Community Healthcare Trust Inc

Previous wording

The purpose of this Management's Discussion and Analysis ("MD&A") is to provide an understanding of the Company's consolidated financial condition, results of operations and cash. MD&A is provided as a supplement to, and should be read in conjunction with, the Company's Condensed Consolidated Financial Statements and accompanying notes.

Current wording

The purpose of this Management's Discussion and Analysis ("MD&A") is to provide an understanding of the Company's consolidated financial condition, results of operations and cash flows. MD&A is provided as a supplement to, and should be read in conjunction with, the Company's Condensed Consolidated Financial Statements and accompanying notes.

Previous wording

During the first quarter of 2026, the Company acquired one inpatient rehabilitation facility totaling approximately 37,151 square feet for an aggregate purchase price and cash consideration of approximately $28.5 million. The property was 100.0% leased with a lease expiration in 2044. The acquisition was funded with net proceeds from the Company's Revolving Credit Facility and from asset sales. See Note 4 – Real Estate Acquisition, Disposition, and Asset Held for Sale to the Condensed Consolidated Financial Statements for more details on this acquisition.

Current wording

During the first quarter of 2026, the Company acquired one inpatient rehabilitation facility totaling approximately 37,151 square feet for an aggregate purchase price and cash consideration of approximately $28.5 million. The property was 100.0% leased with a lease expiration in 2044. Amounts reflected in revenues and net income for the property for the nine months ended September 30, 2026 were approximately $1.9 million and $1.6 million, respectively. The acquisition was funded with net proceeds from the Company's Revolving Credit Facility and from asset sales. See Note 4 – Real Estate Acquisition, Disposition, and Assets Held for Sale to the Condensed Consolidated Financial Statements for more details on this acquisition.

Previous wording

The Company has four properties under definitive purchase agreements, to be acquired after completion and occupancy, for an aggregate expected purchase price of approximately $99.0 million. The Company anticipates closing on one of these properties in the third quarter of 2026 and another in the fourth quarter of 2026 and the remaining two properties in 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 with cash from operations, with net proceeds from equity or debt issuances, with the Company's Revolving Credit Facility, or from asset sales.

Current wording

The Company has four properties under definitive purchase agreements, to be acquired after completion and occupancy, for an aggregate expected purchase price of approximately $99.0 million. The Company anticipates closing on the first of these properties in the fourth quarter of 2026, a second in the first quarter of 2027, and the remaining two between mid-2027 and early 2028; 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 cash from operations, with net proceeds from equity or debt issuances, with the Company's Revolving Credit Facility, or from asset sales.

Previous wording

During the second quarter of 2026, the Company sold a property, received net proceeds of approximately $0.4 million, and recorded a $46,000 gain on sale. During the first quarter of 2026, the Company sold a property, received net proceeds of approximately $5.2 million, and recorded a $46,000 loss on sale. During the first quarter of 2026, the Company also received net cash proceeds of approximately $0.7 million for a property disposed of during the fourth quarter of 2025. The net proceeds were used to repay outstanding balances on the Company's Revolving Credit Facility.

Current wording

During the nine months ended September 30, 2026, the Company sold three properties, received aggregate net proceeds of approximately $5.7 million, and recorded a $0.7 million loss on sale in the aggregate. During the first quarter of 2026, the Company also received net cash proceeds of approximately $0.7 million for a property disposed of during the fourth quarter of 2025. The net proceeds were used to repay outstanding balances on the Company's Revolving Credit Facility.

Previous wording

As of June 30, 2026, our real estate portfolio was approximately 89.8% leased. During the first six months of 2026, we had expiring or terminated leases related to approximately 388,000 square feet, and we leased or renewed leases relating to approximately 342,000 square feet.

Current wording

As of September 30, 2026, our real estate portfolio, excluding assets held for sale, was approximately 90.1% leased. During the first nine months of 2026, we had expiring or terminated leases related to approximately 493,000 square feet, and we leased or renewed leases relating to approximately 450,000 square feet.

Previous wording

On March 29, 2026, the Company's interest rate swaps that had fixed the interest rate at a weighted average rate of approximately 3.8% on $75.0 million of its Revolving Credit Facility balance matured. The Company has not replaced these interest rate swaps, so interest on the $75.0 million is now under the Revolving Credit Facility floating rate. The floating rate for the Revolving Credit Facility at June 30, 2026 was approximately 5.3%. See Note 5 – Debt, net for more details on the Company's debt.

Current wording

On March 29, 2026, the Company's interest rate swaps that had fixed the interest rate at a weighted average rate of approximately 3.8% on $75.0 million of its Revolving Credit Facility balance matured. The Company has not replaced these interest rate swaps, so interest on the $75.0 million is now under the Revolving Credit Facility floating rate. The floating rate for the Revolving Credit Facility at September 30, 2026 was approximately 5.6%. See Note 5 – Debt, net for more details on the Company's debt.

Previous wording

Inflation has significantly increased during the past several years and a prolonged period 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 raised interest rates in 2022 and 2023, however, the Federal Reserve lowered interest rates in 2024 and 2025, and may provide additional rate changes during 2026. Higher interest rates may adversely impact real estate asset values and increase our interest expense on our variable-rate borrowings under our revolving credit facility.

Current wording

Inflation has significantly increased during the past several years and a prolonged period 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 raised interest rates in 2022 and 2023, however, the Federal Reserve lowered interest rates in 2024 and 2025, but have raised interest rates during 2026 and may provide additional rate increases during the remainder of 2026. Higher interest 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

The Company's results of operations for the three and six months ended June 30, 2026 compared to the same period in 2025 were impacted by real estate acquisitions and dispositions, and interest expense, as well as other items discussed in more detail below.

Current wording

The Company's results of operations for the three and nine months ended September 30, 2026 compared to the same periods in 2025 were impacted by real estate acquisitions and dispositions, and interest expense, as well as other items discussed in more detail below.

Previous wording

Rental income increased approximately $0.8 million, or 2.8%, for the three months ended June 30, 2026 compared to the same period in 2025 due mainly to the following:

Current wording

Rental income increased approximately $1.4 million, or 4.5%, for the three months ended September 30, 2026 compared to the same period in 2025 due mainly to the following:

Previous wording

•A decrease in rental income of approximately $0.3 million and non-cash straight line rent of approximately $0.6 million related to a tenant placed on cash basis during the six months ended June 30, 2026;

Current wording

•A decrease in rental income of approximately $0.2 million related to a tenant placed on cash basis during the three months ended June 30, 2026;

Previous wording

General and administrative expenses decreased approximately $5.7 million, or 36.2%, for the six months ended June 30, 2026 compared to the same period in 2025 due mainly to:

Current wording

General and administrative expenses decreased approximately $0.5 million, or 10.0%, for the three months ended September 30, 2026 compared to the same period in 2025 due mainly to a reduction in the non-cash amortization of stock-based compensation primarily due to fully amortized restricted stock shares and units.

Previous wording

•Depreciation and amortization expense decreased by approximately $0.1 million, or 1.3%, for the three months ended June 30, 2026 compared to the same period in 2025 impacted by the following:

Current wording

Depreciation and amortization expense decreased by approximately $0.2 million, or 2.1%, for the three months ended September 30, 2026 compared to the same period in 2025 due mainly to the following:

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 $0.8 million;

Previous wording

•Depreciation and amortization on real estate sold during 2026 and 2025 resulted in a decrease of approximately $0.1 million; offset partially by

Current wording

•Real estate properties sold during 2026 and 2025 resulted in a decrease of approximately $0.1 million; offset partially by

Previous wording

•Depreciation on tenant and other capital improvements resulted in an increase of approximately $0.3 million.

Current wording

•Tenant and other capital expenditures resulted in an increase of approximately $0.4 million.

Previous wording

•During the three months ended June 30, 2025, the Company amended an expired lease with a tenant which converted it from an operating lease to a sales-type lease. The Company recognized a gain on sale of the real estate totaling approximately $1.3 million. Also during the three months ended June 30, 2025, the Company sold a property and recognized a gain on the sale of approximately $0.2 million. Further, during the three months ended June 30, 2025, the Company recorded an impairment on a property classified as held for sale at the lower of the net book value and fair value less estimated cost to sell of approximately $0.9 million, based on a contract to sell the property.

Current wording

•During the three months ended September 30, 2026, the Company sold a property in Illinois and recognized a loss on sale of the real estate totaling approximately $0.7 million. Also during the three months ended September 30, 2026, the Company recorded an impairment on a property classified as held for sale at the lower of the net book value and fair value less estimated cost to sell of approximately $0.4 million, based on a contract to sell the property.

Previous wording

•During the three months ended June 30, 2025, the Company amended an expired lease with a tenant which converted it from an operating lease to a sales-type lease. The Company recognized a gain on sale of the real estate totaling approximately $1.3 million. Also during the three months ended June 30, 2025, the Company sold a property and recognized a gain on the sale of approximately $0.2 million. Further, during the three months ended June 30, 2025, the Company recorded an impairment on a property classified as held for sale at the lower of the net book value and fair value less estimated cost to sell of approximately $0.9 million, based on a contract to sell the property.

Current wording

•During the three months ended September 30, 2025, the Company sold a property in Pennsylvania and recognized a loss on sale of the real estate totaling approximately $0.2 million. Also during the three months ended September 30, 2025, the Company recorded an impairment on a property classified as held for sale at the lower of the net book value and fair value less estimated cost to sell of approximately $0.7 million, based on a contract to sell the property.

Previous wording

Interest expense increased approximately $0.8 million, or 12.7%, for the three months ended June 30, 2026 compared to the same period in 2025 due mainly to an increase in the weighted average balance on the Revolving Credit Facility and the maturity of two interest rate swaps on $75 million of the Revolving Credit Facility in March 2026, which were not replaced.

Current wording

Interest expense increased approximately $0.4 million, or 6.2%, for the three months ended September 30, 2026 compared to the same period in 2025 due mainly to an increase in the weighted average balance on the Revolving Credit Facility and the maturity of three interest rate swaps on $75 million of the Revolving Credit Facility in March 2026, which were not replaced.

Previous wording

Rental income increased approximately $2.4 million, or 4.0%, for the six months ended June 30, 2026 compared to the same period in 2025 due mainly to the following:

Current wording

Rental income increased approximately $3.8 million, or 4.1%, for the nine months ended September 30, 2026 compared to the same period in 2025 due mainly to the following:

Previous wording

•A decrease in rental income of approximately $0.3 million and non-cash straight line rent of approximately $0.6 million related to a tenant placed on cash basis during the three months ended June 30, 2026; and

Current wording

•A decrease in rental income of approximately $0.5 million and non-cash straight line rent of approximately $0.6 million related to a tenant placed on cash basis during the three months ended June 30, 2026;

Previous wording

Other operating interest increased $1.2 million for the six months ended June 30, 2026 compared to the same period in 2025 due mainly to the following:

Current wording

Other operating interest increased $1.2 million for the nine months ended September 30, 2026 compared to the same period in 2025 due mainly to the following:

Previous wording

•During the six months ended June 30, 2025, the Company reversed interest receivables due from geriatric behavioral hospital tenant totaling approximately $1.5 million, net of cash collections; offset partially by

Current wording

•During the nine months ended September 30, 2025, the Company reversed interest receivables due from geriatric behavioral hospital tenant totaling approximately $1.5 million; offset partially by

Previous wording

•Interest income recognized during the six months ended June 30, 2025 totaling approximately $0.3 million related to a loan that was repaid in June 2025.

Current wording

•Interest income recognized in 2025 totaling approximately $0.3 million related to a loan that was repaid in June 2025.

Previous wording

Property operating expenses increased approximately $0.6 million, or 4.7%, for the six months ended June 30, 2026 compared to the same period in 2025, due mainly to:

Current wording

Property operating expenses increased approximately $0.6 million, or 3.4%, for the nine months ended September 30, 2026 compared to the same period in 2025, due mainly to:

Previous wording

•Property operating expenses increased approximately $0.2 million due to leasing commission amortization, $0.2 million due to real estate taxes, $0.1 million due to utilities, $0.1 million due to repairs and maintenance costs, $0.1 million due to HOA/condo fees and $0.1 million due to landscaping costs (including snow plow); offset partially by

Current wording

•Property operating expenses increased approximately $0.3 million due to leasing commissions, $0.2 million due to real estate taxes, $0.2 million due to utilities, $0.1 million due to repairs and maintenance costs, $0.1 million due to landscaping costs (including snow plow); offset partially by

Previous wording

•A reduction of approximately $0.2 million in expenses due to properties sold during 2025 and 2026.

Current wording

•A reduction of approximately $0.3 million in expenses due to real estate properties sold during 2025 and 2026.

Previous wording

General and administrative expenses decreased approximately $5.7 million, or 53.7%, for the three months ended June 30, 2026 compared to the same period in 2025 due mainly to:

Current wording

General and administrative expenses decreased approximately $6.1 million, or 30.2%, for the nine months ended September 30, 2026 compared to the same period in 2025 due mainly to:

Previous wording

•During the second quarter of 2025, upon termination of a former executive officer, in accordance with the terms of his employment agreement, the Company accelerated the unamortized remaining balance of deferred compensation and recognized approximately $4.6 million of non-cash amortization expense. Additionally, the Company recognized approximately $1.3 million of severance and transition-related expenses; offset partially by

Current wording

•During the second quarter of 2025, upon termination of a former executive officer, in accordance with the terms of his employment agreement, the Company accelerated the unamortized remaining balance of deferred compensation and recognized approximately $4.6 million of non-cash amortization expense. Additionally, the Company recognized approximately $1.3 million of severance and transition-related expenses; and

Previous wording

•Non-cash amortization of other stock-based compensation increased approximately $0.2 million for the three months ended June 30, 2026 compared to the same period in 2025.

Current wording

•Non-cash amortization of other stock-based compensation decreased approximately $0.3 million for the nine months ended September 30, 2026 compared to the same period in 2025 primarily due to fully amortized restricted stock shares and units.

Previous wording

Depreciation and amortization expense decreased approximately $0.4 million, or 2.0%, for the six months ended June 30, 2026 compared to the same period in 2025. This decrease was comprised mainly of the following:

Current wording

Depreciation and amortization expense decreased approximately $0.7 million, or 2.0%, for the nine months ended September 30, 2026 compared to the same period in 2025. This decrease was comprised mainly of the following:

Previous wording

•Fully amortized real estate lease intangibles which generally have a shorter depreciable life than a building resulted in a decrease of approximately $1.4 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 $2.2 million; and

Previous wording

•Tenant improvements and other capital expenditures resulted in an increase of approximately $0.5 million; partially offset by

Current wording

•Tenant improvements and other capital expenditures resulted in an increase of approximately $0.9 million.

Previous wording

Interest expense increased approximately $1.3 million, or 9.9%, for the six months ended June 30, 2026 compared to the same period in 2025 due mainly to an increase in the weighted average balance on the Revolving Credit Facility and the maturity of two interest rate swaps on $75 million of the Revolving Credit Facility in March 2026, which were not replaced.

Current wording

Interest expense increased approximately $1.7 million, or 8.6%, for the nine months ended September 30, 2026 compared to the same period in 2025 due mainly to an increase in the weighted average balance on the Revolving Credit Facility and the maturity of three interest rate swaps on $75 million of the Revolving Credit Facility in March 2026, which were not replaced.

Previous wording

A credit loss reserve totaling $8.7 million was recorded during the three months ended June 30, 2025 related to notes receivable with a geriatric inpatient behavioral hospital tenant, fully reserving these notes in 2025. See Note 10 – Other Assets, net for more details on these notes and the credit loss reserve.

Current wording

A credit loss reserve totaling $8.7 million was recorded in 2025 related to notes receivable with a geriatric inpatient behavioral hospital tenant, fully reserving these notes in 2025. See Note 10 – Other Assets, net for more details.

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. The table below reconciles net income (loss) to FFO and AFFO for the three and six months ended June 30, 2026 compared to the same period in 2025.

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, 2026 compared to the same periods in 2025.

Previous wording

(1) During the three and six months ended June 30, 2025, the Company recorded a credit loss reserve on its notes related to a geriatric behavioral hospital tenant totaling approximately $8.7 million. Because these notes are incidental to the Company's main business, the Company added back these reserves in its calculations of FFO and AFFO.

Current wording

(1) During the nine months ended September 30, 2025, the Company recorded a credit loss reserve on its notes related to a geriatric behavioral hospital tenant totaling approximately $8.7 million. Because these notes are incidental to the Company's main business, the Company added back these reserves in its calculations of FFO and AFFO.

Previous wording

(2) During the three and six months ended June 30, 2025, the Company recorded severance and transition-related charges totaling approximately $5.9 million, including non-cash accelerated amortization of stock-based compensation of approximately $4.6 million, which in total reduced FFO per diluted common share by approximately $0.22 for the three and six months ended June 30, 2025.

Current wording

(2) During the nine months ended September 30, 2025, the Company recorded severance and transition-related charges totaling approximately $5.9 million, including non-cash accelerated amortization of stock-based compensation of approximately $4.6 million, which in total reduced FFO per diluted common share by approximately $0.22 for the nine months ended September 30, 2025.

Previous wording

(3) During the three and six months ended June 30, 2025, the Company reversed interest related to a geriatric behavioral hospital tenant totaling approximately $1.7 million, resulting in a reduction of FFO and AFFO per diluted share of approximately $0.06.

Current wording

(3) During the nine months ended September 30, 2025, the Company reversed interest related to a geriatric behavioral hospital tenant totaling approximately $1.7 million, resulting in a reduction of FFO and AFFO per diluted share of approximately $0.06.

Previous wording

The table below reconciles net income (loss) to NOI for the three and six months ended June 30, 2026 compared to the same period in 2025.

Current wording

The table below reconciles net income (loss) to NOI for the three and nine months ended September 30, 2026 compared to the same periods in 2025.

Previous wording

The Company uses the NAREIT definition of EBITDAre which is net income or loss plus interest expense, income tax expense, and depreciation and amortization, plus losses or minus gains on the disposition of depreciable property, including losses/gains on change of control, plus impairment write-downs of depreciable property and of investments in unconsolidated affiliates caused by a decrease in value of depreciable property in the affiliate, plus or minus adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates and consolidated affiliates with non-controlling interest. The Company also presents Adjusted EBITDAre which is EBITDAre before non-cash stock-based compensation expense.

Current wording

The Company uses the NAREIT definition of EBITDAre which is net income or loss plus interest expense, income tax expense, and depreciation and amortization, plus losses or minus gains on the disposition of depreciable property, including losses/gains on change of control, plus impairment write-downs of depreciable property and of investments in unconsolidated affiliates caused by a decrease in value of depreciable property in the affiliate, plus or minus adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates and consolidated affiliates with non-controlling interest. The Company also presents Adjusted EBITDAre which is EBITDAre before non-cash stock-based compensation expense, accelerated amortization of deferred compensation, and credit loss reserve.