Chiron Real Estate Inc. (XRN, GMRE, XRN-PA, XRN-PB Q3 FY2025 earnings call

• Portfolio performance: Achieved 2.7% same-store NOI growth, 95% leased with over 5 years WAULT, leases have 2.1% annual escalator.
• Balance sheet: Amended credit facility, extending revolver to 2029, dividing $350 million Term Loan A into 3 tranches with maturities 2029-2031, weighted average debt term extended by 3 years, effective interest rate ~4.8%.
• Investments: Pipeline of $11.5 billion in prospective transactions, near-term pipeline of ~$500 million with 7.5%-8% cash returns, disciplined on acquisitions due to cost of capital.
• Asset management: Same-store NOI growth, re-leased Beaumont, Texas facility, disposed of 2 assets, portfolio 95.2% leased with 5.3 years remaining WAULT, YTD CapEx and leasing costs $9.7 million within $12M-$14M guidance range.

During the third quarter, the portfolio posted 2.7% same-store NOI growth. Funds from operations (FFO) were $14.5 million or $1 per share in unit, and adjusted FFO (excluding straight-line rent) was $16.2 million or $1.12 per share, both up 4% on a per-share basis year-over-year. Year-to-date funds available for distribution totaled $39.2 million with a payout ratio of 84% at the current annual dividend rate. The GMRE portfolio is 95% leased with over 5 years of remaining weighted average unexpired lease term (WAULT), and leases have an embedded annual escalator of 2.1%.

• Full-year CapEx and leasing costs guided $12M-$14M.
• Fourth quarter FFO implied range $1.13-$1.23, influenced by lease-ups, rent growth, and interest rate reductions from credit facility refinancing.
• Target leverage sub-6x, potential to fund $200M-$500M in external growth with permanent capital.

• Market and credit risk: Affects ability to access insurance debt and achieve desired credit rating.
• Capital markets uncertainty: Impacts ability to execute on acquisition opportunities as planned.

Q: Talked about positive leasing momentum, pipeline of leases to commence rent over next few quarters?

A: Danica Holley said performance consistent with quarter, no surprises.

Q: What drove occupancy increase during the quarter?

A: Mainly selling empty Aurora facility; Q4 FFO benefit from lease-ups like CHRISTUS.

Q: How low would leverage have to get to be net acquirer?

A: Target near-term leverage sub-6x, could fund $200M-$500M in external growth with permanent capital.

Q: Thoughts on preferred stock?

A: Mark Decker thinks preferred is attractive equity, consider expanding use.