Global Medical REIT Inc. (GMRE)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered stable operating performance with total revenue $34.6M and GAAP EPS $0.03; AFFO per unit was $0.22, flat sequentially and down $0.01 YoY as higher borrowings and tenant issues offset lower G&A .
• The quarter missed Wall Street consensus on both Primary EPS and revenue; S&P Global indicates Primary EPS was ~$0.052 vs ~$0.063 estimate and revenue ~$34.58M vs ~$35.49M; company GAAP EPS was $0.03, reflecting definitional differences across measures* .
• Acquisition execution remained a bright spot: GMRE closed the previously announced $69.6M five‑property portfolio at a 9.0% cap, adding strategic, procedure‑based tenants near hospital campuses; portfolio occupancy ended at 95.6% .
• Guidance was reaffirmed: FY 2025 AFFO per share/unit $0.89–$0.93; capex outlook ~$12–$14M; leverage stood at 46.1% with $187M of borrowing capacity and a facility extension under discussion in 2H 2025 .
• Near‑term catalysts include Beaumont (CHRISTUS) rent commencement in Q2, progress re‑leasing East Orange post Prospect’s lease rejection, financing updates, and a dividend reset to $0.15/share in Q2 that may broaden investor appeal for income‑stability vs payout risk .

What Went Well and What Went Wrong

What Went Well

• Accretive acquisition at scale: Completed the $69.6M five‑property medical portfolio at a 9.0% cap; buildings ~92% leased at close and largely on‑campus with procedure‑based specialties, supporting retention and returns .
• Cost discipline: G&A fell to $3.6M YoY from $4.4M, aided by lower non‑cash LTIP expense, and management guided cash G&A run‑rate to $3.4–$3.6M per quarter for the remainder of 2025 .
• Strategic recycling: Two dispositions for $8.2M generated $1.4M aggregate gain (occupied asset at ~6.7% cap), demonstrating ability to fund growth while improving portfolio quality .

Management quotes:

• “We utilized our deep relationships…to win the bidding for this portfolio at an attractive cap rate of 9.0%” — Jeffrey M. Busch, CEO .
• “We are working to lease up the acquired vacancy…which will provide additional returns above the 9% in‑place cap rate” — Alfonzo Leon, CIO .

What Went Wrong

• Consensus miss: S&P Global shows Q1 Primary EPS and revenue came in below street expectations; GAAP EPS was $0.03, reflecting pressure from higher borrowings and tenant‑related impacts* .
• Tenant‑credit overhang: Prospect bankruptcy led to East Orange lease rejection; GMRE received $250k post‑petition through Feb, but re‑leasing will take time and Prospect’s remaining leases were undecided as of May 6 .
• Occupancy volatility ahead: CFO flagged potential dip to 94–95% in Q2–Q3 from acquired vacancy and a 50k sq ft non‑renewal, before recovering toward ~96% by year‑end .

Financial Results

Consensus vs actual (S&P Global):

Values retrieved from S&P Global. Company reported GAAP EPS was $0.03 .*

Portfolio KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “These properties are a great strategic fit…procedural‑based…close proximity…promotes tenant retention…almost 70%…triple‑net leases…at an attractive cap rate of 9.0%” — Jeffrey M. Busch .
• “G&A…$3.6M…decrease primarily resulted from…non‑cash LTIP…we expect cash G&A run rate…$3.4–$3.6M per quarter” — Robert Kiernan .
• “We acquired…at approximately $143 per square foot…substantially below replacement cost…most facilities are on‑campus…working to lease up acquired vacancy” — Alfonzo Leon .

Q&A Highlights

• East Orange (Prospect) re‑leasing: Convert subtenants to direct tenants; broker engaged; hospital next door under new operator interested; net rent target mid‑teens vs gross mid‑$30s; NOI rebuild by year‑end 2025 .
• Guidance exposure to Prospect: Impact included but limited vs overall NOI; Vernon leases not rejected as of the call .
• Financing: Active lender discussions to extend facility/term loan; execution targeted 3Q/early 4Q; keep line balances broadly consistent .
• G&A outlook: Q2 LTIP non‑cash to be ~$1.8M; GAAP G&A elevated in Q2 to $5.1–$5.3M, then normalizing to $4.5–$4.7M range .
• Beaumont (CHRISTUS) rent: ~$$2.9M ABR; commencement expected April/May; slight uplift vs prior Steward rent .

Estimates Context

• Q1 2025 consensus vs actual (S&P Global): Primary EPS ~$0.063 vs ~$0.052 actual (miss), revenue ~$35.49M vs ~$34.58M actual (miss); company reported GAAP EPS $0.03, reflecting definitional differences* .
• Implications: Short‑term estimate revisions may trend lower given occupancy headwinds (Q2/Q3 94–95%) and Prospect timing, partially offset by CHRISTUS ABR ramp and acquisition contributions .
• Expense trajectory supports margins: Cash G&A run‑rate reduced to $3.4–$3.6M/quarter and LTIP normalization post Q2 should stabilize per‑share AFFO .

Values retrieved from S&P Global.*

Key Takeaways for Investors

• Acquisition execution and below‑replacement‑cost pricing underpin NAV support; continued focus on on‑campus, procedure‑based tenants should sustain retention and cash yields .
• Near‑term occupancy volatility (acquired vacancy, 50k sq ft non‑renewal) likely tempers Q2/Q3 optics; management expects recovery toward ~96% by year‑end, supporting AFFO cadence .
• Dividend reset to $0.15 aligns payout with capital needs and occupancy path; reduces risk of future cuts and may broaden income‑focused ownership base .
• Beaumont (CHRISTUS) ABR $2.9M and East Orange re‑leasing progress are tangible 2H 2025 catalysts for NOI stabilization and sentiment improvement .
• Financing update (facility/term loan extension) in 2H 2025 should lower refinancing uncertainty at 46.1% leverage; $187M borrowing capacity provides flexibility .
• Cash G&A run‑rate reduction to $3.4–$3.6M/quarter supports per‑share economics amid higher average borrowings; watch Q2 LTIP‑driven GAAP G&A spike, then normalization .
• Heitman JV offers dual‑track capital solutions: JV for core‑plus, REIT for higher‑yield 9% cap deals; no ROFR preserves REIT optionality .