BETHESDA, Md.--(BUSINESS WIRE)--Global Medical REIT Inc. (NYSE:GMRE), a Maryland corporation engaged primarily in the acquisition of licensed, state-of-the-art, purpose-built healthcare facilities and the leasing of these facilities to strong clinical operators with leading market share, today provides an update to its acquisition pipeline and announces guidance ranges for the quarters ended September 30, 2017 and December 31, 2017.
Acquisitions Placed Under Contract From March 31, 2017 through May 26, 2017
Between March 31, 2017 and May 26, 2017, the Company entered into four purchase contracts which will add approximately 148,200 aggregate square feet to its current property portfolio. The four purchase contracts, also discussed further below, are for the purchase of the Carrus Specialty Hospital and Carrus Rehabilitation Hospital in Sherman, Texas; the Lone Star Endoscopy Center located in Flower Mound, Texas; the Cardiologists of Lubbock facility located in Lubbock, Texas; and the Unity Family Medicine Center located in Brockport, New York.
Carrus – Sherman, Texas
This transaction includes a 29,642 square-foot long term acute care facility and a 34,181 square-foot inpatient rehabilitation facility (plus an additional 17,529 square feet of aggregate shell space) (the “Carrus Hospitals”). Upon closing, the Company will enter into a new, 20-year, triple-net lease with SDB Partners, LLC (who then intends to enter into subleases with the operators of the facilities, Texoma Hospital Partners, LLC and Carrus Rehabilitation Hospital, LLC). As full-service rehabilitation and long term acute care facilities, the Carrus Hospitals provide treatment for an array of illnesses and medical conditions, including diabetes, congestive heart failure, vascular disease, chronic obstructive pulmonary disease, cancer, severe heat trauma and brain injury, spinal cord injuries, polytrauma, as well as general medical disability and neurological disorders such as multiple sclerosis, Parkinson’s, Guillain Barre Disease and muscular dystrophy, among others. The Carrus Hospitals benefit from limited competition in the North Texas and Oklahoma markets and have experienced recent growth in patient volumes. Please see the Company’s Current Report on Form 8-K, filed on May 23, 2017 for additional details about this transaction.
Lone Star Endoscopy Center – Flower Mound, Texas
This transaction includes a 10,062 square foot ambulatory surgery center that is currently leased to Lone Star Endoscopy Center, LLC, pursuant to a triple-net lease with a remaining lease term of approximately nine years. The Company will assume this lease upon closing. Lone Star Endoscopy Center, LLC is a joint-venture between Baylor Scott & White Health, United Surgical Partners International, and Texas Digestive Disease Consultants, which is one of the largest gastroenterology group in Texas. Located in a growing area north of Dallas-Ft. Worth, the Lone Star Endoscopy Center provides the full spectrum of care for patients with concerns involving the esophagus, stomach, small bowel, colon, rectum, gallbladder, pancreas and liver, and others.
Cardiologists of Lubbock – Lubbock, Texas
This transaction includes a 27,280 square-foot cardiac clinic (the “Cardiac Clinic”) located in Lubbock, Texas. Upon closing, the Company will enter into a new, 12-year, triple-net lease with the Lubbock Heart Hospital. The property is located adjacent to the Lubbock Heart and Surgical Hospital, which is a 74-bed physician-owned hospital that has operated in the growing Lubbock, Texas market since 2003. Rent payments under the new lease with the Company are expected to be guaranteed by Surgery Partners, Inc., which manages the Cardiac Clinic through a joint venture agreement.
Unity Family Medicine – Brockport, New York
This transaction includes a 29,497 square-foot clinic located in Brockport, New York. The property is currently leased to Unity Hospital of Rochester pursuant to a triple-net lease with a remaining lease term of approximately 13 years. The Company will assume this lease upon closing. Constructed in 2011 and expanded in 2015, services provided at the property include primary care, OBGYN, lab and x-ray services. The Unity Hospital of Rochester is a large not-for-profit hospital that was part of the Unity Health System, which merged in 2014 with the Rochester General Hospital to form the Rochester Regional Health System (“RRHS”). RRHS is one of the largest health systems in the region.
Non-GAAP Financial Measures
FFO, AFFO and Normalized AFFO are non-GAAP financial measures within the meaning of the rules of the United States Securities and Exchange Commission. The Company considers FFO, AFFO and Normalized AFFO to be important supplemental measures of its operating performance and believes FFO is frequently used by securities analysts, investors, and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. In accordance with the National Association of Real Estate Investment Trusts’ (“NAREIT”) definition, FFO means net income or loss computed in accordance with generally accepted accounting principles (”GAAP”) before non-controlling interests of holders of operating partnership units, excluding gains (or losses) from sales of property and extraordinary items, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs), and after adjustments for unconsolidated partnerships and joint ventures. The Company does not expect to incur any gains or losses from the sales of property or record any adjustments for unconsolidated partnerships and joint ventures during the year ended December 31, 2017. Because FFO excludes real estate related depreciation and amortization (other than amortization of deferred financing costs), the Company believes that FFO provides a performance measure that, when compared period-over-period, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from the closest GAAP measurement, net income or loss.
Management calculates AFFO, which is also a non-GAAP financial measure, by modifying the NAREIT computation of FFO by adjusting it for certain cash and non-cash items and certain recurring and non-recurring items. For the Company these items include acquisition and disposition costs, loss on the extinguishment of debt, straight line deferred rental revenue, stock-based compensation expense, amortization of deferred financing costs, recurring capital expenditures, recurring lease commissions, recurring tenant improvements and other items.
Management calculates Normalized AFFO, which is also a non-GAAP financial measure, by modifying AFFO by adjusting for non-recurring income and expenses. For the Company these items include the costs of establishing a system of Sarbanes-Oxley-complaint internal controls and procedures and the portion of our General Counsel and Secretary’s salary for 2017 that is reimbursable by the Company to its external manager (such reimbursement obligation expires on May 8, 2018).
Management believes that reporting AFFO in addition to FFO is a useful supplemental measure for the investment community to use when evaluating the operating performance of the Company on a comparative basis. Management also considers normalized AFFO to be a useful measure to evaluate the Company’s operating results excluding non-recurring income and expenses. Normalized AFFO can help investors compare the operating performance of the Company between periods or as compared to other companies. The Company’s Normalized AFFO, AFFO and FFO computations may not be comparable to Normalized AFFO, AFFO and FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, that interpret the NAREIT definition differently than the Company does or that compute FFO, AFFO and Normalized AFFO in a different manner.
About Global Medical REIT Inc.
Global Medical REIT Inc. is a Maryland corporation engaged primarily in the acquisition of licensed, state-of-the-art, purpose-built healthcare facilities and the leasing of these facilities to strong clinical operators with leading market share. The Company’s strategy is to produce increasing, reliable rental revenue by expanding its portfolio, and leasing its healthcare facilities to market-leading operators under long-term triple-net leases. The Company’s management team has significant healthcare, real estate and public real estate investment trust, or REIT, experience and has long-established relationships with a wide range of healthcare providers. The Company intends to elect to be taxed as a REIT for U.S. federal income tax purposes commencing with its taxable year ending December 31, 2016.
