Q4 2019 Earnings Call
Greetings welcome to global Medical <unk> fourth quarter in your and 29 10 earnings call.
This I'm all participants are not listen only mode. A question and answers that she will follow the formal presentation. If any what's your operators to since during the conference. Please press Star Zero and your telephone keypad. Please note. This conference is being recorded I will now turn the conference over to Evelyn Infurna fear no, but that's really.
Since they can't maybe it.
Thank you operator, good morning, everyone and welcome to the global medical fourth quarter.
Earnings Conference call.
That would be used to forward looking statements by the company on this conference call statements made on this call may include statements, which are not historical sachsen are considered forward looking.
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Furthermore.
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I would now like to turn the call just Bush Chief Executive Officer Global Medical agree. Thank you everyone and welcome to our fourth quarter 2019 conference call. Joining me today, our Bobcat and our Chief Financial Officer, and all forms of we own our chief investment Officer.
2019 was a remarkable year for GM already we invested over $250 million in 18 medical properties supported our growth with two successful equity offerings and initiated the internalization review process.
Throughout 2019, we stuck to our core strategy of investing in primarily off campus medical facilities, including medical office specialty hospitals inpatient rehabilitation facilities and ambulatory surgery centers.
Importantly, the weighted average cap rate on our 2019 acquisitions was 7.5%.
Jim already strategy is that the nexus of important changes and the way health care is delivered in the United States increasingly health insurance providers are incentivizing patients and physicians to seek care in off campus specialized facility.
These like those owned by GE, a moderate our focus is on secondary markets, which helps to underpin our favorable rent coverage ratios. For example, all procedures and reimbursements have been price nationally by insurance providers.
Rental rates are dictated by the local market. So comparable physician groups may generate similar topoint nationally.
But realize very different bottomlines, depending on the market. They operate in to ensure that we are making smart decisions regarding operators are acquisition team performs extensive due diligence.
Help mitigate.
Risk of our tenants credit we believe our portfolio of health care facilities is well diversified by asset type geography and tenant.
Ability to combine the health kill knowledge and financial discipline with real estate expertise has helped create a portfolio with durable.
Recurring.
Cash flow and strong coverage ratios, we have a seasoned team both in our management and on our board that brings both real estate expertise and health care expertise to the table. This helps tamari navigate nuances regulatory implications and structural factors that provide us.
With valuable insights in pursuing accretive transactions.
Health care properties, we acquired our primary lease to medical groups with strong profitability and credit profiles on a long term triple or absolute net basis. Overall, we believe our portfolio continued to ball provide a stable stream.
Income and drive strong results for investors, we're pleased with our.
Accomplishments in 2019 and look forward to even more success in 2020.
Before turning the call over to Bob I would like to take a moment to discuss internalization.
On December 17, the company announced the board had formed a special committee of independent directors to evaluate a potential management internalization transaction given that the internalization is an ongoing process will limited as to what we can share at this time.
That I turn the call over to bar parent and our CFO, who will discuss our fourth quarter financial results [noise].
Thank you Jeff last night after market close GMR He reported financial results for the fourth quarter and year ended December 31, 2019 fire, our press release and simultaneous posting of our supplemental earnings package through our website.
Total revenue for the fourth quarter increased 42.3% year over year to 20.5 million due to the continued growth of our investment portfolio through our accretive acquisition strategy as well as same store portfolio contractual rental increases for the 12 months ended December 31, 2019 total revenue.
33% to 70.7 million.
Our same store portfolio contractual rent increased 3.3 million during the fourth quarter of 2019 or 2.2% compared to the fourth quarter of 2018.
Total expenses for the fourth quarter of 2019 increased 40.9% to 17.7 million year over year for 2019 total expenses were 61.1 million up 32% as compared to 2018.
Depreciation and amortization expenses as well as interest expense remain large component of our total expenses for each period as we continue to actively acquire properties.
DNA expense for the fourth quarter of 2019 was 1.6 million up 17.5% compared to 1.4 million in the year ago period. This quarterly increase was primarily due to an increase in noncash LTIP compensation expense.
Tip compensation expense was 843000 for the three months ended December 31, 19 compared to 693000 for the same period in 2018.
For the year ended December 31, 2019, DNA was 6.5 million up 18% compared to 5.5 million for the year ended December 31, 2018 in this number our non cash held tip compensation expense increased to 3.3 million for 2019 from $2.7 million.
In 2018, and our cash in a expenses increased to 3.2 million from 2.8 million in 2018.
The increase in our cashing expenses is primarily a function of our increased size and for 2020, we expect to see increase to be approximately 3.4 million.
Depreciation and interest expense continued to be our two largest expense line items in the fourth quarter driven by our acquisition activity depreciation expense was 5.6 million in the fourth quarter of 2019 compared to 3.7 million in the prior year quarter interest expense was approximately 4.8 million in the quarter up.
11% from a year ago period for the year ended December 31, 2019, depreciation expense was 19.1 million compared to 13.6 million in the prior year and interest expense was 70.5 million up 17% from the same period last year.
These increases are a direct result of our acquisition activity over the past year with respect to interest expense higher average borrowings used to finance or acquisitions.
Our average borrowing costs for the fourth quarter of 2019 was 3.87% compared to 4.21% in the prior quarter and 4.48% in the fourth quarter of 2018.
Quenching quarterly decrease in our borrowing cost was largely driven by the impact of the 130 million of interest rate swaps that we entered into an early in October 2019.
Net income attributable to common stockholders for the fourth quarter of 2019 was 1.2 million compared to net income of 7 million in the fourth quarter of 2018. The reason for the decrease was due to a 7.7 billion gain on the sale of an investment property in the fourth quarter of 2018, partially offset.
By the benefits of accretive acquisition activity in 2019.
For the year, our net income was 3.4 million versus 7.7 million in the prior year.
Our our FFO and AFFO for the fourth quarter of 2019 were both 21 cents per share.
And unit up a penny compared to the prior year quarter for the full year 2019, our FFO and AFFO per share and unit were each 75 cents down one penny respectively from the same period, a year ago, so year over year decline in FFO and AFFO per share in unit are primarily due to.
The increase in our share count associated with our equity raises in March in December and related reductions in our average leverage.
Moving onto the balance sheet.
As of December 31, 2019, our gross investment in real estate was just over 905 million, an increase of 258 million or 40% from year end 2018.
Turning to the liability side of our balance sheet. Our total debt was 386 million as of the ended the year up from 350 million at the end of 2018, reflecting the growth of our portfolio. We finished the year with total liquidity, including cash and availability on our revolver of 151.4 million.
In December we issued 6.9 million shares of common stock at $13 per share generating gross proceeds of 89.7 million. In addition, during the fourth quarter. We raised 7.6 million on our ATM at a weighted average price of $13.04 per share.
Looking ahead to the first quarter, we expected decrease in our FFO and AFFO on a per share basis as a result of lower leverage as we paid down our revolver with proceeds from Harvard Sember equity offering and incrementally higher management fees based on our increased equity base.
Beyond the first quarter and for the full year 2020, our results will be impacted by various factors, including the timing of our acquisition closing equity capital issuances and the potential internalization transaction.
These are well there are uncertainties around the impact of these items in any quarter. We expect that we will cover our quarterly dividend on an AFFO and AFFO basis in these periods and for the full year.
With that I will now turn the call over to a phone so who will review the investment landscape in our investment activity.
Thank you Bob the fourth quarter capped off what was a very active year on the acquisition front for GM Ari as we acquired five properties for 72.8 million at a weighted average cap rate of 7.4%.
The year, we acquired 18 properties for a company record 253.5 million at a weighted average cap rate of 7.5%.
Portfolio metrics for the fourth quarter have changed on the margin our properties are well diversified and now number 109 buildings and 27 states.
The 2.8 million square foot portfolio is 99.8% leased at a weighted average rental rate of 25.
Wallace 33 cents per square foot and a weighted average lease term of 8.8 years.
And average rent escalation of 2.1% per year.
Finally, the properties have a portfolio light rent coverage ratio of 4.9 times.
Since our last earnings call on November seven we completed five acquisitions.
As high quality facilities leased leading healthcare providers diversify our portfolio.
These facilities include.
On November 15, we acquired a 12000 square foot MLB, and then 8000 square foot clinic in Jacksonville, Florida for 8.7 million.
MLB and clinic or a 100% leased to south East Orthopedics group with 50, plus providers, we did a 15 year sale leaseback with strong rent coverage.
12000 square foot MLB is located directly adjacent to St. Vincent's Medical Center, Riverside, which is part of attention.
On the seven December 17, we acquired a 17000 square foot Medical office building and surgery Center in Greenwood, Indiana.
5.8 million.
The MLB and assay.
100% leased to Indiana, I clinic for 13 plus years.
Along rent coverage, Indiana has been a leading group in Greene with for 30 years.
On February 13.
We acquired a 98000 square foot MLB and Highpoint, North Carolina for 24.75 million.
And we'll be contains a multi specialty clinic neurology urgent care and diagnostics.
And we'll be is 100% leased a cornerstone healthcare, which is wholly owned by wake Forest Baptist Health.
Forest and atrium health.
Now in November.
2019 that they are moving forward with a strategic partnership.
Cornerstone is a leading a CEO that was acquired by wake Forest in May 2016.
On February 27, we acquired a 115000 square foot MLB and Clinton, Iowa for 11.35 million.
The MLB contains a multi specialty clinic surgery center nephrology gastro in diagnostics.
Yeah, well be at a 100% leased immersing medical center, the local subsidiary of Trinity Health, which is a large health system with annual operating revenues of 18.3 billion and assets of 26.2 billion.
So we acquired a medical associates, the largest multi specialty group with 40 plus providers and Clinton in June 2019.
Yesterday, we acquired at 34000 square foot MLB.
West Dallas, Wisconsin.
For 9 million the multi specialty facility includes assisting exam rooms procedure rooms imaging services full service lab.
Rehab services into Gi and pain surgical suite.
Ladies 100% lease the Columbia, St. Mary's Hospital, which is a wholly owned subsidiary of Ascension Health Network Ascension Health is the largest not for profit health system in United States.
In addition, as of yesterday, we had entered into contracts acquire four properties for approximately 67.3 million.
We are currently in the due diligence process for the properties under contract.
Identify problems with one or more of these properties are the operator of the property during our due diligence review.
We may not close the transaction on a on a timely basis or at all.
We had an exceptional year with respect to finding high quality product in volume as we look to 2020. It is important to remember that while we have a strong pipeline of high quality assets. The amount of assets. We opened fairly close on will vary year to year.
Our top priority is to focus on acquiring assets that are accretive of high quality and meet our strict underwriting standards.
If we cannot find assets that meet our criteria, we will not pursue transactions just to grow our asset base with that said, we target fully or acquisitions in a range of 180 to 220 million.
Which is at the midpoint similar to the amount we acquired in 2016.
We are confident in our strategy and believe that we have built and continues to build a portfolio that that will provide durable cash flows for our shareholders.
With that we will be happy to take your questions.
Thank you at this time will be conducting a question and answer session. If you like to ask the question. Please press star one and your telephone keypad and confirmation tell indicate your line is in the question Q you May press star to if he were they to room of your question from the Q and for participants you seen speaker equipment.
It may be necessary to pick up your handset before pressing the star he's.
Our first question is from Chad Vanacore with Stifel. Please proceed.
Hi, good morning, all.
Good morning.
All right could you talk to us a little bit about the process of timeline of internalization, what discussions regarding the board level and more importantly, what are some of the procedural hurdles you might need to overcome.
Yes, Hi, Chad this is Bob So I can just addressed this really only at a high level at this point, so really other than to say that the special Committee has been formed in is it's going through its evaluation, we can't really comment on the process because it is in process and so there's.
Really as news is disclosable from that process, we will.
We will do that but but at this time, we can't really comment on the process.
All right you can't give us any kind of landmark shore or hurdles or benchmarks. So you have to hit.
No no no I mean, I think it's really.
In the committees hands from a process perspective versus.
The company or management team.
All right how about something that's more formulaic can you remind us what the management termination fee might be sure sure in terms of the numbers.
Formulaic in the agreement at the average.
The trailing eight quarters annual fee it at three times and depending on on the actual timing and in 2020, it looks like it would be between 18, and a half million and $20 million.
From a from an overall.
Perspective, I think it's also noteworthy that we'll also have legal the company will in other professional fees associated with the internalization.
And we don't have full visibility into what those numbers will be at this point, but im estimating around a million dollars plus or minus on the on the type of transaction cost that we may incur through this process.
Okay, and then Bob I think last quarter, you had mentioned that you're potentially perfume are pursuing some debt financing options can you go into detail about where you are there.
Yes, so we have.
We are open to pursuing that we haven't really we havent really there's nothing new to report Chad on the.
On changing our debt structure at this point, it's still a work in process on that so nothing nothing new to before we continue to evaluate opportunities to diversify.
Away from the credit facility and also one of the things we'll be looking at during the year, it's likely to expansion on the credit facility.
Okay.
And then you just mentioned in the press release about increasingly competitive acquisition environment just wondered.
Is that a general statement about the broader market or are you seeing more activity into your secondary markets and that in within the within the size range that you're looking at.
Yes.
It it that comment was.
General and specific sales both.
But changes a lot I mean, it goes up and down.
Coming into the Air you know my sense was that it was getting more competitive than there was.
I got the fence that within the niche that we're targeting there was.
More more competition.
Deals that I thought.
We.
Could get we're getting priced beyond our numbers, where we wanted to price then.
But you know it.
In the last couple of weeks.
There has definitely been a change in that sentiment and I'm actually thinking over the next.
Quarter or too I'm expecting a actually softening.
So it moves around a bit coming into the air ties.
My sense of it and it's hard to.
Pega number and measure it you know this is very very subjective a metric.
Going into it was getting competitive but as I as I said today I'm.
Thinking its.
People are probably taking their foot off the gas.
Alright. Thanks.
Our next question interim drew Babin with Robert W. Baird <unk> Company. Please proceed.
Hey, good morning.
Good morning, Georgia.
Question on the management fee I think Bob you mentioned that yeah, I'm just based on the increase in market cap will be higher management fees and assuming that you have no internalization occurs immediately in the first quarter can you quantify kind of what that jump is at the management fees based on the current price of the stock and increased market cap.
Sure. It's it's right around $2 million from a quarterly perspective for looking at Q1.
Okay.
And then secondly in another balance sheet question, where I work on it.
I know that Theres, a matrix for the at the spread on your credit facility.
Decreases and leverage the spread widened out a little bit I guess as you read whoever after the equity issuance.
Might we see the spread widened out a little bit as the result of that Relever trick and I guess sort of how do you kind of quantify the tradeoff between the two factors there.
So so we ended the year in the 40% to 45% range on our pricing grid and the credit facility and yes, I expect it in as we end Q1 will move into the next level on the pricing grid into 45 to 50 will likely be in the low end of that.
That that pricing grade and it does go into our decision, making in terms of managing where we are above and below that that pricing grid tend to be as.
Efficient as we can't from a from a balance sheet and debt management perspective.
Can you remind us what spread is a bit in both of the two ranges on the grid that you mentioned, how much that widens out.
Yes, a 25 basis point change between.
Between the tail.
Okay.
And lastly from me how long do I just wanted to touch on the the white rocket acute care hospital.
The disclose coverage ratio on that was obviously pretty low for hospital, but I know you've talked in the past about the transitional I wonder if some of this property is managed by pipeline could you just kinda give an update on the status of operations and kind of the near to intermediate term expected trajectory there.
Yes, I know you touched on it exactly so.
If you recall this was a property that.
D J JV between Baylor tenants, so to us and pipeline in the first quarter of 2018.
When we did our underwriting we not just underwrote and got comfortable with pipeline, but we also underwrote and this is more importantly.
Underwrote the hospital that the our business the local area. The fundamentals, so which is why we felt very comfortable that this was a long term a good good investment.
We knew going in that that first here, what's going to be a transition here, which is why we had them pre pay rent per year.
Which is also why it was impossible to calculate a rent coverage because you know they prepaid all of it and it was a transition year.
We decided to start reporting that number.
There is still working on.
I would characterize it as Dave transitioned they stabilized and now they're focused on a revenue opportunities.
They've they've worked through.
On the expense side pretty well and so there's right now they're focusing more on revenue growth opportunities growing their EBITDA. So I would expect that rent coverage to go grow from just one forward.
Great and appreciate the disclosure there that's helpful.
Our next question is from Barry actions with D.A. Davidson. Please proceed.
Great. Thanks, guys. I guess this is for alfonzo once you're not not not to the cap rate ticked down a little bit in the fourth quarter, just a little bit I mean nothing.
You know alarming clearly, but was that a function of the assets or was that a function of the marketplace getting a little more competitive.
So I would say that both and it it's hard to control what opportunities are available in the market I mean, we're always.
Scanning and evaluating and discussing with everyone that we can talk to to try to find deals.
And we don't really control.
You know what kind of deals we're going to has a chance to pursue.
So yes, I think if you look across the quarters I mean, it bumps up and down and it's hard to really a you know forecast trends based on any one quarter is the way I put it.
Right so badly that there.
Okay, and then on the off campus. That's like are you finding that better risk adjusted return or <unk> or are you, making more of a conscious decision that look this is the way.
Medical.
It's going to be serviced in the future and we need to be there.
So many many things to answer that question I mean, it I would start by saying it depends on what campus I mean, some campuses are fortresses.
And there you know, it's safe bet that they're going to continue being a center as held for generations and there's you know in every major city. There is one of those.
But when it's that obvious other place that is going to be around 400 years or.
Knows how long I mean, the pricing for that kind of asset is.
Very very expensive and you're going to get everyone's everyone to bed and you're going to squeeze every last two basis point of.
Of enjoyment out of that investment.
When you start getting into and on the other side of that you know you've got some campuses that are obviously struggling in areas that are questionable.
In pricing on whether or not that's a good investment I mean, you're really betting on the hospital.
Even though you're buying like on them Ob on that campus at the end of the day, what you really have to do there's underwrite the hospital.
And you know in some of that I I would say the investment community has got an pretty savvy.
And more often than not a you know those actually get priced with 100 200 basis points above where the core.
On campus him obese trade at.
Off campus.
It requires a lot more thoughts about you know why the property is where it is you know how convenient that is what the tendency is what the uses what else is built around.
And it's it you can't just make a blanket statement about whether or not off campus as better or not I mean, it really truly is case specific you really have to contemplate why and you have to go through.
List of questions and you have to you know really kind of make an assessment, whether it really makes sense from a health care delivery perspective, and you know within the off campus inventory I mean, there's a pretty wide spectrum of types of facilities.
And each one of them has a unique inherent pros and cons, so a long way of saying that it depends.
Right now no I appreciate all that color and then lastly on the four properties that you have under contract if they were to close.
I would we see them closing like in March April would it be more like an April may type of timeframe.
Uh huh.
Uh Huh March April roughly yes, okay, Okay, maybe I just do it.
A little bit of a big numbers, so tiny is going to matter on that yeah.
Yeah. So yeah, I'd say March April and you know you might we might have one or two that slips into may but I would say March April.
Thanks, so much.
Our next question is from Brian Maguire with B. Riley FBR. Please proceed.
Good morning, guys. So.
Question I have been you may or may not have seen aren't as this morning on on community health care, but that but how is it maybe this is best for Alfonzo and I know, Jeff you talked about this in your prepared comments kind of early on the difference in assets and locations or what have you may begin delve into that little bit deeper, but how is it Tim is seeing and buying assets.
Yielding kind of nine to 11 times nine to 11 cap rates and you guys are kind of seven or eight no I'm not really saying one is better than the other it just seems when I look at both portfolios.
The reads other than ones internal ones external and maybe that explains some of the disparity in that in the multiples don't seem all that different except for your asset seem to be a little bit bigger little bit more pricey, but I'm trying to wrap my hands around the disparity in the two portfolios and what people are acquiring and I know you might not want.
On a talk too much about a competitors portfolio, what they're doing but can you maybe talk to the different types of assets and alfonzo are you seeing 911 cap rate properties that you just passing on.
Yes so.
You know.
We there's a lot of the stuff that that would you know that we see that are trading at 911 don't fit our portfolio.
Having said that I mean, we have one that we bought that is 11 cap.
But you know there's a story behind that and it starts with you know it took US 13 months to completed.
And it was a system that was buying the group.
And you know.
We were negotiating with them a you know.
Well, we got into the deal they were still in a process of getting acquired it wasn't sure. They were going to get acquired and they've got acquired and then it took us a long time to close.
And negotiate but that was a situation where we came into this understanding that.
You know in essence, we are getting pricing arbitrage because of stark laws and the hospital is limited in terms of what they can do and the physicians are in a position where they are negotiating getting acquired and so it was an opportunity for us to hang around to hoop and various strategic patience and very conscientious.
Hi management understanding that this was going to take a long time.
Resulted in a great yield and.
Low low below replacement cost investment a nice buildings very great looking surgery center, but you know, it's a very very selective so a pause there and I'll, let Jeff also China, Yeah, I just want to distinguish between where community health is and we where we are.
We're both in the same buying medical real estate their Boeing the higher caps, but higher risk where Boeing less risk.
That's essentially what the issue is a we tend to.
Pass over those type of deals, but they are they can work out on a risk portfolio. We believe that we're trying to buy low risk, but be in secondary markets and because our medical expertise are disappointed in buying that we turned down many many deals.
We'll give us that extra risk adjusted return and we'll get a benefit on risk adjusted return and they have a strategy that's different than ours in higher return and I don't know of their risk level, but essentially we don't look at that level of risk that they do.
Yeah. It just seems pretty start when you when you hear that and they're trading at North of 24 times. This year's EBITDA and you guys are trading at just under 17 times. It seems like a huge gap. The one company that's running a 90% occupancy and one that is trading nearly 100% occupancy.
So trying to wrap our heads around that here, but thank you for the insights.
Our next question is from Rob Stevenson with Janney Montgomery Scott. Please proceed.
Good morning, Bob I mean, the boat I know that there's limits to what you can say, but you know whatever gate that the board makes a decision assuming that they decide to internalize what does the timeframe from there for you guys in terms of completing the internalization how long does it.
Radically given all the legal and everything else is that a three month is that a six month does that you know a couple of weeks can you sort of help us understand what that's sort of timing we take after just after the board would render a decision how long that would take hey, Rob Rob I really I really don't know I mean, how long it would take in it.
You know, there's just not a lot of visibility into what the timing of our actual.
Changeover would would occur to the assets that process evolves, but.
I think it'll it'll be as efficient as as they can I know the committee is is actively working through the process and they're interested in getting this done as quickly and as efficiently as they can so that the process run smoothly and we end up with.
With that a good transaction for shareholders that that gets done inefficient way I mean, I think thats really the the most I can say.
And then so youve completed roughly $45 million of acquisitions, thus far in 2020, you've got another close to 70 million under contract. That's a alphonse is that likely close in sort of March and April once you've gotten that how much.
Equity or how much dry powder do you have the complete acquisitions beyond that without raising money under either under the ATM or in a market transaction.
Sure. So we ended the year with the about call. It 150 million of capacity on a revolver and so that.
As that winds down that you will limit I mean, our that's a a finite available capital. So we just work backwards from 150 million and then again, we're as I mentioned earlier, we are looking at alternative.
Debt opportunities as well as opportunities within the credit facility to.
To add capacity as the year progresses, and also have access to equity capital. So I think it'll be a combination of that as they as the year progresses.
Okay, and then last one from me alfonzo anything abnormal or different about the properties under contract in terms of cap rate or outside pipe versus what you guys had been doing over the last few quarters.
Well I know in terms of a profile of property quality of building pennant profile that healthcare <unk> underwriting know very a inline with the one.
With the one deal and Clinton, Iowa.
Being a function of.
Hanging around the who've been being realizing that opportunity of working with the physicians into health system to get a you know above standard yield otherwise now.
Okay, I mean anything.
We are sort of asset types that you guys don't currently own that you would own you know for right deal right price.
So.
Yeah.
We're always in discussions with people with different asset types.
Something that comes on top of mind is like.
You know like add but what are you calling on micro hospitals.
We've been exploring thus far have not found one that makes sense to me.
You know I think within the industry. There is there's like a first and second Jan and usually first and second Gen don't really makes sense and you've got to wait for third Gen.
Before people kind of figure out the model and I think we're probably getting there.
The other one is a you know behavioral is one that I feel like whether I like it or not people you know as I talk to me about behavioral and more often than not and I don't like what I'm hearing and I feel like the spaces.
Specialty the addiction side of the space is one that I don't feel comfortable in and doesn't make sense to me a it doesn't doesn't pass the.
The just the I guess.
Just doesn't pass the test for my opinion, but we are beginning to have discussions so on within that the behavioral space I mean, it's a wide ecosystem and in pretty actually very very diverse different types of UBS niches within behavioral which makes it hard to come.
Our apples to apples, but there are some some aspects of behavior that do seem pretty interesting.
Geriatric pediatric seem.
Like they make a lot more sense.
But no today, we really haven't found the deal that where we like that we that we're comfortable with that we feel our are going to be good investments that are not going to give us headaches. A you know during our during our ownership.
You know urgent care centers I felt like all of a sudden everybody wanted to talk to me about urgent care centers and that in of itself with a sign that I, probably shouldn't invest an urgent care centers.
'cause it just made the first and it came to mind was that there was going to be oversupply and Im reminded me of freestanding yours couple of years ago I felt like everybody wanted to talking about freestanding ers and that again was assigned to me that.
There's probably oversupply and people are trying to dump and I stayed away from it.
So you know it there's there's a growing a inventory and types of facilities that that people can can invest and we're always exploring and you know we are opportunistic a you know we pride ourselves with with being so so we're always exploring but and we have an open mind, but.
Thus far.
I wouldn't say that we're going to.
Pursue any anything.
In in any magnitude.
At this point this is Jeff I just wanted to say one area, we're going to stay out of this is sniffs.
We see some danger in that right now in the market. So we will be staying out of that we never went into it and we're going to stay out of it.
And I mean, how much your assets if any are in essentially.
Shopping centers and things like that because it seems like that that's where a lot of those urgent care and veterinary clinics and things of that nature, which don't have a lot of location premium to on where it could go into the strip mall down the street.
Standpoint, how much of that stuff do you have if any.
Yes, we are on the first when it comes to mind when I think of some of those really retail locations.
Yeah. The parcels are complicated sometimes you're you're dealing with facilities that used to be pizza hut's that are now converted into something else and or you know abandoned Carter car the facility itself, sometimes it's pretty problematic.
But once in Awhile, you know you do come across.
You know that there there is there's a lot of developers in the space that are actually very very good at what they do and they help.
They they find good lots within you know.
Jason to malls or within the mall that makes sense and its newer facilities.
I have had some discussions with folks that that develop relationships with health systems to build a urgent care centers I mean that makes sense to me and they're building very high quality stuff what makes even more sense to me for example, as.
You know developers that have form relationships with insurance companies building urgent care centers and that makes a ton of sounds to me.
So Ah ha.
Just just really depends but.
I think what you were alluding to is more of the especially when you said no premium no location premium you know, it's kind of Iran.
The healthcare facility, that's kind of wedged into an a mall or retail strip and that kind of stuff we don't like.
Okay, all right. Thanks, guys.
Yes.
As a reminder to star one on your telephone keypad, if he would like to ask a question. Our next question is from garage meet that with National Securities. Please proceed.
Thanks, Good morning, Oh formed during your prepared remarks, I think you made a comment are you expecting from softening the transaction market for next one or two quarters and expand the bombed out a little bit what you've seen the transaction market in the Michael economic uncertainty around the corner lines.
Yeah, I mean, thats basically add I mean, it's too soon to tell.
But if.
And it really just.
Depends on on what measures are taken at the local and state levels too.
To control the spreads.
You know theres already hearing some discussions about conferences that might or might not get cancelled and that that's going to have an impact.
I mean I've already are ready hearing.
That you know on some deals.
Vendors are getting are putting hitting the positive.
So that to me signals that you know if you're looking for.
Third party financing might be.
Might be challenging.
I mean, I mean does that creates more opportunity for you. If you have access to capital another stone.
That's the way I see it.
All right that's all for me. Thank you.
Thank you.
We have had never question and answer session I would like to turn the call back over to Jeff push for closing remarks.
I'd like to thank everybody for joining us and appreciate your time [noise].
Thank you.
Thank you. This concludes today's conference you may disconnect your lines at this time and thank you for your participation.