Q2 2023 Global Medical REIT Inc Earnings Call

Greetings and welcome to the global Medical reached second quarter 2023 earnings Conference call.

At this time all participants are in a listen only mode.

A brief question and answer session will follow the formal presentation.

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As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Steve Sweat the best of relations. Thank you Sir you may begin.

Thank you good morning, everyone welcomed the global global Knuckle reach second quarter of 2023 earnings conference call on the call today are Jeff Bush, Chief Executive Officer of Australia.

Chief Investment Officer, and Bob Tiernan, Chief Financial Officer.

Please note the use of forward looking statements by the company on this conference call statements made on this call may include statements, which are not historical facts and are considered forward looking company intends. These forward looking statements to be covered by the safe Harbor provision for forward looking statements contained in the private Securities litigation the format of 1995, and it's making this statement for the purpose of complying with.

Safe Harbor provision.

Furthermore, actual results may differ materially from those described in the forward looking statements and will be affected by a variety of risks and factors that are beyond the company's control, including without limitation those contained in the company's 10-K for the year ended December 31st 2022, and it's other SEC filings.

The company assumes no obligation to update publicly any forward looking statements, whether as a result of new information future events or otherwise.

Usually on this call the company name refer to certain non-GAAP financial measures such as funds from operations adjusted funds from operations CBRE and adjusted you beat already you can find a tabular reconciliation of these non-GAAP financial measures to the most current comparable gap numbers in the company's earnings release filings with the SEC.

I shall information may be found on the Investor Relations page at the company's website at Www Dot global medical eat Dot com.

Oh now like to turn the call over to Jeff Bush, Chief Executive Officer of Global Medical we just.

Thank you Steve Good morning, and thank you for joining our second quarter 2023 earnings call.

[noise] portfolio continues to produce excellent results with portfolio occupancy at the end of the quarter of 97% unchanged from the first quarter and a weighted average lease term of 5.8 years during the quarter, we sold eight four property.

M O b portfolio in Oklahoma City, Oklahoma.

Gross proceeds of $66 million at a 6.5 tap rate, resulting in a game of $12.8 million importantly, we use the net proceeds from this sale to pay down a variable rate debt.

Resulting in leverage ratio at the end of the quarter of 44.5% and reducing our ratio a variable rate debt b, 12% off.

Of our total Indepth openness.

Including the 12.8 million dollar gain from the sale of Oklahoma City properties are net income attributable to common shareholders for the second quarter of 2023 was $11.8 million or 18 cents per share compared to two.

Point $2 million or three cents per share in the second quarter of 2022.

F F O and the second quarter was 21 cents per share and union down three cents from the prior year quarter and our <unk> was 23 cents per share and unit down two cents from the second quarter of last year.

Primary reason for the decline in both the F F O and a F. F. O was an increase in interest costs due to the elevated interest rate environment.

For acquisitions in the corner, we acquired two medical office buildings in Redding, California, four $6.7 million with a 7.6% Catholic. This was primarily funded by out issuance of O P units that were price that $11.

Per unit, which helps improve our liquidity and provides tax planting flexibility to sell us overall, we can spin you. We continue to spend time identifying properties that need our investment criteria in our underwriting standards as we start to see more attractive pricing in the market.

And we will main discipline in our approach.

Regarding dispositions, we are very pleased with our progress in selling properties to reduce our variable rate debt and lessons.

Inclusive of our Oklahoma City sale through June 30th we have generated proceeds of 70.

$4 million from dispositions and earlier this week, we closed on the sale of a medical office building in North Charleston at 5.3 cap rate that generated an additional $10.1 million of gross proceeds these dispositions have enabled us.

To achieve a goal of reducing our leverage to our target range of between 40 and 45% as of June 30th.

Overall, I am pleased with our second quarter results and once in Saint <unk> entire team for their hard work and contributions to their results with that I turn the call over to a fond of discuss our investment activity and our current acquisition market conditions in more detail.

Thank you Jeff.

The transaction market for our target medical facilities, which are lined with our investment criteria remains constrained due to the impact of higher interest rates and a wide that ask spread.

A considerable number of opportunities we are reviewing.

We are remaining prudent and adhering to our underwriting standards.

During the second quarter, you completed one acquisition consisting of two fully occupied single tenant medical office buildings and running in California for a purchase price of $6.7 million with a cap rate of 7.6% with 12.8 years, a term, which was primarily financed by our issuance of O P U N.

At a price per unit of $11 per share.

We persist and it actively engaging with diverse physician groups and corporate sellers.

<unk> potential opportunities to emerge.

Especially as searching owners may face the need to sell it they encountered difficulties and refinancing their mortgages.

Furthermore.

We are continuously exploring avenues to expand our potential deal volume, while achieving strong spreads include.

Including options like development financing and joint venture opportunities.

As Jeff mentioned in the second quarter, we sold a portfolio for medical office buildings located in Oklahoma City, Oklahoma.

A cap rate of 6.5%.

Gross proceeds of $66 million, resulting in a gain of $12.8 million.

With the recently completed sale of our North Charleston facility at a 5.3 cap rate that generated gross proceeds of $10.1 million.

We have made great progress against our target goal approximately $90 million of dispositions at a cap right between six and 6.5% and I've been pleased with a considerable level of interest from investors that we have seen.

Due to the uncertainty surrounding equity markets and their impact on current equity value.