Sila Realty Trust - Earnings Call - Q3 2025

Executive Summary

• Q3 2025 delivered steady operational growth: Rental revenue rose to $49.4M, diluted EPS was $0.21, and Cash NOI increased to $42.8M; AFFO per diluted share was $0.56.
• Results modestly beat Wall Street: EPS topped consensus by $0.02*, and total revenue edged past consensus by ~$0.1M*, supported by acquisitions and 1.2% same-store Cash NOI growth. Consensus came from S&P Global; see Estimates Context.
• Balance sheet remains robust with $476.7M of liquidity, Net Debt/EBITDAre of 3.9x, and a 71% AFFO payout ratio; Board authorized a 3-year $75M buyback and maintained the $0.40 quarterly dividend.
• Strategic catalysts: $87M of Q3 acquisitions (Southlake MOB/ASC and two Reunion Novus IRFs), an additional Dover land purchase, and a pipeline including an awarded ~$43M deal expected to close in early 2026.

What Went Well and What Went Wrong

What Went Well

• Cash NOI grew 4.9% YoY and 2.2% QoQ, driven by acquisitions and same-store growth, partially offset by Stoughton carrying costs during demolition.
• Portfolio leasing execution: 90% of 2025 expirations renewed; Washington Regional Medical Center will replace CHS under a 17.5-year lease, with a CHS termination payment expected in Q4.
• Liquidity and tenant health: $476.7M liquidity; reporting obligors up to 75.8% with weighted average EBITDA rent coverage of 6.19x, underpinned by a high-coverage tenant added via lease assignment.

Direct quotes:

• “Cash NOI was $42.8 million…increase of 4.9% from $40.8 million in the Third Quarter of 2024…Same-Store Cash NOI growth of 1.2%”.
• “We have successfully renewed 90% of our 2025 Lease Expirations…Washington Regional will assume the entire facility…17 and a half years”.
• “Total liquidity exceeding $476 million…EBITDA Rent Coverage Ratio of 6.19 times”.

What Went Wrong

• AFFO per share decreased 0.8% YoY, primarily due to higher interest expense from swaps entered at year-end 2024, despite acquisition benefits and mezzanine interest income.
• Stoughton demo impacts: demolition costs incurred and carry costs remain until completion; expected to decrease to ~$35K/month into 2026, and further reductions anticipated after tax appeals.
• Minor vacancy events: an Alexandria, LA tenant vacated (15.6K sq ft, ~0.3% of ABR); Palm Desert CA building shows 0% leased status in portfolio table detail.

Transcript

Operator (participant)

Good morning and welcome to Sila Realty Trust, Third Quarter 2025, earnings conference call and webcast. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. I will now turn the conference over to your host, Drew Miles, Senior Associate of Capital Markets and Investor Relations for Sila. You may begin.

Drew Miles (Senior Capital Markets and Investor Relations Associate)

Good morning and welcome to Sila Realty Trust, Third Quarter 2025, earnings conference call. Yesterday evening, we issued our earnings release and supplement, which are available on the Investor Relations section of our website at investors.sila-realtytrust.com. With me today are Michael Seton, President and Chief Executive Officer, and Kay Neely, Executive Vice President and Chief Financial Officer. Before we begin, I would like to remind you that today's comments will include forward-looking statements under federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Statements that are not historical facts, such as statements about expected financial performance, are also forward-looking statements. Actual results may differ materially from those contemplated by such forward-looking statements.

A discussion of the factors that could cause a material difference in our results compared to these forward-looking statements is contained in our SEC Filings. Please note that on today's call, we will be referring to non-GAAP measures. You can find the reconciliation of these historical non-GAAP measures to the most directly comparable GAAP Measures in our Third Quarter Earnings Release and our Earnings Supplement, both of which can be found on the Investor Relations section of our website and in the Form 8-K we filed with the SEC. With that, I will turn the call over to Michael Seton, our President and Chief Executive Officer.

Michael Seton (President and CEO)

Thank you, Drew, and good morning to everyone joining us today. As we reflect on the Third Quarter, I am pleased to report positive results that continue to exemplify the resilience and strength of Sila Realty Trust's investing platform. Our steadfast commitment to pursuing prudent, accretive growth has consistently yielded meaningful results for our Shareholders, reinforcing the value of our strategic, long-term approach to building our company. During the quarter, we made significant strides to net lease healthcare Real Estate portfolio by making several key investments in lower-cost patient settings. Our $16.3 million acquisition of the Southlake Portfolio, comprised of a Medical Outpatient Building and an adjacent Ambulatory Surgery Center, operates symbiotically and demonstrates the type of healthcare Real Estate that is central to our Investment Thesis.

These buildings are anchored by Investment-Grade Affiliated Tenancy and benefit from strong operational synergies, and are strategically located in Southlake, Texas, an affluent suburb of Dallas. The overlapping physicians, who are uniquely aligned in their ownership of the ASC Tenant, seamlessly transition from providing patient consultations in the MOB to surgical procedures in the ASC. Furthermore, the ownership affiliation with and proximity to Baylor Scott & White Medical Center enhance the overall Tenancy, acting as a referral network for strong patient volumes. In addition to the Southlake Acquisitions, during the quarter, we closed on the $70.5 million. Reunion Novus Portfolio, which is comprised of two newly constructed state-of-the-art inpatient rehabilitation facilities located in Plano, Texas, and Peoria, Arizona. These purpose-built facilities, operated by an experienced and well-regarded partner in Novus Rehabilitation Partners, serve two of the fastest-growing markets in the United States.

Both the Southlake and Reunion Novus transactions, which total approximately $87 million, demonstrate our laser focus on acquiring best-in-class Net Lease Healthcare Assets in markets with strong and growing demographics. In addition to the achievements on the acquisition front during the quarter, we have had success at sourcing opportunities to deploy capital at attractive Yields to serve our existing Tenancy. In the first example, PAM Health entered into an amended lease in May for a facility which we own in San Antonio, Texas, whereby Sila is providing approximately $5 million of capital at an attractive yield for the property's redevelopment as a 34-Bed Inpatient Rehabilitation Facility. The commencement of operations at this location is anticipated for December 2025. Please note that PAM Health has been paying full rent to Sila as it has anticipated repositioning the facility to better serve the San Antonio Marketplace.

Base rent will increase to reflect Sila's additional Capital Deployment upon commencement of operations, and Sila will also enjoy the benefit from a new 20-Year Triple Net Lease Term. As another example, we have made significant strides at our Dover Healthcare Facility located in Dover, Delaware, which is tenanted by a joint venture between BayHealth and PAM Health. Sila purchased the facility in April 2025 for $24.1 million. During the Third Quarter, we acquired adjacent land to the facility to support an approximately $12.5 million. Expansion of the building, which we expect to be completed by the end of 2026. Sila expects to generate a highly attractive yield on the deployment of its Capital to expand the facility and benefit from a new 20-Year Triple Net Lease Term, which commences upon completion of the expansion.

This development will add nearly 13,000 sq ft and up to 12 New Beds to the facility, a much-needed increase to serve the high demand of the patient population in Dover, Delaware. As a final example, we expect to have a similar expansion and Capital Deployment opportunity at our PAM Health and University of Kansas IRF in Overland Park, Kansas, which is anticipated to cost approximately $16 million. This expansion will add two additional floors and 17 New Beds, which we expect to commence and be completed in 2026. Collectively, the opportunities which I just mentioned, along with others that we have in the pipeline, are our concerted response to the ongoing demand for high-quality Healthcare Services in the markets in which we operate.

These expansion opportunities underscore our consistent ability to enhance value for Sila's Shareholders, generating Cash Yields on our incremental Capital Deployment of typically 150 basis points or better beyond our acquisition Cash Cap Rates. Real Estate Ownership often presents opportunities to provide capital to a captive audience, our existing Tenants. Utilizing our existing portfolio, these opportunities that I mentioned, along with more to come, lend support to our thesis of continuing to externally grow the company through acquisitions of highly healthcare Real Estate. our Pipeline for Acquisitions remains strong, with an approximately $43 million opportunity that has been awarded to Sila and is anticipated to close in early 2026, subject to our customary due diligence process. We have a strong acquisition opportunity set as we head into 2026 and expect a similar level of Acquisition Volume next year as we have accomplished so far this year.

We do expect our targeted Cap Rate to tighten somewhat due to anticipated looser Central Bank Monetary Policy. As I have stated repeatedly, we are committed to growing thoughtfully, strategically, and accretively. Turning to Leasing Activity, we have successfully renewed 90% of our 2025 Lease Expirations. In the Third Quarter, we executed three lease renewals, which accounted for approximately 58,000 sq ft, or 1% of portfolio ABR. Following the close of the quarter, we experienced an unanticipated tenant departure at our Alexandria Healthcare Facility located in Alexandria, Louisiana, whereby a tenant with whom we had a lease offer signature to renew decided to vacate. This tenant represents 15,600 sq ft, or approximately 0.3% of total portfolio square feet and ABR. The tenant paid full rent and holdover rent between its stated lease expiration of July 31, 2025, and through and including October.

In additional leasing news, we are pleased to report that despite having approximately three years left on a lease with Community Health Systems, or CHS, at our Fayetteville healthcare Facility in Fayetteville, Arkansas, we are agreeing to terminate our lease early with CHS, receiving a termination payment, and anticipate simultaneously executing a new lease with Washington Regional Medical Center, best-in-class regional hospital system. Washington Regional will assume the entire facility under a new lease agreement for 17 and a half years, and we expect this transition to take place in December 2025. This strategic transition from CHS to Washington Regional will move CHS from being our third-largest tenant to our sixth-largest tenant. I would like to take a moment to remind everyone what Sila's differentiated proposition brings to its Shareholders.

Sila distinguishes itself from many peers through its integrated focus on Healthcare Assets and a long-term Net Lease Structure, which we believe Yields better long-term outcomes for Shareholders. The non-discretionary nature of healthcare spending has been demonstrated to show durability and resilience across market cycles. Our thesis around Triple Net Lease Structures is critical to achieving the best outcomes for our Shareholders over time as Property Operating Expenses are passed through to tenants, mitigating the high cost of day-to-day Ownership of Real Estate. Our longer duration lease terms should result in reduced re-tenanting capital expenses, namely Tenant Improvement Allowances and Lease Commissions, relative to peers with shorter-term Lease Agreements. We are confident that our distinctive and disciplined approach, supported by our robust Balance Sheet and available liquidity, positions us to be able to sustain positive momentum and deliver value to our Shareholders.

At this time, I will turn the call over to Kay to provide further insight into our financial performance.

Kay Neely (EVP and CFO)

Thank you, Michael, and good morning, everyone. I am pleased to share that our disciplined capital allocation and accretive transactions continue to result in strong financial performance in the Third Quarter. For the Third Quarter of 2025, Cash NOI was $42.8 million, an increase of 4.9% from $40.8 million in the Third Quarter of 2024. This increase was largely driven by acquisition activity over the last year and Same-Store Cash NOI growth of 1.2%. Partially offset by reduced Cash NOI from our Stoughton Healthcare facility. Compared to the Second Quarter of 2025, Cash NOI increased 2.2%. Primarily due to the acquisition of the Southlake and Reunion Novus portfolios, as well as reduced Carrying costs at Stoughton as demolition of the building is underway.

Our Third-Quarter AFFO per Share decreased by 0.8% compared to the Third Quarter of last year, primarily due to the increased Interest Expense related to the new swaps we entered into at year-end 2024. This was partially offset by the acquisitions and other Cash NOI items mentioned previously and increased notes receivable interest income related to our fully funded Mezzanine Loans. Compared to the Second Quarter of this year, AFFO per Share increased 4.2%. Primarily driven by the acquisitions mentioned previously, increased interest income from our Mezzanine Loans, and a decrease in G&A. Beyond earnings, Sila's in-place Tenancy remains strong. Our percentage of reporting obligors increased by 2.4% to 75.8% and collectively reported an EBITDA Rent Coverage Ratio of 6.19 times, up from 5.31 times from the Second Quarter of 2025.

This increase in coverage was largely driven by one tenant, which possesses a high EBITDA Rent Coverage Ratio that was recently added into the reporting population due to a lease assignment. Without this one tenant, our average EBITDA Rent Coverage Ratio would have remained at 5.31 times quarter over quarter. These strong coverage ratios of our tenants and guarantors help further solidify our portfolio's resilience and demonstrate the durability of the income stream that we have built in our pursuit of providing long-term value to our Shareholders. Though political headlines and the macroeconomic landscape continue to be top of mind, we believe our strong Tenancy, Balance Sheet position, and available liquidity continue to distinguish us in terms of both security and growth potential.

At the conclusion of the Third Quarter, our Revolver provided nearly $450 million of available funds, resulting in total liquidity exceeding $476 million, while Net Debt-to-EBITDA Ratio of 3.9 times remains below our targeted range. The combination of a robust Balance Sheet, low to moderate leverage, and a prudent AFFO Payout Ratio of 71% for the quarter reinforces our confidence in our ability to maintain a sustainable dividend and our ability to grow our portfolio thoughtfully and accretively. During the Third Quarter, the board authorized a Share Repurchase Program of up to $75 million in gross proceeds for a three-year period from August 4, 2025. Limited to $25 million in gross proceeds in any 12-month period. We did not purchase any shares under the program during the quarter.

Additionally, on August 12, 2025, we entered into an At-the-Market Equity Offering Sales Agreement, or our ATM Program, through which from time to time we may offer and sell shares when we believe it is in the best interest of our Shareholders. We established the ATM Program, as many REITs have done, to add another tool in our toolbox to be readily available when we are able to accretively raise Equity Capital with an immediate vision into how those funds will be deployed. To date, no shares have been issued under the ATM Program. We are particularly proud of the results from this quarter, building on to many successes throughout 2025. Although we still possess considerable dry powder, we will continue to remain prudent in the allocation of our capital, ensuring that Leverage Levels are maintained within sustainable limits.

We have now put in place various tools, including the Share Repurchase Program and the ATM, which give us full flexibility to take thoughtful and accretive actions when we believe the time is right. We remain fully committed to our capital allocation philosophy, focusing on the acquisition of high-performing Triple Net Lease Healthcare Assets leased to quality tenants that operate in growing markets close to the patient. With that, we look forward to taking your questions.

Operator (participant)

Thank you. Ladies and gentlemen, we'll now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchstone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Rob Stevenson from Janney. Please go ahead.

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

Good morning, guys. The CHS termination payment, was that in Third Quarter or is that going to be in fourth quarter? And how much was that?

Michael Seton (President and CEO)

Good morning, Rob. Thank you for joining. That CHS termination payment that we anticipate would come in the fourth quarter. The expectation is that Washington Regional will take over that facility. So essentially, we'll have an effective lease starting December 1. And so my expectation is simultaneous with that, we would terminate the CHS lease and we would receive that termination payment, which is, roughly speaking, a couple hundred thousand dollars.

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

Okay. That's helpful. And then, Kay. You're going to get in the fourth quarter, you're going to get the full quarter benefit of the August and September acquisitions. And that's going to net out against some of the Louisiana departure. Anything else of note, positively or negatively, likely to impact the Income Statement in the fourth quarter versus the Third Quarter?

Kay Neely (EVP and CFO)

Yes. The main things I would factor in would be continued decreased Carry Costs for Stoughton. So as more and more of that building comes down, the Carry is reduced. We're, I think, roughly about 75,000 a month. As we get to the end of the year, and we expect that to be roughly about 35,000 a month into 2026. However, our intention is also to. Real Estate taxes and to drive that down even further. Once that occurs. In terms of we added a clarification on Deferred Rent. We have. Deferred Rent we're receiving, Michael spoke to in his prepared remarks on one of our PAM Properties. That will just be reflected in Rental Revenues going forward, so you won't see that line item. So the amount will still factor in. It'll just be up at the top as opposed to added in for AFFO.

We do think G&A for the year will come in below previous. Communicated range. Previously, we had indicated a range of 22.5 to 23.5 million dollars for G&A. We do believe we will be at the low end, if not slightly below, that. Range for 2025. We do have Demolition Costs. Of course, those, if you've seen our Supplemental, are added back for Core and AFFO, but separately distinguished on our Income Statement and in that Reconciliation Table, so you can see those amounts. Those amounts will continue to be incurred through the end of the year and. Into the very early parts of 2026. And the only other item that's a little bit seasonal in nature is just any accruals related to. Any Bonuses.

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

Okay. That's extremely helpful. Thank you very much for that detail. And then I guess the other thing for me is, so you've got. It seems like with the Third Quarter, I don't know what the fourth quarter is looking like for you, but it seems like the deal volume has been kicking up. As the stock price has sort of. Excuse me, moved below $24. If you do that $40 million transaction in early 2026, how much more capacity do you have. And stay within your targeted leverage. Ranges to do additional deals without needing to issue equity at these type of levels?

Kay Neely (EVP and CFO)

We estimate something around $200-$220 million to hit the midpoint of our communicated leverage target, which we had previously stated would be 4.5-5.5 times Net Debt to EBITDA. So to around five times is $200 million, roughly.

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

Okay. That's extremely helpful. And then last one, Michael, as you're looking at the. Whatever you guys refer to it internally, but essentially a tenant Credit Watch List. And you look back a couple of quarters, is that list getting shorter? Is it staying the same? Is it increasing as. Operators have difficulty? How do you sort of characterize the sort of evolution of your. Credit Watch List these days? And where is that likely to be going as we enter the beginning of 2026?

Michael Seton (President and CEO)

I would say that. We're cautiously optimistic. We had a very good. Rent Collection Year this year. I would tell you we're more focused on. Lease maturities. And obviously, Renewal Rates for those Leases as we look forward. We have long Lease Duration in the Portfolio, as you well know. I wouldn't tell you the Watch List has per se increased. We have things move up. We have things move down. I think we had a very solid year in 2025. We're obviously not done yet, but. I'm optimistic. As we go into next year, we do see our operators performing well. I mean, as you know, Big Beautiful Bill Act has been out there. We've talked about. Our assets being. A mitigating factor in that space. I would say overall, I'm cautiously optimistic about. What the future holds.

I mean that from a tenant credit perspective because I don't think anybody knows what the future holds in the context of. Federal government reimbursement and so forth. But what you can see, our coverage ratios are strong, and they remain and they continue to be strong, and they continue to go up. So we feel good about who we're aligned with on the tenant side.

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

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

Michael Seton (President and CEO)

Thank you, Rob.

Operator (participant)

Thank you. Your next question comes from John Wilczewski from Wells Fargo. Please go ahead.

John Wilczewski (Equity Research Analyst)

Hi. Good morning out there. My first one is just on. Capital Deployment and where you find opportunities that are most attractive. I mean, given where your stock is trading today, does maybe rotating out of some non-core assets, surgical specialty, and buying back stock here get more attractive relative to growing the asset base? I'm curious what that spread needs to be for you to say that's where incremental dollars should go.

Michael Seton (President and CEO)

Good morning, John. Thank you for joining. We found opportunities. I'll speak at first to really 2025 thus far. The opportunities that we found have been more in the IRF Space than the other spaces that we target. Of course, MOB is a key area of that. We've seen a lot of MOB Sales. I mean, volumes are down, admittedly, from years ago, but we've seen a number of MOB Sales out there, particularly large portfolios, as you monitor as well in the marketplace. But the quality of that hasn't been the quality that we seek to have within our portfolio, hence our targeting of particularly IRFs, where we can get long vault, we can get high-quality operators, we can get Demonstrated Performance in the Portfolio. So that's what we've clearly found in the Novus Transactions. That's clearly what we found in the transaction that I'm referring to.

That we may close on. In January, subject to our due diligence. From the Capital Recycling Perspective. We're long-term owners of Real Estate. Sure, there are things that. We have on the Radar, and we do have a list of Properties that could be potential dispositions. I would say those tend to be a little bit more event-driven, whether they're Tenant-Driven. It could be an issue with the Tenant, or as it relates to a tenant simply wanting to own their Real Estate, which we have a number of those occurring as well. So. I don't know that they'll come to fruition. Nothing is per se penned in. There are some discussions taking place. But as we look at those opportunities, I think we. Are, I would say, slanted and prejudiced towards deploying capital in new investments at this point.

Obviously, we are very aware of our share price in terms of cost of capital, ability to raise future equity capital. Kay gave some numbers as it relates to. Ranges where we can expect to lever up to. In the runway that we have. That being said, the board did approve a share of purchase program. So we've got really, I would tell you, all the tools in the toolbox: capital ready to deploy, certainly properties that we could sell or we could invest those or buy back shares, of course, and then the share of purchase program. So we're remaining nimble. In terms of our approach to Capital Deployment.

John Wilczewski (Equity Research Analyst)

Well, that was very helpful. And I guess as you think about. Obviously, you're still tilted towards the acquisition side. I guess when you talk about the development opportunities that you're seeing, they're a little bit higher yielding. And you look at your leverage capacity, I think the number was 200. What percentage of that do you think could be deployed into maybe some of those opportunities relative to just the fee simple acquisitions that you noted Cap Rates are getting a little bit tighter here?

Michael Seton (President and CEO)

We like. As you know, had done late last year now, those Lynchburg Mezzanine Loans. And we like those kinds of opportunities because they're double-digit mid-teens type returns. We recognize it as interest income. For purposes of income purposes. So it's current development deals. If we're funding the development as equity owner. Really, the income gets recognized when that property goes into service. That being said. When we talk about expansion opportunities within our portfolio, those are relatively short-term constructions, 12 months or less. And those Yields that I mentioned. Are 150 basis points or greater. So we'd like to find more of those opportunities. We're conscious of tenant exposure. We want to make sure there's opportunity for that expansion of that property in that particular marketplace.

But we love those opportunities because the tenant's also captive to us because we own the underlying land, for instance, and they're adding onto their building and attaching it to existing building, which we already own. And by the way, I would mention some of those Yields are 300 basis points wide of our acquisition Cap Rate. So it can really vary, but. I tried to be, I would say, relatively conservative in saying minimum kind of 150 basis points or greater. So we're looking for those development opportunities. I don't think there's a ton of medical development in the marketplace today. I think banks out there are willing and able to do, for instance, MOB transactions, but in the rehab space, there's probably more limited folks willing to do those kinds of transactions on the lending side.

So we want to be a partner to those developers and to those tenants that want to expand.

John Wilczewski (Equity Research Analyst)

Okay. Thank you. Last one for me, if you wouldn't mind. Just on the opening remarks, you made the comment about the Alexandria tenant. And I apologize if I missed this, but that move out that's happening in October, is there. Do we have any expectations on what's going to happen to rent in 4Q?

Michael Seton (President and CEO)

Yes. So they were scheduled to expire already in late July. And as mentioned in the remarks, I mean, we had a lease out for signature with them. They paid holdover rent through the months of August through. October. So full rent plus the 25% additional holdover rent. And we do have an expectation that they may need another month of staying there. So we may very well get. November. Rent with holdover. We're obviously very early in the month of December. Most tenants kind of pay in the first, I'll call it, 10 days or so. But that's the indication to us at this time.

John Wilczewski (Equity Research Analyst)

Okay. Thank you.

Michael Seton (President and CEO)

Thank you, John.

Operator (participant)

Thank you. Lisa and Yilman, as a reminder, if you wish to ask a question, please press star one. Your next question comes from Michael Lewis from Truist Securities. Please go ahead.

Michael Lewis (Analyst)

Great. Thank you. As far as these development or expansion projects, how do you know when one's a candidate? How do you know it works and that the risk-reward is balanced? Does the tenant come to you with it, and you kind of. Evaluate it? How do you get comfortable with those and you know you've got the right one?

Michael Seton (President and CEO)

Good morning, Michael. Thank you for joining. I would tell you it's the vast majority of the time, it's really an. Down from the tenant. So we're monitoring, as you know, the financials of these operations. The operations, in a particular case, may be doing very well, and that property may be busting at the seams, essentially. And that tenant is saying, "Hey, there's a market." So we'll often review those proformas of the tenant saying, "Hey, this is what it looks like if we add this number of beds." We've already got, of course, the benefit of the credit of the existing operations because the operations in those facilities are not shut down or stopped. They actually continue. And. The construction. Goes on. So I would tell you it's really. Communication from the tenant. Of course, we monitor so we know which properties. Are good candidates for those.

And we do market our tenants and say, "We're here to be your partner, provide capital."

Michael Lewis (Analyst)

Okay. Great. And then. This is an old question, I guess, but still relevant. As this shutdown goes on and the battle seems mostly focused on these ACA subsidies. You've got good coverage across the portfolio. Is there any risk anywhere you see if the. I guess, call it the Republicans prevail and those subsidies go away?

Michael Seton (President and CEO)

Yeah. I mean, that's a great question. I mean, as you know, we're not acute care hospital owners per se, short-term acute care hospitals owners per se. We're focused on. Outpatient procedure settings, lower-cost patient settings. So even when we have a situation where there may be a hospital partner, which we have a number of LifePoint transactions like that, in fact, all of our LifePoint transactions are really like that. We're not looking really to the hospital credit in that case. We're looking to the site performance in those transactions. We like the benefit of the branding of hospitals related to. Marketing and patient recognition. But from an operational standpoint, we're not looking to those. I do think that we're going to see. Even if there is some ACA.

Subsidy continuation or there's something more done than is currently passed by the Big Beautiful Bill, we might see more influx to emergency rooms. Naturally, we'll see less insured. I mean, even if someone's premium goes up $100 a month, they may elect to not have insurance. So I think that we'll see that. And I think that's a stress on the whole system overall. The facilities that we focus on. As you know, looking at our portfolio is really the MOB and. The lower-cost patient setting post-acute spaces. So. The rehab, and of course, we own some LTACs as well, kind of a limited amount of behavioral. So we think we're much more insulated than a lot of folks out there. But. I would tell you it's not good for the whole healthcare marketplace, just generally speaking. But again, with our focus, we think we're pretty well insulated.

Michael Lewis (Analyst)

Okay. Thanks. And then lastly from me, so you've got the ATM program, you've got the buyback program. Are you closer to one or the other, or does neither one of those look attractive here? Does it depend if an opportunity pops up? How do you think about that?

Michael Seton (President and CEO)

Well. We've read your reports, Michael, and I think you have a. Good when you think about NAV, for instance, for us, not necessarily price target, as well as with your peers. That's what we're thinking about when we're thinking about kind of ATM-type levels. So we feel we need to be higher. Issuing equity now, we think, is very dilutive and not reflective of the value of the company. So. We don't think this is the right level to do it. So we do feel we're trading at. A pretty substantial discount. So that leads into, of course, the. Alternative, which we could be doing. And I think that that's always a topic of conversation. In the company and with the board. We want to be thoughtful about how we're spending money. If we only have a dollar, we only have that dollar to spend.

So we want to put it in the right place. I mentioned from an acquisition standpoint that we had done. Well, we've done about $145 million of acquisition so far this year. And sort of the indication I gave for next year was, "Hey, it's going to be. A base case scenario kind of relatively consistent with that." And I think that's a fair statement. Could be more if we find the right opportunities. But at the end of the day. We want to be thoughtful, and we want to be also. What's critical in our minds is also the. Quality of our Balance Sheet as well.

Michael Lewis (Analyst)

Great. Thank you.

Michael Seton (President and CEO)

Thank you, Michael.

Operator (participant)

Thank you. Ladies and Yilman, there are no further questions at this time. I will now turn the call over to Michael Seton, CEO, for closing remarks. Please go ahead.

Michael Seton (President and CEO)

I would like to once again extend my sincere thanks to the entire Sila team. Their hard work and dedication continue to drive successful outcomes. On behalf of our leadership team and board of directors, we deeply appreciate the support and confidence of our Shareholders. Thank you, and have a great day.

Operator (participant)

Ladies and Gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect.