Global Medical REIT Q2 Earnings Call Highlights

Global Medical REIT reported second-quarter results as it continues to reposition its portfolio toward senior housing and away from outpatient medical real estate, with management emphasizing capital recycling, leadership additions and a growing investment pipeline. Chief Executive Officer Mark Decker Jr. said the company’s existing portfolio remained operationally stable while it pursued a broader strategic transition. Normalized same-store net operating income increased 1.7% during the quarter, in line with the company’s expectations and its guidance at the start of the year, he said. The strategic actions we’re taking today are not a response to operational challenges. It’s about capital allocation. He said the company sees opportunities for better total returns within healthcare real estate than in portions of its outpatient medical portfolio. During the quarter, Chiron closed a $100 million Maewyn investment alongside the acquisition of its first two senior housing communities: The Landing and The Riviera in Alexandria, Virginia. The properties together comprise 292 luxury homes. The Landing is a stabilized continuum-of-care community, while The Riviera opened in March and remains in lease-up. Chiron also completed the sale of seven inpatient rehabilitation facilities to a newly formed joint venture in June. The transaction generated about $200 million in gross proceeds, according to Decker, while the company retained a small equity interest in the venture. Chief Financial Officer Bob Kiernan said the facilities were sold at an aggregate value of $217 million. In addition, the company is under contract to sell a surgical hospital in Beaumont, Texas, for $49 million at a 5.9% exit capitalization rate. Decker said proceeds from asset sales will be redirected into higher-returning investments, including the previously announced acquisition of The Pinnacle, a luxury senior housing community that welcomed its first residents in June. Management said it is evaluating additional dispositions from the outpatient medical portfolio, including individual asset sales and potential larger portfolio transactions. Chiron has hired a broker to help evaluate options for selling further assets in a manner intended to maximize value, Decker said in response to an analyst question. For the second quarter, Kiernan reported GAAP-redefined funds from operations of $0.88 per share and unit, while Core FFO was $1.40 per share and unit. Same-store cash NOI increased 0.8% year over year. The result was affected by a one-time, non-recurring revenue recovery recorded in the prior-year period for a single tenant. Excluding that asset, same-store cash NOI growth would ...