breach prevention warranty. Since the Company’s inception, the Company has not had a security breach resulting in expenses, penalties or settlements.
Current wording
The Company’s Information Technology infrastructure is cloud-based, utilizing Software as a Service (“SaaS”) applications for substantially all of its software requirements. Management has formed an IT Committee consisting of the Chief Executive Officer, Chief Financial Officer, and the Vice President of Information Technology to review and discuss information security matters and cyber security risks. The committee meets at least twice a year and reports to the Board of Directors as needed. The Company has adopted the Center of Internet Security (CIS) v8 IG1 cyber security controls including adopting an annual information security training program for its employees. The Company has partnered with a global cyber security leader to continuously and proactively manage and mitigate the ever growing list of cyber threats. As part of the managed monitoring and remediation platform, the Company benefits from a $100,000 breach prevention warranty. Since its inception, the Company has not had a security breach, and has not incurred any resulting expenses, penalties or settlements.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
The table below shows our results of operations for the six months ended June 30, 2024 compared to the same period in 2023 and the effect of changes in those results from period to period on our net loss.
Current report — wording carried from elsewhere
•Expenses on properties acquired during 2023 and 2024 increased property operating expenses by approximately $1.1 million;
Current report — wording carried from elsewhere
Depreciation and amortization expense increased approximately $2.8 million, or 15.4%, for the six months ended June 30, 2024 compared to the same period in 2023. This increase was comprised mainly of the following: