CHCT Commmunity Healthcare Trust

COMMUNITY HEALTHCARE TRUST INCORPORATED

CONSOLIDATED BALANCE SHEETS

(Dollars and shares in thousands, except per share amounts)

(Unaudited)

June 30, 2024

December 31, 2023

ASSETS

Real estate properties:

Land and land improvements

$                     143,717

$                 136,532

Buildings, improvements, and lease intangibles

976,415

913,416

Personal property

318

299

Total real estate properties

1,120,450

1,050,247

Less accumulated depreciation

(221,834)

(200,810)

Total real estate properties, net

898,616

849,437

Cash and cash equivalents

734

3,491

Restricted cash

—

1,142

Real estate properties held for sale

7,326

7,466

Other assets, net

76,520

83,876

Total assets

$                     983,196

$                 945,412

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Debt, net

$                     457,625

$                 403,256

Accounts payable and accrued liabilities

12,023

12,032

Other liabilities, net

15,777

16,868

Total liabilities

485,425

432,156

Commitments and contingencies

Stockholders' Equity

Preferred stock, $0.01 par value; 50,000 shares authorized; none issued and outstanding

—

—

Common stock, $0.01 par value; 450,000 shares authorized; 28,049 and 27,613 shares
issued and outstanding at June 30, 2024 and December 31, 2023, respectively

280

276

Additional paid-in capital

699,833

688,156

Cumulative net income

82,094

88,856

Accumulated other comprehensive gain

21,490

16,417

Cumulative dividends

(305,926)

(280,449)

Total stockholders' equity

497,771

513,256

Total liabilities and stockholders' equity

$                     983,196

$                 945,412

The Consolidated Balance Sheets do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

COMMUNITY HEALTHCARE TRUST INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(Unaudited; Dollars and shares in thousands, except per share amounts)

Three Months Ended

June 30,

Six Months Ended

June 30,

2024

2023

2024

2023

REVENUES

Rental income

$             27,905

$          26,764

$       56,247

$       52,892

Other operating interest, net

(389)

1,046

602

2,094

27,516

27,810

56,849

54,986

EXPENSES

Property operating

5,572

4,786

11,363

9,659

General and administrative ⁽¹⁾

4,760

3,787

9,314

19,992

Depreciation and amortization

10,792

9,219

21,054

18,237

21,124

17,792

41,731

47,888

OTHER INCOME (EXPENSE)

Impairment of real estate asset

(140)

—

(140)

—

Interest expense

(5,986)

(4,140)

(11,048)

(8,132)

Credit loss reserve

(11,000)

—

(11,000)

—

Deferred income tax expense

—

(50)

—

(85)

Interest and other income, net

307

749

308

774

(16,819)

(3,441)

(21,880)

(7,443)

NET (LOSS) INCOME

$           (10,427)

$            6,577

$       (6,762)

$          (345)

NET (LOSS) INCOME PER COMMON SHARE ⁽¹⁾

Net (loss) income per common share - Basic

$               (0.42)

$              0.24

$         (0.31)

$         (0.07)

Net (loss) income per common share -Diluted

$               (0.42)

$              0.24

$         (0.31)

$         (0.07)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-BASIC

26,479

25,065

26,388

24,648

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-DILUTED

26,479

25,065

26,388

24,648

___________

⁽¹⁾ General and administrative expenses for the six months ended June 30, 2024 included stock-based compensation expense totaling approximately $4.9 million. General and administrative expenses for the six months ended June 30, 2023 included stock-based compensation expense totaling approximately $16.0 million, including the accelerated amortization of stock-based compensation totaling approximately $11.8 million, recognized upon the passing of our former CEO and President in the first quarter of 2023.

The Consolidated Statements of Income do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

COMMUNITY HEALTHCARE TRUST INCORPORATED

RECONCILIATION OF FFO and AFFO ⁽¹⁾

(Unaudited; Dollars and shares in thousands, except per share amounts)

Three Months Ended June 30,

2023

Net income (loss) ^{(2) (3)}

$                (10,427)

$                    6,577

   Real estate depreciation and amortization

10,895

9,293

   Impairment of real estate asset

140

—

Credit loss reserve ⁽⁴⁾

11,000

—

   Total adjustments

22,035

9,293

FFO ^{(1) (2) (3)}

$                  11,608

$                  15,870

   Straight-line rent

204

(819)

   Stock-based compensation

2,469

1,692

Net gain from insurance recovery on casualty loss ⁽³⁾

—

(706)

AFFO ^{(1) (2)}

$                  14,281

$                  16,037

   FFO per Common Share-Diluted ^{(1) (2) (3)}

$                      0.43

$                      0.62

   AFFO per Common Share-Diluted ^{(1) (2)}

$                      0.53

$                      0.63

Weighted Average Common Shares Outstanding-Diluted ⁽⁵⁾

26,791

25,650

(1)

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time.  However, since real estate values have historically risen or fallen with market conditions, many industry investors deem presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For that reason, the Company considers funds from operations ("FFO") and adjusted funds from operations ("AFFO") to be appropriate measures of operating performance of an equity real estate investment trust ("REIT"). In particular, the Company believes that AFFO is useful because it allows investors, analysts and Company management to compare the Company's operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by unanticipated items and other events. 

The Company uses the National Association of Real Estate Investment Trusts, Inc. ("NAREIT") definition of FFO. FFO is an operating performance measure adopted by NAREIT. NAREIT defines FFO as the most commonly accepted and reported measure of a REIT's operating performance equal to net income (calculated in accordance with GAAP), excluding gains or losses from the sale of certain real estate assets, gains and losses from change in control, impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, plus depreciation and amortization related to real estate properties, and after adjustments for unconsolidated partnerships and joint ventures. NAREIT also provides REITs with an option to exclude gains, losses and impairments of assets that are incidental to the main business of the REIT from the calculation of FFO.

In addition to FFO, the Company presents AFFO and AFFO per share. The Company defines AFFO as FFO, excluding certain expenses related to closing costs of properties acquired accounted for as business combinations and mortgages funded, excluding straight-line rent and the amortization of stock-based compensation, and including or excluding other non-cash items from time to time. AFFO presented herein may not be comparable to similar measures presented by other real estate companies due to the fact that not all real estate companies use the same definition. 

FFO and AFFO should not be considered as alternatives to net income (determined in accordance with GAAP) as indicators of the Company's financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of the Company's liquidity, nor are they necessarily indicative of sufficient cash flow to fund all of the Company's needs. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO and AFFO should be examined in conjunction with net income as presented elsewhere herein.

(2)

Net loss and FFO for the three months ended June 30, 2024 included reversals of rent and interest related to a tenant totaling approximately $3.2 million, including straight-line rent of approximately $0.9 million, resulting in a reduction of FFO per diluted share of approximately $0.12 per diluted share. AFFO, which adds back straight-line rent, was reduced by approximately $0.09 per diluted share for the three months ending June 30, 2024.

(3)

Net income and FFO for the three months ended June 30, 2023 included a $0.7 million net casualty gain from insurance proceeds received related to one property that was vandalized. The net gain increased FFO by $0.03 per diluted share for the three months ended June 30, 2023.

(4)

During the three months ended June 30, 2024, the Company recorded an $11.0 million credit loss reserve related to notes receivable that are incidental to the Company's main business with a geriatric inpatient behavioral hospital tenant.

(5)

Diluted weighted average common shares outstanding for FFO and AFFO are calculated based on the treasury method, rather than the 2-class method used to calculate earnings per share.