Chiron Real Estate Inc. (XRN, GMRE, XRN-PA, XRN-PB Q3 FY2024 earnings call

• The high-quality diversified portfolio maintained 96.1% occupancy, 5.6-year weighted average lease term, and 4.6x rent coverage ratio. - Completed acquisition of a 15-property outpatient medical real estate portfolio, with the first tranche closed in Q3 and remaining in October. - Has a 5-property portfolio under contract for ~$70 million with 94% leased and 9% cap rate. - Issued 1.2 million shares via ATM, raising $12 million. - Sold two medical facilities in Q3, generating $12.1 million gross proceeds and $1.8 million gain. - Entered a new 15-year triple net lease with CHRISTUS Health in Beaumont, Texas, replacing Steward Healthcare. - Transaction market for medical facilities is evolving; active in sourcing acquisitions, but mortgage rate increase tempered demand. - Portfolio at end of Q3 2024 had $1.4 billion in gross investments in real estate, $634 million in debt, 44.1% leverage, and 3.79% weighted average interest rate.

At the end of the third quarter of 2024, the portfolio occupancy was 96.1% with a weighted average lease term of 5.6 years and a portfolio average rent coverage ratio of 4.6x. For the third quarter, net income attributable to common shareholders was $1.8 million or $0.03 per share, down from $3.1 million or $0.05 per share in the third quarter of 2023. FFO attributable to common shareholders and non-controlling interest in the third quarter was $0.19 per share and unit, down $0.03 from the prior quarter. AFFO attributable to common shareholders and non-controlling interest was $0.22 per share and unit, down $0.01 from the prior year quarter. The company closed the first tranche of a 15-property outpatient medical real estate portfolio acquisition for $30.8 million in Q3 and the remaining 10 properties in October, with an aggregate purchase price of $80.3 million. It has a 5-property portfolio under contract for just under $70 million. In Q3, the company issued 1.2 million shares of common stock via ATM, generating $12 million gross proceeds, and closed the sale of two medical facilities, generating $12.1 million gross proceeds and $1.8 million gain.

• Expect to continue with equity issuances and asset dispositions to maintain a strong balance sheet. - Anticipate closing the 5-property portfolio acquisition in tranches. - Projected total capital expenditures for 2024: $12 million to $14 million. - Optimistic about the acquisition market, encouraged by recent successes in adding quality assets.

• Impact of cash basis tenants like Steward at the Beaumont facility. - Mortgage rate increases tempering demand in the market. - Uncertainty around closing acquisitions subject to customary terms and conditions. - Potential material differences between forward-looking statements and actual results due to various risks beyond the company's control.

Q: Austin Wurschmidt asked about sources of funding to maintain balance sheet, cap rates, etc.

A: Bob Kiernan talked about leverage at 44%, potential to stay in target range with sales or equity. Alfonzo Leon discussed market evolution with Fed rate cuts affecting demand.

Q: Bryan Maher asked about states of acquired portfolio, equity accretiveness, disposition selectivity, Steward rent collection.

A: Alfonzo Leon on confidentiality of states, Bob Kiernan on equity accretiveness at 9.50% and above, Alfonzo Leon on disposition selectivity, Bob Kiernan on Steward rent collection.

Q: Rob Stevenson asked about CHRISTUS rent vs Steward, CapEx for Beaumont, closing of $70 million portfolio, tenant concentration.

A: Bob Kiernan on CHRISTUS rent being slightly higher, Jeff Busch on CapEx and closing in tranches, Jeff Busch on tenant concentration.

Q: Alec Feygin asked about funding portfolio deals, runway for asset recycling, term loan.

A: Jeff Busch on equity and dispositions, Jeff Busch on asset recycling market adjustment, Bob Kiernan on term loan planning.

Q: Robin Haneland asked about CHRISTUS rent decline, dividend sustainability, disposition pool, lease expirations 2025, pipeline.

A: Bob Kiernan on CHRISTUS rent, Jeff Busch on dividend sustainability, Bob Kiernan on disposition pool fluidity, Bob Kiernan on lease expirations optimism, Jeff Busch on pipeline cap rates.

Q: Gaurav Mehta asked about why portfolio under contract has 9% cap rate.

A: Jeff Busch on factors like property profile, campus location, and relationship deal contributing to 9% cap rate.