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Community Healthcare Trust Inc (CHCT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 results were stable quarter-over-quarter: revenue $29.30M, GAAP diluted EPS $0.04, FFO/share $0.48, AFFO/share $0.55; year-over-year comparisons were lower primarily due to one challenged geriatric psychiatric hospital tenant moved to cash basis in Q2 2024 .
  • Portfolio occupancy ticked down to 90.9% with WALT at 6.7 years; management expects occupancy to remain in the 91–93% range as redevelopment projects commence leases in 1H25 .
  • Liquidity improved materially: revolver upsized to $400M, maturity extended to 2029, with no debt maturities until March 2028, supporting selective acquisitions and potential capital recycling .
  • Dividend raised again to $0.4675 (annualized $1.87); management reiterated comfort with coverage and pointed to resolution of the tenant issue and redevelopment tailwinds as supports .

What Went Well and What Went Wrong

  • What Went Well

    • FFO/AFFO per share held steady sequentially at $0.48/$0.55; property operating expenses fell q/q on lower seasonal utilities, helping offset modestly higher interest expense .
    • External growth pipeline intact: acquired three physician clinics ($8.2M) at ~9.4% returns; seven additional properties under definitive PSA for $169.5M at 9.1%–9.75% returns; two near-term closings expected ($33M) .
    • Balance sheet flexibility increased: $400M revolver, extended maturity and lower pricing; no maturities until Mar-2028 .
    • Quote: “We are proud to have raised our dividend every quarter since our IPO.” – CEO Dave Dupuy .

  • What Went Wrong

    • Year-over-year pressure: FFO declined ~14.5% and AFFO ~9% versus Q4 2023, primarily due to lost rent and interest from the geriatric psych operator shifted to cash basis in Q2 2024 .
    • Occupancy edged down to 90.9% (from 91.3% in Q3) on late-quarter expirations/terminations; WALT declined to 6.7 years .
    • Interest expense ticked up q/q (to $6.4M) given higher borrowings under the revolver and term loan grid impacts despite lower revolver spread post-upsizing .

Financial Results

Quarterly performance (oldest → newest):

MetricQ2 2024Q3 2024Q4 2024
Total Revenues ($USD Millions)$27.52 $29.64 $29.30
GAAP Diluted EPS$(0.42) $0.04 $0.04
FFO per Share - Diluted$0.43 $0.48 $0.48
AFFO per Share - Diluted$0.53 $0.55 $0.55
Net Income ($USD Millions)$(10.43) $1.75 $1.83
Net Income Margin %-37.9% (calc. from )5.9% (calc. from )6.3% (calc. from )

Q4 year-over-year comparison:

MetricQ4 2023Q4 2024
Total Revenues ($USD Millions)$29.12 $29.30
GAAP Diluted EPS$0.15 $0.04
FFO per Share - Diluted$0.57 $0.48
AFFO per Share - Diluted$0.61 $0.55

KPIs and portfolio activity:

KPIQ2 2024Q3 2024Q4 2024
Occupancy92.6% 91.3% 90.9%
WALT (years)7.1 6.8 6.7
Acquisitions (count / $)1 / $23.5M 1 / $6.2M 3 / $8.2M
Pipeline Under PSA (after completion)$169.5M @ 9.1–9.75% $169.5M @ 9.1–9.75% $169.5M @ 9.1–9.75%

Notes: Q2 revenue and EPS were impacted by tenant revenue/interest reversals ($3.2M) and an $11.0M CECL reserve on notes receivable; the CECL did not impact FFO/AFFO calculations .

Guidance Changes

No formal revenue, earnings, or margin guidance provided. Management reiterated an annual acquisitions target as a directional goal, and raised the dividend.

MetricPeriodPrevious GuidanceCurrent UpdateChange
Annual Acquisitions TargetOngoing$120–$150M target (directional) “Still a fair target” despite higher yield bar; expect to use capital recycling and ATM when appropriate Maintained
Dividend per Share (Quarterly)Q3 → Q4 2024$0.465 (Q3 dividend) $0.4675 (Q4 dividend; $1.87 annualized) Raised
Liquidity (Revolver)Oct 2024$150M revolver $400M revolver; maturity to 2029; lower pricing; no maturities until Mar-2028 Increased/Extended

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Tenant credit risk (geriatric psych operator)Q2: Moved to cash basis; CECL reserve $11.0M; ~$1.5M quarterly rent+interest exposure; consultants engaged . Q3: Census improving; multiple parallel paths to resume rent/interest; annualized all-in exposure ~$6M .No Q4 rent/interest; small payment received in Q1’25; tenant exploring asset sales; CHCT evaluating all lease/note options .Stabilizing plan, timeline still uncertain
Capital allocation & liquidityQ2: Modest leverage; access to ATM as appropriate; consider capital recycling . Q3: Upsized revolver to $400M; considering selective dispositions; ATM avoided at depressed share price .No ATM issuance in Q4; $400M revolver live; potential capital recycling and share repurchases (if authorized) .Flexibility improved
Occupancy & redevelopmentQ2: Occupancy 92.6%; five redevelopments underway . Q3: Occupancy 91.3%; three projects expected to start leases in Q1’25 (~$0.75M+ ABR) .Occupancy 90.9%; two projects expected to commence leases in Q2’25; LT range 91–93% .Near-term trough; tailwinds ahead
Acquisition pipeline & yieldsQ2/Q3: Ongoing pipeline; post-completion PSAs ~$169.5M @ 9.1–9.75% .3 clinics closed in Q4 for $8.2M at 9.4%; two near-term closings ($33M) .Execution steady
Dividend coverageQ2: Payout ~87% (AFFO $0.53, dividend $0.4625) . Q3: Payout ~85% (AFFO $0.55, dividend $0.465) .Dividend to $0.4675; management “comfortable” with coverage; expects resolution and redevelopment to help .Stable coverage

Management Commentary

  • Strategy and capital: “We…anticipate having sufficient capital from selected asset sales, coupled with our increased revolver capacity to fund near-term acquisitions… including, if authorized, potential share repurchases, all while maintaining modest leverage levels.” – CEO Dave Dupuy .
  • Dividend: “We declared our dividend for the fourth quarter and raised it to $0.4675 per common share… We are proud to have raised our dividend every quarter since our IPO.” – CEO Dave Dupuy .
  • Pipeline and hurdle rates: “$120–$150 million is absolutely still the goal… our bar has been raised a little bit as far as yield… focused on being accretive on an AFFO per share basis.” – CEO Dave Dupuy .
  • Tenant path forward: “The tenant… indicated that they can make payments of $100,000 to $200,000 per quarter… evaluating strategic alternatives, including the potential sale of… hospitals.” – CEO Dave Dupuy .
  • Dividend coverage: “We feel comfortable with our dividend coverage… at some point we are going to resolve the geriatric psych issue… a significant amount of additional AFFO as we resolve that issue.” – CEO Dave Dupuy .

Q&A Highlights

  • Tenant resolution timeline and cash flows: Small payment received in January; tenant suggests $100–$200k per quarter across rent and interest; CHCT pursuing parallel paths including tenant asset sales and, if needed, replacements; better clarity expected over coming quarters .
  • Funding strategy: Near-term acquisitions (~$33M) to be bridged by revolver with planned deleveraging via capital recycling; potential use of ATM if share price improves; balance sheet conservatism emphasized .
  • Acquisitions cadence: Annual $120–$150M target deemed achievable, but deal bar higher given cost of equity; focus on accretive (AFFO/share) execution .
  • Dividend coverage: Management reiterated comfort with dividend on cash basis given acquisition and redevelopment returns and eventual tenant resolution .
  • Occupancy trajectory: Expect to remain in 91–93% range; redevelopment commencements to support occupancy and earnings; no material change expected near term .

Estimates Context

  • We attempted to pull S&P Global consensus for Q4 revenue, FFO/share, and EPS but could not access due to daily request limits. As a result, we cannot provide a formal “vs. consensus” comparison for Q4 2024 at this time (Values would be retrieved from S&P Global).* [SPGI request limit error].
  • Management characterized Q4 results as broadly in line with Q3 (stable FFO/AFFO and revenue), which aligns with reported figures .
  • Where estimate comparisons are critical for your process, we can re-run S&P Global pulls upon access reset and update beat/miss calculations accordingly.*

Key Takeaways for Investors

  • Sequential stabilization: Revenues, FFO/share ($0.48) and AFFO/share ($0.55) held flat q/q as property-level expenses normalized seasonally; near-term earnings appear anchored while tenant resolution progresses .
  • Healthy liquidity and flexibility: $400M revolver, extended maturity runway, and capital recycling options provide ample capacity to fund selective high-9% yield deals without stressing leverage or issuing dilutive equity at current prices .
  • Dividend durability: The quarterly dividend increased to $0.4675; management remains comfortable with coverage, with potential upside from tenant resolution and redevelopment commencements in 1H25 .
  • Watch the tenant timeline: Incremental payments have begun, and strategic alternatives are under evaluation; clarity on consistency and magnitude of rent/interest over the next couple of quarters is a key stock narrative driver .
  • Acquisition execution remains intact: Q4 purchases ($8.2M at 9.4%) and a robust PSA pipeline ($169.5M at 9.1–9.75%) support medium-term AFFO growth if funding remains balanced and capital recycling is executed efficiently .
  • Occupancy tailwinds: Management expects occupancy to remain in the 91–93% band, with redevelopments commencing in coming quarters to aid rent growth and utilization .
  • Trading implication: Near-term stock catalysts hinge on confirmed tenant cash flow resumption or asset sale progress, and tangible steps on capital recycling to fund accretive acquisitions at high yields without pressuring leverage .

Additional detail and source documents:

  • Q4 2024 press release and financials .
  • Q4 2024 earnings call transcript (prepared remarks and Q&A) .
  • Prior quarters for trend context: Q3 2024 press release and reconciliation ; Q3 2024 call –; Q2 2024 press release and reconciliation ; Q2 2024 call –.
  • Revolver upsizing and maturity extension (Oct 2024) .

Footnote: *Values would be retrieved from S&P Global.