Global Medical REIT Announces First Quarter 2023 Financial Results
Jeffrey M. Busch, Chairman, Chief Executive Office and President stated, “Consistent with the second half of 2022, during the first quarter of 2023 we continued to navigate through the challenging acquisitions and interest rate environment by relying on the quality of our portfolio and the resilience of our tenant base. We continue to closely monitor the acquisitions market for accretive opportunities, closing one acquisition to date in 2023 for a purchase price of
First Quarter 2023 Highlights
-
Net income attributable to common stockholders was
$0.7 million $0.01 $2.7 million $0.04 -
Funds from Operations (“FFO”) of
$15.1 million $0.22 $16.0 million $0.23 -
Adjusted Funds from Operations (“AFFO”) of
$16.0 million $0.23 $16.8 million $0.24 -
Increased total revenue
13.7% year-over-year to$36.2 million -
Sold a medical office building located in
Jacksonville, Florida , receiving gross proceeds of$4.4 million $0.5 million -
Increased portfolio leased occupancy from
96.5% at December 31, 2022 to97.0% at March 31, 2023.
Financial Results
Rental revenue for the first quarter 2023 increased
Total expenses for the first quarter were
Interest expense for the first quarter was
Net income attributable to common stockholders for the first quarter totaled
The Company reported FFO of
Investment Activity
During the first quarter of 2023, the Company did not complete any acquisitions and sold one medical office building located in
On April 17, 2023, the Company completed the acquisition of two medical office buildings in
Portfolio Update
As of March 31, 2023, the Company’s portfolio was
Balance Sheet and Capital
At March 31, 2023, total debt outstanding, including outstanding borrowings on the credit facility and notes payable (both net of unamortized debt issuance costs), was
As of May 3, 2023, the Company’s borrowing capacity under the credit facility was
The Company did not issue any shares of common stock under its ATM program during the first quarter of 2023 or from April 1, 2023 through May 3, 2023.
Dividends
On March 10, 2023, the Board of Directors (the “Board”) declared a
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 Thursday, May 4, 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
ANNUALIZED BASE RENT
Annualized base rent represents monthly base rent for March 2023, 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) |
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As of |
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March 31, 2023 |
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December 31, 2022 |
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Assets |
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Investment in real estate: |
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Land |
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$ |
167,285 |
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$ |
168,308 |
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Building |
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|
1,077,340 |
|
|
|
1,079,781 |
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Site improvements |
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|
22,024 |
|
|
|
22,024 |
|
|
Tenant improvements |
|
|
66,375 |
|
|
|
65,987 |
|
|
Acquired lease intangible assets |
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|
148,249 |
|
|
|
148,077 |
|
|
|
|
|
1,481,273 |
|
|
|
1,484,177 |
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Less: accumulated depreciation and amortization |
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(213,690 |
) |
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(198,218 |
) |
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Investment in real estate, net |
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1,267,583 |
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1,285,959 |
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Cash and cash equivalents |
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4,603 |
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4,016 |
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Restricted cash |
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9,378 |
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|
10,439 |
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Tenant receivables, net |
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7,402 |
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|
8,040 |
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Due from related parties |
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|
321 |
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|
200 |
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Escrow deposits |
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8,625 |
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7,833 |
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Deferred assets |
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30,322 |
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|
29,616 |
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Derivative asset |
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|
27,428 |
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|
34,705 |
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Goodwill |
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5,903 |
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|
5,903 |
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Other assets |
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7,473 |
|
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|
6,550 |
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Total assets |
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$ |
1,369,038 |
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$ |
1,393,261 |
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Liabilities and Equity |
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Liabilities: |
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Credit Facility, net of unamortized debt issuance costs of March 31, 2023 and December 31, 2022, respectively |
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$ |
634,796 |
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$ |
636,447 |
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Notes payable, net of unamortized debt issuance costs of March 31, 2023 and December 31, 2022, respectively |
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|
57,367 |
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|
57,672 |
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Accounts payable and accrued expenses |
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|
12,604 |
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|
13,819 |
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Dividends payable |
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|
15,854 |
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|
15,821 |
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Security deposits |
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4,688 |
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5,461 |
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Other liabilities |
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8,226 |
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7,363 |
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Acquired lease intangible liability, net |
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7,028 |
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7,613 |
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Total liabilities |
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740,563 |
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744,196 |
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Commitments and Contingencies |
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Equity: |
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Preferred stock, |
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74,959 |
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74,959 |
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Common stock, |
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66 |
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66 |
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Additional paid-in capital |
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722,113 |
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721,991 |
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Accumulated deficit |
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(211,794 |
) |
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(198,706 |
) |
|
Accumulated other comprehensive income |
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|
27,410 |
|
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|
34,674 |
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Total Global Medical REIT Inc. stockholders' equity |
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612,754 |
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|
632,984 |
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Noncontrolling interest |
|
|
15,721 |
|
|
|
16,081 |
|
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Total equity |
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|
628,475 |
|
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|
649,065 |
|
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Total liabilities and equity |
|
$ |
1,369,038 |
|
|
$ |
1,393,261 |
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GLOBAL MEDICAL REIT INC. Condensed Consolidated Statements of Operations (unaudited, and in thousands, except per share amounts) |
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Three Months Ended March 31, |
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2023 |
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2022 |
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Revenue |
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Rental revenue |
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$ |
36,199 |
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$ |
31,852 |
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Other income |
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|
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|
31 |
|
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|
23 |
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Total revenue |
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36,230 |
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|
31,875 |
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Expenses |
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General and administrative |
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3,804 |
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|
4,197 |
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Operating expenses |
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|
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|
|
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|
7,536 |
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|
|
5,372 |
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Depreciation expense |
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|
|
|
|
|
|
|
10,494 |
|
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|
9,402 |
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Amortization expense |
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|
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|
|
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|
4,395 |
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|
3,777 |
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Interest expense |
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|
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|
8,271 |
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|
4,801 |
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Preacquisition expense |
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|
42 |
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|
40 |
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Total expenses |
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|
34,542 |
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|
27,589 |
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Income before gain on sale of investment property |
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1,688 |
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4,286 |
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Gain on sale of investment property |
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|
485 |
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— |
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Net income |
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$ |
2,173 |
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$ |
4,286 |
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Less: Preferred stock dividends |
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(1,455 |
) |
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|
(1,455 |
) |
|
Less: Net income attributable to noncontrolling interest |
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(45 |
) |
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(170 |
) |
|
Net income attributable to common stockholders |
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|
$ |
673 |
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$ |
2,661 |
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Net income attributable to common stockholders per share – basic and diluted |
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$ |
0.01 |
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$ |
0.04 |
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Weighted average shares outstanding – basic and diluted |
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|
65,525 |
|
|
|
65,302 |
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Global Medical REIT Inc. Reconciliation of Net Income to FFO and AFFO (unaudited, and in thousands, except per share and unit amounts) |
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Three Months Ended March 31, |
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2023 |
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2022 |
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Net income |
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$ |
2,173 |
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$ |
4,286 |
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Less: Preferred stock dividends |
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|
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|
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(1,455 |
) |
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|
(1,455 |
) |
|
Depreciation and amortization expense |
|
|
|
|
|
|
|
|
14,861 |
|
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|
13,151 |
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Gain on sale of investment property |
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(485 |
) |
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|
— |
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FFO |
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|
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|
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$ |
15,094 |
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$ |
15,982 |
|
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Amortization of above market leases, net |
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|
|
|
|
|
|
291 |
|
|
|
199 |
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Straight line deferred rental revenue |
|
|
|
|
|
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|
|
(763 |
) |
|
|
(1,195 |
) |
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
688 |
|
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|
1,287 |
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Amortization of debt issuance costs and other |
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|
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|
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|
601 |
|
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|
515 |
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Preacquisition expense |
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|
42 |
|
|
|
40 |
|
|
AFFO |
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|
|
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|
|
|
$ |
15,953 |
|
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$ |
16,828 |
|
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Net income attributable to common stockholders per share – basic and diluted |
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|
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|
$ |
0.01 |
|
|
$ |
0.04 |
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FFO per share and unit |
|
|
|
|
|
|
|
$ |
0.22 |
|
|
$ |
0.23 |
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AFFO per share and unit |
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|
|
|
|
|
|
$ |
0.23 |
|
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$ |
0.24 |
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Weighted Average Shares and Units Outstanding – basic and diluted |
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|
|
|
|
|
|
69,830 |
|
|
|
69,319 |
|
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Weighted Average Shares and Units Outstanding: |
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Weighted Average Common Shares |
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|
65,525 |
|
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|
65,302 |
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Weighted Average OP Units |
|
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|
|
|
|
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|
1,667 |
|
|
|
1,672 |
|
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Weighted Average LTIP Units |
|
|
|
|
|
|
|
|
2,638 |
|
|
|
2,345 |
|
|
Weighted Average Shares and Units Outstanding – basic and diluted |
|
|
|
|
|
|
|
|
69,830 |
|
|
|
69,319 |
|
|
Global Medical REIT Inc. Reconciliation of Net Income to EBITDAre and Adjusted EBITDAre (unaudited, and in thousands) |
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Three Months Ended
|
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2023 |
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2022 |
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Net income |
|
|
|
|
|
|
$ |
|
2,173 |
|
|
$ |
4,286 |
|
Interest expense |
|
|
|
|
|
|
|
|
8,271 |
|
|
|
4,801 |
|
Depreciation and amortization expense |
|
|
|
|
|
|
|
|
14,889 |
|
|
|
13,179 |
|
Gain on sale of investment property |
|
|
|
|
|
|
|
|
(485 |
) |
|
|
— |
|
EBITDAre |
|
|
|
|
|
|
$ |
|
24,848 |
|
|
$ |
22,266 |
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
688 |
|
|
|
1,287 |
|
Amortization of above market leases, net |
|
|
|
|
|
|
|
|
291 |
|
|
|
199 |
|
Preacquisition expense |
|
|
|
|
|
|
|
|
42 |
|
|
|
40 |
|
Adjusted EBITDAre |
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|
|
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|
$ |
|
25,869 |
|
|
$ |
23,792 |
|
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View source version on businesswire.com: https://www.businesswire.com/news/home/20230503005875/en/
Investor Relations:
Stephen Swett
stephen.swett@icrinc.com
203.682.8377
Source: Global Medical REIT Inc.
