CHCT — Community Healthcare Trust Incorporated

CHCT Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Total Revenue: Increased to $30.9 million, up 5.6% year-over-year but down slightly from $31.1 million in Q3 2025.
• Funds from Operations (FFO): Rose to $13.3 million, a 4.6% increase from $12.7 million in Q4 2024. On a per-share basis, FFO was $0.49, down $0.01 from Q3 2025.
• Adjusted Funds from Operations (AFFO): Totaled $14.9 million, a 2.1% increase year-over-year. AFFO per share remained flat at $0.55 compared to Q4 2024 but decreased from $0.56 in Q3 2025.
• Occupancy Rate: Improved from 90.1% to 90.6% during the quarter, with an increase in the weighted average lease term from 6.7 to 7 years.
• Dividends: Increased to $0.4775 per share, marking a continuous quarterly increase since the IPO.

2. Strategic Updates and Business Highlights:

• Tenant Activity: A geriatric behavioral hospital operator is in the process of being acquired, with ongoing communication and due diligence. The transaction is expected to close in one complete phase rather than in stages.
• Capital Recycling: Sold an inpatient rehab facility for an approximate 7.9% cap rate, generating an $11.5 million gain and reinvesting proceeds into a new facility for $28.5 million with an anticipated return of 9.3%.
• Acquisitions: Acquired three properties in 2025 totaling 113,000 square feet for $64.5 million, all fully leased with long-term leases.
• Future Investments: Signed agreements for five additional properties expected to close between 2026 and 2027, with anticipated returns ranging from 9.1% to 9.75%.

3. Forward Guidance and Outlook:

• Occupancy Expectations: Anticipated to remain stable in the low 90s for the next couple of quarters, with potential growth expected in the second half of 2026 as new leases become effective.
• Investment Pipeline: While the company sees numerous opportunities, it remains selective due to current stock price conditions, which limit capital-raising through equity.

4. Bad News, Challenges, or Points of Concern:

• Transaction Delays: Progress on the acquisition of the geriatric behavioral hospital operator has been slower than expected, primarily due to the buyer's need to confirm various liabilities.
• Flat Financial Performance: Despite revenue growth year-over-year, quarter-over-quarter comparisons showed flat performance across many income statement items due to capital recycling activities.
• Market Conditions: The company is cautious about increasing leverage and is focused on maintaining modest debt levels, which may limit growth opportunities.

5. Notable Q&A Insights:

• Transaction Structure: The acquisition of the hospital operator is expected to be a single transaction rather than staged, which could simplify the process.
• Cap Rates: The company noted a strong demand for assets, with expected cap rates for acquisitions in the 9% to 10% range, while dispositions are yielding around 7.9%.
• Dialysis Term Sheet Pipeline: The potential for future transactions with a dialysis operator is currently on hold, with no immediate plans for new deals due to the operator's focus on core business acquisitions.

Overall, CHCT demonstrated solid year-over-year growth in revenue and FFO, while also navigating challenges related to tenant transactions and market conditions. The outlook remains cautiously optimistic with strategic acquisitions and redevelopment projects on the horizon.