Acquires $149 Million in Medical Real Estate
During 2022
Global Medical REIT Inc. (NYSE: GMRE) (the “Company” or “GMRE”),
a net-lease medical office real estate investment trust (REIT) that
owns and acquires healthcare facilities and leases those facilities
to physician groups and regional and national healthcare systems,
today announced financial results for the three and twelve months
ended December 31, 2022 and other data.
Jeffrey M. Busch, Chairman, Chief Executive Officer and
President stated, “We were able to navigate through a challenging
period during 2022 by relying on the quality of our portfolio and
the resilience of our tenant base. With the rise in interest rates,
we prudently moderated our pace of growth, even as we locked in
long term capital at very favorable rates. As we look to the
future, we believe we are well-positioned to restart our
acquisition activity as cap rate spreads return to an attractive
level, and markets normalize. I would like to thank the entire team
for their collective efforts and contributions to these
results.”
Fourth Quarter 2022 Highlights
- Net income attributable to common stockholders was $0.4
million, or $0.01 per diluted share, as compared to $3.8 million,
or $0.06 per diluted share, in the comparable prior year
period.
- Funds from Operations (“FFO”) of $15.5 million, or $0.22 per
share and unit, as compared to $15.6 million, or $0.23 per share
and unit, in the comparable prior year period.
- Adjusted Funds from Operations (“AFFO”) of $16.5 million, or
$0.24 per share and unit, as compared to $16.4 million, or $0.24
per share and unit, in the comparable prior year period.
- Increased total revenue 19.6% year-over-year to $36.3 million,
primarily driven by the Company’s acquisition activity since the
comparable prior year period.
Full Year 2022 Highlights
- Net income attributable to common stockholders was $13.3
million, or $0.20 per diluted share, as compared to $11.8 million,
or $0.19 per diluted share, in the comparable prior year
period.
- FFO of $64.0 million, or $0.92 per share and unit, as compared
to $58.2 million, or $0.90 per share and unit, in the comparable
prior year period.
- AFFO of $68.0 million, or $0.98 per share and unit, as compared
to $61.4 million, or $0.95 per share and unit, in the comparable
prior year period.
- Increased total revenue 18.4% year-over-year to $137.3 million,
primarily driven by the Company’s acquisition activity since the
comparable prior year period.
- Completed 14 acquisitions encompassing an aggregate 583,253
leasable square feet, for an aggregate purchase price of $148.9
million and a weighted average cap rate of 7.4%.
- Sold a medical office building located in Germantown,
Tennessee, receiving gross proceeds of $17.9 million, resulting in
a gain of $6.8 million.
- Amended credit facility to, among other things: (i) add a new
$150 million term loan with a maturity date of February 1, 2028,
(ii) extend the maturity of the revolver component of the credit
facility from May 2025 to August 2026 with two six-month
company-controlled extension options, and (iii) transition all
LIBOR-based loans under the credit facility to SOFR-based
loans.
- Entered into interest rate swaps with a notional value of $150
million that fix the SOFR component of the new term loan at 2.54%
through its maturity.
- Generated $10.3 million in gross proceeds from ATM equity
issuances at an average offering price of $17.15 per share.
Financial Results
Rental revenue for the fourth quarter 2022 increased 19.7%
year-over-year to $36.3 million, reflecting the growth in the
Company’s portfolio.
Total expenses for the fourth quarter were $34.5 million,
compared to $25.9 million for the comparable prior year period,
primarily reflecting higher interest, operating, depreciation, and
amortization expenses due to the growth in the Company’s portfolio
as well as rising interest rates in 2022.
Interest expense for the fourth quarter was $8.1 million,
compared to $4.8 million for the comparable prior year period. This
change was primarily the result of increased interest rates during
2022. The Company’s weighted average interest rate on its
indebtedness increased from 2.88% in the fourth quarter of 2021 to
4.07% during the fourth quarter of 2022.
Net income attributable to common stockholders for the fourth
quarter totaled $0.4 million, or $0.01 per diluted share, compared
to $3.8 million, or $0.06 per diluted share, in the comparable
prior year period.
The Company reported FFO of $15.5 million, or $0.22 per share
and unit, and AFFO of $16.5 million, or $0.24 per share and unit,
for the fourth quarter of 2022, which compares to FFO of $15.6
million, or $0.23 per share and unit, and AFFO of $16.4 million, or
$0.24 per share and unit, in the comparable prior year period.
Investment Activity
For the full year 2022, the Company completed 14 acquisitions,
encompassing an aggregate 583,253 leasable square feet, for an
aggregate purchase price of $148.9 million at a weighted average
cap rate of 7.4%.
In July 2022, the Company sold its medical office building
located in Germantown, Tennessee receiving gross proceeds of $17.9
million, resulting in a gain on sale of $6.8 million.
As of February 28, 2023, the Company had one property under
contract to acquire for a purchase price of $6.7 million. This
property is currently in the due diligence period and is subject to
various closing conditions. Accordingly, the transaction may not
close on a timely basis or we may terminate the purchase contract
and not close the transaction.
As of February 28, 2023, the Company had two properties under
contract to sell for an aggregate sales price of $11.6 million. The
buyers are currently in the due diligence periods and the
transactions are subject to various closing conditions.
Accordingly, the transactions may not close on a timely basis or
the buyers may terminate the purchase agreements and not close the
transactions.
Portfolio Update
As of December 31, 2022, the Company’s portfolio was 96.5%
occupied and comprised of 4.9 million leasable square feet with an
annualized base rent of $114.5 million. The weighted average lease
term for the Company’s portfolio was 6.2 years with weighted
average annual rental escalations of 2.1%, and the Company’s
portfolio rent coverage ratio was 4.4 times as of December 31,
2022.
Balance Sheet and Capital
At December 31, 2022, total debt outstanding, including
outstanding borrowings on the Company’s credit facility and notes
payable (both net of unamortized debt issuance costs), was $694.1
million and the Company’s leverage was 47.6%, which was unchanged
compared to September 30, 2022 and up from 43.0% at year-end 2021.
As of December 31, 2022, the Company’s total debt carried a
weighted average interest rate of 4.20% and a weighted average
remaining term of 3.9 years. As of February 28, 2023, the Company’s
unutilized borrowing capacity under the Company’s credit facility
was $245.0 million.
The Company’s fixed debt totaled $558.1 million on a gross basis
at December 31, 2022, representing 79% of its total debt, with a
weighted average interest rate of 3.75% based on the Company’s
interest rate swaps and at current leverage, with a weighted
average maturity of 3.8 years. Due to the Company’s forward swap
structures, the weighted average interest rate on fixed debt is
expected to improve over the next few years. Weighted average
interest rates on the Company’s fixed debt are expected to decrease
to approximately 3.67% in 2023, 3.50% in 2024, and 3.43% in 2025,
based on the Company’s current leverage.
During the year ended December 31, 2022, the Company issued 0.6
million shares of common stock through its ATM program at an
average offering price of $17.15 per share, generating gross
proceeds of $10.3 million. The Company did not issue any shares
under its ATM program during the fourth quarter of 2022.
Dividends
On December 7, 2022, the Board of Directors (the “Board”)
declared a $0.21 per share cash dividend to common stockholders and
unitholders of record as of December 22, 2022, which was paid on
January 9, 2023, representing the Company’s fourth quarter 2022
dividend payment. The Board also declared a $0.46875 per share cash
dividend to holders of record as of January 15, 2023 of the
Company’s Series A Preferred Stock, which was paid on January 31,
2023. This dividend represented the Company’s quarterly dividend on
its Series A Preferred Stock for the period from October 31, 2022
through January 30, 2023.
2023 Annual Meeting
On February 23, 2023, the Board approved the meeting and record
dates for the Company’s 2023 Annual Stockholders’ Meeting. The
Meeting will be held on Wednesday, May 10, 2023. Stockholders of
record as of March 15, 2023 will be eligible to vote at the
Meeting.
SUPPLEMENTAL INFORMATION
Details regarding these results can be found in the Company’s
supplemental financial package available on the Investor Relations
section of the Company’s website at
http://investors.globalmedicalreit.com/.
CONFERENCE CALL AND WEBCAST INFORMATION
The Company will host a live webcast and conference call on
Wednesday, March 1, 2023 at 9:00 a.m. Eastern Time. The webcast is
located on the “Investor Relations” section of the Company’s
website at http://investors.globalmedicalreit.com/.
To Participate via Telephone:
Dial in at least five minutes prior to start time and reference
Global Medical REIT Inc. Domestic: 1-877-704-4453 International:
1-201-389-0920
Replay:
An audio replay of the conference call will be posted on the
Company’s website.
NON‐GAAP FINANCIAL MEASURES
General
Management considers certain non-GAAP financial measures to be
useful supplemental measures of the Company's operating
performance. For the Company, non-GAAP measures consist of Earnings
Before Interest, Taxes, Depreciation and Amortization for Real
Estate (“EBITDAre” and “Adjusted EBITDAre”), FFO and AFFO. A
non-GAAP financial measure is generally defined as one that
purports to measure financial performance, financial position or
cash flows, but excludes or includes amounts that would not be so
adjusted in the most comparable measure determined in accordance
with GAAP. The Company reports non-GAAP financial measures because
these measures are observed by management to also be among the most
predominant measures used by the REIT industry and by industry
analysts to evaluate REITs. For these reasons, management deems it
appropriate to disclose and discuss these non-GAAP financial
measures.
The non-GAAP financial measures presented herein are not
necessarily identical to those presented by other real estate
companies due to the fact that not all real estate companies use
the same definitions. These measures should not be considered as
alternatives to net income, as indicators of the Company's
financial performance, or as alternatives to cash flow from
operating activities as measures of the Company's liquidity, nor
are these measures necessarily indicative of sufficient cash flow
to fund all of the Company's needs. Management believes that in
order to facilitate a clear understanding of the Company's
historical consolidated operating results, these measures should be
examined in conjunction with net income and cash flows from
operations as presented elsewhere herein.
FFO and AFFO
FFO and AFFO are non-GAAP financial measures within the meaning
of the rules of the United States Securities and Exchange
Commission (“SEC”). The Company considers FFO and AFFO to be
important supplemental measures of its operating performance and
believes FFO is frequently used by securities analysts, investors,
and other interested parties in the evaluation of REITs, many of
which present FFO when reporting their results. In accordance with
the National Association of Real Estate Investment Trusts’
(“NAREIT”) definition, FFO means net income or loss computed in
accordance with GAAP before noncontrolling interests of holders of
OP units and LTIP units, excluding gains (or losses) from sales of
property and extraordinary items, less preferred stock dividends,
plus real estate-related depreciation and amortization (excluding
amortization of debt issuance costs and the amortization of above
and below market leases), and after adjustments for unconsolidated
partnerships and joint ventures. Because FFO excludes real
estate-related depreciation and amortization (other than
amortization of debt issuance costs and above and below market
lease amortization expense), the Company believes that FFO provides
a performance measure that, when compared period-over-period,
reflects the impact to operations from trends in occupancy rates,
rental rates, operating costs, development activities and interest
costs, providing perspective not immediately apparent from the
closest GAAP measurement, net income or loss.
AFFO is a non-GAAP measure used by many investors and analysts
to measure a real estate company’s operating performance by
removing the effect of items that do not reflect ongoing property
operations. Management calculates AFFO by modifying the NAREIT
computation of FFO by adjusting it for certain cash and non-cash
items and certain recurring and non-recurring items. For the
Company these items include: (a) recurring acquisition and
disposition costs, (b) loss on the extinguishment of debt, (c)
recurring straight line deferred rental revenue, (d) recurring
stock-based compensation expense, (e) recurring amortization of
above and below market leases, (f) recurring amortization of debt
issuance costs, (g) recurring lease commissions, and (h) other
items.
Management believes that reporting AFFO in addition to FFO is a
useful supplemental measure for the investment community to use
when evaluating the operating performance of the Company on a
comparative basis.
EBITDAre and Adjusted EBITDAre
We calculate EBITDAre in accordance with standards established
by NAREIT and define EBITDAre as net income or loss computed in
accordance with GAAP plus depreciation and amortization, interest
expense, gain or loss on the sale of investment properties, and
impairment loss, as applicable.
We define Adjusted EBITDAre as EBITDAre plus non-cash stock
compensation expense, non-cash intangible amortization related to
above and below market leases, preacquisition expense and other
normalizing items. Management considers EBITDAre and Adjusted
EBITDAre important measures because they provide additional
information to allow management, investors, and our current and
potential creditors to evaluate and compare our core operating
results and our ability to service debt.
RENT COVERAGE RATIO
For purposes of calculating our portfolio weighted-average
EBITDARM coverage ratio (“Rent Coverage Ratio”), we excluded
credit-rated tenants or their subsidiaries for which financial
statements were either not available or not sufficiently detailed.
These ratios are based on latest available information only. Most
tenant financial statements are unaudited and we have not
independently verified any tenant financial information (audited or
unaudited) and, therefore, we cannot assure you that such
information is accurate or complete. Certain other tenants
(approximately 16% of our portfolio) are excluded from the
calculation due to (i) lack of available financial information or
(ii) small tenant size. Additionally, included within 16% of
non-reporting tenants is Pipeline Healthcare, LLC, which filed for
Chapter 11 bankruptcy protection in October of 2022. Additionally,
our Rent Coverage Ratio adds back physician distributions and
compensation. Management believes all adjustments are reasonable
and necessary.
ANNUALIZED BASE RENT
Annualized base rent represents monthly base rent for December
2022, multiplied by 12 (or base rent net of annualized expenses for
properties with gross leases). Accordingly, this methodology
produces an annualized amount as of a point in time but does not
take into account future (i) contractual rental rate increases,
(ii) leasing activity or (iii) lease expirations. Additionally,
leases that are accounted for on a cash-collected basis are not
included in annualized base rent.
CAPITALIZATION RATE
The capitalization rate (“cap rate”) for an acquisition is
calculated by dividing current Annualized Base Rent by contractual
purchase price. For the portfolio capitalization rate, certain
adjustments, including for subsequent capital invested, are made to
the contractual purchase price.
FORWARD-LOOKING STATEMENTS
Certain statements contained herein may be considered
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, and it is the Company’s
intent that any such statements be protected by the safe harbor
created thereby. These forward-looking statements are identified by
their use of terms and phrases such as "anticipate," "believe,"
"could," "estimate," "expect," "intend," "may," "should," "plan,"
"predict," "project," "will," "continue" and other similar terms
and phrases, including references to assumptions and forecasts of
future results. Except for historical information, the statements
set forth herein including, but not limited to, any statements
regarding our earnings, our liquidity, our tenants’ ability to pay
rent to us, expected financial performance (including future cash
flows associated with new tenants or the expansion of current
properties), future dividends or other financial items; any other
statements concerning our plans, strategies, objectives and
expectations for future operations and future portfolio occupancy
rates, our pipeline of acquisition opportunities and expected
acquisition activity, including the timing and/or successful
completion of any acquisitions and expected rent receipts on these
properties, our expected disposition activity, including the timing
and/or successful completion of any dispositions and the expected
use of proceeds therefrom, and any statements regarding future
economic conditions or performance are forward-looking statements.
These forward-looking statements are based on our current
expectations, estimates and assumptions and are subject to certain
risks and uncertainties. Although the Company believes that the
expectations, estimates and assumptions reflected in its
forward-looking statements are reasonable, actual results could
differ materially from those projected or assumed in any of the
Company’s forward-looking statements. Additional information
concerning us and our business, including additional factors that
could materially and adversely affect our financial results,
include, without limitation, the risks described under Part I, Item
1A - Risk Factors, in our Annual Report on Form 10-K, our Quarterly
Reports on Form 10-Q, and in our other filings with the SEC. You
are cautioned not to place undue reliance on forward-looking
statements. The Company does not intend, and undertakes no
obligation, to update any forward-looking statement.
GLOBAL MEDICAL REIT
INC.
Condensed Consolidated Balance
Sheets
(unaudited, and in thousands,
except par values)
As of December 31,
2022
2021
Assets
Investment in real estate:
Land
$
168,308
$
152,060
Building
1,079,781
985,091
Site improvements
22,024
19,021
Tenant improvements
65,987
58,900
Acquired lease intangible assets
148,077
127,931
1,484,177
1,343,003
Less: accumulated depreciation and
amortization
(198,218
)
(143,255
)
Investment in real estate, net
1,285,959
1,199,748
Cash and cash equivalents
4,016
7,213
Restricted cash
10,439
5,546
Tenant receivables, net
8,040
6,070
Due from related parties
200
163
Escrow deposits
7,833
5,957
Deferred assets
29,616
25,417
Derivative asset
34,705
1,236
Goodwill
5,903
5,903
Other assets
6,550
6,232
Total assets
$
1,393,261
$
1,263,485
Liabilities and Equity
Liabilities:
Credit Facility, net of unamortized debt
issuance costs of $9,253 and $8,033 at December 31, 2022 and
December 31, 2021, respectively
$
636,447
$
514,567
Notes payable, net of unamortized debt
issuance costs of $452 and $607 at December 31, 2022 and December
31, 2021, respectively
57,672
57,162
Accounts payable and accrued expenses
13,819
10,344
Dividends payable
15,821
15,668
Security deposits
5,461
4,540
Derivative liability
—
7,790
Other liabilities
7,363
7,709
Acquired lease intangible liability,
net
7,613
8,128
Total liabilities
744,196
625,908
Commitments and Contingencies
Equity:
Preferred stock, $0.001 par value, 10,000
shares authorized; 3,105 issued and outstanding at December 31,
2022 and December 31, 2021, respectively (liquidation preference of
$77,625 at December 31, 2022 and December 31, 2021,
respectively)
74,959
74,959
Common stock, $0.001 par value, 500,000
shares authorized; 65,518 shares and 64,880 shares issued and
outstanding at December 31, 2022 and December 31, 2021,
respectively
66
65
Additional paid-in capital
721,991
711,414
Accumulated deficit
(198,706
)
(157,017
)
Accumulated other comprehensive income
(loss)
34,674
(6,636
)
Total Global Medical REIT Inc.
stockholders' equity
632,984
622,785
Noncontrolling interest
16,081
14,792
Total equity
649,065
637,577
Total liabilities and equity
$
1,393,261
$
1,263,485
GLOBAL MEDICAL REIT
INC.
Condensed Consolidated
Statements of Operations
(unaudited, and in thousands,
except per share amounts)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2022
2021
2022
2021
Revenue
Rental revenue
$
36,290
$
30,312
$
137,167
$
115,804
Other income
16
32
116
132
Total revenue
36,306
30,344
137,283
115,936
Expenses
General and administrative
4,051
3,934
16,545
16,453
Operating expenses
7,138
4,525
25,188
15,488
Depreciation expense
10,580
9,046
40,008
33,825
Amortization expense
4,513
3,607
16,715
13,050
Interest expense
8,064
4,809
25,230
19,696
Preacquisition expense
112
5
354
151
Total expenses
34,458
25,926
124,040
98,663
Income before gain on sale of investment
property
1,848
4,418
13,243
17,273
Gain on sale of investment property
—
1,069
6,753
1,069
Net income
$
1,848
$
5,487
$
19,996
$
18,342
Less: Preferred stock dividends
(1,455
)
(1,455
)
(5,822
)
(5,822
)
Less: Net income attributable to
noncontrolling interest
(24
)
(228
)
(854
)
(720
)
Net income attributable to common
stockholders
$
369
$
3,804
$
13,320
$
11,800
Net income attributable to common
stockholders per share – basic and diluted
$
0.01
$
0.06
$
0.20
$
0.19
Weighted average shares outstanding –
basic and diluted
65,518
64,326
65,462
60,640
Global Medical REIT
Inc.
Reconciliation of Net Income
to FFO and AFFO
(unaudited, and in thousands,
except per share and unit amounts)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2022
2021
2022
2021
Net income
$
1,848
$
5,487
$
19,996
$
18,342
Less: Preferred stock dividends
(1,455
)
(1,455
)
(5,822
)
(5,822
)
Depreciation and amortization expense
15,064
12,624
56,611
46,764
Gain on sale of investment property
—
(1,069
)
(6,753
)
(1,069
)
FFO
$
15,457
$
15,587
$
64,032
$
58,215
Amortization of above market leases,
net
292
202
1,027
520
Straight line deferred rental revenue
(1,006
)
(1,170
)
(4,251
)
(5,317
)
Stock-based compensation expense
1,066
1,242
4,681
5,810
Amortization of debt issuance costs and
other
601
514
2,201
1,982
Preacquisition expense
112
5
354
151
AFFO
$
16,522
$
16,380
$
68,044
$
61,361
Net income attributable to common
stockholders per share – basic and diluted
$
0.01
$
0.06
$
0.20
$
0.19
FFO per share and unit
$
0.22
$
0.23
$
0.92
$
0.90
AFFO per share and unit
$
0.24
$
0.24
$
0.98
$
0.95
Weighted Average Shares and Units
Outstanding – basic and diluted
69,725
68,214
69,662
64,548
Weighted Average
Shares and Units Outstanding:
Weighted Average Common Shares
65,518
64,326
65,462
60,640
Weighted Average OP Units
1,668
1,702
1,669
1,732
Weighted Average LTIP Units
2,539
2,186
2,531
2,176
Weighted Average Shares and Units
Outstanding – basic and diluted
69,725
68,214
69,662
64,548
Global Medical REIT
Inc.
Reconciliation of Net Income
to EBITDAre and Adjusted EBITDAre
(unaudited, and in thousands)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2022
2021
2022
2021
Net income
$
1,848
$
5,487
$
19,996
$
18,342
Interest expense
8,064
4,809
25,230
19,696
Depreciation and amortization expense
15,093
12,653
56,723
46,875
Gain on sale of investment property
—
(1,069
)
(6,753
)
(1,069
)
EBITDAre
$
25,005
$
21,880
$
95,196
$
83,844
Stock-based compensation expense
1,066
1,242
4,681
5,810
Amortization of above market leases,
net
292
202
1,027
520
Preacquisition expense
112
5
354
151
Adjusted EBITDAre
$
26,475
$
23,329
$
101,258
$
90,325
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230228006365/en/
Investor Relations: Stephen
Swett stephen.swett@icrinc.com 203.682.8377
Global Med REIT (NYSE:GMRE)
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