Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Community Healthcare Trust Inc (NYSE:CHCT) reported a 2.5% annual revenue growth from $29.3 million in Q1 2024 to $30.1 million in Q1 2025.
• The company maintained a stable occupancy rate of 90.9% and a weighted average remaining lease term of 6.7 years.
• CHCT acquired a behavioral residential treatment facility with a new lease expiring in 2040, anticipating a 9.5% annual return.
• The company declared and raised its quarterly dividend to $0.47 per share, marking consistent dividend growth since its IPO.
• CHCT has a solid pipeline with signed agreements for seven properties, expecting returns between 9.1% and 9.75%.

Negative Points

• Funds from operations (FFO) decreased slightly by $77,000 quarter over quarter, with FFO per diluted share dropping from $0.48 to $0.47.
• Property operating expenses increased by $600,000 due to higher seasonal utility and snowplow expenses.
• General and administrative expenses rose by $300,000, primarily due to non-cash amortization of deferred compensation and seasonal adjustments.
• The company did not issue any shares under its ATM due to a low share price, impacting capital raising capabilities.
• CHCT is dealing with a troubled geriatric psychiatric hospital operator, which is evaluating strategic alternatives, including potential sales.

Q & A Highlights

• Warning! GuruFocus has detected 10 Warning Signs with CHCT.

Q: Can you provide more details on the timing and process regarding the potential sale of the geriatric psychiatric hospital operator? A: The operator is in an active sale process with potential buyers evaluating the purchase of all or selected hospitals. We expect to have additional certainty on buyer interest and terms by the end of the second quarter or beginning of the third quarter, which will guide our next steps. Dave Dupuy, CEO

Q: What is the outlook for acquisitions and capital allocation given the current market conditions? A: We have a healthy pipeline, including two inpatient rehab facilities expected to close in the third and fourth quarters. We are cautious about raising equity at current stock prices and will consider selected asset sales and revolver draws to fund acquisitions without significantly increasing leverage. Dave Dupuy, CEO

Q: How do you weigh the option of buying back stock versus using capital for growth and acquisitions? A: While we discuss this at the board level, our focus remains on executing our pipeline deals using capital recycling. We prefer not to increase leverage for share repurchases, but we will consider all options depending on capital recycling opportunities. Dave Dupuy, CEO

Q: Is the $3.2 million contractual payment from the psychiatric hospital operator just for rent, or does it include notes as well? A: The $3.2 million is just for rent. The notes comprise an additional $2.5 million, making the total contractual payment just under $6 million annually. Dave Dupuy, CEO and Bill Monroe, CFO

Q: What is your stance on potentially issuing preferred stock to raise capital? A: We evaluate all capital options, but our preference is to keep the capital structure simple. While preferred stock has pros and cons, it is not a new consideration for us, and we will continue to assess various alternatives. Dave Dupuy, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.