On August 6, 2024, Global Medical REIT Inc (GMRE, Financial) released its 8-K filing detailing the financial results for the second quarter of 2024. Global Medical REIT Inc is a Maryland corporation engaged predominantly in the acquisition of purpose-built healthcare facilities and the leasing of those facilities to physician groups and regional and national healthcare systems. The company's principal business objective is to provide attractive, risk-adjusted returns to its stockholders through a combination of reliable dividends and long-term capital appreciation. Its healthcare facilities are located in secondary markets and suburbs of primary markets and are typically leased to single-tenants under triple-net leases.
Financial Performance and Challenges
Global Medical REIT Inc (GMRE, Financial) reported a decrease in rental revenue for Q2 2024, down 5.8% year-over-year to $34.2 million. This decline was primarily due to property dispositions completed in 2023 and the recognition of reserves for $0.8 million of rent related to Steward Health Care at the Beaumont Facility. Total expenses for the quarter were $32.8 million, down from $35.0 million in the prior year, reflecting lower interest expenses and the impact of property dispositions.
Interest expense for the quarter was $7.0 million, compared to $8.5 million in the previous year, due to lower leverage and the impact of interest rate swaps. However, the company reported a net loss attributable to common stockholders of $3.1 million, or $0.05 per diluted share, compared to net income of $11.8 million, or $0.18 per diluted share, in Q2 2023. This loss includes a $3.4 million loss on the sale of an investment property, contrasting with a $12.8 million gain on property sales in the prior year.
Key Financial Achievements
Despite the challenges, GMRE reported Funds From Operations (FFO) of $13.9 million, or $0.20 per share and unit, and Adjusted Funds From Operations (AFFO) of $15.7 million, or $0.22 per share and unit, for Q2 2024. These figures are slightly lower than the FFO of $14.7 million, or $0.21 per share and unit, and AFFO of $15.9 million, or $0.23 per share and unit, reported in the same period last year.
Investment Activity and Portfolio Update
During Q2 2024, GMRE entered into a purchase agreement for a 15-property portfolio of outpatient medical real estate for $80.3 million. The first tranche, comprising five properties for $30.8 million, was completed in July 2024. The remaining properties are expected to be acquired in Q4 2024. Additionally, GMRE sold its medical facility in Mishawaka, Indiana, for $8.1 million, resulting in a $3.4 million loss, and a facility in Panama City, Florida, for $11.0 million.
As of June 30, 2024, GMRE's portfolio was 96.2% occupied, with 4.7 million leasable square feet and an annualized base rent of $106.0 million. The weighted average lease term was 5.8 years, with annual rent escalations of 2.2%, and a portfolio rent coverage ratio of 4.6 times.
Balance Sheet and Capital
At the end of Q2 2024, GMRE had total debt of $613.7 million, with a leverage ratio of 43.8%. The weighted average interest rate on the debt was 3.89%, with a remaining term of 2.5 years. The company had a borrowing capacity of $261 million under its credit facility as of August 5, 2024.
Dividends
On June 6, 2024, GMRE's Board of Directors declared a $0.21 per share cash dividend to common stockholders and unitholders, paid on July 9, 2024. Additionally, a $0.46875 per share cash dividend was declared for Series A Preferred Stockholders, paid on July 31, 2024.
Non-GAAP Financial Measures
GMRE uses non-GAAP financial measures such as FFO, AFFO, EBITDAre, and Adjusted EBITDAre to evaluate its performance. These measures exclude certain items to provide a clearer view of the company's core operating results and ability to service debt.
Jeffrey M. Busch, Chairman, CEO, and President, stated, "During the second quarter, we continued to produce consistent results due to the quality of our portfolio and the reliability of our tenant base. With ample liquidity, we are well positioned to continue to pursue acquisitions that fit our portfolio quality and return criteria."
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Global Medical REIT Inc for further details.
