Filing summary
Registrant: The filing identifies Global Medical REIT Inc. (NYSE: GMRE), not Chiron Real Estate Inc. The summary below reflects the filing’s registrant. This unaudited Form 10-Q covers the quarter and nine months ended September 30, 2021; filed November 5, 2021.
Business context and reporting period
GMRE acquires purpose-built healthcare facilities and leases them primarily to healthcare systems and physician groups. At quarter-end, its portfolio comprised 102 facilities with 4.2 million leasable square feet and $100.8 million of annualized base rent. The company completed 16 acquisitions during the first nine months of 2021.
Financial performance and position
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Total revenue | $30.0m | $25.1m | $85.6m | $68.8m |
| Net income (loss) | $5.4m | ($9.6m) | $12.9m | ($5.1m) |
| Net income (loss) attributable to common stockholders | $3.7m | ($10.3m) | $8.0m | ($8.8m) |
| Basic and diluted EPS | $0.06 | ($0.22) | $0.13 | ($0.19) |
| Operating cash flow | Not provided for quarter | Not provided for quarter | $51.7m | $18.4m |
| FFO per share and unit | $0.23 | ($0.03) | $0.67 | $0.34 |
| AFFO per share and unit | $0.24 | $0.23 | $0.71 | $0.65 |
Amounts are in U.S. dollars; financial statement amounts are rounded to the nearest $0.1 million. FFO and AFFO are non-GAAP measures and should be considered alongside GAAP results and cash flows. The filing does not provide a clear operating-margin measure.
- Cash flows, nine months: Operating activities provided $51.7m; investing activities used $166.7m, primarily for property acquisitions; financing activities provided $116.2m. Cash, cash equivalents and restricted cash totaled $11.9m at September 30, 2021, including $6.0m of cash and cash equivalents.
- Debt and liquidity: Total debt, net, was $554.6m, down from $586.6m at December 31, 2020. The weighted-average interest rate was 2.91%, versus 3.17% at year-end 2020. The $750m unsecured credit facility had $497.2m outstanding net at quarter-end; management reported approximately $240m of revolver capacity available as of November 1.
- Balance sheet: Total assets were $1.243bn, net real estate investment was $1.181bn, total liabilities were $613.1m, and total equity including noncontrolling interest was $630.2m at September 30, 2021.
- Dividends: Common dividends were $0.205 per share for Q3, compared with $0.20 a year earlier. Series A preferred dividends are cumulative at a 7.50% annual rate.
Material changes versus the prior comparable period
- Q3 revenue rose $4.9m year over year, mainly from properties acquired after September 30, 2020. Nine-month revenue increased $16.8m for similar portfolio-growth reasons.
- Net income improved substantially in both comparisons because 2020 included management-internalization expense of $12.6m in Q3 and $14.0m for the nine-month period. The 2021 results had no such expense; the year-over-year improvement should not be read as solely underlying same-property growth.
- Nine-month general and administrative costs increased $5.0m, reflecting costs internalized from the former advisor and higher stock-based compensation. Depreciation, amortization, and operating expenses also increased with the expanded portfolio.
- Common shares outstanding rose to 64.2m from 49.5m at December 31, 2020. The company raised net proceeds of approximately $194.4m through a public offering and ATM issuances during the first nine months.
- On May 3, 2021, GMRE amended and restated its credit facility, increasing capacity from $600m to $750m, converting it from secured to unsecured, and extending maturities. It repaid $19.5m net under the facility during the nine-month period and paid off the West Mifflin loan.
Outlook, risks, contingencies and unusual items
- No numerical earnings or operating guidance is provided. Management described long-term demand drivers including healthcare spending, an aging population, and the shift toward outpatient care; it also cited greater competition for healthcare property acquisitions.
- Management said COVID-19 had not materially affected the business to date, but warned that renewed outbreaks or variants could affect tenants’ rent-paying capacity, financing access, or equity raising.
- Interest-rate and LIBOR-transition risks remain. The company hedged the $350m term loan with swaps, but had $155.7m of unhedged floating-rate borrowings; management estimated a 100-basis-point LIBOR increase would reduce annual cash flow by approximately $1.6m, assuming debt levels were unchanged.
- Capital improvement commitments were approximately $28.9m, with obligations over the next 12 months potentially reaching $23.9m; some are contingent and timing is uncertain. The credit facility includes leverage, coverage, and minimum-net-worth covenants; management believed the company was compliant as of November 1, 2021.
- After quarter-end, GMRE sold a Prescott, Arizona property for $5.5m gross proceeds and recorded an approximately $1.1m gain. It also agreed to sell a Belpre, Ohio property for approximately $44.6m gross, subject to due diligence and closing contingencies; completion was expected no earlier than March 2022. Three properties were under contract for acquisition for approximately $23.9m.
- The filing reports no material pending litigation, no known material environmental liability, and no material changes to previously disclosed risk factors beyond those referenced in the filing. Disclosure controls were assessed as effective.
Important facts for investors to verify
- Confirm the issuer identity: the filing is for Global Medical REIT Inc., despite the request metadata naming Chiron Real Estate Inc.
- Review acquisition economics, lease terms, tenant/operator credit quality, and rent collection—including the effect of straight-line rent receivables and tenant reimbursements.
- Assess whether AFFO and operating cash flow support common and cumulative preferred dividends, planned property improvements, and debt service.
- Verify credit-facility covenant headroom, available borrowing capacity, and exposure as LIBOR transitions to a replacement benchmark.
- Track dilution from equity issuance and execution risks for the Belpre sale and contracted acquisitions, including the intended reinvestment of sale proceeds.