Summary of CHCT Q1 2026 Earnings Call

1Key Financial Results and Metrics

Total Revenue: Increased to $31.5 million, up 4.8% year-over-year and 1.9% quarter-over-quarter.

Funds from Operations (FFO): Rose to $13.4 million, a 5.8% increase from $12.7 million in Q1 2025. FFO per diluted share remained stable at $0.49.

Adjusted Funds from Operations (AFFO): Increased to $15.4 million, up 4.1% year-over-year. AFFO per diluted share was $0.56, a $0.01 increase from the previous year and quarter.

Occupancy Rate: Decreased from 90.6% to 89.8% due to lease terminations.

Dividend: Increased to $0.48 per share, marking a continuous quarterly increase since the IPO.

2Strategic Updates and Business Highlights

The company is in the advanced stages of a transaction involving a behavioral hospital operator, with a letter of intent signed for the sale of operations for six hospitals.

CHCT acquired an inpatient rehabilitation facility for $28.5 million, with an anticipated annual return of approximately 9.3%.

The company has signed agreements for four additional properties, with expected investments totaling $99 million and returns ranging from 9.1% to 9.75%.

Active capital recycling strategy in place, focusing on selling less attractive properties to fund new acquisitions.

3Forward Guidance and Outlook

The company anticipates leased occupancy to grow in the next quarter as leasing activity increases.

Management expects to see AFFO growth in the second half of the year as redevelopment projects come online.

CHCT is committed to maintaining modest leverage levels while evaluating capital uses, with no plans to raise capital through the ATM.

4Bad News, Challenges, or Points of Concern

Occupancy Decline: The decrease in occupancy from 90.6% to 89.8% raises concerns about tenant retention and lease terminations.

Interest Expense: Although it decreased in Q1, a rise in interest expense is expected in Q2 due to additional borrowings and the expiration of interest rate hedges.

Market Competition: There are concerns about the competitive landscape, particularly with rising interest rates affecting acquisition opportunities and valuations in the healthcare property sector.

5Notable Q&A Insights

CEO David Dupuy indicated that while progress is being made on the hospital transfer, there are still outstanding liabilities to confirm, particularly with Ohio Medicaid.

In response to questions about acquisition strategies, Dupuy clarified that the company is focusing on capital recycling rather than raising new capital, aiming to prune the portfolio for better quality assets.

The 9.3% yield on the recent acquisition is a cash yield, with 2% annual escalators consistent across other properties in the pipeline. Overall, CHCT's Q1 2026 results reflect solid revenue growth and a strategic focus on acquisitions and capital recycling, though challenges in occupancy and rising interest expenses present potential headwinds.