Community Healthcare Trust Inc Q1 FY2025 earnings call

• Busy first quarter with selective acquisitions. Four properties undergoing redevelopment/renovations with long-term tenants. Acquired a behavioral residential treatment facility for ~$9.7M with $1.4M in TI. Signed agreements for 7 properties to be acquired with expected investment of $169.5M. Sold a building in Ohio for a gain. Geriatric psychiatric hospital operator has incremental operating improvements and is in active sale process. Dividend raised to $0.47 per common share, annualized to $1.88.

Total revenue grew from $29.3 million in Q1 2024 to $30.1 million in Q1 2025, a 2.5% annual growth. Property operating expenses were $6.1 million, up ~$600k QoQ. General and administrative expenses were $5.1 million, up ~$300k QoQ. Interest expense was flat at $6.4 million. FFO was $12.7 million, down slightly QoQ. AFFO was $14.7 million, ~$100k higher than Q4 2024. Occupancy was 90.9% and weighted average remaining lease term was 6.7 years, flat QoQ.

• Expect NOI from a redevelopment project in Q4 2025. Have a pipeline of 7 properties to acquire with expected returns 9.1%-9.75%, with one closing in Q3 and others closing through 2027. Evaluate capital recycling and revolver draws for acquisitions, not interested in raising equity at current share price levels. Will be opportunistic with capital allocation based on share price and pipeline.

• Uncertainty around the geriatric psychiatric hospital operator's sale process timing. Potential macroeconomic impacts on tenants' ability to pay rent. Concerns about leveraging the balance sheet for share buybacks or acquisitions without increasing leverage meaningfully.

Q: Could you provide more color on the geriatric psychiatric hospital operator's sale timing?

A: They're in an active sale process, expecting more certainty by end of Q2/beginning of Q3.

Q: Thoughts on acquisition outlook and capital allocation?

A: Have a pipeline with one closing in Q3, another in Q4, and a $4M property under term sheet. Will use selected asset sales and revolver draws, not raising equity at current share price.

Q: Clarification on contractual payments with the psychiatric hospital operator?

A: $3.2M is rent, notes are another ~$2.5M run rate.

Q: Conditions under which CHCT might not proceed with the $169M pipeline?

A: Could move on if development project isn't right, but expect to close on the pipeline.

Q: Position of notes vis-à-vis other creditors in case of the geriatric tenant selling assets?

A: Have second-lien on AR and first-lien on other assets of the borrower.