Global Medical REIT - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 delivered stable operating performance: rental revenue rose 6.1% YoY to $35.0M, AFFO/share held at $0.22 (vs. $0.23 LY), and occupancy was 96.4%.
• One-time items drove mixed optics: $3.2M CEO transition costs pressured FFO/share to $0.15 (vs. $0.19 LY), partially offset by a $5.8M gain on asset sales and a $1.7M impairment.
• 2025 outlook: AFFO/share introduced at $0.89–$0.93; G&A guided to normalize to ~$4.5–$4.7M/quarter; capex planned at $12–$14M; dividend maintained at $0.21.
• Strategic catalysts: (1) Joint venture with Heitman (12.5% GMRE stake) to expand capacity/fee streams, (2) 9% cap-rate five-asset acquisition under contract (three closed post-Q4), and (3) CHRISTUS lease at Beaumont expected to commence in Q2 2025 ($2.9M ABR), supporting cash flow trajectory.

What Went Well and What Went Wrong

What Went Well

• Executing growth at attractive yields: closed a 15-asset portfolio at an 8.0% cap and contracted a 5-asset, $69.6M portfolio at a 9.0% cap, with three assets ($31.5M) closed in February 2025.
• New JV platform with Heitman provides incremental capital and fee income potential; seeded with two assets and $35.2M gross proceeds; GMRE owns 12.5% and manages the JV.
• Rapid re-tenanting of Beaumont: long-term, 15-year triple-net lease signed with CHRISTUS; annual rent ~$2.9M with 2.5% escalators, expected to begin Q2 2025; slightly above Steward’s prior rent.

“During the year we maintained our disciplined acquisition approach… and entered into a purchase agreement to acquire a five-property, $69.6 million portfolio at a cap rate of 9.0%… [and] entered into a joint venture with Heitman” – Jeffrey M. Busch.

What Went Wrong

• Non-recurring CEO transition costs ($3.2M) and a $1.7M impairment pressured headline profitability and FFO in Q4.
• Prospect Medical filed for Chapter 11 in January 2025; exposure is small (~0.8% of ABR), but creates near-term uncertainty and potential incremental vacancy of ~30K sq. ft..
• FFO/share declined to $0.15 (vs. $0.19 LY), reflecting the transition costs; AFFO/share was flat YoY at $0.22, indicating core cash flow stability but limited per-share growth.

Transcript

Operator (participant)

Greetings and welcome to Global Medical REIT, Fourth Quarter 2024 Earnings Call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Swett, Investor Relations. Thank you. Please go ahead.

Steve Swett (Head of Investor Relations)

Thank you. Good morning, everyone, and welcome to Global Medical REIT's Fourth Quarter and full year 2024 Earnings Conference Call. On the call today are Jeff Busch, Chief Executive Officer; Alfonzo Leon, Chief Investment Officer; and Bob Kiernan, Chief Financial Officer. Please note the use of forward-looking statements by the company on this conference call. Statements made on this call may include statements which are not historical facts and are considered forward-looking. The company intends these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is making this statement for purpose of complying with those safe harbor provisions.

Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond the company's control, including, without limitation, those contained in the company's 10-K for the year ended December 31, 2023, and its other SEC filings. The company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. Additionally, on this call, the company may refer to certain non-GAAP financial measures such as funds from operations, adjusted funds from operations, EBITDA-REIT, and adjusted EBITDA-REIT. You can find a tabular reconciliation of these non-GAAP financial measures to the most currently comparable GAAP numbers in the company's earnings release and in its filings with the SEC. Additional information may be found on the Investor Relations page of the company's website at www.globalmedicalreit.com.

I would now like to turn the call over to Jeff Busch, Chief Executive Officer of Global Medical REIT. Jeff.

Jeff Busch (CEO)

Thank you, Steve. Good morning, and thank you for joining our Fourth Quarter and Full Year 2024 earnings call. Our high-quality, diversified portfolio continues to produce steady results. At the end of the fourth quarter, portfolio occupancy was 96.4%, with a weighted average lease term of 5.6 years and a portfolio average rent coverage ratio of 4.5 times. For the fourth quarter, net income attributable to common shareholders was $1.4 million, or $0.02 per share, compared to a net loss attributable to common stockholders of $800,000, or $0.01 per share in the fourth quarter of 2023. FFO attributable to common stockholders and non-controlling interest in the fourth quarter was $0.15 per share and unit, down $0.04 from prior year quarter due primarily to $3.2 million of severance-related costs.

FFO attributable to common stockholders and non-controlling interest was $0.22 per share and unit, down $0.01 from the prior year quarter. Regarding our acquisition activity during the year, in the spring, we entered into a purchase agreement to acquire a 15-property portfolio of outpatient medical real estate properties for an aggregate purchase price of $80.3 million. During the third quarter, we closed on the first tranche of this acquisition, consisting of five properties for $30.8 million. During the fourth quarter, we completed the acquisition of the remaining 10 properties for $49.5 million. These properties are fully leased under triple-net, or absolute triple-net leases, and the acquisition was completed at a cap rate of 8%. Additionally, in the fourth quarter, we entered into a purchase agreement to acquire five property portfolios of medical outpatient facilities for an aggregate purchase price of $69.6 million at a 9% cap rate.

Subsequent to the year-end, we closed on the first tranche of this acquisition, completing the acquisition of three properties for $31.5 million. We expect to complete the acquisition of the remaining two properties during the second quarter of 2025. The transaction market continues to present promising opportunities in our asset class, and we are pleased with the recent addition to strengthen our high-quality portfolio. As we focus on growing our business, we remain committed to maintaining a strong balance sheet through our strategic asset recycling program. During the fourth quarter, we completed the sale of four medical facilities, generating aggregate gross proceeds of $40.5 million, resulting in an aggregate gain of $5.8 million. Of these $40.5 million of gross proceeds, $35.2 million were related to the sale of two properties to a joint venture with Hyphen, a premier real estate investment firm managing over $48 billion in assets.

In this joint venture, we maintain a 12.5% ownership stake and serve as its managing member, while Hyphen holds the remaining 87.5% interest and, through its voting interest, controls the joint venture. We are excited to partner with Hyphen and feel the joint venture allows us to capitalize on our acquisition and asset management platforms to continue to acquire assets, earn ancillary fees income, and gain a new capital partner. Lastly, in early 2025, we announced my succession plan as CEO. Over the past eight years, I have had the privilege of leading GMRE through both successes and challenges, working alongside many wonderful partners, associates, industry professionals, and friends in the investment community. This transition creates an opportunity to bring fresh perspective to our growing strategy.

I have the utmost confidence in our board's ability to select a successor who will lead our experienced team and leverage our robust infrastructure to create value for our stockholders. I am confident this transition will be seamless, and I'm deeply grateful to everybody who has been part of this journey. With that, I turn the call over to Alfonzo to discuss our investment activity and the current market conditions in more detail.

Alfonzo Leon (CIO)

Thank you, Jeff. The transaction market for our target medical facilities that align with our investment criteria continues to show promising momentum. We remain actively engaged with a broad range of physician groups, brokers, and corporate sellers to identify compelling acquisition opportunities that will help us continue growing our portfolio. As Jeff mentioned, in the fourth quarter, we closed on a second tranche of our 15-property portfolio announced earlier in the year, acquiring the remaining 10 properties encompassing 160,000 leasable sq ft. In total, the 15-property portfolio had an aggregate purchase price of $80.3 million, with an aggregate of approximately 254,000 leasable sq ft and aggregate annualized base rent of $6.4 million, equating to an 8% cap rate. Also, during the fourth quarter, we announced a $69.6 million portfolio of five medical outpatient properties, which are under contract to purchase at a 9% cap rate.

After year-end, we closed the first tranche of this acquisition, acquiring three properties encompassing roughly 189,000 leasable sq ft for an aggregate purchase price of $31.5 million, with an aggregate annualized base rent of $2.8 million, with the second tranche expected to close during the second quarter of 2025. As noted last quarter, these buildings feature tenants who have invested significant capital in their own suites, with triple-net rents averaging $14-$15 per sq ft. These well-maintained mission-critical facilities serve their respective health systems with a comprehensive mix of medical services, from primary and urgent care to specialized practices, including neuro, cardio, artho, and cancer, as well as diagnostics, radiology, and laboratory services. All of the properties operate under ground leases, with an average of 60 years in remaining term. Approximately two-thirds of the property's square footage is located on campus.

Approximately 60% and 82% of the on- and off-campus properties, respectively, are at least investment-grade tenants. The ability to complete these deals in a two-tranche transaction provides us flexibility to fund these transactions prudently. The second tranche remains under contract and is under customary closing conditions. As such, we cannot guarantee that the remainder of this acquisition will close on time or at all. On the disposition front, during the quarter, we closed on the sale of four medical facilities receiving aggregate proceeds of $40.5 million, resulting in an aggregate gain of $5.8 million. Of the $40.5 million of gross proceeds, $35.2 million came from the sale of two medical properties to our joint venture with Hyphen. We maintain a 12.5% investment in the joint venture and serve as its managing member, while Hyphen maintains an 87.5% investment.

We are excited about this partnership and the opportunity that it may provide in the future as Hyphen allocates capital to this strategy. For the full year, we completed seven dispositions, including two to the joint venture, as Jeff mentioned, that generated aggregate gross proceeds of $60.7 million, resulting in an aggregate gain of $4.2 million at a weighted average cap rate of 9%. Looking forward, we remain committed to our prudent investment approach that aligns with our strategy and underwriting standards. By leveraging our competitive advantage of scale, capital access, and OP unit structuring capabilities, we continue to pursue value-creating opportunities. I'd now like to turn the call over to Bob to discuss our financial results. Bob?

Bob Kiernan (CFO)

Thank you, Alfonzo. At the end of the fourth quarter of 2024, our portfolio consisted of gross investments in real estate of $1.5 billion and included 4.8 million of total leasable sq ft, 96.4% occupancy, 5.6 years of weighted average lease term, 4.5 times rent coverage with 2.2% weighted average contractual rent escalations. In the fourth quarter of 2024, our total revenues increased by approximately 6.7% compared to the prior year to $35.2 million, primarily due to the impact of acquisitions that closed during 2024. Total expenses for the fourth quarter of 2024 were $36.3 million compared to $31.5 million in the prior year quarter. These increases due primarily to the impact of one-time costs related to our CEO succession plan included in our G&A expenses. Our operating expenses for the fourth quarter of 2024 were $7.2 million compared to $6.1 million in the prior year quarter.

Regarding the fourth quarter of 2024 expenses, $4.7 million related to net leases, where the company recognized a comparable amount of expense recovery revenue, and $1.2 million related to gross leases. Relative to the increase in expense in 2024, this reflects increased costs from properties acquired in 2024, as well as the impact of tenants placed on cash-based accounting in the fourth quarter of 2023 and second quarter of 2024. G&A expenses for the fourth quarter of 2024 were $7.7 million compared to $4.2 million in the prior year quarter. The increase primarily resulted from $3.2 million that was expensed in 2024 related to the CEO succession plan. Looking ahead, we expect our total quarterly G&A expenses in 2025, excluding CEO transition-related costs, to be in the range of $4.5 million-$4.7 million.

During the fourth quarter, we completed four property dispositions that generated aggregate gross proceeds of $40.5 million, resulting in an aggregate gain of $5.8 million. In addition to these sales, we recognized an impairment loss of $1.7 million in the fourth quarter related to our Derby, Kansas facility. Net income attributable to common stockholders for the fourth quarter of 2024 was $1.4 million or $0.02 per share, compared to a net loss attributable to common stockholders of $800,000 or $0.01 per share in the fourth quarter of 2023. FFO attributable to common stockholders and non-controlling interest in the fourth quarter of 2024 was $11.1 million or $0.15 per share and unit, compared to $13.3 million or $0.19 per share and unit in the fourth quarter of 2023.

AFFO attributable to common stockholders and non-controlling interest in the fourth quarter of 2024 was $15.8 million or $0.22 per share and unit, compared to $15.9 million or $0.23 per share and unit in the fourth quarter of 2023. The primary reason for the reduction in FFO was the recognition of $3.2 million in severance and transition-related expenses related to our CEO succession plan. These expenses are included in FFO but excluded from AFFO. Regarding capital expenditures on the portfolio, in 2024, our cash spend was approximately $13 million, with approximately 45% related to tenant improvements. Currently, we're projecting 2025 capital expenditures of approximately $12 million-$14 million. In terms of tenant-related items, on January 11, 2025, Prospect Medical Group filed for Chapter 11 bankruptcy reorganization.

At that time, Prospect had approximately $2.4 million of outstanding lease payments related to three of our healthcare facilities, including $2.2 million related to our facility in East Orange, New Jersey, which has been accounted for on a cash basis since the fourth quarter of 2023. As of year-end 2024, Prospect represented 0.8% of our total ABR. As of today, there has been no announced tenant or court decision on the leases we have with Prospect. If Prospect rejects any of its leases with the company, we will have a general unsecured claim with respect to pre-petition amounts owed under any rejected lease. With respect to our 2025 lease expirations, we are pleased with our progress on renewals, and based on activity to date, we are currently estimating a 70%-80% retention rate on the 508,000 sq ft that were scheduled to expire as of the end of 2024.

Additionally, as a result of the Prospect bankruptcy, we expect to have approximately 30,000 sq ft of increased vacancy once the Prospect bankruptcy proceedings are complete. Moving on to the balance sheet, as of December 31, 2024, our gross investment in real estate was $1.5 billion. Additionally, we had $651 million of total gross debt, with a weighted average remaining term of 2.0 years. 79% of our total debt was fixed-rate debt. Our leverage ratio was 44.8%, and our weighted average interest rate was 3.75%. As of today, pro forma for the acquisitions completed earlier this year, the current unutilized borrowing capacity under the credit facility is $219 million. Relative to equity, we did not issue any shares of common stock under our ATM program during the fourth quarter or to date in the first quarter of this year.

Turning to our full year 2025 guidance, we expect AFFO per share and unit in the range of $0.89-$0.93. Our 2025 guidance assumes no additional acquisition or disposition activity other than what has been completed or announced, and no additional equity or debt issuances other than normal course revolver activity. AFFO guidance excludes one-time expenses related to the CEO succession plan. As we start the year, our stable portfolio positions us well to navigate the current environment, while our liquidity allows us to selectively continue to acquire properties that fit our strategic objectives. We remain confident in our ability to execute our business strategy and look forward to sharing progress with you throughout the year. This concludes our prepared remarks. Operator, please open the call for questions.

Operator (participant)

Thank you. The floor is now open for questions. If you would like to ask a question, please press Star one on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the Star keys. Again, that's Star 1 to register a question at this time. Today's first question is coming from Juan Sanabria of BMO Capital Markets. Please go ahead.

Juan Sanabria (Managing Director)

Hi, good morning. I was just hoping you could talk a little bit about the new Hyphen joint venture with regards to target size, leverage, the types of assets the venture will be targeting relative to your own on-balance sheet opportunities, and whether any incremental growth would be externally sought after in new acquisitions, or if we should expect further GMRE assets to be contributed into the JV.

Alfonzo Leon (CIO)

Sure. The JV was set up with Hyphen, and it's part of a fund that they have dedicated for medical office. I mean, this fund is basically like a core plus fund. It's looking for strong cash-on-cash returns. Their cost of capital is more competitive than ours. I mean, we're targeting deals in the, call it, low to seven to low seven cap rates range, looking primarily for strong properties with decent lease terms, a bias towards single-tenant assets. The fund that we're joint-ventured with has available for this strategy. At the time we formed the joint venture, about $50 million of equity that they could contribute. The goal is to grow this, and it's a fund that continues raising money. Presumably in the next few years, that fund will have more capital to allocate to this strategy.

We contributed a couple of assets, and this was after long conversations with Hyphen in terms of understanding what kind of assets they like, what kind of markets they like. We started this joint venture with this seed with the hopes of growing it. There aren't any discussions currently right now about selling more of our assets into that fund, but that's obviously an option that we have and was part of our consideration in forming this joint venture. Primarily, the goal is to grow this fund together with Hyphen.

Jeff Busch (CEO)

This is Jeff. I just want to add a little bit why we did this. We do have an option to buy it at the end so we could build up a nice core portfolio. As we grow, this could be added at some point back in a purchase, and we're already managing this asset. I generally am not that interested in selling our own assets into the fund. I'm looking for outside assets, really. We needed to start it off, so we did this, but I'm more interested in outside assets, building a nice portfolio of that, earning the fees on it. When you come down and, let's say, you buy a seven cap, we're now earning what we need is sort of an eight cap or so because we get fees on this.

Juan Sanabria (Managing Director)

Great. Just curious on the CEO's transition, and sorry to hear you're stepping back from your current role, Jeff, but just curious on kind of the background of why stepping down. As part of the search process, is the board contemplating a broader strategic review and kind of what criteria is the board looking for in a new CEO?

Jeff Busch (CEO)

Okay. Okay. A couple of reasons. I'm 67 years old and want to do less. I started the company, and it's been a great adventure, and I think we did well in acquiring the assets and doing that. Capital markets is we can't help the interest rates. The macro economy is not as good now, but we'll improve. My plan is to stay active as Chairman of the company. The idea in the new CEO is to bring in somebody who we're always interested as a board if there's a fresh perspective, that something that I'm missing. We also need the skills in that of having capital markets experience, having a good track record, and basically understanding the real estate assets type of thing. It's not to throw out. We feel we've been successful in what we bought.

You could see that we're projecting out that we'll still have strong AFFO going forward. Our portfolio is very strong. We improved it last year. As a new CEO that we're looking for, we're looking for somebody with the experience in running a company, experience in capital markets, experience in the medical and the real estate. That is really where we're coming at.

Juan Sanabria (Managing Director)

Was there ever a discussion on a broader strategic review as part of the change in the guard?

Jeff Busch (CEO)

Definitely doing broader strategic reviews, and we do this all the time. I am looking forward to a new CEO coming in. I will be Chairman, and we will look at this from is there anything we are missing, and hopefully, the talent we bring to the table could help us move forward.

Juan Sanabria (Managing Director)

Thanks, Jeff. One just last question for me. For the two tenants in question, kind of Steward and Prospect, I guess how much rents were in the fourth quarter? Could you just remind us again? You talked a little bit on the prepared remarks. What's assumed kind of going forward in guidance? Trying to get a sense of the cadence and what might be a temporary dip as a result of some rent payment ceasing or vacancy or what have you.

Bob Kiernan (CFO)

Okay. Yeah. On Prospect, we talked, I mean, the largest single piece is the East Orange piece that we mentioned, and that's been on a cash basis since the end of 2023. The other two properties for Prospect are in Vernon, Connecticut. Those properties, the exposure there, kind of I'll call it the stub relative to bankruptcy, is around $150,000. It runs in that, call it, around $75,000-$100,000 per month. Again, at this point, we don't have any visibility into accepting or rejecting the lease per se, but I think in general, there's a sense that they would accept the Vernon, Connecticut leases. These were assets they were looking to sell the operations from, but that transaction did not get done. Again, it's not that significant of an exposure. Like we said, it's less than 1% of our total ABR at December.

On Steward, again, apart from the Beaumont exposure, the Steward exposure is, again, is at a couple of smaller facilities. Again, those are being worked through similar to what they were last year.

Juan Sanabria (Managing Director)

Great. Thank you.

Operator (participant)

Thank you. The next question is coming from Austin Wurschmid of KeyBank Capital Markets. Please go ahead.

Austin Wurschmidt (VP and Equity Research Analyst)

Hi, and good morning, everybody. I was wondering if you could share some additional details about the nature of the assets that you seeded the joint venture with Hyphen. Sorry if I missed this, but what was the cap rate on that sale into the joint venture?

Alfonzo Leon (CIO)

Sure. It was a low seven cap, and it was single-tenant assets. We sold the property we had in High Point, North Carolina, which was the bulk of it. We had a gastro property that we had in Texas. Those two properties that we used to seed the transaction.

Austin Wurschmidt (VP and Equity Research Analyst)

That's helpful. Just what are sort of the latest thoughts then since Jeff, you alluded to not wanting to sell additional assets into the joint venture? I guess what are the latest thoughts on funding the remaining portion of the acquisitions you've made or have under contract?

Jeff Busch (CEO)

Right now, we're basically looking at either adjustments. Our stock price seems to be going up, so we could use ATM. It goes back and forth. ATM is a possibility. We could sell assets if we like. We do look at our portfolio. We used about the $150 million. This is what I look at. We did $150 million. The first tranches we did at eight something, and the other is nine something. So we're about 8.5. We've been selling off assets, less assets that we're less interested in, or we don't think as good for the future in our philosophy of doesn't fit as well into our portfolio. We're trying to improve, and we tremendously did that last year by selling off the Mishawaka one and getting the Beaumont released. We actually improved our portfolio tremendously.

One of the goals is these assets, I would put that in the top 10% in quality in our portfolio. We are looking to possibly sell some things that are not in the higher percentage in the quality just to improve the overall quality of our portfolio.

Austin Wurschmidt (VP and Equity Research Analyst)

I guess, kind of as you look out at the investment pipeline, are you looking kind of dual track on assets that would both go into the JV as well as opportunities that may not fit the core plus quality that the joint venture is looking for? These nine cap type opportunities that you've sourced, are those still on the table and something you consider doing on balance sheet?

Jeff Busch (CEO)

Absolutely. We also have a little bit of interesting thing in the market that's happening is a bunch of our small ones in communities are being able to be sold because they're strong markets, and there's local buyers that's not nationally out there and paying pretty good cap rates. We have been selling some of our properties, and we could move it into if we could find qualities around the eight and a half, nine. That's trading one for the other and making a profit in the process as we did last year.

Alfonzo Leon (CIO)

Yeah. There's a lot of owner-user interest in our properties, and we've been receiving inbound inquiries on properties and offers as well.

Austin Wurschmidt (VP and Equity Research Analyst)

The main—

Alfonzo Leon (CIO)

Go ahead.

Jeff Busch (CEO)

Is strategy in this sort of down period or slow period where your stock's not really there and the cost of capital's not there is how we can improve the quality of our portfolio and take a look at assets that we just may not want or not strategic to us in the future, but put in strong assets. Because this $100 million portfolio, the two portfolios that we got were very strong assets, high quality.

Austin Wurschmidt (VP and Equity Research Analyst)

That's all very helpful, and that's all for me. Jeff, just wanted to wish you all the best.

Jeff Busch (CEO)

Thank you. I'm still here with the company. I plan to be the chairman for quite a while.

Operator (participant)

Thank you. The next question is coming from Gaurav Mehta of Alliance Global Partners. Please go ahead.

Gaurav Mehta (Managing Director and Senior Equity Research Analyst)

Thank you. Good morning.

Jeff Busch (CEO)

Good morning.

Gaurav Mehta (Managing Director and Senior Equity Research Analyst)

I just wanted to clarify on your comments around Prospect. For 2025, Prospect revenues are around $150,000 a month. Is that right?

Jeff Busch (CEO)

Yeah. About $800,000 of annual or 0.8% ABR.

Gaurav Mehta (Managing Director and Senior Equity Research Analyst)

That is still included in your guidance, right? You're not assuming that those rents go away?

Jeff Busch (CEO)

Correct.

Gaurav Mehta (Managing Director and Senior Equity Research Analyst)

Okay. I also wanted to ask you overall for your tenant mix, do you guys maintain a tenant watchlist? Are there any other tenants you're concerned about within your portfolio?

Bob Kiernan (CFO)

Of course. I mean, we have active management and oversight of all the assets in the portfolio, but there's nothing material that we would identify or flag for as an item of that nature at this point.

Gaurav Mehta (Managing Director and Senior Equity Research Analyst)

Okay. I think earlier in the call, you mentioned $12 million-$14 million of CapEx expected in 2025. That is the recurring CapEx, and it does not include any leasing commissions, right?

Bob Kiernan (CFO)

That's right. I think with respect to leasing commissions, just to comment on that, if you look back at last year's leasing commission number at $5.7 million, I think it's important to keep in mind that there were two individual leasing commissions, one on the Christus, the new lease in the Beaumont facility, as well as a renewal that we did for very long-term leases for Encompass Properties that represented over 60% of that total. Those were, again, one-off type items in last year's numbers. As we look at this year, I'd expect that leasing commission number to be a lot lower than that and trend more toward the $1-$2 million type range.

Gaurav Mehta (Managing Director and Senior Equity Research Analyst)

Okay. Thank you. That's all I had.

Operator (participant)

Thank you. The next question is coming from Wes Golladay of Baird. Please go ahead.

Wes Golladay (Senior Research Analyst)

Hey, good morning, everyone. Just have a few questions for you. When we look at the $110 million of ABR that you disclosed in your supplement, does that include the rent of Prospect, which was on cash basis, and then the replacement tenant for Steward?

Bob Kiernan (CFO)

It does not include the cash basis. East Orange, which was on cash basis, that is zero from an ABR perspective. The two Vernon properties are in that ABR number. With respect to the Beaumont facility, since that rent was not applicable at December, that is not in that, it is not in that 12/31 ABR number.

Wes Golladay (Senior Research Analyst)

Okay. Do you still have a mid-year commencement for that Beaumont tenant? Is that still the game plan and the guidance?

Bob Kiernan (CFO)

Yes. At some point in the second quarter.

Wes Golladay (Senior Research Analyst)

Okay. You talked about the retention of the leases that are expiring this year. Is any of that front half loaded, back half loaded? How should we think about that?

Bob Kiernan (CFO)

I think from the perspective of expirations, it's, I think, largely ratable. I don't think of any from a retention perspective. The one thing I would flag, there's one lease that expires in May that's about 50,000 sq ft that we're, again, would look to that as likely to potentially being in moving into vacancy. Apart from that, that one individual item, I think from an occupancy perspective, again, very consistent with past years relative to the trends we're seeing on our leasing activity. I did mention, again, with the Prospect facility, and if the East Orange facility, excuse me, lease is rejected, we'll see new vacancy as it relates to that. That's currently covered under an overall master lease.

Wes Golladay (Senior Research Analyst)

Okay.

Bob Kiernan (CFO)

Those are into our guidance that we've provided.

Wes Golladay (Senior Research Analyst)

Okay. I guess one last one on the acquisitions. When you buy these portfolios, I'm looking at the cap rates. They have some sevens, some nines, and you had one 11 at Slippery Rock. Would that be something that you may look to dispose of, buy the whole portfolio, but maybe get rid of one or two assets? Is that how we should think about that?

Alfonzo Leon (CIO)

When we priced the portfolio, I mean, we looked at it as a portfolio cap rate, and there was a lot of back and forth with the seller in terms of pricing. I mean, there was a lot of context on the seller's side that was very specific to that seller that we had to contend with. The short answer is no. I mean, the allocations do not completely reflect the value of each building. For example, that Slippery Rock one is a single tenant. It's a very nice facility. It's functioning very well. The hospital system is doing very well in that site. Would we consider it? I mean, it's a small asset relative to the portfolio.

When we're thinking about these positions, I mean, we kind of go through a long list of questions like pros and cons as to does it make sense? This one, just based on the characteristics of the property, not one that we would consider selling quickly. The other thing we have to take into consideration also is just all the rules and hold periods. The short answer is not necessarily. No.

Wes Golladay (Senior Research Analyst)

Okay. Thank you, everyone.

Operator (participant)

Thank you. The next question is coming from Rob Stevenson of Janney Montgomery Scott. Please go ahead.

Rob Stevenson (Managing Director and Head of Real Estate Research)

Good morning, guys. One quick one on the Hyphen JV. Do they have right of first refusal? In other words, you find a great asset and it's at an eight and a half cap. Does the JV get first right of refusal as to whether or not to acquire that before the REIT, or how does that work?

Alfonzo Leon (CIO)

No. No. Whatever we find, I mean, we have the right to pursue on our own, and it's our option whether we want to pursue with Hyphen.

Rob Stevenson (Managing Director and Head of Real Estate Research)

Okay. That's helpful. Then.

Bob Kiernan (CFO)

Rob, just to add in a little bit, we were really debating doing a JV, but it had to be really separate types of properties. Basically, we have a group out there seeing all the properties, but they're buying properties that we would not buy. They're just with our cost of capital.

Rob Stevenson (Managing Director and Head of Real Estate Research)

Okay. I guess the other question with that would wind up being is that is there an opportunity for you guys to manage other assets, or will it only be management of assets that you put in that you are a 12.5% owner of?

Alfonzo Leon (CIO)

I mean, so the question is, would we provide management services to third parties?

Rob Stevenson (Managing Director and Head of Real Estate Research)

To Heitman for other assets that they may wind up having in their other healthcare funds.

Alfonzo Leon (CIO)

Not been considered. No, for now, it would just be on the assets that we own in the joint venture.

Rob Stevenson (Managing Director and Head of Real Estate Research)

Okay. And then, Bob, the Christus rent ramp that starts in the second quarter, I think you said, is that a full quarter of rent? When do you get to a full quarter of rent on that lease, and how much ABR is that going to be once it's fully implemented?

Bob Kiernan (CFO)

Okay. Yeah, working backwards, it's about $2.9 million from an overall ABR perspective. It's a little bit of a moving target as it relates to when it fully kicks in. It could be April, it could be May. It's somewhere in that zone where it will fully kick in. There's a chance that we could start to do some partial as it evolves over the next few months. The full $2.9 million from an annual perspective should be in that April-May type of timeframe.

Rob Stevenson (Managing Director and Head of Real Estate Research)

Okay. With the FFO guidance range, what drives you to the higher and lower ends of that range other than acquisition volumes and investment spreads?

Bob Kiernan (CFO)

We look at that from an overall perspective that the lower end would allow for maybe reduced leverage, maybe a potential if there's an unforeseen type event or change in rates from a forward curve perspective, things like that. From an upper end perspective, probably a little bit leverage staying on the higher side, things of that nature. Again, maybe just things of that nature that would be on the higher side.

Rob Stevenson (Managing Director and Head of Real Estate Research)

Okay. That's helpful, guys. Thanks. Appreciate the time this morning.

Operator (participant)

Thank you. Ladies and gentlemen, this concludes today's event. We would like to thank you for your interest and participation in today's Global Medical REIT teleconference. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.