Community Healthcare Trust Announces Results for the Three Months Ended June 30, 2020

Rhea-AI Summary

Community Healthcare Trust Incorporated (NYSE: CHCT) reported a net income of approximately $4.5 million, or $0.19 per diluted share, for Q2 2020. Funds from operations and adjusted funds from operations stood at $0.51 and $0.52 per diluted share, respectively. The company raised approximately $23.7 million by issuing 578,759 shares at an average price of $41.70 each. It also acquired seven properties for $21.3 million, fully leased until 2035. A quarterly dividend of $0.4225 per share was declared. Additionally, the company has deferral agreements with 20 tenants due to COVID-19 impacts.

Positive

• Net income of approximately $4.5 million, or $0.19 per diluted share.
• Funds from operations and adjusted funds from operations were $0.51 and $0.52 per diluted share, respectively.
• Raised approximately $23.7 million through the issuance of 578,759 shares at an average price of $41.70.
• Acquired seven fully leased properties for $21.3 million with lease expirations through 2035.
• Declared a quarterly dividend of $0.4225 per share.

Negative

• Anticipates entering into deferral agreements with 20 tenants, which may indicate cash flow concerns.
• Uncertainty regarding the timing and completion of future property acquisitions.

FRANKLIN, Tenn., Aug. 4, 2020 /PRNewswire/ -- Community Healthcare Trust Incorporated (NYSE: CHCT) (the "Company") today announced results for the three months ended June 30, 2020. The Company reported net income for the second quarter of approximately $4.5 million, or $0.19 per diluted common share. Funds from operations and adjusted funds from operations ("AFFO") for the three months ended June 30, 2020 totaled $0.51 and $0.52, respectively, per diluted common share.

Highlights include:

• During the second quarter of 2020, the Company issued, through its at-the-market offering program ("ATM Program"), 578,759 shares of common stock at an average gross sales price of $41.70 per share and received net proceeds of approximately $23.7 million at an approximate 4.11% current equity yield.
• During the second quarter of 2020, the Company acquired seven real estate properties totaling approximately 92,000 square feet and also acquired a land parcel adjacent to one of our existing properties to be used for additional parking for an aggregate purchase price of approximately $21.3 million and cash consideration of approximately $21.5 million. Upon acquisition, the real estate properties were 100% leased in the aggregate with lease expirations through 2035.
• The Company has two properties under definitive purchase agreements for an aggregate expected purchase price of approximately $2.6 million and expected aggregate returns of approximately 9.3%. The Company expects to close on these properties in the third quarter of 2020; however, the Company cannot provide assurance as to the timing of when, or whether, these transactions will actually close.
• The Company has three properties under definitive purchase agreements, to be acquired after completion and occupancy, for an aggregate expected purchase price of approximately $68.0 million. The Company's expected aggregate returns on these investments range from approximately 9.5% to 11.0%. The Company expects to close on one of these properties in the fourth quarter and the other two through the middle of 2021; however, the Company cannot provide assurance as to the timing of when, or whether, these transactions will actually close.
• On August 3, 2020, the Company's Board of Directors declared a quarterly common stock dividend in the amount of $0.4225 per share. The dividend is payable on August 28, 2020 to stockholders of record on August 17, 2020.

COVID-19 Pandemic

• Many healthcare providers have been impacted by the COVID-19 pandemic. Some of them were unable to see patients for a period of time; others have seen a reduced number of elective procedures and/or patient visits; while others have experienced limited impact, or have even seen improved cash flows from either increases in census or from government funding.
• As of July 31, 2020, the Company has entered into, or anticipates entering into, deferral agreements with up to approximately 20 tenants representing less than one percent of our annualized rent. Pursuant to these agreements, the tenants are generally required to repay the deferred amounts in equal monthly installments during the third and fourth quarters of 2020.

Highland Update:

• On July 1, 2020, the bankruptcy sale of Highland Hospital was completed and the operator who had been managing the facility acquired its operations and entered into a lease with the Company.
• The Company provided debtor in possession financing (the "DIP") to facilitate the sale and, as of the closing of the sale, had an approximately $1.2 million net payable. In addition, the Company continued to have a net investment of $550,000 in a separate note (the "Note"), secured by all assets of Highland Hospital.
• As of the date of this filing, the DIP and the Note have been combined into a single net receivable balance of approximately $1.4 million.
• The Company expects this receivable to be repaid in the next few months, as well as other amounts previously owed to the Company. However, the Company cannot provide assurance as to the timing or whether the receivable and other amounts will be received.

About Community Healthcare Trust Incorporated
Community Healthcare Trust Incorporated is a real estate investment trust that focuses on owning income-producing real estate properties associated primarily with the delivery of outpatient healthcare services in our target sub-markets throughout the United States. The Company had investments of approximately $664.7 million in 131 real estate properties as of June 30, 2020, located in 33 states, totaling approximately 2.8 million square feet.

Additional information regarding the Company, including this quarter's operations, can be found at www.chct.reit.  Please contact the Company at 615-771-3052 to request a printed copy of this information.

Cautionary Note Regarding Forward-Looking Statements

This press release contains 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", "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, the degree and nature of the Company's competition, the ability to consummate acquisitions under contract, effects on global and national markets as well as businesses resulting from the COVID-19 pandemic, 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, 2019, in the Quarterly Report on Form 10-Q for the Quarter Ending March 31, 2020, and the Company's other filings with the Securities and Exchange Commission from time to time. Readers are therefore cautioned not to place undue reliance on the forward-looking statements contained herein which speak only as of the date hereof.  The Company intends these forward-looking statements to speak only as of the time of this release and the Company undertakes no obligation to update forward-looking statements, whether as a result of new information, future developments, or otherwise, except as may be required by law.

COMMUNITY HEALTHCARE TRUST INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited; Dollars in thousands, except per share amounts)
	June 30, 2020				December 31, 2019
ASSETS
Real estate properties:
Land and land improvements	$	78,999			$	68,129
Buildings, improvements, and lease intangibles	585,454				534,503
Personal property	234				220
Total real estate properties	664,687				602,852
Less accumulated depreciation	(89,698)				(77,523)
Total real estate properties, net	574,989				525,329
Cash and cash equivalents	4,896				1,730
Restricted cash	351				293
Other assets, net	32,068				35,179
Total assets	$	612,304			$	562,531
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Debt, net	$	197,309			$	194,243
Accounts payable and accrued liabilities	5,497				3,606
Other liabilities	22,395				11,271
Total liabilities	225,201				209,120
Commitments and contingencies
Stockholders' Equity
Preferred stock, $0.01 par value; 50,000,000 shares authorized; none issued and outstanding	—				—
Common stock, $0.01 par value; 450,000,000 shares authorized; 22,726,141 and 21,410,578 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively	227				214
Additional paid-in capital	500,477				447,916
Cumulative net income	26,180				17,554
Accumulated other comprehensive (loss) income	(13,969)				(4,808)
Cumulative dividends	(125,812)				(107,465)
Total stockholders' equity	387,103				353,411
Total liabilities and stockholders' equity	$	612,304			$	562,531

The Condensed Consolidated Balance Sheets do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

 

COMMUNITY HEALTHCARE TRUST INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 (Unaudited; Dollars in thousands, except per share amounts)
	Three Months Ended June 30,								Six Months Ended June 30,
	2020				2019				2020				2019
REVENUES
Rental income	$	17,830			$	13,361			$	35,258			$	26,259
Other operating interest	450				955				958				1,498
	18,280				14,316				36,216				27,757
EXPENSES
Property operating	3,223				2,993				6,566				6,068
General and administrative	1,919				1,776				4,111				3,561
Depreciation and amortization	6,119				5,299				12,178				10,545
	11,261				10,068				22,855				20,174
OTHER INCOME (EXPENSE)
Loss on sale of real estate	(313)				—				(313)				—
Interest expense	(2,183)				(2,251)				(4,432)				(4,305)
Interest and other income, net	3				69				10				238
	(2,493)				(2,182)				(4,735)				(4,067)
NET INCOME	$	4,526			$	2,066			$	8,626			$	3,516
NET INCOME PER COMMON SHARE:
Net income per common share – Basic	$	0.19			$	0.09			$	0.37			$	0.16
Net income per common share – Diluted	$	0.19			$	0.09			$	0.37			$	0.16
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING-BASIC	21,264				18,246				20,999				18,101
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING-DILUTED	21,264				18,246				20,999				18,101

The Condensed Consolidated Statements of Income do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

 

COMMUNITY HEALTHCARE TRUST INCORPORATED RECONCILIATION OF FFO and AFFO (1) (Unaudited; Amounts in thousands, except per share amounts)
	Three Months Ended June 30,
	2020				2019
Net income	$	4,526			$	2,066
Real estate depreciation and amortization	6,168				5,340
Loss on sale of depreciable real estate	313				—
Total adjustments	6,481				5,340
Funds From Operations	$	11,007			$	7,406
Straight-line rent	(725)				(413)
Stock-based compensation	1,070				899
AFFO	$	11,352			$	7,892
Funds from Operations per Common Share-Diluted	$	0.51			$	0.40
AFFO Per Common Share-Diluted	$	0.52			$	0.42
Weighted Average Common Shares Outstanding-Diluted (2)	21,750				18,685

(1)		Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time.  However, since real estate values have historically risen or fallen with market conditions, many industry investors deem presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For that reason, the Company considers funds from operations ("FFO") and adjusted funds from operations ("AFFO") to be appropriate measures of operating performance of an equity real estate investment trust ("REIT"). In particular, the Company believes that AFFO is useful because it allows investors, analysts and Company management to compare the Company's operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by unanticipated items and other events.   The Company uses the National Association of Real Estate Investment Trusts, Inc. ("NAREIT") definition of FFO. FFO and FFO per share are operating performance measures adopted by NAREIT. NAREIT defines FFO as the most commonly accepted and reported measure of a REIT's operating performance equal to net income (calculated in accordance with GAAP), excluding gains or losses from the sale of certain real estate assets and gains or losses from change in control, plus depreciation and amortization related to real estate, plus impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, and after adjustments for unconsolidated partnerships and joint ventures, as well as other items discussed in NAREIT's Funds From Operations White Paper - 2018 Restatement. NAREIT also provides REITs with an option to exclude gains, losses and impairments of assets that are incidental to the main business of the REIT from the calculation of FFO. AFFO presented herein may not be comparable to similar measures presented by other real estate companies due to the fact that not all real estate companies use the same definition.   FFO and AFFO should not be considered as alternatives to net income (determined in accordance with GAAP) as indicators of the Company's financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of the Company's liquidity, nor are they necessarily indicative of sufficient cash flow to fund all of the Company's needs. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO and AFFO should be examined in conjunction with net income as presented elsewhere herein.
(2)		Diluted weighted average common shares outstanding for FFO are calculated based on the treasury method, rather than the 2-class method used to calculate earnings per share.

CONTACT:  David H. Dupuy, 615-771-3052

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SOURCE Community Healthcare Trust Incorporated

FAQ

What were the Q2 2020 results for CHCT?

Community Healthcare Trust reported a net income of approximately $4.5 million for Q2 2020.

What is the current dividend for CHCT?

CHCT declared a quarterly dividend of $0.4225 per share, payable on August 28, 2020.

What properties did CHCT acquire in Q2 2020?

In Q2 2020, CHCT acquired seven properties for approximately $21.3 million.

How many shares did CHCT issue during the ATM program?

CHCT issued 578,759 shares at an average gross sales price of $41.70 per share.

How has COVID-19 impacted CHCT's operations?

CHCT anticipates entering into deferral agreements with about 20 tenants due to COVID-19 impacts.