Community Healthcare Trust Inc
For the period ended Sep 30, 2024. Filed Oct 29, 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.
Sep 30, 2024 · Filed Oct 29, 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 2024-06-30; filed 2024-07-30.
0001631569-24-000077
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-29.
0001631569-24-000101
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 148 previous paragraphs and 145 current paragraphs.
76 unchanged; 45 reworded; 22 added; 22 removed; 5 previous and 2 current paragraphs rearranged.
Tables are not compared: 5 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 (22)
Current report
Real Estate Dispositions
Current report
During the third quarter of 2024, the Company disposed of an 11,200 square foot surgical center in Texas, received net proceeds of approximately $1.0 million, and recognized an immaterial gain on sale.
Current report
The Company has four properties under definitive purchase agreements for an aggregate expected purchase price of approximately $8.8 million. The Company's expected returns on these investments range from 9.29% to 9.50%. The Company expects to close on these properties in the fourth quarter of 2024; 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 with proceeds from the Company's Revolving Credit Facility.
Current report
Property operating expenses increased approximately $0.5 million, or 9.7%, for the three months ended September 30, 2024 compared to the same period in 2023 due mainly to additional expenses on properties acquired during 2023 and 2024.
Current report
Depreciation and amortization expense decreased approximately $0.3 million, or 2.5%, for the three months ended September 30, 2024 compared to the same period in 2023. This decrease was due mainly to the following:
Current report
•Depreciation and amortization on the two properties classified as held for sale during the second and fourth quarters of 2023 resulted in a decrease of approximately $1.3 million;
Current report
•Accelerated amortization of lease intangibles on the two GenesisCare properties where the leases were rejected resulted in a decrease of approximately $1.5 million;
Current report
•Depreciation on tenant and other capital improvements resulted in an increase of approximately$3.2 million.
Current report
Deferred income tax expense
Current report
Deferred income tax expense decreased approximately $0.2 million for the three months ended September 30, 2024 compared to the same period in 2023. During the three months ended September 30, 2023, the Company recorded an additional valuation allowance on its deferred tax asset.
Current report
Interest and other income, net increased approximately $0.2 million for the three months ended September 30, 2024 compared to the same period in 2023. During the three months ended September 30, 2023, the Company received earnest money on a terminated contract on a property held for sale.
Current report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Current report
Other operating interest decreased $2.2 million for the nine months ended September 30, 2024 compared to the same period in 2023 due mainly to placing a tenant note on non-accrual and reversing interest due from that tenant, as well as a reduction in interest on notes due to reduced principal balances from payments received.
Current report
Property operating expenses increased approximately $2.2 million, or 14.8%, for the nine months ended September 30, 2024 compared to the same period in 2023 due mainly to the following:
Current report
•Accelerated amortization of lease intangibles on the two GenesisCare properties in 2023 where the leases were rejected resulted in a decrease of approximately $1.5 million; and
Current report
•Depreciation and amortization on the two properties classified as held for sale during the second and fourth quarters of 2023 ceased at that time resulting in a decrease of approximately $1.5 million.
Current report
Deferred income tax expense
Current report
Deferred income tax expense decreased approximately$0.3 million for the nine months ended September 30, 2024 compared to the same period in 2023. During thenine months ended September 30, 2023, the Company recorded an additional valuation allowance on its deferred tax asset.
Current report
(1) During the three months ended June 30, 2024, the Company placed leases related to a tenant on cash basis and reversed rent and placed notes related to the tenant on non-accrual and reversed interest totaling approximately $3.2 million, including straight-line rent of approximately $0.9 million.
Current report
(2) During the three months ended June 30, 2023, the Company recognized a $0.7 million net casualty gain from insurance proceeds received related to one property. The Company recorded impairments on the property in previous quarters based on contracts to sell, and sold the property during the three months ended September 30, 2024, recording an immaterial gain on sale.
Current report
On October 16, 2024, the Company amended its Credit Facility to increase the Revolving Credit Facility capacity from $150.0 million to $400.0 million and extend the maturity through October 16, 2029. The amended Credit Facility also lowered pricing on the Revolving Credit Facility by 10 to 30 basis points, depending on the Company's leverage ratio. Proceeds from the increased Revolving Credit Facility were used to repay the existing $75.0 million A-3 Term Loan which was scheduled to mature on March 29, 2026. In addition, amounts outstanding under the Revolving Credit Facility prior to this amendment will remain outstanding. Interest rate swaps previously entered into to fix the interest rates on the A-3 Term Loan will remain in place on the Revolving Credit Facility through their maturity on March 29, 2026. See Note 5 – Debt, net and Note 14 – Subsequent Events to the Condensed Consolidated Financial Statements which provide more details on the Company's Credit Facility. At September 30, 2024, prior to the amendment, the Company had borrowing capacity remaining under the Revolving Credit Facility of approximately $25.0 million. At the time of closing on the amendment, on October 16, 2024, the Company had borrowing capacity remaining under the Revolving Credit Facility of approximately $198.0 million.
Current report
The Company has four properties under definitive purchase agreements for an aggregate expected purchase price of approximately $8.8 million. The Company's expected returns on these investments range from 9.29% to 9.50%. The Company expects to close on these properties in the fourth quarter of 2024; 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 with proceeds from the Company's Revolving Credit Facility.
Removed paragraphs (22)
Previous report
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 report
Loss on operating lease receivable
Previous 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.
Previous 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).
Previous 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:
Previous report
•Property taxes resulted in an increase of approximately $0.2 million; and
Previous 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:
Previous report
•An increase in professional fees of approximately $0.2 million.
Previous report
Impairment of real estate asset
Previous 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.
Previous report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Previous 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.
Previous 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:
Previous 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.
Previous report
Impairment of real estate asset
Previous 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.
Previous report
Credit loss reserve
Previous 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.
Previous 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.
Previous report
(2) Net income (loss) and FFO for the three and six months ended June 30, 2023 included a $0.7 million net casualty gain from insurance proceeds received related to one property that was vandalized. The net gain increased FFO by $0.03 per diluted share for the three and six months ended June 30, 2023.
Previous report
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 report
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.
Reworded paragraphs (45)
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, 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.
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, changes in interest rates, supply chain disruptions, labor conditions, the conflicts in Ukraine and the Middle East, 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 place undue reliance on the forward-looking …
Excerpt shortened here; the source contains the full paragraph.
Previous 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.
Current wording
During the first nine months of 2024, the Company acquired six real estate properties totaling approximately 223,000 square feet for an aggregate purchase price of approximately $63.9 million and cash consideration of approximately $64.2 million. Upon acquisition, the properties were 99.3% 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, Disposition, and Assets Held for Sale to the Condensed Consolidated Financial Statements for more details on these acquisitions.
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's expected return on these investments will approximate 9.1% to 9.75%. 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.
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's expected return on these investments will approximate 9.1% to 9.75%. The Company anticipates closing on these properties throughout 2025, 2026 and 2027; however, the Company cannot provide assurance as to the timing of when, or whether, these transactions will actually close.
Previous 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.
Current wording
As of September 30, 2024, our real estate portfolio was approximately 91.3% leased, excluding real estate properties held for sale. During the first nine months of 2024, we had expiring or terminated leases related to approximately 431,000 square feet, and we leased or renewed leases relating to approximately 427,000 square feet.
Previous 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.
Current wording
At September 30, 2024, the Company had an aggregate gross investment of approximately $32.9 million in 10 real estate properties with purchase options exercisable at September 30, 2024 that had not been exercised.
Previous wording
Periods of high and persistent inflation could cause an increase in our expenses, capital expenditures, and cost of our variable-rate borrowings which could have a material impact on our financial position or results of operations. Many of our lease agreements contain provisions designed to mitigate the adverse impact of inflation, including annual rent increases based on stated increases or CPI increases. In response to inflationary pressures, the Federal Reserve began raising interest rates in 2022. Higher interest rates imposed by the Federal Reserve to address inflation may adversely impact real estate asset values and increase our interest expense on our variable-rate borrowings under our revolving credit facility.
Current wording
Periods of high and persistent inflation could cause an increase in our expenses, capital expenditures, and cost of our variable-rate borrowings which could have a material impact on our financial position or results of operations. Many of our lease agreements contain provisions designed to mitigate the adverse impact of inflation, including annual rent increases based on stated increases or CPI increases. In response to inflationary pressures, the Federal Reserve began raising interest rates in 2022. Though these higher interest rates have just begun to decline, these higher rates may adversely impact real estate asset values and increase our interest expense on our variable-rate borrowings under our revolving credit facility.
Previous wording
During the first quarter of 2024, the Company's Board approved and adopted certain changes to executive compensation. Through the adoption of the Third Amended and Restated Alignment of Interest Program, the Board established a maximum elective deferral percentage amount of 50% (previously 100%) of compensation allowed to be deferred and applied to the acquisition of restricted stock for certain participants in the program, and limited the duration of the restriction period election depending on each individual's retirement eligibility date. These changes were effective beginning January 1, 2024 for salary and other compensation deferrals and will be effective for performance periods commencing on and after July 1, 2024 for cash bonus deferrals.
Current wording
During the first quarter of 2024, the Company's Board approved and adopted certain changes to executive compensation. Through the adoption of the Third Amended and Restated Alignment of Interest Program, the Board established a maximum elective deferral percentage amount of 50% (previously 100%) of compensation allowed to be deferred and applied to the acquisition of restricted stock for certain participants in the program, and limited the duration of the restriction period election depending on each individual's retirement eligibility date. These changes were effective beginning January 1, 2024 for salary and other compensation deferrals and are now effective beginning July 1, 2024 for cash bonus deferrals.
Previous 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.
Current wording
The Company's resultsof operations for the three and nine months ended September 30, 2024 compared to the same period in 2023 were impacted by real estate acquisitions, lease receivable, interest and loan loss reserves recognized in the second quarter of 2024 related to a tenant, 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 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.
Current wording
The table below shows our results of operations for the three months ended September 30, 2024 compared to the same period in 2023 and the effect of changes in those results from period to period on our net income.
Previous 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.
Current wording
Rental income increased approximately $1.6 million, or 5.9%, for the three months ended September 30, 2024 compared to the same period in 2023. Rental income on properties acquired during 2023 and 2024 resulted in additional rental income of approximately $2.7 million in 2024 compared to 2023, offset partially by the impact of moving a tenant to cash basis in 2024 resulting in a reduction of approximately $0.8 million, with the remaining reduction due mainly to lease terminations, including two Genesis Care leases with the Company that they rejected in 2023 as part of their bankruptcy.
Previous wording
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 wording
Other operating interest decreased approximately $0.7 million for the three months ended September 30, 2024 compared to the same period in 2023 due mainly to placing a tenant note on non-accrual and reversing interest due from that tenant, as well as a reduction in interest on notes due to reduced principal balances from payments received.
Previous wording
•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 wording
General and administrative expenses increased approximately $1.3 million, or 36.4%, for the three months ended September 30, 2024 compared to the same period in 2023 due mainly to compensation-related expenses. The non-cash amortization of deferred compensation increased approximately $0.6 million and cash compensation increased approximately $0.7 million for the three months ended September 30, 2024 compared to the same period in 2023 due to the issuance of additional restricted shares and from the impact of adopting the new executive compensation program in January 2024 which included the grant of 3-year forward-looking restricted stock units, as well as limiting the maximum elective deferral percentage amount of salary and bonus to 50% (previously 100%) as described in more detail in Note 9 – Stock Incentive Plan to the Condensed Consolidated Financial Statements.
Previous wording
•Fully amortized real estate lease intangibles which generally have a shorter depreciable life than a building resulted in a decrease of approximately $0.7 million.
Current wording
•Fully amortized real estate lease intangibles which generally have a shorter depreciable life than a building resulted in a decrease of approximately $1.9 million;
Previous wording
•Depreciation and amortization on real estate acquired during 2023 and 2024 resulted in an increase of approximately $1.6 million.
Current wording
•Depreciation and amortization on real estate acquired during 2023 and 2024 resulted in an increase of approximately$1.3 million; and
Previous 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.
Current wording
Interest expense increased approximately $1.6 million, or 34.7%, for the three months ended September 30, 2024 compared to the same period in 2023 duemainlyto increases in the weighted average balance and interest rates on the revolving credit facility.
Previous wording
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 wording
The table below shows our results of operations for the nine months ended September 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 $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 wording
Rental income increased approximately $5.0 million, or 6.2%, for the nine months ended September 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 $9.2 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) with the remaining reduction due mainly to 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 $0.5 million;
Current wording
•Expenses on properties acquired during 2023 and 2024 increased property operating expenses by approximately $1.5 million;
Previous wording
•Repairs and maintenance expenses resulted in an increase of approximately $0.1 million; and
Current wording
•Repairs and maintenance expenses resulted in an increase of approximately $0.2 million; and
Previous 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:
Current wording
General and administrative expenses decreased approximately $9.4 million, or 39.6% for the nine months ended September 30, 2024 compared to the same period in 2023 due mainly to the following:
Previous wording
•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 wording
•An increase in the non-cash amortization of other deferred compensation of approximately $1.3 million and cash compensation of approximately $1.4 million for the nine months ended September 30, 2024 compared to the same period in 2023 due to the issuance of additional restricted shares and from the impact of adopting the new executive compensation program in January 2024 which included the grant of 3-year forward-looking restricted stock units, as well as limiting the maximum elective deferral percentage amount of salary and bonus to 50% (previously 100%) as described in more detail in Note 9 – Stock Incentive Plan to the Condensed Consolidated Financial Statements.
Previous 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:
Current wording
Depreciation and amortization expense increased approximately $2.5 million, or 8.6%, for the nine months ended September 30, 2024 compared to the same period in 2023. This increase was comprised mainly of the following:
Previous wording
•Acquisitions of real estate in 2023 and 2024 resulted in an increase of approximately $3.0 million;
Current wording
•Acquisitions of real estate in 2023 and 2024 resulted in an increase of approximately $4.2 million;
Previous wording
•Tenant improvements and other capital expenditures resulted in an increase of approximately $0.5 million; and
Current wording
•Tenant improvements and other capital expenditures resulted in an increase of approximately $4.2 million; offset against
Previous wording
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 wording
Interest expense increased approximately $4.5 million, or 35.4%, for the nine months ended September 30, 2024 compared to the same period in 2023. Interest due under the Credit Facility increased approximately $4.2 million due mainly 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 decreased approximately $0.4 million for the nine months ended September 30, 2024 compared to the same period in 2023. Mortgage interest decreased approximately $0.1 million for the nine months ended September 30, 2024 compared to the same period in 2023 due to the repayment of the mortgage note at maturity.
Previous wording
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 wording
Credit loss reserve totaling$11.0 million was recorded during the second quarter of 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.
Previous wording
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 wording
Interest and other income, net decreased approximately $0.3 million, or 33.8%, for the nine months ended September 30, 2024 compared to the same period in 2023. During thenine months ended September 30, 2023, the Company recognized a net casualty gain relating to a property totaling $0.7 million. During the second quarter of
Previous wording
Management believes that net income, as defined by GAAP, is the most appropriate earnings measurement. However, management believes FFO, AFFO, FFO per share and AFFO per share provide an understanding of the operating performance of the Company’s properties without giving effect to certain significant non-cash items, primarily depreciation and amortization expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. The Company believes that by excluding the effect of depreciation, amortization, impairments and gains or losses from sales of real estate, losses and impairment of incidental assets, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO, AFFO, FFO per share and AFFO per share can facilitate comparisons of operating performance between periods.
Current wording
Management believes that net income, as defined by GAAP, is the most appropriate earnings measurement. However, management believes FFO, AFFO, FFO per share and AFFO per share provide an understanding of the operating performance of the Company’s properties without giving effect to certain significant non-cash items, primarily depreciation and amortization expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. The Company believes that by excluding the effect of depreciation, amortization, impairments and gains or losses from sales of real estate, losses and impairment of incidental assets, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO, AFFO, FFO per share and AFFO per share can facilitate comparisons of operating performance between periods. The table below reconciles net income (loss) to FFO and AFFO for the three and nine months ended September 30, 2024 compared to the same periods in 2023.
Previous 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.
Current wording
(3) During the three months ended March 31, 2023, the Company accelerated the 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 (loss) income to NOI for the three and six months ended June 30, 2024 compared to the same periods in 2023.
Current wording
The table below reconciles net income (loss) to NOI for the three and nine months ended September 30, 2024 compared to the same periods in 2023.
Previous 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.
Current wording
The table below reconciles net income (loss) to EBITDAre and Adjusted EBITDAre for the three and nine months ended September 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 June 30, 2024, our debt to total capitalization ratio (debt plus stockholders' equity plus accumulated depreciation) was approximately 38.9%.
Current wording
The Company’s current financing policy limits aggregate debt (secured or unsecured) in excess of 40% of the Company's total capitalization, except for short-term, transitory periods. At September 30, 2024, our debt to total capitalization ratio (debt plus stockholders' equity plus accumulated depreciation) was approximately 40.0%.
Previous wording
The Company derives most of its revenues from its real estate properties. Our rental income represents our primary source of liquidity to fund our dividends, general and administrative expenses, property operating expenses, capital improvements on our properties, interest expense on our Credit Facility, and other expenses incurred related to managing our existing portfolio. To the extent additional resources are needed, the Company will fund its investment activity generally through equity or debt issuances either in the public or private markets or through proceeds from our Credit Facility.
Current wording
The Company derives most of its revenues from its real estate properties. Our rental income represents our primary source of liquidity to fund our dividends, general and administrative expenses, property operating expenses, capital improvements on our properties, interest expense on our Credit Facility, and other expenses incurred related to managing our existing portfolio. To the extent additional resources are needed, the Company will fund its investment activity generally through equity or debt issuances either in the public or private markets or through proceeds from our Credit Facility, which was amended in October 2024 to provide additional financing for acquisitions, capital improvements and other cash needs. See Note 14 – Subsequent Events to the Condensed Consolidated Financial Statements.
Previous wording
At June 30, 2024, the Company was obligated, as the lessee, under four non-prepaid ground leases accounted for as operating leases with expiration dates, including renewal options, through 2076, and two non-prepaid ground leases accounted for as financing leases with expiration dates through 2109, including renewal options. Any rental increases related to the Company's ground leases are generally either stated or based on the Consumer Price Index. At June 30, 2024, the Company's aggregate obligation under these ground leases was approximately $8.8 million. See Note 3 – Real Estate Leases to the Condensed Consolidated Financial Statements.
Current wording
At September 30, 2024, the Company was obligated, as the lessee, under four non-prepaid ground leases accounted for as operating leases with expiration dates, including renewal options, through 2076, and two non-prepaid ground leases accounted for as financing leases with expiration dates through 2109, including renewal options. Any rental increases related to the Company's ground leases are generally either stated or based on the Consumer Price Index. At September 30, 2024, the Company's aggregate obligation under these ground leases was approximately $8.7 million. See Note 3 – Real Estate Leases to the Condensed Consolidated Financial Statements.
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 net 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 these properties 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 $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.
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 $26.0 million as of September 30, 2024. At September 30, 2024, six of these projects, totaling $13.1 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 $4.5 million as of June 30, 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 $3.1 million as of September 30, 2024. Six of these projects totaling $0.8 million, represent redevelopment projects of the buildings into different healthcare uses backed by long-term leases. 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 $4.8 million at June 30, 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 $4.2 million at September 30, 2024. See Note 10 – Other Assets, net to the Condensed Consolidated Financial Statements.
Previous 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.
Current wording
Cash flows provided by operating activities for the nine months ended September 30, 2024 and 2023 were approximately $43.2 million and $47.1 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 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.
Current wording
Cash flows used in investing activities for the nine months ended September 30, 2024 and 2023 were approximately $83.2 million and $100.1 million, respectively. During the nine months ended September 30, 2024, the Company invested in six properties for an aggregate cash consideration of approximately $64.2 million and sold a property for cash consideration of approximately $1.0 million. Also, during the nine months ended September 30, 2024, the Company funded notes totaling $2.9 million, received payments on its notes totaling $2.4 million and funded capital expenditures on its existing portfolio totaling approximately $19.5 million.
Showing the first 40 of 45 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
•Fully amortized real estate lease intangibles which generally have a shorter depreciable life than a building resulted in a decrease of approximately $2.8 million;
Current report — wording carried from elsewhere
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. Also, during the nine months ended September 30, 2024, the Company recorded into income $0.2 million of earnest money on a terminated contract on a property held for sale.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
•Property insurance resulted in an increase of approximately $0.1 million.
Previous report — wording carried elsewhere
•Expenses on properties acquired during 2023 and 2024 increased property operating expenses by approximately $1.1 million;
Previous report — wording carried 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:
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
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.