Q1 2021 Community Healthcare Trust Inc Earnings Call
Okay.
Welcome to community Healthcare Trust 2021 first quarter earnings release conference call.
On the call today, the company will discuss its 2021 first quarter financial results.
Also discuss progress made on various aspects of its business.
Following the remarks from lines will be open for question and answer session. The core.
Company's earnings release was distributed last evening and has also been posted on its website www Dot C. H C. T. R E T core.
Company wants to emphasize on some of the information that may be discussed on this call will be based on information as of today basis 2021 and may contain forward looking statements that involve risk and uncertainty as cool actual results may differ materially from those set forth in such statements.
For a discussion of these risks and uncertainties you should review the company's disclosures regarding forward looking statements in its earnings release as well as its risk factors and M. D N a.
S E SEC filings the company undertakes no obligation to update forward looking statements.
As the result of new information future developments or otherwise, except as may be required by law. During this call. The company will discuss G. A a P in dogs.
Financial measures a reconciliation between the two is available in its earnings release, which is posted on its website.
Call participants are advised on a conference call is being recorded for playback purposes.
Archive of the call will be made available on the company's Investor Relations website for approximately 30 days and is the property of the company. This call may not be recorded or otherwise reproduced or distributed without the company's prior written permission.
Now I would like to turn the call over to Tim Wallace C. E O of community Healthcare Trust incorporated go ahead Tim.
Thanks, Garrett and good morning, everyone and thank you for joining us today for our 2021 first quarter conference call on the call with me today is Dave <unk>, Our Chief Financial Officer, and Leigh Ann Stach, Our Chief Accounting Officer.
As is our normal process our earnings announcement and supplemental data report were released last night and filed with an 8-K and our quarterly report on form 10-Q was also filed last night.
We had a busy quarter, both from an operations standpoint, and from an acquisition standpoint.
Healthcare providers have been impacted by the COVID-19 pandemic some saw reduced number of procedures and patient visits. However, most of our tenants operations are basically back to pre pandemic levels.
As of March 31, the company had one remaining rent deferral with a tenant with one tenant representing less than $50000.
Our receivables are in great shape.
Asset management group has done a great job related to collections during the pandemic per.
This will probably be my last update on COVID-19 issues hopefully.
Now on the normal more normal issues.
As you know, we Havent activate T M program in place during.
During the first quarter. The company issued 435272 shares of stock through its ATM program at an average growth sales price of $46 70 per share.
We received net proceeds of approximately $19 9 million at an approximately 374% current equity.
As was previously announced we increased.
And extended and modified our credit facilities.
I will not steal daves part here as I am sure. He will give a lot more color on that later.
Yeah.
During the first quarter, we acquired six properties with a total of approximately 159000 square feet for a purchase price of approximately $59 8 million. These properties were 100% leased with leases running through 2036 and anticipated annual returns of nine 1% to 10.
3%.
In addition, the company entered into a $6 million term loan and a revolving loan of up to $4 million with the tenant on two of these properties as we discussed in our first quarter conference call.
I mean, our fourth quarter conference call.
So far this quarter through May 5th the company has acquired one property totaling approximately 44000 square feet for an aggregate purchase price of approximately $4 $2 million.
Upon acquisition the property was approximately 91% leased with lease expirations through 2028, and an anticipated annual return of 10, 1%.
The company has two properties under definitive purchase agreements for an aggregate expected purchase price of approximately $8 4 million.
And expected aggregate returns of approximately nine 3%.
The company is currently performing due diligence and expects to close these properties in the second quarter.
Yeah.
In addition, we disclosed in the Investor presentation.
It is posted on our website.
We have 10 day signed term sheets with clients for up to approximately 14, new properties at up to approximately $154 million of new investment.
It is anticipated that stays investments will be made over the next approximately 24 months.
We continue to have many properties under review and have term sheets on several properties with anticipated returns of 9% to 10%.
We anticipate having enough availability on our credit facilities to fund our acquisitions and we expect to continue to opportunistically utilize the ATM to strategically access the equity markets.
Our weighted average remaining lease term continued moving up at approximately 8.28 years.
Occupancy ticked up slightly for the quarter as leasing activity picked up and we are encouraged by the activity we see on the part of healthcare providers.
On another front, we declared our dividend for the first quarter and raised it to <unk> 43 per common share.
This equates to an annualized dividend of $1 72 per share.
And I continue to be proud to say, we have raised our dividend every quarter since our IPO.
I believe that takes care of the items I wanted to cover so I will hand things off to Dave to cover the numbers.
Great. Thanks, Tim and good morning, everyone before jumping into the financial results I wanted to highlight some key aspects of our recent refinancing the details of which are included in our SEC filings.
In addition to adding a new seven year $125 million term loan and extending our revolver maturity for five years. The credit facilities are now unsecured and have provisions that make it consistent with an investment grade financing and pricing grid.
Since we manage our business with disciplined growth strategy modest leverage and diversification.
Essentially in line with other investment grade rated reads, we wanted to structure our loan agreement to allow for bond financing at some point in the future.
We believe our refinancings successfully positioned the company for continued growth at very attractive borrowing rates, both today and in the future.
Now on to the numbers.
As Tim discussed, we had a busy and productive first quarter on.
I'm pleased to report that total revenue grew from $17 9 million in the first quarter of 2020 to $21 4 million in the first quarter of 2021, representing 19, 3% growth over the same period last year.
Revenue for the fourth quarter of 2020 was $20 1 million, representing six 3% sequential growth.
Our two largest acquisitions closed later in the quarter. So we did not see their full impact in our first quarter results. So on a pro forma basis. If all the 2021 first quarter acquisitions had occurred on the first day of the first quarter total revenue would have increased by an additional 866.
<unk> thousand to a pro forma total of $22 3 million in the first quarter.
From an operating from an expense perspective property operating expenses will increase.
Increased quarter over quarter from $3 5 million to $3 7 million or 7% the increase and is in line with the growth we are experiencing in total revenue.
Meanwhile, G&A increase from $2 5 million to $2 9 million sequentially in the first quarter or 15%.
Increases in G&A were primarily were driven primarily by fees and expenses associated with our refinancing a reconciliation catch up in taxes as well as an increase in deferred compensation expense, which is a noncash item.
Meanwhile, interest expense increased from $2, one to $2 2 million or for 9% and this increase was due to the write off of deferred financing costs associated with our refinancing as well as increased outstandings under our revolver to fund acquisitions in the first quarter.
Going forward, our interest costs will trend higher due to the new $125 million term loan, which moves us into a higher pricing tier in our loans.
I am pleased to report that funds from operations <unk> for the first quarter of 2021 grew to $12 6 million from $10 2 million in the first quarter of 2020.
Representing 23, 3% growth over the same period last year and on a per share basis <unk> increased from 48 per diluted share in the first quarter of 2020 to 54 cents per diluted share in the first quarter of 2021, an increase of 12, 5%.
Meanwhile, <unk> for the fourth quarter of 2020 was $12 2 million, representing three 3% growth sequentially.
Adjusted funds from operations, which adjust for straight line rent and stock based compensation totaled $13 3 million compared with $10 4 million in the first quarter of 2020 or 28, 6% growth year over year.
On a per share basis <unk> increased from 49 per diluted share in the first quarter of $2022 57 per diluted share in the first quarter of 2021 or 16, 3%.
Finally for the fourth quarter of 2020.
<unk> was $12 9 million, representing three 3% growth on a sequential basis.
And from a pro forma perspective, if all of first quarter acquisitions occurred on the first day of the first quarter <unk> would have increased by approximately 752000 to a pro forma total of $14 1 million, increasing <unk> on a pro forma.
Form a basis to <unk> 60 per share.
That's all I have from a numbers perspective, Garrett we're ready to start the question and answer session.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your headset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
The first question comes from Amanda Sweitzer from Baird.
Thanks, Good morning.
I'm wondering if a larger transaction that you signed term sheets on can you just talk a little bit more about how those partnerships came about and then I think in the past you've talked about targeting zero entrepreneur ours as partners.
You view those agreement this fall into that bucket and then is there a potential for a credit upgrade on those properties in the future.
So Amanda thanks for the question and I'll have to I have to give you the price because youre. The only one that went back to page seven of the investor presentation and found found.
I found that information so you get surprised this quarter for doing the best due diligence on before the call.
Yes.
They are they are part of our ongoing client relationships a serial entrepreneur program.
And.
We look at this as a way to fill out the pipeline.
These properties.
Probably won't any of them close this year one my butt.
There are probably more 2022 and first half of 2023, but we really like having that ability to look at it and see what that pipeline looks like.
And we are continuing to focus on that we had we had a meeting yesterday were for those.
Basically the significant focus of the meeting was where are we on some of these these discussions and how do we how do we bring them forward.
But it takes time to do some of them, but we feel very good about it and yes, we anticipate.
At some point the serial entrepreneurs they have a history of building companies and then selling them to larger companies. So we anticipate that thats going to happen although we.
We do our underwriting is if it's not going to happen and then when it does we have.
Our next step up in credit and value.
That's great and helpful.
And so with those deals and kind of the line of sight you have into your pipeline in <unk> and 'twenty 'twenty three do you expect to raise your kind of a 120 to 150 million targeted acquisition guidance on a go forward basis or do you expect on Nevada.
On your three year step up on acquisitions that might moderate over time.
I mean, I always I always caution anybody.
From from increasing it we feel very comfortable on the 120 to $1 50 range, we think that can.
And produced consistently growing.
Returned its something that we feel comfortable with and so I mean as I've said over time as we get bigger. It may go to 130 to 160 or 140 to 170, but we do not see any significant step up on that.
And the main reason is we look to optimize our profit and if we.
We're buying.
Half a million dollars a quarter or a half a million dollars a year a half a billion dollars a year.
We wouldn't be able to maintain the.
The profit margin on on the deals.
Makes sense appreciate the time.
Okay. Thanks Amanda.
Our next question comes from Alexander Goldfarb with Piper Sandler.
Hi.
Good morning, Tim.
And hey.
Yes. It is.
Yes, it's typical of your understated style too.
And kudos to Amanda for taking through page seven, but I would have thought that that would have been something that you would have highlighted in the press release, but again I guess.
Leave that for future things to date for it.
Two questions for you, but let me let me let me address that for just a second because we never have announced term sheets.
The earnings press release or in the queue.
Always put term sheets and the investor presentation and the main reason is the investor presentation has not filed with.
On the assay.
But it is made available on the website on the widely available basis.
So there is there is were just following historic norms on that and we've never we've never put term sheets on anything other than the investor presentation.
Okay, well hopefully if the attorneys to be comfortable with it I mean, it's great stuff that you guys have and it'd be great to just publicize it more so if the attorneys are comfortable with it going in the press release awesome, but good to know Tim and thank you for pointing out that the.
The investor presentation could have for.
Acquisition material that may not be on the press release, so I appreciate that.
So two questions the first day.
You mentioned a line of credit is going to drive higher interest costs and I think you mentioned because of the terms or the size of the facility and I didn't know if you just meant that more drawn on the facility and therefore, the interest rate is higher or if the actual interest rates.
On the spreads are are higher on the new facility and if that's the case I'm just sort of curious I would think as the company gets more bigger more credit worthy closer to investment grade I would figure that the spreads would go down so I wasn't sure. If it was just a comment about spreads for food was a comment about just absolute level of interest.
So it's two things really Alex.
The first is we added the $125 million term loans and simultaneous with that we refinanced.
Short dated $50 million term loans, so incrementally we've added $75 million of debt that we then swaps that we've got some fixed rate additional fixed rate debt at higher costs for.
From an interest perspective, there, but the second thing is we do.
Our pricing grid.
Is the same in terms of how it works we've added an investment grade component. So to the extent there is a time two three years from now when we achieve investment grade ratings and the details are included in our filings then we have the ability to transition to that investment grade grid. Our grid currently is.
The same but because we put some incremental leverage on the business. We're just in a higher pricing two year. So nothing nothing is our pricing has not gone up.
Fact, we've got a pathway for our pricing to go down as we get more investment grade sort of metrics, but it's just we're in a higher tier and so as a result, we're paying slightly higher spreads I mean two things.
I would add Alex so 30% debt to capital is.
<unk>.
Bright line in the agreement in and before we were at $28. Five. So we were in a lower tier as Dave has mentioned and now we're at like 31, five so we are in the upper tier, but as we as we raise more equity.
We'll probably slide back down under 30%.
The other thing David I don't know did.
Did you go into what the fixed rate was on that.
On the new net yes, no I havent gone into details there, but we do have.
Three 6% fixed rate blended fixed rate on the new $125 million term loan which.
Is of course higher than.
LIBOR based drawings on our revolver. So thats part of the issue is that low, but lower than lower than our than the $50 million lower than the $50 million that we paid off right.
Okay Cool and then the second question is.
On the relationships that you guys have with your with your serial entrepreneurs, the presale developers and everyone else.
Obviously, Tim Youre, a wonderful person to do business with but are you sensing that there is more competition out there.
It's hard to believe that others haven't noticed the success that that's the HCP has had so are you coming across more competitors or is this a situation where because theres a lot of individual assets due diligence on a lot of this is sort of out of the major markets that you still have a lot of runway for yourself and you're not really seeing.
Much in the way of competition for them.
Okay.
Yes.
I'd like to say, we're just really smart.
Just don't think other people are focused on it I mean, I think I think we do individual due diligence on assets we.
Individual due diligence on on the operators and.
We don't look to do the big transactions on everybody else looks to do the big transactions.
So.
I scratch my head, probably once a week and fat.
I don't understand why other people haven't picked up on what we're doing.
And we had a discussion that the board meeting and.
If you get to our point doing what were doing looks relatively easy, but the issue is getting our point.
And it takes a unique set of people and unique set of.
Of constituents.
Helping.
To get to where we are today and I think thats a lot of it because it's just it's just.
Isn't the easiest thing to do to execute from from methane that where we are today.
Okay, Okay listen thank you, Tim and thank you Dave Thanks.
Thanks, Alex Yeah. Thanks.
Our next question comes from Gaurav Mehta of National Securities.
Hey, Thanks, good morning.
First question on your lease exploration I think in your prepared remarks, you said that you had seen some pick up.
And the leasing activity I was hoping if you could maybe comment on your 2020 on these exploration while you're expecting.
One for your present.
Then what kind of renewal spreads are you expecting for 2021.
Well, we never expect and good morning.
Appreciate the question, we never expect a 100% renewals.
But actually 2021 is one of the easiest series, we've had from a leasing standpoint, and I forget exactly how much is coming due this year, but it's less and less than 5% I believe for three.
They've tells me it's for 3%. So so we're we're actually already working on 2022 renewals.
And we're excited about what we're seeing from the providers because.
Oh last year after the pandemic started.
Basically provide us to skip their nose down and took care of the business.
And didn't have a lot of time to talk about leasing, but we have several.
Good size leasing transactions that are real close to being signed and so we're excited about what we're seeing from a leasing standpoint.
Great second question on your G&A it seems like.
Yes.
This quarter as a percentage of revenue was little bit higher.
Higher than historically.
Talked about price and taking place over quite some range D&A is approximately the revenue. So are you guys expecting G&A to maybe go down.
Our next few quarters or I guess, what kind of run rate are you expecting going forward.
Yes, so a couple of things on G&A that I'd say.
First of all.
In the supplemental information on page eight I think everyone knows we sort of.
Provide us.
Our ratio of cash versus noncash G&A and so.
A significant portion of our G&A every quarter is noncash.
And so what I would say on the cash portion of the G&A as I mentioned in the comments every year in the first quarter, we tend to have a little bit higher G&A expense, because we do salary increases as part of that funding everybody's.
HSA a little bit there are some unusual one time sort of things that go into G&A. In addition to what I mentioned.
With regard to the facility refinancing and everything but from a cash perspective, I think it's safe to say, we'd be somewhere in that 5% to 6% of revenue range from a G&A perspective.
And I also just just to point out that on a non cash basis that G&A, we're taking kind of a double hit because we get the dilution in SSO regarding to the regarding to the shares that are issued in that first quarter.
And then we're also increasing the amount of our deferred comp as well so it's kind of a double hit against our our <unk> and against our earnings but.
I think that 5% to 6% cash basis is sort of a good range and you should probably expect to see that over the next few quarters.
I'll add I'll add a comment or two Americas.
We've always said is focus on the cash G&A because the non cash deferred comp the way that we take our comp on everybody in the room here is always taken there.
100% of their comp in stock.
It's never a cash item.
So therefore, it's never going to affect the ability to pay a dividend et cetera.
And even though it's an expense.
It's one that the shares are already outstanding so as Dave pointed out if you if you don't.
Kind of a factor out the non cash and we're getting a double hit.
On that analysis.
And that's why we always focus on <unk>.
As opposed to just <unk>, because <unk> takes out the noncash.
Deferred compensation.
Okay. Thank you.
Thanks.
Our next question comes from Bryan Mayer.
FBR.
Good morning.
Quick question, maybe you can kind of on mind.
As to why and I don't know, how you want to classify them as the providers for doctors.
The owners for tenant why would they be willing to do leases.
Kind of on the most recent.
At $9 10 in the quarter per se, which is pretty rich on a near zero percent interest rate environment.
Suspect that many of these people could probably borrow on a lot less on kind of capture that spread to their own pocketbooks. So can you just kind of walk us through again why they are willing to pay these rates.
I mean, the thing is we understand their business.
You say they could go bar and they probably could on on one off basis, but they would lose a lot of brain sales, but we offer as a one step program.
And basically either either we're working with one of our banks for the bank provides for construction loans, we provide the takeout.
Purchasing the property.
Or in the case of one of them, we're going to actually provide the construction financing for the year.
For the dialysis clinics.
And it's basically a one stop shop and they don't have they don't have to stop doing what they're doing from an operations standpoint or from a growth standpoint.
To go finance the properties on a one off basis.
On the real benefit that they get is if what their goal is is to grow their company quickly from wherever they are 2000 20 million $30 million $50 million wherever they are on an EBITDA basis to wherever they need to be to sell out.
If we can if we can provide the ability for them to do that and it turns out its two years quicker the.
For the internal rate of return on their investment goes up significantly.
So basically what we do is we provide them the ability.
To grow faster being able to sell out faster and in turn basically what that does for US is it gives us a credit upgrade when that happens.
So it works out.
Everybody's benefit in and the fact of the matter is.
Most of this stuff is done most most.
Normal.
Yes.
We work with the developer et cetera is done on developing to a 9% yield to cost for an eight 5% yield on the cost or whatever so on when it works at 50 to 100 basis points.
It's not a bad price to pay to get there and then in turn on basically.
Net paying that but for until they sell the company.
So if you look at it from from the entrepreneur standpoint, who is trying to to turn $5 million into 100 $100 million.
They can do that two years quicker.
Makes a lot of sense.
And you made a comment on.
On the Q&A about how you scratch your head.
I understand why maybe other people are doing bolt on.
And I understand that there's a lot of diligence involved in on Cobbling up all the while non 10% cap rate property.
Why wouldn't a bigger healthcare REIT ammo be I mean, we hear so often about.
On <unk> going on by MLP 5665 caps why we don't want are these guys just swallow you up.
On say, Hey, can you healthcare trust as a division of these bigger re generally by $5 six caps that hey, we've got this big chunk of our other multi over here, it's doing 9% <unk> on juice. Their total returns why isn't that something we might see.
It's what I've said from the beginning I mean, we're for sale every day.
No, but everybody is coming up for that yet.
The matters, we're relatively expensive.
No.
From a multiple standpoint for someone to do that.
And the fact the matter is.
So that's kind of the quandary that Reits have found themselves in at this point in time and it's to me it's.
It's an absolute silly thing that everybody has gotten into but but the concept of NAV.
It makes it almost impossible for a REIT to buy something at a higher cap rate.
Been acquiring stuff at 5% cap rates and people had been valuing their portfolios at a 5% cap rate if all of a sudden they started by 8% cap rates I just the value of their stock.
Which is which is a very strange concept when you think about it.
To buy something cheaper to get a better price for simple and it reduces the value of your stock, but thats basically the situation. We're in now with people paying attention to NAV.
Well I don't pay too much attention to NAV, but thanks for those comments appreciate it alright, thanks, Brian.
The next question comes from Nate Crossett of Aaron Berg.
Hey, everybody. This is connor on for <unk>. Thanks for having me on the call.
Quick one on the general state of the acquisition pipeline Im wondering where youre seeing the best opportunities to fit your framework right now in terms of asset class and market positioning and just to frame that question. I mean, we continue to see a lot of eyes on Mlps <unk> to a certain degree.
We're seeing some news flow related to struggling operators in more rural areas. So I'm just I'm wondering what you're looking at to hit these yield targets.
We're looking at basically what we've always looked at.
We're buying them from physicians.
But other than the serial entrepreneurs the physicians are probably the biggest source of our.
Our acquisitions.
Im thinking to what we've got currently.
And the pipeline and everything and the biggest thing is the physicians.
And it's a number there is a number of reasons why they are interested in doing it again for a reason why we're able to do it is because nobody else is buying 3 million to $6 million property. So.
We go in we set a price and sometimes it takes months for them to come back and say, Okay. We will take your price because they've got to go out and they've got to reconcile this is the price.
For the market and nobody else is going to owe for them anything better.
But thats kind of I mean.
It's kind of the same market that we've been in.
For the last five or six years its physicians I mean, that's a big chunk of it.
We see a lot in behavioral healthcare.
I'm sure that won't surprise anybody on this line behavioral continues to be an area of significant growth I will tell you just like everything we do we're very choosy. We we look at a lot of transactions to find the operators and to find that the subsectors that we are comfortable with and so.
Behavioral is a big area of course, we're continuing to look at inpatient rehab and L tax on a selected a very selective basis, but again it gets down to that granular.
Underwriting and just making sure that we feel comfortable with the operator in the markets because again, we're we're looking at things on a property by property basis, even for for our clients. So.
And the other areas dialysis I mean that continues to be an area of growth for us as well, but again the common theme in all of this is they tend to be smaller projects and as a result, they take a little bit more effort and time to sort of underwrite and acquire.
Okay. That's helpful color and then maybe just a little bit more on the underwriting framework I know this is Ben.
Up in a couple of the older Conference calls, but can you give us a sense at all how many assets are making it through the initial screening process.
How many targets are you underwriting and whats the hit rate to actually close on one of these acquisitions.
We don't actually keep statistics like that because we see so much stuff.
But but.
The close rate versus what we see is is a very small percentage.
Those weighted against.
If we actually get to a point, where we issue a term sheet.
Close rates fairly high.
And.
I would hesitate to put a percentages or anything on either one of those but.
Okay.
We probably.
We probably look at.
It seems like you felt like 10, a day or so.
And also I think.
This goes back to Tim's comment earlier about how five years ago. It was a whole lot more difficult. There is a group of call it 8% to 10 brokers.
No, what we do and aren't going to bring us stuff that we're not going to engage around and so that has helped that has helped the funnel a little bit, but but yes its depth.
Definitely a numbers game and we spend a lot of time on on <unk>.
Figuring out which ones we want to spend time on because it's just really three or four of us here that are that are doing that work.
That's helpful color, thanks, very much guys.
Thanks.
The next question comes from Sheila Mcgrath with Evercore.
Hi, yes, good morning.
<unk> growth has been very strong such that the dividend payout ratio now is much more conservative just wondering what yours and the board philosophy is do you want to get to a certain.
Payout ratio or can shareholders.
A bigger increase on the horizon.
Good morning, Sheila Thanks for the question.
It's been a topic of discussion.
And basically I think the thought process is when we increase it will probably increase the inquiries from.
A quarter of a cent quarter.
Quarter to half a cent per quarter, but we want to make sure that we.
Our comfortable.
That we can maintain that <unk> a quarter.
And maintain a very conservative payout ratio.
So and that's kind of the day.
The things that we're looking at an end.
I've said I think in previous previous calls.
We're probably we're a lot closer to being there than what we have been we're not quite there.
But it is it is something that is.
Is being looked at and discussed.
Okay, Great and then just on the pipeline or that term sheets.
And I apologize if I missed this.
What kind of time horizon are those the $94 million on the $60 million over it sensor development is it a couple of years or yes, yes, I said 24 months.
Probably the first one we will probably close on it.
Could be fourth quarter this year for its more likely first quarter next year.
And so look for basically 20 to mid <unk>.
Second third quarter of 2003.
As being the timeframe for those.
Okay and so.
In both of those transactions.
<unk> funds the development and then.
It does the takeout at the agreed upon cap rates is that correct.
No.
On the inpatient rehab facility is one of our banks is doing the construction lending and then we buy.
We buy the facility after it has been.
Constructed.
And the reason for that is we didn't feel comfortable doing the construction lending because it's those are.
$20 million plus properties, we are doing the construction lending.
Dialysis clinics, but those are $4 million to $6 million a piece. So it's a lot more.
A lot more manageable.
So there is a slight difference between the two and that's kind of the reason for it.
Okay great.
Anything on the horizon.
Healthcare policy out of D C that year.
Watching on for.
That might have an impact on any of your tenants.
Okay.
I mean other than everything.
Yes.
Kind of the odd thing about it is our view is yes, we're concerned about everything that's happening in D C.
When it comes down to it I don't think that anything that's happening in D. C is going to.
Materially be negative for for our tenants.
If you talk on about spending a lot more money, it's probably going to be good for our tenants.
So I mean, David for you got any thoughts on.
No I think Thats right I think there is.
The government seems to be throwing a lot of money and a lot of different areas. So I think the next.
The foreseeable future is positive from a healthcare perspective.
Aye.
We do like some of the transparency discussions that have been had from a pricing perspective, because we think that plays very well for many of our tenants that tend to be low cost providers, but other than that we just we just see the government continuing to throw money at things, including healthcare so that should be a net positive for our tenants.
Lord knows what happens to the dollar but no I appreciate it thanks guys.
Thanks, Sheila Thanks Sheila.
This concludes our question and answer session I would like to turn the conference back over to Tim Wallace for any closing remarks.
Well.
I'd like to thank everybody for for being with US spending the time with US today, and we will look forward to talking to you all in three months plus I think ive got several conferences in between.
Between now and then so we may talk to you sooner.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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Okay.
Yeah.
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