Community Healthcare Trust (CHCT) Q4 2024 earnings summary

Executive summary

• Fourth quarter operations included selective acquisitions and ongoing redevelopment projects, with occupancy at 90.9% and average lease term at 6.7 years.

• Acquired three physician clinics for $8.2 million, fully leased through 2029, and disposed of one property and a land parcel for $1.4 million in net proceeds.

• For the year, nine properties acquired for $72.1 million, 99.3% leased, with leases through 2039 and returns of 9.1%-9.75%.

• As of December 31, 2024, held investments in 200 properties across 36 states, totaling $1.2 billion and 4.4 million square feet.

• Net income for Q4 2024 was $1.8 million, or $0.04 per diluted share, with FFO and AFFO at $0.48 and $0.55 per diluted share, respectively.

Financial highlights

• Q4 total revenue was $29.3 million, nearly flat compared to $29.6 million in Q3; Q4 2024 rental income was $29.0 million, up from $28.1 million in Q4 2023.

• Property operating expenses decreased by $500,000 quarter-over-quarter to $5.5 million; G&A expenses slightly down to $4.8 million, with 2024 G&A including $10.0 million in stock-based compensation.

• Interest expense rose to $6.4 million from $6.3 million in Q3, reflecting higher borrowings and rate changes.

• FFO for Q4 was $12.7 million, down 14.5% year-over-year, mainly due to lost rent and interest from a troubled tenant; FFO and AFFO per diluted share for Q4 2024 were $0.48 and $0.55, respectively, compared to $0.57 and $0.61 in Q4 2023.

• AFFO was $14.6 million, flat sequentially but down 9% year-over-year; AFFO per share remained at $0.55.

Outlook and guidance

• Two redevelopment projects expected to commence leases in Q2 2025.

• Two properties under definitive purchase agreements for $33 million expected to close in Q1 2025, with returns of 9.5%-9.75%.

• Entered agreements to acquire a residential treatment campus for $9.5 million and seven additional properties for $169.5 million, with expected returns of 9.1% to 9.75%.

• Six additional properties under contract for $146 million, expected to close through 2025-2027; anticipates closing on one property in Q1 2025 and the remainder through 2027, but timing is not assured.

• Annual acquisition target of $120-$150 million remains achievable, with a focus on accretive deals; occupancy expected to remain in the 91%-93% range, with redevelopment projects providing a tailwind.