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Community Healthcare Trust Inc (CHCT)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was a clean rebound quarter: revenue rose to $31.086M (+4.9% YoY; +6.9% vs Q2 reported) and FFO/AFFO per share improved to $0.50/$0.56, respectively, driven by a Florida IRF acquisition and normalized operations after Q2 one-time charges .
  • Results modestly beat S&P Global consensus on normalized EPS and revenue; Primary EPS was $0.094 vs $0.08 and revenue $31.086M vs $30.781M; GAAP diluted EPS was $0.03 (difference reflects normalization vs GAAP) *.
  • Dividend raised to $0.4750 per share (+0.5% QoQ), continuing a multi-year cadence of quarterly increases and implying $1.90 annualized .
  • Capital recycling is the funding priority: management expects a 1031 sale with $11.5M gain to fully fund the next acquisition, plus two additional Q4 dispositions ($6.1M net proceeds), targeting leverage-neutral growth .
  • Near-term catalysts: potential resolution of the geriatric behavioral hospital tenant via sale/new leases (timing most likely Q1 2026), year-end occupancy uplift of 50–100 bps, and interest expense tailwinds from recent Fed cuts on revolver exposure .

What Went Well and What Went Wrong

What Went Well

  • AFFO/FFO stability and YoY growth: AFFO per diluted share rose to $0.56 (+$0.01 YoY), FFO per diluted share to $0.50 (+$0.02 YoY), underscoring core portfolio durability post Q2 disruptions .
  • Accretive acquisition execution: Closed a 100% leased Florida IRF at a ~$26.5M price with ~9.4% expected return; WALT increased to 6.7 years .
  • Clear capital plan: Management guided to a leverage-neutral funding model via 1031 exchanges and dispositions; “we do not expect to meaningfully increase leverage” .

What Went Wrong

  • GAAP profitability remains thin: Net income was $1.640M and diluted EPS $0.03; interest expense rose to $7.075M due to revolver borrowings for acquisitions .
  • Residual tenant exposure: The geriatric behavioral hospital operator paid only ~$0.2M in rent/interest in Q3 versus prior ~$0.8M rent run-rate, and management assigns low odds to collecting back rents/interest .
  • Elevated financing costs: Interest expense increased $0.5M QoQ; although management expects rate-cut benefits in Q4, floating-rate exposure ($180M) still creates sensitivity .

Financial Results

MetricQ3 2024Q4 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$29.639 $29.298 $30.078 $29.085 $31.086
Net Income ($USD Millions)$1.749 $1.832 $1.591 $(12.557) $1.640
Diluted EPS ($USD)$0.04 $0.04 $0.03 $(0.50) $0.03
FFO ($USD Millions)$12.821 $12.745 $12.668 $6.336 $13.547
FFO per Share - Diluted ($USD)$0.48 $0.48 $0.47 $0.23 $0.50
AFFO ($USD Millions)$14.639 $14.630 $14.739 $13.585 $15.099
AFFO per Share - Diluted ($USD)$0.55 $0.55 $0.55 $0.50 $0.56
NOI ($USD Millions)$23.653 $23.813 $23.983 $23.500 $25.156
Adjusted EBITDAre ($USD Millions)$21.421 $21.617 $21.596 $20.068 $22.970

Segment/Portfolio mix (Annualized Rent %):

Property Type% of Annualized Rent
MOB36.0%
IRF21.5%
Acute Inpatient Behavioral13.0%
Specialty Centers8.7%
Physician Clinics8.6%
Behavioral Specialty Facilities6.2%
Surgical Centers & Hospitals3.9%
LTACH2.1%

Key KPIs:

KPIQ3 2025
Leased %90.1%
Weighted Average Lease Term6.7 years
Total Square Feet Owned4,556,621
Common Shares Outstanding28,471,424
Cash & Cash Equivalents$3.383M
Net Debt$530.138M
Debt to Total Capitalization43.1%
Quarterly Dividend (Declared)$0.4750
Quarter-end Stock Price$15.30

Results vs Consensus (Q3 2025):

MetricS&P Consensus*Reported Actual# of Estimates
Primary EPS (Normalized)$0.08*$0.0939*1*
Revenue ($USD)$30.781M*$31.086M *3*

Note: CHCT’s GAAP diluted EPS was $0.03; “Primary EPS” reflects normalized EPS used by S&P Global and is not directly comparable to GAAP diluted EPS *.
Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
OccupancyFY 2025 year-endNot providedExpect leased occupancy to increase by 50–100 bps by year-endRaised
Dividend per shareQ3 2025$0.4725 (Q2 declared) $0.4750Raised
Acquisition closingsQ4 2025–20276 properties under DPAs; close throughout 2025–2027 One closing in Q4 2025; remaining in 2026–2027Maintained/Specified
Capital recyclingQ4 2025$0.6M Q2 small disposition Two Q4 dispositions (~$6.1M net proceeds) plus IRF sale with ~$11.5M gain via 1031 to fund next acquisitionNew/Updated
ATM equity issuanceQ3 2025None in Q2 None in Q3Maintained
Interest expense outlookQ4 2025Not providedExpect benefit from FOMC rate cut on ~$180M floating revolver balanceNew

Earnings Call Themes & Trends

TopicQ1 2025 (Previous Mentions)Q2 2025 (Previous Mentions)Q3 2025 (Current)Trend
Geriatric behavioral tenantExploring strategic alternatives; $165k rent/interest; $3.2M annual rent; notes ~$2.5M run-rate; secured positions detailed LOI signed 7/17; interest receivable reversal ($1.7M); credit loss reserve ($8.7M); cash-basis rent; $260k received $200k paid in Q3; buyer due diligence; timing more likely Q1 2026; low likelihood of back rent recovery Progressing toward resolution; cautious timing
Capital recycling vs equityConsidering selected asset sales; avoid ATM at low share price; keep leverage modest Capital recycling underway; revolver + sales to fund pipeline 1031 strategy; “not meaningfully increase leverage”; dispositions to match acquisitions Firm commitment to recycle capital
Occupancy & leasing90.9% occupancy; active leasing 90.7% occupancy; continued leasing 90.1% occupancy; expect +50–100 bps by year-end; leases signed in Oct Near-term uplift expected
Acquisition pipeline/returns~$169.5M across 7 assets; expected returns 9.1–9.75%; staged closings through ’27 6 assets; close one in Q4; returns 9.1–9.75% Closed ~$26.5M IRF at ~9.4% return; pipeline unchanged; selective Accretive projects, disciplined timing
Financing/interestInterest expense stable QoQ; revolver capacity available Interest expense up modestly; severance elevated G&A Interest expense +$0.5M QoQ; expect rate-cut tailwind Rate backdrop turning supportive
G&A/one-time itemsSeasonal G&A; no unusual items $5.9M severance/transition; $4.6M accelerated stock comp G&A normalized at $4.658M; non-cash stock comp $2.5M Normalization after Q2 spike

Management Commentary

  • “We would expect our leased occupancy to increase by 50 to 100 basis points by year-end” (CEO) .
  • “We do not expect to meaningfully increase leverage” and will use 1031 like-kind exchange proceeds to fund the next acquisition (CEO/CFO) .
  • “We benefited late in the quarter from the FOMC’s 25 bps reduction… the full benefit will be realized in our fourth quarter” (CFO) .
  • Acquisition discipline: “We are seeing opportunities… 9 to 10% cap rate range… we are being highly selective” (CEO) .

Q&A Highlights

  • Behavioral tenant trajectory: Prior rent ~$0.8M/quarter; Q3 payments ~$0.2M; buyer diligence ongoing; back-rent recovery unlikely; timing more likely Q1 2026 .
  • Funding strategy and leverage: Dispositions and 1031 to fund pipeline on a leverage-neutral basis; next acquisition to be “completely paid for” by IRF sale proceeds (CFO) .
  • Disposition pricing: Indicative cap rates in the 7.5–8% range; targeted positive spread vs ~9–10% acquisition yields .
  • Watchlist/credit risk: No other top-10 tenants on watchlist; remaining notes to other tenants (~$4.1M) performing; assurance notes fully reserved .
  • Redevelopment earnings timing: Major behavioral residential project lease expected to commence post mid-2026; some smaller projects contribute in 2026; leasing tailwinds into 2026 .

Estimates Context

  • Q3 2025 revenue and normalized EPS beat S&P Global consensus; Primary EPS $0.094 vs $0.08 and revenue $31.086M vs $30.781M. Low coverage (EPS: 1 estimate; Revenue: 3) suggests potential volatility in estimate revisions *.
  • Note: CHCT reports GAAP diluted EPS of $0.03; S&P “Primary EPS” is normalized, so comparisons reflect different bases *.
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Core operating metrics are improving: AFFO per share rose to $0.56 and NOI/Adj. EBITDAre expanded, setting a cleaner base after Q2 one-offs .
  • Capital recycling should fund the near-term pipeline without equity issuance; expect ~$11.5M gain from IRF sale and ~$6.1M in additional Q4 proceeds to match acquisitions .
  • Near-term occupancy uplift (50–100 bps) and incremental leasing should support 2026 AFFO trajectory; watch for Q4 occupancy prints and lease commencements .
  • Rate environment is turning supportive; revolver floating exposure positions CHCT to benefit from Fed cuts in Q4 and potentially December, aiding interest expense and FFO .
  • Behavioral tenant resolution remains a swing factor; base-case assumes limited back-rent recovery with potential normalization if the sale/new leases close (most likely Q1 2026) .
  • Dividend growth intact (now $0.4750); payout ratio of ~85% on AFFO remains conservative for a healthcare REIT .
  • Trading lens: Watch announcements on dispositions/1031 timing, buyer/lease terms for the six geriatric hospitals, and any additional acquisition closings to validate leverage-neutral growth .

Footnote: *Values retrieved from S&P Global.