Community Healthcare Trust's Q4 2024: Unraveling Contradictions in Tenant Issues, CapEx, and Dividend Strategies

These are the key contradictions discussed in Community Healthcare Trust's latest 2024Q4 earnings call, specifically including: Geriatric Tenant Issue Resolution and Timeline, CapEx Requirements, Dividend Coverage, and Acquisition Pipeline and Funding Strategy:



Occupancy and Lease Term Trends:
- Community Healthcare Trust reported an occupancy rate of 90.9% at year-end, a slight decrease from previous levels.
- The weighted average remaining lease term declined to 6.7 years, marking a slight decrease compared to previous periods.
- The decrease in occupancy and lease terms is attributed to a few expirations and terminations that occurred late in the fourth quarter.

Acquisition Activity:
- The company acquired 9 properties totaling 261,000 square feet for an aggregate purchase price of $72.1 million, with anticipated annual returns of 9.1% to 9.75%.
- Additionally, they have properties under definitive purchase agreements for an aggregate expected purchase price of $33 million.
- The strategic acquisitions are aimed at maintaining a high-quality portfolio and focusing on highly leased properties with long-term leases.

Dividend Increase:
- Community Healthcare Trust declared a dividend for the fourth quarter, raising it to $0.4675 per common share, equating to an annualized dividend of $1.87 per share.
- The company is proud to have raised its dividend every quarter since its IPO.
- The dividend increase is a result of the company's strong financial performance and its commitment to returning capital to shareholders.

Geriatric Psychiatric Hospital Operator Challenge:
- The company experienced a loss of rent and interest from a geriatric psychiatric hospital operator, impacting funds from operations (FFO) and adjusted funds from operations (AFFO).
- The tenant in 6 of their properties, representing approximately 79,000 square feet and an annual base rent of $3.2 million, did not make any rent or interest payments in the fourth quarter.
- The operator is evaluating strategic alternatives, including the potential sale of all or selected hospitals within its portfolio, and the company remains in active dialogue with the operator.