Chiron Real Estate Inc. (XRN, GMRE, XRN-PA, XRN-PB Q2 FY2024 earnings call

• Portfolio Performance: High quality diversified portfolio with 96.2% occupancy, 5.8-year weighted average lease term, and 4.6 times rent coverage ratio. • Acquisition Activity: Entered into a purchase agreement for a 15-property outpatient medical real estate portfolio at $80.3 million, with the first tranche completed post-quarter end and the second tranche expected in Q4 2024. Investment pipeline consists of approximately $120 million of assets at attractive cap rates. • Disposition Activity: Closed on the sale of medical facilities in Mishawaka, Indiana ($8.1M) and Panama City, Florida ($11M). • Steward Health Care: Steward represented 2.8% of annualized base rent, primarily in Beaumont, Texas. Actively pursuing releasing opportunities at this facility.

At the end of the second quarter, the portfolio had an occupancy of 96.2% with a weighted average lease term of 5.8 years and a portfolio average rent coverage ratio of 4.6 times. For the second quarter, the net loss attributable to common shareholders was $3.1 million or $0.05 per share. FFO attributable to common shareholders and non-controlling interest was $0.20 per share and unit, down $0.01 from the prior year quarter. AFFO attributable to common stockholders and non-controlling interest was $0.22 per share and unit, down $0.01 from the prior year quarter. Entered into a purchase agreement for a 15-property portfolio of outpatient medical real estate with an aggregate purchase price of $80.3 million, with the first tranche acquired post-quarter end for $30.8 million and the second tranche expected to be completed in the fourth quarter of 2024. Closed on the sale of a medical facility in Mishawaka, Indiana for $8.1 million and in Panama City, Florida for $11 million.

• Expect to complete the second tranche of the 15-property portfolio acquisition in the fourth quarter of 2024. • Investment pipeline of approximately $120 million of healthcare assets at attractive cap rates. • Projected total capital expenditures for 2024 are in the range of $11 million to $13 million.

• Impact of Steward Health Care bankruptcy on rent and operations. • Uncertainty around market conditions and refinance challenges. • Interest rate fluctuations affecting borrowing costs and acquisition potential.

Q: Austin Wurschmidt asked about the $120 million investment pipeline composition, economics, timing, and cap rates on dispositions.

A: Robert Kiernan stated the pipeline doesn't include the second tranche, Alfonzo Leon mentioned medical office buildings in the pipeline targeting cap rates north of ACAP and in the high 8s to 9s, and Jeffery Busch added excitement about opportunities if interest rates fall.

Q: Juan Sanabria inquired about dispositions' cap rates and the mark-to-market of the Steward Beaumont lease.

A: Jeffery Busch said the Panama City sale was at a 7.1 cap, the Mishawaka asset had a low double-digit cap, and Robert Kiernan said the Steward Beaumont lease is comparable to current market levels.

Q: Rob Stevenson asked about Steward payments and the tenant watch list.

A: Robert Kiernan discussed reserves and operating expenses related to Steward, and Jeffery Busch and Alfonzo Leon talked about the tenant watch list and focus on medical office buildings.

Q: Bryan Maher asked about interest rates and the re-leasing of the Steward property.

A: Robert Kiernan expected interest rates to go lower, and Jeffery Busch was optimistic about re-leasing the Steward property in Beaumont.