Chiron Real Estate (XRN) Q3 2024 earnings summary

Executive summary

• Portfolio occupancy at quarter-end was 96.1% with a weighted average lease term of 5.6 years and average rent coverage ratio of 4.6x.

• Net income attributable to common shareholders was $1.8 million ($0.03/share), down from $3.1 million ($0.05/share) year-over-year.

• FFO and AFFO per share/unit declined year-over-year, primarily due to cash-basis tenants and lower occupancy.

• Completed the first tranche of a 15-property acquisition for $80.3 million and closed the remainder post-quarter; under contract for a $70 million, five-property portfolio at a 9% cap rate, expected to close in 2025.

• Re-leased Beaumont facility to CHRISTUS Health after Steward's bankruptcy, securing a new 15-year triple net lease.

Financial highlights

• Total revenues for Q3 2024 were $34.3 million, down 3.5% year-over-year, mainly due to lower occupancy and cash-basis tenants.

• Total expenses were $32.7 million, slightly down from $33 million year-over-year, with reduced depreciation offset by higher operating and interest expenses.

• FFO was $13.7 million ($0.19/share and unit), down from $15.3 million ($0.22/share and unit) year-over-year.

• AFFO was $15.3 million ($0.22/share and unit), compared to $16.5 million ($0.23/share and unit) in Q3 2023.

• Three property dispositions in 2024 generated $20.2 million in gross proceeds, resulting in a net loss of $1.6 million.

Outlook and guidance

• Projected full-year 2024 capital expenditures of $12–$14 million.

• Expect rent from CHRISTUS lease to commence in March or April 2025.

• Management expects to complete the $69.6 million five-property acquisition in two tranches during the first half of 2025, subject to customary conditions.

• Optimistic about occupancy and leasing activity for 2025, with an 85% retention rate trending for 2024 expirations.

• Management anticipates continued pressure from elevated interest rates and healthcare wage inflation, but expects demographic trends and outpatient care shifts to support long-term demand.