Community Healthcare Trust Inc 10-Q for FY2025 Q3
Community Healthcare Trust Inc (CHCT)
10-Q
2025-10-28
For: 2025-09-30
View Original
Added on
April 12, 2026
About this 10-Q
Community Healthcare Trust Inc filed this 10-Q on October 28, 2025, covering the quarter ended September 30, 2025 (FY2025 Q3).
Headline figures
Quarter ended September 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $31.09M
- up 4.9% from $29.64M a year earlier
- Net income
- $1.64M
- down 6.2% from net income of $1.75M a year earlier
- Diluted EPS
- $0.03
- down 25.0% from $0.04 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One) | ||||||||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED | ||||||||
OR | ||||||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO | ||||||||
Commission file number: 001-37401
(Exact Name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of Principal Executive Offices) (Zip Code)
(615 ) 771-3052
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each Class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
☒ | Accelerated filer | ☐ | Emerging-growth company | Non-accelerated filer | ☐ | Smaller reporting company | |||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
The Registrant had 28,471,424 shares of Common Stock, $0.01 par value per share, outstanding as of October 21, 2025.
COMMUNITY HEALTHCARE TRUST INCORPORATED
FORM 10-Q
SEPTEMBER 30, 2025
TABLE OF CONTENTS
Page | ||||||||
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COMMUNITY HEALTHCARE TRUST INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands, except per share amounts)
(Unaudited) | |||||||||||
| September 30, 2025 | December 31, 2024 | ||||||||||
ASSETS | |||||||||||
Real estate properties | |||||||||||
Land and land improvements | $ | $ | |||||||||
Buildings, improvements, and lease intangibles | |||||||||||
Personal property | |||||||||||
Total real estate properties | |||||||||||
Less accumulated depreciation | ( | ( | |||||||||
Total real estate properties, net | |||||||||||
Cash and cash equivalents | |||||||||||
| Assets held for sale, net | |||||||||||
Other assets, net | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Liabilities | |||||||||||
Debt, net | $ | $ | |||||||||
Accounts payable and accrued liabilities | |||||||||||
Other liabilities, net | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Cumulative net income | |||||||||||
Accumulated other comprehensive income | |||||||||||
Cumulative dividends | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders' equity | $ | $ | |||||||||
See accompanying notes to the condensed consolidated financial statements.
COMMUNITY HEALTHCARE TRUST INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
(Unaudited; Dollars and shares in thousands, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
REVENUES | |||||||||||||||||||||||
Rental income | $ | $ | $ | $ | |||||||||||||||||||
Other operating interest | ( | ||||||||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Property operating | |||||||||||||||||||||||
General and administrative (1) | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
| OTHER (EXPENSE) INCOME | |||||||||||||||||||||||
| (Loss) Gains on sale and impairments of real estate assets | ( | ( | ( | ||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Credit loss reserve | ( | ( | |||||||||||||||||||||
Interest and other income, net | |||||||||||||||||||||||
| ( | ( | ( | ( | ||||||||||||||||||||
| NET INCOME (LOSS) | $ | $ | $ | ( | $ | ( | |||||||||||||||||
| NET INCOME (LOSS) PER COMMON SHARE | |||||||||||||||||||||||
| Net income (loss) per common share - Basic | $ | $ | $ | ( | $ | ( | |||||||||||||||||
| Net income (loss) per common share - Diluted | $ | $ | $ | ( | $ | ( | |||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-BASIC | |||||||||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-DILUTED | |||||||||||||||||||||||
| __________ | |||||||||||||||||||||||
(1) General and administrative expenses for the nine months ended September 30, 2025, included severance and transition-related expenses totaling $ | |||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
COMMUNITY HEALTHCARE TRUST INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
(Unaudited; Dollars in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||
| NET INCOME (LOSS) | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||
| Other comprehensive loss: | |||||||||||||||||||||||||||||
| Increase (decrease) in fair value of cash flow hedges | ( | ( | |||||||||||||||||||||||||||
Reclassification for amounts recognized as interest expense | ( | ( | ( | ( | |||||||||||||||||||||||||
| Total other comprehensive loss | ( | ( | ( | ( | |||||||||||||||||||||||||
| COMPREHENSIVE INCOME (LOSS) | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
COMMUNITY HEALTHCARE TRUST INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025
(Unaudited; Dollars and shares in thousands, except per share amounts)
Preferred Stock | Common Stock | Additional Paid in Capital | Cumulative Net Income | Accumulated Other Comprehensive Income | Cumulative Dividends | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net of issuance costs | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation, net of forfeitures | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Shares withheld on vesting of stock-based compensation | — | — | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||
| Increase in fair value of cash flow hedges | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Reclassification for amounts recognized as interest expense | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Dividends to common stockholders ($ | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net of issuance costs | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation, net of forfeitures | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Shares withheld on vesting of stock-based compensation | — | — | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||
| Decrease in fair value of cash flow hedges | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||
| Reclassification for amounts recognized as interest expense | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||
Dividends to common stockholders ($ | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
COMMUNITY HEALTHCARE TRUST INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024
(Unaudited; Dollars and shares in thousands, except per share amounts)
Preferred Stock | Common Stock | Additional Paid in Capital | Cumulative Net Income | Accumulated Other Comprehensive Income | Cumulative Dividends | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net of issuance costs | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation, net of forfeitures | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Shares withheld on vesting of stock-based compensation | — | — | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||
| Decrease in fair value of cash flow hedges | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Reclassification for amounts recognized as interest expense | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Dividends to common stockholders ($ | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net of issuance costs | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation, net of forfeitures | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Shares withheld on vesting of stock-based compensation | — | — | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||
| Increase in fair value of cash flow hedges | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Reclassification for amounts recognized as interest expense | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||
Dividends to common stockholders ($ | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
COMMUNITY HEALTHCARE TRUST INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; Dollars in thousands)
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
OPERATING ACTIVITIES | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Other amortization | |||||||||||
Stock-based compensation | |||||||||||
| Accelerated amortization of stock-based compensation | |||||||||||
Straight-line rent receivable | ( | ( | |||||||||
| Loss on sale and impairments of real estate assets, net of gains on sale | |||||||||||
Credit loss reserve | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Other assets | ( | ||||||||||
Accounts payable and accrued liabilities | ( | ||||||||||
Other liabilities | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
INVESTING ACTIVITIES | |||||||||||
Acquisitions of real estate | ( | ( | |||||||||
Proceeds from sale of real estate | |||||||||||
Funding of notes receivable | ( | ||||||||||
Proceeds from the repayment of notes receivable | |||||||||||
Capital expenditures on existing real estate properties | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
FINANCING ACTIVITIES | |||||||||||
| Net borrowings on revolving credit facility | |||||||||||
Mortgage note repayments | ( | ||||||||||
Dividends paid | ( | ( | |||||||||
Proceeds from issuance of common stock | |||||||||||
| Taxes paid on behalf of employees and shares withheld upon shares vesting | ( | ( | |||||||||
Equity issuance costs | ( | ( | |||||||||
| Net cash provided by financing activities | |||||||||||
| Decrease in cash, cash equivalents and restricted cash | ( | ( | |||||||||
Cash, cash equivalents and restricted cash, beginning of period | |||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
Supplemental Cash Flow Information: | |||||||||||
Interest paid (net of capitalized interest) | $ | $ | |||||||||
Invoices accrued for construction, tenant improvement, and other capitalized costs | $ | $ | |||||||||
Reclassification of registration statement costs to equity issuance costs | $ | $ | |||||||||
| (Decrease) increase in fair value of cash flow hedges | $ | ( | $ | ||||||||
Income taxes paid | $ | $ | |||||||||
| Capitalized interest | $ | $ | |||||||||
See accompanying notes to the condensed consolidated financial statements.
COMMUNITY HEALTHCARE TRUST INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Overview
Community Healthcare Trust Incorporated (the ‘‘Company’’, ‘‘we’’, ‘‘our’’) was organized in the State of Maryland on March 28, 2014. The Company is a fully-integrated healthcare real estate company that owns and acquires real estate properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers. As of September 30, 2025, the Company had gross investments of approximately $1.2 billion in 200 real estate properties (including one property, with sales-type leases, with a gross amount totaling approximately $8.1 million and two 6.2 million). The properties are located in 36 states, totaling approximately 4.6 million square feet in the aggregate, with a weighted average remaining lease term of approximately 6.7 years. Excluding the real estate assets held for sale the properties were approximately 90.1 % leased. Any references to square footage, property count, or occupancy percentages, and any amounts derived from these values in these notes to the Condensed Consolidated Financial Statements, are outside the scope of our independent registered public accounting firm's review.
Basis of Presentation
The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. This interim financial information should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2025. All intercompany accounts and transactions have been eliminated.
Use of Estimates in the Condensed Consolidated Financial Statements
Preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in the Condensed Consolidated Financial Statements and accompanying notes, including among others, estimates related to impairment assessments, purchase price allocations, valuation of properties held for sale, allowances for accounts and interest receivables, and valuation of financial instruments. Actual results may materially differ from those estimates.
Segment Reporting
The Company acquires and owns, or finances, healthcare-related real estate properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers throughout the U.S. The Company operates and manages its business as one
Notes to Condensed Consolidated Financial Statements - Continued
Cash and Cash Equivalents
Accounting Pronouncements Not Yet Adopted
ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, provides disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. One of the amendments in ASU 2023-09 includes disclosure of, on an annual basis, a tabular rate reconciliation of both amounts and percentages of (i) the reported income tax expense (or benefit) from continuing operations, to (ii) the product of the income (or loss) from continuing operations before income taxes and the statutory federal income tax rate using specific categories, including separate disclosure for any reconciling items within certain categories that are equal to or greater than a specified quantitative threshold of 5%. ASU 2023-09 also requires disclosure of, on an annual basis, the year-to-date amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign jurisdictions, including additional disaggregated information on income taxes paid (net of refunds received) to an individual jurisdiction equal to or greater than 5% of total income taxes paid (net of refunds received). The amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024. While the adoption is not expected to have a material impact on our financial statements, it is expected to result in incremental disclosures within the footnotes to our Consolidated Financial Statements.
ASU 2024-03, Disaggregation of Income Statement Expenses, will require entities to provide enhanced disclosures related to certain expense categories included in income statement captions. ASU 2024-03 aims to increase transparency and provide investors with more detailed information about the nature of expenses reported on the face of the income statement. The new standard does not change the requirements for the presentation of expenses on the face of the income statement. Entities will be required to disaggregate, in a tabular format, expense captions presented on the face of the income statement, including but not limited to employee compensation, intangible asset amortization, and depreciation and amortization. For any remaining items within each relevant expense caption, entities must provide a qualitative description of the nature of those expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027 though early adoption is permitted. While the adoption is not expected to have a material impact on our financial statements, it is expected to result in incremental disclosures within the footnotes to our Consolidated Financial Statements.
NOTE 2. REAL ESTATE INVESTMENTS
As of September 30, 2025, we had gross investments of approximately $1.2 billion in 200 real estate properties (including one property with sales-type leases with a gross amount totaling approximately $8.1 million and two 6.2 million). The Company's investments are diversified by property type, geographic location, and tenant as shown in the following tables:
| Property Type | # of Properties | Gross Investment (in thousands) | ||||||
| Medical Office Building | $ | |||||||
| Inpatient Rehabilitation Hospitals | ||||||||
| Acute Inpatient Behavioral | ||||||||
| Specialty Centers | ||||||||
| Physician Clinics | ||||||||
| Behavioral Specialty Facilities | ||||||||
| Surgical Centers and Hospitals | ||||||||
| Long-term Acute Care Hospitals | ||||||||
| Total | $ | |||||||
Notes to Condensed Consolidated Financial Statements - Continued
| State | # of Properties | Gross Investment (in thousands) | ||||||
| Texas | $ | |||||||
| Illinois | ||||||||
| Ohio | ||||||||
| Florida | ||||||||
| Pennsylvania | ||||||||
| All Others | ||||||||
| Total | $ | |||||||
| Primary Tenant | # of Properties | Gross Investment (in thousands) | ||||||
Lifepoint Health | $ | |||||||
| US HealthVest | ||||||||
| PAM Health | ||||||||
| All Others (less than 4%) | ||||||||
| Total | $ | |||||||
NOTE 3. REAL ESTATE LEASES
Lessor Accounting
The Company’s properties are generally leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2045. The Company’s leases generally require the lessee to pay minimum rent, with fixed rent renewal terms or increases based on a Consumer Price Index and may also include additional rent, which may include the reimbursement of taxes (including property taxes), insurance, maintenance and other operating costs associated with the leased property. Some leases also allow the lessee to renew or extend their lease term or in some cases terminate their lease, based on conditions provided in the lease.
Future minimum lease payments under the non-cancelable operating leases due to the Company for the years ending December 31, as of September 30, 2025, are as follows (in thousands):
| 2025 (three months ended December 31) | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 and thereafter | |||||
| $ | |||||
Rental income is recognized as earned over the life of the lease agreement on a straight-line basis when collection of rental payments over the term of the lease is probable. Straight-line rent increased rental income by approximately $0.9 million and $2.7 million, respectively, for the three and nine months ended September 30, 2025, and increased rental income by approximately $0.7 million and $1.2 million, respectively, for the three and nine months ended September 30, 2024.
Purchase Option Provisions
Certain of the Company's leases provide the lessee with a purchase option or a right of first refusal to purchase the leased property. The purchase option provisions generally allow the lessee to purchase the leased property at fair value or at an amount greater than the Company's gross investment in the leased property at the time of the purchase.
Notes to Condensed Consolidated Financial Statements - Continued
During the third quarter of 2025, a tenant exercised its purchase option on one property with a gross investment of $1.4 million and a purchase price of $1.8 million. The Company cannot provide assurance as to the timing of when, or whether, this transaction will actually close. As a result, the Company determined that the property did not meet the criterion for assets held for sale as of September 30, 2025.
At September 30, 2025, the Company had an aggregate gross investment of approximately $38.6 million in 12 real estate properties with purchase options exercisable at September 30, 2025 that had not been exercised.
Sales-type Leases
The Company has one property with two sales-type leases totaling approximately $8.0 million included in other assets, net on the Company's Condensed Consolidated Balance Sheets. During the second quarter of 2025, the Company amended an operating lease on the property, resulting in a sales-type lease. As a result, the Company recorded a gross lease receivable of $5.1 million which is included in other assets, net on the Company's Condensed Consolidated Balance Sheet. Future lease payments due to the Company under these leases for the years ending December 31, as of September 30, 2025, are as follows (in thousands):
| 2025 (three months ended December 31) | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 and thereafter | |||||
| Total undiscounted lease receivable | |||||
| Discount | ( | ||||
| Lease receivable | $ | ||||
The Company recognized interest income of approximately $0.2 million and $0.1 million, respectively, during the three months ended September 30, 2025 and 2024 and approximately $0.4 million and $0.2 million, respectively, during the nine months ended September 30, 2025 and 2024, which is included in other operating interest on the Company's Condensed Consolidated Statements of Operations.
Lessee Accounting
At September 30, 2025, the Company was obligated, as the lessee, under four non-prepaid ground leases accounted for as operating leases with expiration dates, including renewal options, through 2076, and two non-prepaid ground leases accounted for as finance leases with expiration dates through 2109, including renewal options. Any rental increases related to the Company's ground leases are generally either stated or based on the Consumer Price Index. The Company's future lease payments under these non-prepaid ground leases were as follows (in thousands):
| Operating | Financing | |||||||
| 2025 (three months ended December 31) | $ | $ | ||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 and thereafter | ||||||||
| Total undiscounted lease payments | ||||||||
| Discount | ( | ( | ||||||
| Lease liabilities | $ | $ | ||||||
Notes to Condensed Consolidated Financial Statements - Continued
The following table discloses other information regarding the ground leases.
| Three Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Operating leases: | ||||||||
| Weighted-average remaining lease term in years (including renewal options) | ||||||||
| Weighted-average discount rate | % | % | ||||||
| Financing leases: | ||||||||
| Weighted-average remaining lease term in years (including renewal options) | ||||||||
| Weighted-average discount rate | % | % | ||||||
NOTE 4. REAL ESTATE ACQUISITIONS, DISPOSITIONS, AND ASSETS HELD FOR SALE
Acquisitions
During the third quarter of 2025, the Company acquired an inpatient rehabilitation facility upon completion of construction for cash consideration of approximately $26.4 million. The property is 100 % leased to a tenant with a lease expiration in 2040. Amounts reflected in revenues and net income for the property for the nine months ended September 30, 2025 were approximately $0.7 million and $0.5 million, respectively.
During the first quarter of 2025, the Company acquired a behavioral specialty facility for cash consideration of approximately $9.7 million. Because the acquisition was accounted for as a sale-leaseback transaction and the lease had not commenced as of the acquisition, the Company could not recognize the acquisition as a real estate purchase but rather as a financing transaction. During the second quarter of 2025, the lease commenced, the real estate purchase was able to be recognized, and the asset was reclassified from other assets to real estate properties on the Company's Condensed Consolidated Balance Sheet. The property is 100 % leased to a tenant with a lease expiration in 2040. Amounts reflected in revenues and net income for the property for the nine months ended September 30, 2025 were approximately $0.7 million and $0.5 million, respectively, and transaction costs totaling approximately $0.2 million were capitalized relating to the property acquisition.
The following table summarizes our property acquisitions for the nine months ended September 30, 2025:
| Location | Property Type (1) | Number of Properties | Date Acquired | Purchase Price | Cash Consideration | Real Estate | Other (2) | Square Footage | ||||||||||||||||||
| (000's) | (000's) | (000's) | (000's) | |||||||||||||||||||||||
| Cartersville, GA | BSF | 1 | 3/6/2025 (3) | $ | $ | $ | $ | ( | ||||||||||||||||||
| Ocoee, FL | IRF | 1 | 7/9/2025 | ( | ||||||||||||||||||||||
| $ | $ | $ | $ | ( | ||||||||||||||||||||||
(1) BSF - Behavioral Specialty Facility; IRF - Inpatient Rehabilitation Facility | ||||||||||||||||||||||||||
(2) Includes liabilities assumed at acquisition | ||||||||||||||||||||||||||
(3) The date acquired above for the Cartersville, GA property is the date the Company closed on the transaction with the seller. The lease commenced on 4/4/2025. | ||||||||||||||||||||||||||
Notes to Condensed Consolidated Financial Statements - Continued
The following table summarizes the relative fair values of the assets acquired and liabilities assumed in the property acquisitions for the nine months ended September 30, 2025:
| Relative Fair Value | Estimated Useful Life | |||||||||||||
| (in thousands) | (in years) | |||||||||||||
| Land and land improvements | $ | |||||||||||||
| Building and building improvements | ||||||||||||||
| Liabilities assumed | ( | |||||||||||||
| Total cash consideration | $ | |||||||||||||
Asset Dispositions
During the third quarter of 2025, the Company disposed of a building in Pennsylvania, received net proceeds of approximately $0.7 million, and recognized a loss of approximately $0.2 million on the sale.
During the second quarter of 2025, the Company disposed of a building in Ohio, received net proceeds of approximately $0.6 million, and recognized a gain of approximately $0.2 million on the sale. The property was previously classified as an asset held for sale on the Company's Condensed Consolidated Balance Sheet. Also, during the second quarter of 2025, the Company amended an operating lease on a property that resulted in a sales-type lease. As such, the Company reclassified the net book value of the real estate totaling $3.7 million to a net lease investment in other assets on the Condensed Consolidated Balance Sheet and recognized a gain on sale totaling approximately $1.3 million (see also sales-type leases in Note 3 – Real Estate Leases).
Assets Held for Sale
The Company had two 0.7 million on a property classified as held for sale during the three months ended September 30, 2025, based on the estimated fair value less costs to sell. During the second quarter of 2025, the Company recorded impairment charges of $0.9 million on a property held for sale at September 30, 2025 and December 31, 2024, based on the estimated fair value less costs to sell. The table below reflects the real estate assets classified as assets held for sale as of September 30, 2025 and December 31, 2024.
| (Dollars in thousands) | September 30, 2025 | December 31, 2024 | |||||||||
| Balance Sheet data: | |||||||||||
| Land | $ | $ | |||||||||
| Building, improvements, and lease intangibles | |||||||||||
| Accumulated depreciation | ( | ( | |||||||||
| Assets held for sale, net | $ | $ | |||||||||
Notes to Condensed Consolidated Financial Statements - Continued
NOTE 5. DEBT, NET
The table below details the Company's debt as of September 30, 2025 and December 31, 2024.
| Balance as of | |||||||||||
| (Dollars in thousands) | September 30, 2025 | December 31, 2024 | Maturity Dates | ||||||||
| Credit Facility: | |||||||||||
| Revolving Credit Facility | $ | $ | 10/29 | ||||||||
| A-4 Term Loan, net | 3/28 | ||||||||||
| A-5 Term Loan, net | 3/30 | ||||||||||
| $ | $ | ||||||||||
Credit Facility
The Company's third amended and restated credit agreement, as amended on October 16, 2024 (the "Credit Facility") is by and among Community Healthcare Trust Incorporated, as borrower, the several banks and financial institutions party thereto as lenders, and Truist Bank, as administrative agent. The Credit Facility provides for a $400.0 million revolving credit facility (the "Revolving Credit Facility") and $275.0 million in term loans (the "Term Loans"). The Revolving Credit Facility matures on October 16, 2029. The Term Loans include a term loan facility in the aggregate principal amount of $125.0 million (the "A-4 Term Loan"), which matures on March 19, 2028, and a term loan facility in the aggregate principal amount of $150.0 million (the "A-5 Term Loan") which matures on March 14, 2030. Loans under the Credit Facility are interest only with principal amounts due as of each facility's applicable maturity date. The Company's material subsidiaries are guarantors of the obligations under the Credit Facility.
Amounts outstanding under the Revolving Credit Facility bear interest at a floating rate based on the Company's option, on either: (i) adjusted term SOFR or adjusted daily simple SOFR plus 1.15 % to 1.75 % or (ii) a base rate plus 0.15 % to 0.75 % in each case, depending upon the Company’s leverage ratio. In addition, the Company is obligated to pay an annual fee equal to 0.20 % of the amount of the unused portion of the Revolving Credit Facility if amounts borrowed are greater than 33.3 % of the borrowing capacity under the Revolving Credit Facility and 0.25 % of the unused portion of the Revolving Credit Facility if amounts borrowed are less than or equal to 33.3 % of the borrowing capacity under the Revolving Credit Facility. At September 30, 2025, the Company had $256.0 million outstanding under the Revolving Credit Facility with a borrowing capacity remaining of $144.0 million.
Amounts outstanding under the Term Loans will bear interest at a floating rate that is based, at the Company's option, on either (i) adjusted term SOFR or adjusted daily SOFR plus 1.65 % to 2.30 %, plus a simple SOFR adjustment equal to 0.10 % per annum, or (ii) a base rate plus 0.65 % to 1.30 %, in each case, depending upon the Company’s leverage ratio.
The Company has entered into interest rate swaps to fix the interest rates on the Term Loans and a portion of the Revolving Credit Facility. At September 30, 2025, the Company had fixed the $275.0 million outstanding under the Term Loans and $75.0 million of the Revolving Credit Facility, which had an aggregate fixed weighted average interest rate under the swaps of approximately 4.7 % and 3.8 %, respectively. See Note 6 – Derivative Financial Instruments for more details on the interest rate swaps. The floating rate for the $181.0 million of the Revolving Credit Facility not under a swap was approximately 5.8 % at September 30, 2025.
Notes to Condensed Consolidated Financial Statements - Continued
NOTE 6. DERIVATIVE FINANCIAL INSTRUMENTS
Risk Management Objective of Using Derivatives
The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. The Company does not intend to utilize derivatives for speculative or other purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company does not anticipate that any of the counterparties will fail to meet their obligations.
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
As of September 30, 2025, the Company had fifteen outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk for notional amounts totaling $350.0 million, which mature between 2026 and 2030. See Note 5 – Debt, net.
Tabular Disclosure of Fair Value of Derivative Instruments on the Balance Sheet
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024.
| Asset Derivatives Fair Value at | Liability Derivatives Fair Value at | ||||||||||||||||||||||
| (Dollars in thousands) | September 30, 2025 | December 31, 2024 | Balance Sheet Classification | September 30, 2025 | December 31, 2024 | Balance Sheet Classification | |||||||||||||||||
| Interest rate swaps | $ | $ | $ | $ | |||||||||||||||||||
The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income ("AOCI") and are subsequently reclassified to interest expense in the period that the hedged forecasted transaction affects earnings.
Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s Term Loans and Revolving Credit Facility. During the next twelve months, the Company estimates that an additional $4.2 million will be reclassified from AOCI as a decrease to interest expense.
Notes to Condensed Consolidated Financial Statements - Continued
Tabular Disclosure of the Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income
The table below details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the three and nine months ended September 30, 2025 and 2024.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| (Dollars in thousands) | 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Amount of unrealized gain (loss) recognized in OCI on derivative | $ | $ | ( | $ | ( | $ | |||||||||||
| Amount of gain reclassified from AOCI into interest expense | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||
Total interest expense presented in the Condensed Consolidated Statements of Operations in which the effects of the cash flow hedges are recorded | $ | $ | $ | $ | |||||||||||||
Tabular Disclosures of Offsetting Derivatives
The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company's derivatives as of September 30, 2025 and December 31, 2024. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the Condensed Consolidated Balance Sheets.
Offsetting of Derivative Assets (as of September 30, 2025) | ||||||||||||||||||||
| Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets | ||||||||||||||||||||
| (In thousands) | Gross Amounts of Recognized Assets | Gross Amounts Offset in the Condensed Consolidated Balance Sheet | Net Amounts of Assets in the Condensed Consolidated Balance Sheets | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||
| Derivatives | $ | $ | $ | $ | ( | $ | $ | |||||||||||||
Offsetting of Derivative Liabilities (as of September 30, 2025) | ||||||||||||||||||||
| Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets | ||||||||||||||||||||
| (In thousands) | Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Condensed Consolidated Balance Sheet | Net Amounts of Liabilities in the Condensed Consolidated Balance Sheets | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||
| Derivatives | $ | ( | $ | $ | ( | $ | $ | $ | ||||||||||||
Offsetting of Derivative Assets (as of December 31, 2024) | ||||||||||||||||||||
| Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets | ||||||||||||||||||||
| (In thousands) | Gross Amounts of Recognized Assets | Gross Amounts Offset in the Condensed Consolidated Balance Sheet | Net Amounts of Assets in the Condensed Consolidated Balance Sheets | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||
| Derivatives | $ | $ | $ | $ | $ | $ | ||||||||||||||
Notes to Condensed Consolidated Financial Statements - Continued
Offsetting of Derivative Liabilities (as of December 31, 2024) | ||||||||||||||||||||
| Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets | ||||||||||||||||||||
| (In thousands) | Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Condensed Consolidated Balance Sheet | Net Amounts of Liabilities in the Condensed Consolidated Balance Sheets | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||
| Derivatives | $ | $ | $ | $ | $ | $ | ||||||||||||||
Credit-risk-related Contingent Features
As of September 30, 2025, the Company did not have any derivatives in a net liability position. As of September 30, 2025, the Company had not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company terminated these interest rate swaps or breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value.
NOTE 7. STOCKHOLDERS' EQUITY
Common Stock
The following table provides a reconciliation of the beginning and ending common stock balances for the nine months ended September 30, 2025 and for the year ended December 31, 2024:
| (In thousands) | Nine Months Ended September 30, 2025 | Year Ended December 31, 2024 | ||||||
| Balance, beginning of period | ||||||||
| Issuance of common stock | ||||||||
| Vested RSUs | ||||||||
| Restricted stock issued, net of withheld shares and forfeitures | ||||||||
| Balance, end of period | ||||||||
ATM Program
On February 18, 2025, the Company amended its at-the-market offering program ("ATM Program") with Piper Sandler & Co., Piper Sandler Financial Products II Inc., Evercore Group L.L.C., Fifth Third Securities, Inc., Huntington Securities, Inc., Janney Montgomery Scott LLC, KeyBanc Capital Markets Inc., Regions Securities LLC, Truist Bank, and Truist Securities, Inc. in their capacities as Sales Agents, Forward Purchasers and/or Forward Sellers (each, an “Agent”, and, collectively, the “Agents”).
Under the ATM Program, the Company may issue and sell shares of its common stock, having an aggregate gross sales price of up to $300.0 million, exclusive of shares of common stock sold under its prior agreements with our Agents. The shares of common stock may be sold from time to time through or to one or more of the Agents, as may be determined by the Company in its sole discretion, subject to the terms and conditions of the third amended and restated sales agency agreement and applicable law. In addition, the Company may enter into one or more forward sales agreements under the ATM Program.
The Company did not issue any shares under the ATM Program during the nine months ended September 30, 2025. As of September 30, 2025, the Company had $300.0 million remaining that may be issued under the ATM Program.
Notes to Condensed Consolidated Financial Statements - Continued
NOTE 8. NET INCOME (LOSS) PER COMMON SHARE
The following table sets forth the computation of basic and diluted net income (loss) per common share for the three and nine months ended September 30, 2025 and 2024, respectively. Net income (loss) available to common stockholders excludes dividends paid on participating securities which include restricted stock and time-based RSUs. Dividends accrue but are not paid on unvested performance-based RSUs.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (In thousands, except per share data) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Net income (loss) | $ | $ | $ | ( | $ | ( | |||||||||||||||||
| Participating securities' share in earnings | ( | ( | ( | ( | |||||||||||||||||||
| Net income (loss), less participating securities' share in earnings | $ | $ | $ | ( | $ | ( | |||||||||||||||||
| Weighted average Common Shares outstanding | |||||||||||||||||||||||
Weighted average Common Shares outstanding | |||||||||||||||||||||||
Unvested restricted shares | ( | ( | ( | ( | |||||||||||||||||||
| Weighted average Common Shares outstanding–Basic | |||||||||||||||||||||||
Weighted average Common Shares outstanding –Diluted | |||||||||||||||||||||||
| Basic Net Income (Loss) Per Common Share | $ | $ | $ | ( | $ | ( | |||||||||||||||||
| Diluted Net Income (Loss) Per Common Share | $ | $ | $ | ( | $ | ( | |||||||||||||||||
NOTE 9. STOCK INCENTIVE PLAN
Restricted Stock Awards
A summary of restricted stock award activity for the three and nine months ended September 30, 2025 and 2024 is included in the table below, as well as compensation expense recognized from the amortization of the value of shares over the applicable vesting periods.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
| (Dollars and shares in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||
| Stock-based awards, beginning of period | ||||||||||||||||||||
| Stock in lieu of compensation | ||||||||||||||||||||
| Stock awards | ||||||||||||||||||||
| Total stock granted | ||||||||||||||||||||
| Vested shares | ( | ( | ( | ( | ||||||||||||||||
| Forfeited shares | ( | ( | ( | ( | ||||||||||||||||
| Stock-based awards, end of period | ||||||||||||||||||||
Amortization expense (1) | $ | $ | $ | $ | ||||||||||||||||
| ___________ | ||||||||||||||||||||
(1) Amortization expense for the nine months ended September 30, 2025 includes accelerated amortization totaling $ | ||||||||||||||||||||
Restricted Stock Issuances
During the third quarter of 2025, pursuant to the 2024 Incentive Plan and the Fourth Amended and Restated Alignment of Interest Program, the Company granted an aggregate of 108,553 shares of restricted stock to its employees, in lieu of bonus compensation, which will cliff vest between and eight years . Of the shares granted, 64,751 shares of restricted stock were granted in lieu of compensation from the program pool and 43,802 shares of restricted stock were awarded based on the restriction period elected from the plan pool.
Notes to Condensed Consolidated Financial Statements - Continued
Restricted Stock Units
A summary of the Company's restricted stock unit (RSU) activity during the three and nine months ended September 30, 2025 and 2024, respectively, is included in the table below, as well as compensation expense recognized from the amortization of the value of RSUs over the applicable vesting periods.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
| (Dollars and RSUs in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||
| Restricted Stock Units, beginning of period | ||||||||||||||||||||
Absolute TSR Performance-based RSUs granted (1) | ||||||||||||||||||||
Relative TSR Performance-based RSUs granted (1) | ||||||||||||||||||||
Time-based RSUs granted (2) | ||||||||||||||||||||
| Total RSUs granted | ||||||||||||||||||||
Vested RSUs (2) | ( | ( | ( | |||||||||||||||||
| Restricted Stock Units, end of period | ||||||||||||||||||||
Amortization expense(3) | $ | $ | $ | $ | ||||||||||||||||
| Grant Date Value Remaining at period end to be Amortized During the Performance Period | $ | $ | $ | $ | ||||||||||||||||
| ______________ | ||||||||||||||||||||
(1) The number of performance-based RSUs granted were based on target levels. These RSUs will vest or will be forfeited based on the performance level achieved at the end of the respective -year performance period on June 30, 2026 and June 30, 2028. | ||||||||||||||||||||
(2) The number of time-based RSUs granted were based on target levels and vest ratably on June 30 of each year of the respective -year periods ending June 30, 2026 and 2028, provided the recipient remains continuously employed by the Company on each such date. | ||||||||||||||||||||
(3) Amortization expense for the nine months ended September 30, 2025 includes accelerated amortization totaling $ | ||||||||||||||||||||
Accelerated Amortization of Restricted Stock and Restricted Stock Units
The Company's former Executive Vice President, Asset Management was terminated effective May 31, 2025. In accordance with his employment agreement, his unvested restricted shares totaling 198,015 shares vested and his unvested restricted stock units totaling 18,275 units vested at target upon termination. As such, upon termination and vesting of these shares, the Company accelerated the unamortized remaining balance of his deferred compensation at May 31, 2025 and recognized $4.6 million of amortization expense.
Notes to Condensed Consolidated Financial Statements - Continued
NOTE 10. OTHER ASSETS, NET
Other assets, net on the Company's Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 are detailed in the table below.
| Balance as of | ||||||||
| (Dollars in thousands) | September 30, 2025 | December 31, 2024 | ||||||
| Straight-line rent receivables, net | $ | $ | ||||||
| Sales-type lessor receivables | ||||||||
| Fair value of interest rate swaps | ||||||||
| Leasing commissions, net | ||||||||
| Deferred financing costs, net | ||||||||
| Prepaid assets | ||||||||
| Mortgage note receivable | ||||||||
| Notes receivable, net of credit loss reserve | ||||||||
| Accounts and interest receivables, net | ||||||||
| Above-market intangible assets, net | ||||||||
| Operating lease right of use assets | ||||||||
| Other | ||||||||
| $ | $ | |||||||
The Company's notes and mortgage note receivable included the following at September 30, 2025 and December 31, 2024:
•In June 2025, a note receivable, secured by all assets and ownership interests in seven long-term acute care hospitals and one inpatient rehabilitation hospital owned by the borrower, was prepaid in full, along with interest through its maturity date of December 31, 2025. The balance on the note at December 31, 2024 was $3.0 million.
•At September 30, 2025 and December 31, 2024, notes receivable included a fully-drawn term loan totaling $17.0 2.7 million and $4.5 million drawn, respectively, secured by assets and ownership interests of six geriatric behavioral hospitals and affiliated companies all of which are co-borrowers on the loans. At September 30, 2025, the Company had an unfunded commitment of $5.8 million on the revolving credit facility. Any future requests for borrowings under the revolving credit facility from this tenant will require review and approval by management. The revolving credit facility, as amended, bears interest at 9 % per annum and matures on December 31, 2025. The term loan, as amended, bears interest at 9 % per annum, with interest only payments due currently, quarterly installments of principal payments of $250,000 beginning March 31, 2026 through December 31, 2026, and quarterly installments of principal payments of $666,666 beginning on March 31, 2027 through the facility maturity on December 31, 2032. The term loan and revolving credit facility include a 3 % per annum non-cash interest charge that is payable upon the earlier of the repayment or maturity of each note.
In the second quarter of 2024, the Company determined that the collectability of the term loan and revolver loan was not reasonably assured. The Company prepared a valuation of the notes based on the estimated fair value of the underlying collateral, requiring management to determine certain assumptions used for the estimation of fair value, including the determination of adjusted EBITDA and the selected EBITDA multiple range. As a result, in the second quarter of 2024, the Company recorded an $11.0 million credit loss reserve on these notes receivable and has placed the notes on non-accrual status.
Notes to Condensed Consolidated Financial Statements - Continued
During the second quarter of 2025, the tenant received indications of interest from various buyers for the sale of its business. Based on the offers received, the Company determined that the collectability of the remaining outstanding note and interest receivable balances related to this tenant were not reasonably assured. As such, during the three months ended June 30, 2025, the Company recognized an additional credit loss reserve for the remaining balances of the notes, totaling approximately $8.7 million and reserved the remaining outstanding interest receivable on these notes totaling approximately $1.7 million.
•At September 30, 2025 and December 31, 2024, notes receivable, as amended, also included a $2.0 million revolving credit facility with a borrower. The revolving credit facility will be repaid in monthly installments of $20,000 from March 1, 2025 through May 31, 2025, $40,000 from June 1, 2025 through November 30, 2025, and $50,000 from December 1, 2025 through the maturity date of April 1, 2027 with a balloon payment due at maturity. The revolving credit facility bears interest at 9 % per annum, as well as a 3 % per annum non-cash interest charge that is due and payable upon the earlier of the repayment or maturity of the note.
•At September 30, 2025 and December 31, 2024, the Company had a $2.0 10 % per annum, will be interest only until the principal is due at the earlier of the sale of the property, or August 15, 2027.
The Company identified the borrowers of these notes as variable interest entities ("VIEs"), but management determined that the Company was not the primary beneficiary of the VIEs because we lack either directly or through related parties any material decision-making rights or control of the entities that impact the borrowers' economic performance. We are not obligated to provide support beyond our stated commitment to the borrowers, and accordingly our maximum exposure to loss as a result of this relationship is limited to the amount of our outstanding notes receivable. The VIEs that we have identified at September 30, 2025 are summarized in the table below.
| Classification | Carrying Amount (in thousands) | Maximum Exposure to Loss (in thousands) | ||||||
| Note receivable (revolving credit facility) | $ | $ | ||||||
| Note receivable (mortgage note) | $ | $ | ||||||
NOTE 11. OTHER LIABILITIES, NET
Other liabilities, net on the Company's Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 are detailed in the table below.
| Balance as of | ||||||||
| (Dollars in thousands) | September 30, 2025 | December 31, 2024 | ||||||
| Prepaid rent | $ | $ | ||||||
| Security deposits | ||||||||
| Below-market lease intangibles, net | ||||||||
| Fair value of interest rate swaps | ||||||||
| Other | ||||||||
| $ | $ | |||||||
Notes to Condensed Consolidated Financial Statements - Continued
NOTE 12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practical to estimate the fair value.
Cash and cash equivalents - The carrying amount approximated the fair value. The fair value estimates were determined using level 1 inputs.
Notes and mortgage note receivable - The fair value was estimated using cash flow analyses which are based on an assumed market rate of interest or at a rate consistent with the rates on notes carried by the Company and were classified as level 2 inputs in the hierarchy.
Notes receivable, net of credit loss - The fair value of these notes, net of credit loss, was estimated based on its estimated value of the underlying collateral on the notes and are classified as Level 3 in the hierarchy.
Borrowings under our Credit Facility - The carrying amount approximated the fair value because the borrowings were based on variable market interest rates. The fair value estimates were determined using level 2 inputs.
Derivative financial instruments (Interest rate swaps) - The fair value was estimated using discounted cash flow techniques. These techniques incorporate primarily level 2 inputs. The market inputs were utilized in the discounted cash flow calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative valuation model for interest rate swaps were observable in active markets and were classified as level 2 inputs in the hierarchy.
The table below details the fair values and carrying values for our notes and mortgage note receivable, and interest rate swaps at September 30, 2025 and December 31, 2024.
| September 30, 2025 | December 31, 2024 | ||||||||||||||||
| (Dollars in thousands) | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
| Notes and mortgage note receivable, level 2 | $ | $ | $ | $ | |||||||||||||
Notes receivable, net of credit loss, level 3(1)(2) | $ | $ | $ | $ | |||||||||||||
| Interest rate swap asset | $ | $ | $ | $ | |||||||||||||
| Interest rate swap liability | $ | ( | $ | ( | $ | $ | |||||||||||
| ___________________ | |||||||||||||||||
(1) During 2025 and 2024, the Company recorded an $ | |||||||||||||||||
| (2) Calculated utilizing Level 3 inputs at September 30, 2025 and December 31, 2024. See the table below for Level 3 activity for the nine months ended September 30, 2025 and the year ended December 31, 2024. | |||||||||||||||||
| Level 3 Inputs | |||||||||||
| Notes Receivable: | September 30, 2025 | December 31, 2024 | |||||||||
| Beginning fair value | $ | $ | |||||||||
| Payments | ( | ||||||||||
| Transfers from Level 2 to Level 3 | |||||||||||
| Credit loss reserve | ( | ( | |||||||||
| Ending fair value | $ | $ | |||||||||
Notes to Condensed Consolidated Financial Statements - Continued
NOTE 13. COMMITMENTS AND CONTINGENCIES
Tenant Improvements
The Company may provide tenant improvement allowances in new or renewal leases for the purpose of refurbishing or renovating tenant space. The Company may also assume tenant improvement obligations included in leases acquired in its real estate acquisitions. As of September 30, 2025, the Company had approximately $29.9 million in commitments for tenant improvements, of which $7.7 million primarily relates to three ongoing redevelopment projects of buildings into different healthcare uses, backed by long-term leases.
Capital Improvements
The Company has entered into contracts with various vendors for various capital improvement projects related to its portfolio. As of September 30, 2025, the Company had approximately $3.0 million in commitments for capital improvement projects, of which $1.5 million primarily relates to three ongoing redevelopment projects of buildings into different healthcare uses, backed by long-term leases.
Legal Proceedings
The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company's Consolidated Financial Statements.
NOTE 14. SUBSEQUENT EVENTS
Dividend Declared
On October 23, 2025, the Company’s Board of Directors declared a quarterly common stock dividend in the amount of $0.4750 per share. The dividend is payable on November 21, 2025 to stockholders of record on November 7, 2025.
Capital Recycling Program
As part of the Company's capital recycling program, in October 2025, the Company had an inpatient rehabilitation facility that met the held for sale criteria. The sale of this asset is expected to occur in the fourth quarter of 2025 and the proceeds are generally expected to fund acquisitions through like-kind exchange under Section 1031 of the United States Internal Revenue Code. The Company expects to recognize a gain on sale of approximately $11.5 million.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Disclosure Regarding Forward-Looking Statements
This report and other materials that Community Healthcare Trust Incorporated (the "Company") has filed or may file with the Securities and Exchange Commission, as well as information included in oral statements or other written statements made, or to be made, by management of the Company, contain, or will contain, statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “believes”, “expects”, “may”, "will', “should”, “seeks”, “approximately”, “intends”, “plans”, “estimates”, “anticipates” or other similar words or expressions, including the negative thereof. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. Because forward-looking statements relate to future events, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company’s control. Thus, the Company’s actual results and financial condition may differ materially from those indicated in such forward-looking statements. Some factors that might cause such a difference include the following: general volatility of the capital markets and the market price of the Company’s common stock, changes in the Company’s business strategy, availability, terms and deployment of capital, the Company’s ability to refinance existing indebtedness at or prior to maturity on favorable terms, or at all, changes in the real estate industry in general, interest rates or the general economy, adverse developments related to the healthcare industry, changes in governmental regulations, the degree and nature of the Company’s competition, the ability to consummate acquisitions under contract, catastrophic or extreme weather and other natural events and the physical effects of climate change, the occurrence of cyber incidents, effects on global and national markets as well as businesses resulting from increased inflation, changes in interest rates, supply chain disruptions, labor conditions, prolonged government shutdown or budgetary reductions or impasses, tariffs and global trade tensions, and/or conflicts in Ukraine and the Middle East, and other factors described in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, and the Company’s other filings with the Securities and Exchange Commission from time to time. Readers are therefore cautioned not to place undue reliance on the forward-looking statements contained herein which speak only as of the date hereof. The Company intends these forward-looking statements to speak only as of the time of this report and the Company undertakes no obligation to update forward-looking statements, whether as a result of new information, future developments, or otherwise, except as may be required by law.
The purpose of this Management's Discussion and Analysis ("MD&A") is to provide an understanding of the Company's consolidated financial condition, results of operations and cash. MD&A is provided as a supplement to, and should be read in conjunction with, the Company's Condensed Consolidated Financial Statements and accompanying notes.
Overview
References such as "we," "us," "our," and "the Company" mean Community Healthcare Trust Incorporated, a Maryland corporation, and its consolidated subsidiaries.
We were organized in the State of Maryland on March 28, 2014. We are a self-administered, self-managed healthcare real estate investment trust, or REIT, that acquires and owns properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers.
Trends and Matters Impacting Operating Results
Management monitors factors and trends that it believes are important to the Company and the REIT industry in order to gauge their potential impact on the operations of the Company. Certain of the factors and trends that management believes may impact the operations of the Company are discussed below.
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Asset Acquisitions
During the first nine months of 2025, the Company acquired two real estate properties totaling approximately 75,000 square feet for an aggregate purchase price of approximately $36.0 million and cash consideration of approximately $36.1 million. The properties are each 100.0% leased with both lease expirations in 2040. These acquisitions were funded with net proceeds from the Company's Revolving Credit Facility and from asset sales. See Note 4 – Real Estate Acquisitions, Dispositions, and Assets Held for Sale to the Condensed Consolidated Financial Statements for more details on these acquisitions.
Acquisition Pipeline
The Company has six properties under definitive purchase agreements, to be acquired after completion and occupancy, for an aggregate expected purchase price of approximately $146.0 million. The Company anticipates closing on one of these properties in the fourth quarter of 2025, and the remaining properties throughout 2026 and 2027; however, the Company cannot provide assurance as to the timing of when, or whether, these transactions will actually close. The Company expects to fund these acquisitions with cash from operations, with net proceeds from equity or debt issuances, with the Company's Revolving Credit Facility, or from asset sales.
Asset Dispositions
During the third quarter of 2025, the Company disposed of a building in Pennsylvania, received net proceeds of approximately $0.7 million, and recognized a loss of approximately $0.2 million on the sale. During the second quarter of 2025, the Company disposed of a building in Ohio classified as an asset held for sale, received net proceeds of approximately $0.6 million, and recognized a gain of approximately $0.2 million on the sale. Also during the second quarter of 2025, the Company amended an expired lease with a tenant which converted it from an operating lease to a sales-type lease and recognized a gain on sale of approximately $1.3 million.
Leased Square Footage
As of September 30, 2025, our real estate portfolio was approximately 90.1% leased, excluding real estate properties held for sale. During the first nine months of 2025, we had expiring or terminated leases related to approximately 612,000 square feet, and we leased or renewed leases relating to approximately 562,000 square feet.
Purchase Option Provisions
Certain of the Company's leases provide the lessee with a purchase option or a right of first refusal to purchase the leased property. The purchase option provisions generally allow the lessee to purchase the leased property at fair value or at an amount greater than the Company's gross investment in the leased property at the time of the purchase.
During the third quarter of 2025, a tenant exercised its purchase option on one property with a gross investment of $1.4 million. The tenant is in the process of working through financing options. The purchase price for the property is $1.8 million, and if the transaction closes, the Company expects to recognize a gain on sale.
At September 30, 2025, the Company had an aggregate gross investment of approximately $38.6 million in 12 real estate properties with purchase options exercisable at September 30, 2025 that had not been exercised.
Credit Loss on Loans and Interest Receivables
During the second quarter of 2025, the Company recorded additional reserves, fully reserving its notes and interest with a geriatric inpatient behavioral hospital tenant, totaling approximately $8.7 million on its notes and approximately $1.7 million of interest receivables. See Note 10 – Other Assets, net to the Condensed Consolidated Financial Statements for more details on these reserves.
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Accelerated Amortization of Restricted Stock and Restricted Stock Units
The Company's former Executive Vice President, Asset Management was terminated effective May 31, 2025. In accordance with his employment agreement, his unvested restricted shares totaling 198,015 shares vested and his unvested restricted stock units totaling 18,275 units vested at target upon termination. As such, upon termination and vesting of these shares, the Company accelerated the unamortized remaining balance of his deferred compensation at May 31, 2025 and recognized $4.6 million of amortization expense. Also, the Company recognized severance and transition expense totaling approximately $1.3 million.
Inflation
Inflation has significantly increased during the past several years and a prolonged period of high and persistent
inflation could cause an increase in our expenses, capital expenditures, and cost of our variable-rate borrowings which could have a material impact on our financial position or results of operations. Many of our lease agreements contain provisions designed to mitigate the adverse impact of inflation, including annual rent increases based on
stated increases or CPI increases. In response to inflationary pressures, the Federal Reserve raised interest rates in
2022 and 2023, however, the Federal Reserve lowered interest rates in 2024 and 2025, and may provide additional rate changes during 2025. Higher interest rates may adversely impact real estate asset values and increase our interest expense on our variable-rate borrowings under our revolving credit facility.
Results of Operations
The Company's results of operations for the three and nine months ended September 30, 2025 compared to the same period in 2024 were impacted by credit loss, rent and interest reserves related to a geriatric inpatient hospital tenant, real estate acquisitions, severance and transition charges related to an employee termination, interest expense, and gains/losses on sales and impairments of real estate properties held for sale, as well as other items discussed in more detail below.
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
Revenues
Rental income increased approximately $1.5 million, or 5.0%, for the three months ended September 30, 2025 compared to the same period in 2024 due mainly to the following:
•Acquisitions of properties during 2024 and 2025 resulted in additional rental income of approximately $1.2 million in 2025 compared to 2024;
•Rental income related to the geriatric behavioral hospital tenant resulted in an increase in revenues of approximately $0.2 million for the three months ended September 30, 2025 as compared to the same period in 2024; offset partially by
•The Company amended an expired lease with a tenant which converted it from an operating lease to a sales-type lease, resulting in a decrease in rental revenue of approximately $0.1 million for the three months ended September 30, 2025 compared to the same period in 2024; and
•The remaining $0.2 million increase resulted from net leasing activities.
Expenses
General and administrative expenses decreased approximately $0.3 million for the three months ended September 30, 2025 compared to the same period in 2024 due mostly to a reduction in compensation-related expenses.
Depreciation and amortization expense remained fairly flat for the three months ended September 30, 2025 compared to the same period in 2024; however, depreciation and amortization expense was impacted by the following:
•Depreciation and amortization on real estate acquired during 2024 and 2025 resulted in an increase of approximately $0.4 million;
•Depreciation on tenant and other capital improvements resulted in an increase of approximately $0.3 million; offset partially by
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
•Fully amortized building improvements resulted in a decrease of approximately $0.1 million;
•Fully amortized real estate lease intangibles which generally have a shorter depreciable life than a building resulted in a decrease of approximately $0.5 million; and
•Depreciation and amortization on real estate sold or classified as held for sale during the three months ended September 30, 2025 resulted in a decrease of approximately $0.1 million.
(Loss) Gains on sale and impairments of real estate assets
(Loss) Gains on sale and impairments of real estate assets reduced net income by approximately $0.9 million for the three months ended September 30, 2025 compared to the same period in 2024 due mainly to the following:
•During the three months ended September 30, 2025, the Company sold a property in Pennsylvania and recognized a loss on sale of approximately $0.2 million; and
•During the three months ended September 30, 2025, the Company entered into a contract to sell a property in Rhode Island, classified the property as an asset held for sale, and recorded an impairment on the property at the lower of its net book value and fair value less estimated cost to sell of approximately $0.7 million.
Interest expense
Interest expense increased approximately $0.8 million, or 13.1%, for the three months ended September 30, 2025 compared to the same period in 2024 due mainly to increases in the weighted average balance and interest rates on the Credit Facility.
Interest and other income, net
Interest and other income, net decreased approximately $0.2 million for the three months ended September 30, 2025 compared to the same period in 2024. During the three months ended September 30, 2024, the Company received earnest money on a terminated contract on a property held for sale.
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
Revenues
Rental income increased approximately $5.1 million, or 5.9%, for the nine months ended September 30, 2025 compared to the same period in 2024 due mainly to the following:
•Income on properties acquired during 2024 and 2025 increased rental income by approximately $3.9 million;
•Rental income related to the geriatric inpatient behavioral hospital tenant resulted in an increase in revenues of approximately $0.6 million for the nine months ended September 30, 2025 as compared to the same period in 2024;
•Properties sold during 2024 and 2025 resulted in a decrease in rental income of approximately $0.3 million; and
•The remaining $0.9 million net increase resulted from various other items, including leasing activities.
Other operating interest decreased $1.3 million for the nine months ended September 30, 2025 compared to the same period in 2024 due mainly to the following:
•A decrease in interest revenue of approximately $1.5 million due to reserving notes with a geriatric behavioral hospital borrower/tenant in six properties; offset partially by
•An increase in interest revenue of approximately $0.1 million from a sales-type lease with a tenant that was previously an operating lease discussed above in Revenues.
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Expenses
Property operating expenses increased approximately $0.3 million, or 1.5%, for the nine months ended September 30, 2025 compared to the same period in 2024, due mainly to:
•Property operating expenses increased approximately $0.3 million due to property acquisitions during 2024 and 2025;
•Property operating expenses increased approximately $0.2 million due to utilities, $0.1 million due to insurance, and $0.1 million due to landscaping costs (including snow plow); offset partially by
•A reduction of approximately $0.2 million due to properties sold during 2024 and 2025; and
•A reduction in repairs and maintenance costs of approximately $0.2 million.
General and administrative expenses increased approximately $6.1 million, or 42.6%, for the nine months ended September 30, 2025 compared to the same period in 2024 due mainly to:
•Effective May 31, 2025, the Company terminated its former Executive Vice President of Asset Management. Upon termination, unvested shares of restricted stock and restricted stock units vested in accordance with the terms of his employment agreement, and the Company accelerated the unamortized remaining balance of deferred compensation and recognized approximately $4.6 million of non-cash amortization expense. Additionally, the Company recognized approximately $1.3 million of severance and transition-related expenses; and
•Compensation expense increased approximately $0.5 million for the nine months ended September 30, 2025 compared to the same period in 2024, partially related to a $0.3 million increase to non-cash amortization of stock-based compensation; offset partially by
•Professional fees decreased by $0.3 million for the nine months ended September 30, 2025 compared to the same period in 2024.
Depreciation and amortization expense increased approximately $0.7 million, or 2.3%, for the nine months ended September 30, 2025 compared to the same period in 2024. This increase was comprised mainly of the following:
•Acquisitions of real estate in 2024 and 2025 resulted in an increase of approximately $1.5 million;
•Tenant improvements and other capital expenditures resulted in an increase of approximately $1.4 million; partially offset by
•Properties that were sold or classified as held for sale during 2024 and 2025 resulted in a decrease of approximately $0.3 million;
•Fully amortized building improvements resulted in a decrease of approximately $0.4 million; and
•Fully amortized real estate lease intangibles which generally have a shorter depreciable life than a building resulted in a decrease of approximately $1.5 million.
(Loss) Gains on sale and impairments of real estate assets
(Loss) Gains on sale and impairments of real estate assets increased net loss by approximately $0.1 million for the nine months ended September 30, 2025 compared to the same period in 2024. This decrease was due mainly to the following:
•During the nine months ended September 30, 2025, the Company amended an expired lease with a tenant which converted it from an operating lease to a sales-type lease. The Company recognized a gain on sale of the real estate totaling approximately $1.3 million;
•During the nine months ended September 30, 2025, the Company sold a property in Ohio and recognized a gain on the sale of approximately $0.2 million;
•During the nine months ended September 30, 2024, the Company sold a property in Texas and, during the second quarter of 2024, recognized an impairment at the lower of its net book value and fair value less estimated cost to sell of approximately $0.1 million; partially offset by
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
•During the nine months ended September 30, 2025, the Company entered into a contract to sell a property in Rhode Island, classified the property as an asset held for sale, and recorded an impairment on the property at the lower of its net book value and fair value less estimated cost to sell of approximately $0.7 million;
•During the nine months ended September 30, 2025, the Company sold a property in Pennsylvania and recognized a loss on the sale of approximately $0.2 million;
•During the nine months ended September 30, 2025, the Company entered into a contract to sell a property in Florida that was previously classified as an asset held for sale and recorded an impairment on the property at the lower of its net book value and fair value less estimated cost to sell of approximately $0.9 million.
Credit loss reserve
A credit loss reserve totaling $8.7 million and $11.0 million, respectively, was recorded during the nine months ended September 30, 2025 and 2024 related to notes receivable with a geriatric inpatient behavioral hospital tenant, fully reserving these notes in 2025. See Note 10 – Other Assets, net for more details on these notes and the credit loss reserve.
Interest expense
Interest expense increased approximately $2.7 million, or 15.7%, for the nine months ended September 30, 2025 compared to the same period in 2024 due mainly to increases in the weighted average balance and interest rates on the Credit Facility, including the maturity of two interest rate swaps in 2024, which were replaced with two forward-starting interest swaps at higher interest rates.
Interest and other income, net
Interest and other income, net decreased approximately $0.5 million for the nine months ended September 30, 2025 compared to the same period in 2024. During the nine months ended September 30, 2024, the Company recognized into income an undistributed allowance for tenant improvements totaling $0.3 million upon expiration of the lease and received earnest money on a terminated contract on a property held for sale of approximately $0.2 million.
Non-GAAP Financial Measures and Key Performance Indicators
Management considers certain non-GAAP financial measures and key performance indicators to be useful supplemental measures of the Company's operating performance. A non-GAAP financial measure is generally defined as one that purports to measure financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable measure determined in accordance with GAAP. The Company reports non-GAAP financial measures because these measures are observed by management to also be among the most predominant measures used by the REIT industry and by industry analysts to evaluate REITs. For these reasons, management deems it appropriate to disclose and discuss these non-GAAP financial measures. Set forth below are descriptions of the non-GAAP financial measures management considers relevant to the Company's business and useful to investors, as well as reconciliations of those measures to the most directly comparable GAAP financial measure.
The non-GAAP financial measures and key performance indicators presented herein are not necessarily identical to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. These measures should not be considered as alternatives to net income, as indicators of the Company's financial performance, or as alternatives to cash flow from operating activities as measures of the Company's liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of the Company's needs. Management believes that in order to facilitate a clear understanding of the Company's historical consolidated operating results, these measures should be examined in conjunction with net income and cash flows from operations as presented in the Condensed Consolidated Financial Statements and other financial data included elsewhere in this Quarterly Report on Form 10-Q.
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO")
FFO is an operating performance measure adopted by the National Association of Real Estate Investment Trusts, Inc. (“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.
Management believes that net income, as defined by GAAP, is the most appropriate earnings measurement. However, management believes FFO, AFFO, FFO per share and AFFO per share provide an understanding of the operating performance of the Company’s properties without giving effect to certain significant non-cash items, primarily depreciation and amortization expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. The Company believes that by excluding the effect of depreciation, amortization, impairments and gains or losses from sales of real estate, losses and impairment of incidental assets, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO, AFFO, FFO per share and AFFO per share can facilitate comparisons of operating performance between periods. The table below reconciles net income (loss) to FFO and AFFO for the three and nine months ended September 30, 2025 compared to the same periods in 2024.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (In thousands, except per share amounts) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Net income (loss) | $ | 1,640 | $ | 1,749 | $ | (9,326) | $ | (5,013) | |||||||||||||||
Real estate depreciation and amortization | 11,019 | 11,077 | 32,957 | 32,350 | |||||||||||||||||||
| Loss/Gains on sale and impairments of real estate assets | 888 | (5) | 248 | 135 | |||||||||||||||||||
Credit loss reserve (1) | — | — | 8,672 | 11,000 | |||||||||||||||||||
| FFO | 13,547 | 12,821 | 32,551 | 38,472 | |||||||||||||||||||
Straight-line rent | (913) | (679) | (2,736) | (1,230) | |||||||||||||||||||
Stock-based compensation | 2,465 | 2,497 | 7,706 | 7,390 | |||||||||||||||||||
Accelerated amortization of deferred compensation (2) | — | — | 4,591 | — | |||||||||||||||||||
Severance and transition related expenses (2) | — | — | 1,311 | — | |||||||||||||||||||
| AFFO | $ | 15,099 | $ | 14,639 | $ | 43,423 | $ | 44,632 | |||||||||||||||
FFO per diluted common share (1) (2) (3) | $ | 0.50 | $ | 0.48 | $ | 1.20 | $ | 1.44 | |||||||||||||||
AFFO per diluted common share (3) | $ | 0.56 | $ | 0.55 | $ | 1.60 | $ | 1.67 | |||||||||||||||
Weighted average common shares outstanding - diluted (4) | 27,195 | 26,853 | 27,070 | 26,781 | |||||||||||||||||||
___________________
(1) During the nine months ended September 30, 2025 and 2024, the Company recorded a credit loss reserve on its notes related to a geriatric behavioral hospital tenant totaling approximately $8.7 million and $11.0 million, respectively. Because these notes are incidental to the Company's main business, the Company added back these reserves in its calculations of FFO and AFFO.
(2) During the nine months ended September 30, 2025, the Company recorded severance and transition-related charges totaling approximately $5.9 million, including non-cash accelerated amortization of stock-based compensation of approximately $4.6 million, which in total reduced FFO per diluted common share by approximately $0.22 for the nine months ended September 30, 2025.
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
(3) During the nine months ended September 30, 2025, the Company reversed interest related to a geriatric behavioral hospital tenant totaling approximately $1.7 million, resulting in a reduction of FFO and AFFO per diluted share of approximately $0.06. During the nine months ended September 30, 2024, the Company reversed rent and interest related to this geriatric behavioral hospital 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. AFFO, which adds back straight-line rent, was reduced by approximately $0.09 per diluted share for the nine months ending September 30, 2024.
(4) 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. Restricted stock awards and time-based RSUs are included in the calculation of weighted average common shares outstanding to the extent that they are dilutive. Performance-based RSUs are included in the calculation of weighted average common shares outstanding to the extent that they are in-the-money as of the end of the reporting period and are dilutive.
Net Operating Income ("NOI")
NOI is a key performance indicator. NOI is defined as net income or loss, computed in accordance with GAAP, generated from our total portfolio of properties and other investments before general and administrative expenses, depreciation and amortization expense, gains or loss on the sale of real estate properties or other investments, interest expense, and income tax expense. We believe that NOI provides an accurate measure of operating performance of our operating assets because NOI excludes certain items that are not associated with management of the properties. The Company's use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing NOI.
The table below reconciles net income (loss) to NOI for the three and nine months ended September 30, 2025 compared to the same periods in 2024.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||
Net income (loss) (1) | $ | 1,640 | $ | 1,749 | $ | (9,326) | $ | (5,013) | ||||||||||||||||||
General and administrative (2) | 4,658 | 4,935 | 14,415 | 14,249 | ||||||||||||||||||||||
Severance and transition-related compensation (2) | — | — | 5,902 | — | ||||||||||||||||||||||
| Depreciation and amortization | 10,902 | 10,927 | 32,724 | 31,981 | ||||||||||||||||||||||
| Loss/Gains on sale and impairments of real estate assets | 888 | (5) | 248 | 135 | ||||||||||||||||||||||
Credit loss reserve (3) | — | — | 8,672 | 11,000 | ||||||||||||||||||||||
| Interest expense | 7,075 | 6,253 | 20,019 | 17,301 | ||||||||||||||||||||||
| Interest and other income, net | (7) | (206) | (15) | (514) | ||||||||||||||||||||||
| NOI | $ | 25,156 | $ | 23,653 | $ | 72,639 | $ | 69,139 | ||||||||||||||||||
| ____________ | ||||||||||||||||||||||||||
(1) During the nine months ended September 30, 2025, the Company reversed interest totaling approximately $1.7 million relating to a geriatric behavioral hospital tenant. During the nine months ended September 30, 2024, the Company reversed rent and interest totaling approximately $3.2 million including straight-line rent of approximately $0.9 million for this tenant. | ||||||||||||||||||||||||||
(2) Severance and transition-related compensation, which is included in general and administrative expenses on the income statement, is shown separately in the reconciliation above for the nine months ended September 30, 2025. | ||||||||||||||||||||||||||
(3) During the nine months ended September 30, 2025 and 2024, the Company recorded a credit loss reserve on its notes related to a geriatric behavioral hospital tenant totaling approximately $8.7 million and $11.0 million, respectively. | ||||||||||||||||||||||||||
EBITDAre and Adjusted EBITDAre
The Company uses the NAREIT definition of EBITDAre which is net income or loss plus interest expense, income tax expense, and depreciation and amortization, plus losses or minus gains on the disposition of depreciable property, including losses/gains on change of control, plus impairment write-downs of depreciable property and of investments in unconsolidated affiliates caused by a decrease in value of depreciable property in the affiliate, plus or minus adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates and consolidated affiliates with non-controlling interest. The Company also presents Adjusted EBITDAre which is EBITDAre before non-cash stock-based compensation expense.
We consider EBITDAre and Adjusted EBITDAre important measures because they provide additional information to allow management, investors, and our current and potential creditors to evaluate and compare our core operating results and our ability to service debt.
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
The table below reconciles net income (loss) to EBITDAre and Adjusted EBITDAre for the three and nine months ended September 30, 2025 compared to the same periods in 2024.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||
| Net income (loss) | $ | 1,640 | $ | 1,749 | $ | (9,326) | $ | (5,013) | ||||||||||||||||||
| Interest expense | 7,075 | 6,253 | 20,019 | 17,301 | ||||||||||||||||||||||
| Depreciation and amortization | 10,902 | 10,927 | 32,724 | 31,981 | ||||||||||||||||||||||
| Loss/Gains on sale and impairments of real estate assets | 888 | (5) | 248 | 135 | ||||||||||||||||||||||
EBITDAre (1) (2) | $ | 20,505 | $ | 18,924 | $ | 43,665 | $ | 44,404 | ||||||||||||||||||
| Non-cash stock-based compensation expense | 2,465 | 2,497 | 7,706 | 7,390 | ||||||||||||||||||||||
| Accelerated amortization of deferred compensation | — | — | 4,591 | — | ||||||||||||||||||||||
| Credit loss reserve | — | — | 8,672 | 11,000 | ||||||||||||||||||||||
Adjusted EBITDAre (1) (2) | $ | 22,970 | $ | 21,421 | $ | 64,634 | $ | 62,794 | ||||||||||||||||||
| _____________ | ||||||||||||||||||||||||||
(1) During the nine months ended September 30, 2025, the Company reversed interest totaling approximately $1.7 million for a geriatric behavioral hospital tenant. During the nine months ended September 30, 2024, the Company reversed rent and interest totaling approximately $3.2 million, including straight-line rent of approximately $0.9 million for this tenant. | ||||||||||||||||||||||||||
(2) During the nine months ended September 30, 2025, the Company recognized severance and transition-related charges totaling approximately $1.3 million. | ||||||||||||||||||||||||||
Liquidity and Capital Resources
The Company monitors its liquidity and capital resources and relies on several key indicators in its assessment of capital markets for financing acquisitions and other operating activities as needed, including the following:
•Leverage ratios and financial covenants included in our Credit Facility;
•Dividend payout percentage; and
•Interest rates, underlying treasury rates, debt market spreads and equity markets.
The Company uses these indicators and others to compare its operations to its peers and to help identify areas in which the Company may need to focus its attention.
Sources and Uses of Cash
The Company derives most of its revenues from its real estate properties, collecting rental income and operating expense reimbursements based on contractual arrangements with its tenants. These sources of revenue represent our primary source of liquidity to fund our dividends, general and administrative expenses, property operating expenses, interest expense on our Credit Facility and other expenses incurred related to managing our existing portfolio and investing in additional properties. To the extent additional resources are needed, the Company will fund its investment activity generally with net proceeds from equity or debt issuances, including our at-the-market equity offering program, either in the public or private markets, from our Credit Facility, or from asset sales.
The Company expects to meet its liquidity needs through cash on hand, cash flows from operations and cash flows from sources discussed above. The Company believes that its liquidity and sources of capital are adequate to satisfy its cash requirements. The Company cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet its liquidity needs.
Credit Facility
At September 30, 2025, the Company had $256.0 million outstanding on its Revolving Credit Facility with a maturity on October 16, 2029. In addition, the Company has $275.0 million outstanding in Term Loans with expirations beginning in 2028 through 2030. The Company has entered into interest rate swaps to fix the interest
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
rates on $275.0 million of the Term Loans, with maturities matching the maturity dates of the notes, and $75.0 million of the Revolving Credit Facility, which will mature on March 29, 2026. See Note 5 – Debt, net to the Condensed Consolidated Financial Statements which provide more details on the Company's Credit Facility. At September 30, 2025, the Company had borrowing capacity remaining under the Revolving Credit Facility of approximately $144.0 million.
The Company’s ability to borrow under the Credit Facility is subject to its ongoing compliance with a number of customary affirmative and negative covenants, including limitations with respect to liens, indebtedness, distributions, mergers, consolidations, investments, restricted payments and asset sales, as well as financial maintenance covenants. The Company was in compliance with its financial covenants under its Credit Facility as of September 30, 2025.
Ground Leases
At September 30, 2025, the Company was obligated, as the lessee, under four non-prepaid ground leases accounted for as operating leases with expiration dates, including renewal options, through 2076, and two non-prepaid ground leases accounted for as financing leases with expiration dates through 2109, including renewal options. Any rental increases related to the Company's ground leases are generally either stated or based on the Consumer Price Index. At September 30, 2025, the Company's aggregate obligation under these ground leases was approximately $8.6 million. See Note 3 – Real Estate Leases to the Condensed Consolidated Financial Statements.
Acquisition Pipeline
The Company has six properties under definitive purchase agreements, to be acquired after completion and occupancy, for an aggregate expected purchase price of approximately $146.0 million. The Company anticipates closing on one of these properties in the fourth quarter of 2025, and the remaining properties throughout 2026 and 2027; however, the Company cannot provide assurance as to the timing of when, or whether, these transactions will actually close. The Company expects to fund these acquisitions with cash from operations, with net proceeds from equity or debt issuances, with the Company's Revolving Credit Facility, or from asset sales.
Tenant Improvements and Capital Improvements
Subject to Company approval, we may fund or reimburse tenants for tenant improvements, which are allowed for in certain leases, of up to approximately $29.9 million as of September 30, 2025. At September 30, 2025, $7.7 million of this commitment relates primarily to three ongoing redevelopment projects on buildings with tenants backed by long-term leases.
The Company has also entered into contracts regarding certain capital expenditures with remaining commitments totaling approximately $3.0 million as of September 30, 2025. At September 30, 2025, $1.5 million of this commitment relates primarily to three redevelopment projects of buildings into different healthcare uses backed by long-term leases.
The Company expects to fund these expenditures with cash from operations, with net proceeds from equity or debt issuances, from our Credit Facility, or from asset sales.
Notes Receivable
The Company has a note with a tenant with unfunded commitments remaining totaling $5.8 million at September 30, 2025. Any future requests for borrowings under the revolving credit facility from this tenant will require review and approval by management. See Note 10 – Other Assets, net to the Condensed Consolidated Financial Statements.
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Universal Shelf Registration Statement
On February 19, 2025, the Company filed a new non-automatic shelf registration statement on Form S-3 with the Securities and Exchange Commission which became effective on March 14, 2025. The registration statement is for $500.0 million of securities and is effective for three years. Under this registration statement, the Company has the capacity to offer and sell from time to time various types of securities, including common stock, preferred stock, depository shares, rights, debt securities, warrants and units.
ATM Program
Under the ATM Program, the Company may issue and sell shares of its common stock, having an aggregate gross sales price of up to $300.0 million, exclusive of shares of common stock sold under its prior agreements with our Agents. The shares of common stock may be sold from time to time through or to one or more of the Agents, as may be determined by the Company in its sole discretion, subject to the terms and conditions of the third amended and restated sales agency agreement and applicable law. In addition, the Company may enter into one or more forward sales agreements under the ATM Program. As of September 30, 2025, the Company had $300.0 million remaining that may be issued under the ATM Program.
Operating Activities
Cash flows provided by operating activities for the nine months ended September 30, 2025 and 2024 were approximately $40.9 million and $43.2 million, respectively. Cash flows provided by operating activities were generally provided by contractual rents and interest on our notes receivable, net of property operating expenses not reimbursed by the tenants, general and administrative expenses, and interest expense paid on our Credit Facility.
Investing Activities
Cash flows used in investing activities for the nine months ended September 30, 2025 and 2024 were approximately $43.7 million and $83.2 million, respectively. During the nine months ended September 30, 2025, the Company invested in two properties for cash consideration of approximately $36.1 million, sold two properties for cash consideration totaling approximately $1.3 million, received payments on its notes totaling $5.1 million and funded capital expenditures and tenant improvements on its existing portfolio totaling approximately $14.0 million.
During the nine months ended September 30, 2024, the Company invested in four properties for an aggregate cash consideration of approximately $64.2 million, sold a property for cash consideration of approximately $1.0 million, funded amounts under its notes totaling approximately $2.9 million, received payments on its notes receivable totaling $2.4 million and funded capital expenditures and tenant improvements on its existing portfolio totaling approximately $19.5 million.
Financing Activities
Cash flows provided by financing activities for the nine months ended September 30, 2025 were approximately $1.8 million and cash flows provided by financing activities for the nine months ended September 30, 2024 were $38.2 million. During the nine months ended September 30, 2025, the Company borrowed $44.0 million under its Revolving Credit Facility and paid dividends totaling approximately $40.1 million. Also, upon the vesting of stock-based awards for certain employees, the Company withheld shares and paid taxes totaling approximately $1.8 million on behalf of employees.
During the nine months ended September 30, 2024, the Company (i) borrowed a net amount of $75.0 million under its Revolving Credit Facility, (ii) repaid a mortgage note totaling $4.8 million, (iii) completed equity offerings under its at-the-market program, resulting in net proceeds, net of underwriters' discount and offering costs, of approximately $7.3 million, (iv) upon the vesting of stock-based awards for certain employees, withheld shares and paid taxes totaling approximately $0.8 million on behalf of employees, and (v) paid dividends totaling approximately $38.6 million.
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Security Deposits
As of September 30, 2025, the Company held approximately $2.6 million in security deposits for the benefit of the Company in the event the obligated tenant fails to perform under the terms of its respective lease. Generally, the Company may, at its discretion and upon notification to the tenant, draw upon the security deposits if there are any defaults under the leases.
Dividends
The Company is required to pay dividends to its stockholders at least equal to 90% of its taxable income in order to maintain its qualification as a REIT.
On October 23, 2025, the Company’s Board of Directors declared a quarterly common stock dividend in the amount of $0.4750 per share. The dividend is payable on November 21, 2025 to stockholders of record on November 7, 2025. This rate equates to an annualized dividend of $1.90 per share.
The ability of the Company to pay dividends is dependent upon its ability to generate cash flows and to make accretive new investments.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. We may use certain derivative financial instruments to manage, or hedge, interest rate risks related to our borrowings. We will not use derivatives for trading or speculative purposes and only enter into contracts with major financial institutions based upon their credit rating and other factors. An interest rate swap is a contractual agreement entered into by two counterparties under which each agrees to make periodic payments to the other for an agreed period of time based on a notional amount of principal. Under the most common form of interest rate swap, known from our perspective as a floating-to-fixed interest rate swap, a series of floating, or variable, rate payments on a notional amount of principal is exchanged for a series of fixed interest rate payments on such notional amount. During the nine months ended September 30, 2025, there were no material changes in the quantitative and qualitative disclosures about market risks presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer has concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective.
Changes In Internal Control Over Financial Reporting
There were no changes in our system of internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company may, from time to time, be involved in litigation arising in the ordinary course of business or which may be expected to be covered by insurance. The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in our Quarterly Reports on Form 10-Q for the current year, an investor should consider the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2024 and other reports that may be filed by the Company. There were no material changes in the risk factors presented in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 other than as set forth below:
Changes to U.S. tariff and import/export regulations may have an adverse effect on our business, financial condition and results of operations.
There have been significant changes, and continue to be ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, treaties and tariffs, creating significant uncertainty about the future relationship between the United States and other countries with respect to trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the United States. Any of these factors could depress economic activity and have a material adverse effect on our business, financial condition, results of operations, and the market price of our common stock.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three months ended September 30, 2025, the Company canceled shares of the Company's common stock to satisfy employee tax withholding obligations upon the vesting of stock-based awards, as follows:
| Period | Total Number of Shares Purchased | Average Price Paid per share | Total Number of Shares purchased as part of publicly announced plans or programs | Maximum Number of Shares that may yet be purchased under the plans or programs | ||||||||||
| July 1 - July 30 | — | $ | — | — | — | |||||||||
| August 1 - August 30 | 3,873 | $ | 14.81 | — | — | |||||||||
| September 1 - September 30 | — | $ | — | — | — | |||||||||
| Total | 3,873 | |||||||||||||
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
Rule 10b5-1
During the quarter ended September 30, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted
ITEM 6. EXHIBITS
The exhibits required by Item 601 of Regulation S-K which are filed with this report are listed in the Exhibit Index and are hereby incorporated in by reference.
EXHIBIT INDEX
Exhibit No. | Description | ||||||||||
| 3.1 | |||||||||||
| 3.2 | |||||||||||
| 10.1 * | |||||||||||
| 10.2 * | |||||||||||
| 10.3 * | |||||||||||
| 10.4 * | |||||||||||
| 31.1 * | |||||||||||
| 31.2 * | |||||||||||
| 32.1 ** | |||||||||||
| 101.INS | Inline XBRL Instance Document | ||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | ||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document | ||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | ||||||||||
___________________
(1)Filed as Exhibit 3.1 to Amendment No. 2 to the Registration Statement on Form S-11 of the Company filed with the Securities and Exchange Commission on May 6, 2015 (Registration No. 333-203210) and incorporated herein by reference.
(2)Filed as Exhibit 3.2 to the Quarterly Report on Form 10-Q of the Company filed with the Securities and Exchange Commission on November 3, 2020 (File No. 001-37401) and incorporated herein by reference.
* Filed herewith.
** Furnished herewith.
† Denotes executive compensation plan or arrangement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: October 28, 2025
| COMMUNITY HEALTHCARE TRUST INCORPORATED | ||||||||
| By: | /s/ David H. Dupuy | |||||||
| David H. Dupuy | ||||||||
| Chief Executive Officer and President | ||||||||
| By: | /s/ William G. Monroe IV | |||||||
| William G. Monroe IV | ||||||||
| Executive Vice President and Chief Financial Officer | ||||||||
Exhibit 10.1
COMMUNITY HEALTHCARE TRUST INCORPORATED
FOURTH AMENDED AND RESTATED
ALIGNMENT OF INTEREST PROGRAM
Amendment No. 1 Effective July 24, 2025
This Amendment No. 1 (the “Amendment”) to the Fourth Amended and Restated Alignment of Interest Program (the “Program”) of Community Healthcare Trust Incorporated (the “Company”) shall become effective as of the date first written above (the “Effective Date”). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Program.
WHEREAS, each of the board of directors of the Company (the “Board”) and compensation committee of the Board (the “Compensation Committee”) has adopted the Program to provide incentives and awards to certain officers, employees, and directors of the Company;
WHEREAS, the Compensation Committee may amend the Program in accordance with Section 6 of the Program; and
WHEREAS, the Board and the Compensation Committee have determined that it is in the best interests of the Company and its stockholders to amend Section 5 of the Program.
NOW, THEREFORE, BE IT RESOLVED, that the Program is hereby amended as follows, effective as of the Effective Date.
1. Section 5 of the Program shall be deleted in its entirety and replaced with the following, effective for shares issued under the Program on or after the Effective Date:
5. Termination of Employment. In the event of termination of a Participant’s employment, the disposition of any unvested Acquisition Shares and Award Shares will be determined in accordance with such Participant’s Employment Agreement and Award Agreement, if applicable; provided, however, that Award Shares will be forfeited in connection with a Participant’s retirement upon attainment of Retirement Eligibility (as defined in Participant’s Employment Agreement) unless the Participant has provided at least one year of continuous employment with the Company from the date of effectiveness of the applicable Award Agreement and delivered to the Company written notice of the Participant’s intention to retire at least one year prior to the date of retirement. If a Participant is not employed pursuant to an Employment Agreement and voluntarily terminates his or her employment, or is terminated for Cause (as such term is defined in the Plan), such Participant will forfeit any unvested Acquisition Shares and Award Shares. If a Participant is not employed pursuant to an Employment Agreement and such employment is terminated by the Company without Cause, or by reason of Participant’s death, Disability or retirement (upon attainment of eligibility to retire in accordance with any applicable Company policy then in effect) all unvested Acquisition Shares and Award Shares will continue to vest pursuant to the Restricted Stock Agreement such stock is subject to. The provisions of Section 23 of the Plan will govern in the event of a Change of Control and are not intended to be altered by this Section 5. Notwithstanding the foregoing, for any Participant who is subject to Code Section 162(m) compensation restrictions, no unvested Awards which are intended to be performance-based compensation under Code Section 162(m) shall vest unless the performance goals have been satisfied on a pro rata basis by the termination date.
2. The Program, as modified by the terms of this Amendment, shall continue in full force and effect from and after the date of the adoption of this Amendment.
Exhibit 10.2
TIME-BASED RESTRICTED STOCK UNIT AGREEMENT
This Restricted Stock Unit Agreement (this “Agreement”), dated as of _____, 20__ (the “Grant Date”), is made by and between Community Healthcare Trust Incorporated, a Maryland corporation (the “Company”), and __________ (the “Participant”).
WHEREAS, the Company maintains the 2024 Incentive Award Plan (as amended from time to time, the “Plan”);
WHEREAS, the Company wishes to carry out the Plan (the terms of which are hereby incorporated by reference and made a part of this Agreement);
WHEREAS, Section 10 of the Plan provides for the issuance of Restricted Stock Units (“RSUs”); and
WHEREAS, the Committee has determined that it would be to the advantage and in the best interest of the Company to issue RSUs to the Participant as an inducement to enter into or remain in the service of the Company or any Subsidiary, and as an additional incentive during such service, and has advised the Company thereof.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:
1.Issuance of Award of RSUs. Pursuant to the Plan, in consideration of the Participant’s agreement to provide services to the Company or any Subsidiary (as applicable), the Company hereby issues to the Participant an award of ____ RSUs. Each RSU that vests shall represent the right to receive payment, in accordance with this Agreement, of one share of the Company’s common stock, par value $0.01 per share (the “Common Stock”). Unless and until an RSU vests, the Participant will have no right to payment in respect of any such RSU. Prior to actual payment in respect of any vested RSU, such RSU will represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.
2.Dividend Equivalents. Each RSU granted hereunder is hereby granted in tandem with a corresponding Dividend Equivalent, which Dividend Equivalent shall remain outstanding from the Grant Date until the earlier of the payment or forfeiture of the RSU to which it corresponds. Pursuant to each outstanding Dividend Equivalent, the Participant shall be entitled to receive payments equal to dividends paid, if any, on the Shares underlying the RSU to which such Dividend Equivalent relates, payable in the same form and amounts as dividends paid to each holder of a Share. Each such payment shall be made no later than thirty (30) days following the applicable dividend payment date. Dividend Equivalents shall not entitle the Participant to any payments relating to dividends for which the record date occurs after the earlier to occur of the payment or forfeiture of the RSU underlying such Dividend Equivalent. In addition, notwithstanding the foregoing, in the event of a Termination of Service (other than a Qualifying Termination), the Participant shall not be entitled to any Dividend Equivalent payments with respect to dividends declared but not paid prior to the date of such termination on Shares underlying RSUs which are unvested as of the date of such termination (after taking into account any accelerated vesting that occurs in connection with such termination). Dividend Equivalents and any amounts that may become distributable in respect thereof shall be treated separately from the RSUs and the rights arising in connection therewith for purposes of the designation of time and form of payments required by Section 409A of the Code.
3.Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Plan.
(a)“Cause” shall have the same meaning as the same or similar terms in any written employment agreement between the Participant and CHCT or Subsidiary. In the absence of such a written agreement, “Cause” shall mean involuntary termination of employment due to: (i) conviction of a crime of moral turpitude that adversely affects the reasonable business interests of CHCT, (ii) commission of an act of fraud, embezzlement, or material dishonesty against CHCT or any Subsidiary, or (iii) intentional neglect of the responsibilities of employment, and such neglect remains uncorrected for more than 30 days following written notice from CHCT detailing the acts of neglect.
(b)“Dividend Equivalent” means a right to receive the equivalent value (in cash or Shares) of dividends paid on Shares, awarded under Section 2 hereof.
(c)“Good Reason” shall have the same meaning as the same or similar terms (such as Constructive Termination) in any written employment agreement between the Participant and CHCT or Subsidiary. In the absence of such a written agreement, “Good Reason” shall mean voluntary termination of employment by the Participant because the terms of employment are modified so that the position is not substantially equivalent to the position held immediately prior to the time of the Change in Control. A position is “substantially equivalent” if it is the same or better than the position to which it is being compared. A position is not substantially equivalent unless (i) the cash compensation offered is the same or higher than that earned immediately prior to the Change in Control, (ii) deferred compensation, incentive and equity compensation, and health and welfare benefits are, in the aggregate, similar to those provided immediately prior to the Change in Control, (iii) the duties are similar to the duties performed prior to the Change in Control; and (iv) the position does not require the Participant to relocate or to commute more than 35 miles each way to the place of employment. The Participant’s right to voluntarily terminate employment for “Good Reason” expires 180 days after beginning employment in the position that is not “substantially equivalent” to the Participant’s prior position.
(d)“Qualifying Termination” means a Termination of Service by reason of (i) the Participant’s death, (ii) a termination by the Company or any Subsidiary due to the Participant’s Disability, (iii) a termination by the Company or any Subsidiary other than for Cause, (iv) a termination by the Participant for Good Reason, or (v) a termination by the Participant following attainment of both (a) his or her Retirement Eligibility and (b) at least one year of continuous employment with the Company from the Grant Date, provided the Participant also delivered to the Company written notice of the Participant’s intention to retire at least one year prior to the date of retirement.
(e)“Retirement Eligibility” shall have the meaning set forth in Participant’s written employment agreement with the Company.
(f)“Service Provider” means an Employee of the Company or any of its Subsidiaries.
(g)“Shares” means shares of Common Stock.
(h)“Termination of Service” means, unless otherwise determined by the Committee, the time when the employee-employer relationship between a Participant and the Company and its affiliates is terminated for any reason, including, without limitation, a termination by resignation, discharge, death, disability or retirement.
4.RSUs and Dividend Equivalents Subject to the Plan; Ownership and Transfer Restrictions.
(a)The RSUs and Dividend Equivalents are subject to the terms, definitions and provisions of the Plan, which is incorporated herein by reference, including, without limitation, the restrictions on transfer set forth in Section 10.2 of the Plan.
(b)Without limiting the foregoing, the RSUs and Common Stock issuable with respect thereto shall be subject to the restrictions on ownership and transfer set forth in the charter of the Company, as amended and supplemented from time to time.
5.Vesting Period.
(a)Time Vesting. Subject to Sections 5(b) and 6 below, the RSUs will vest and become nonforfeitable in accordance with and subject to the time vesting schedule set forth on Exhibit A attached hereto, subject to the Participant’s continued status as a Service Provider through each applicable vesting date.
(b)Change in Control. Notwithstanding the foregoing, in the event that a Change in Control occurs and the Participant has not incurred a Termination of Service prior to such Change in Control, Section 23 of the Plan shall govern the vesting of the RSUs awarded under this Agreement.
6.Effect of Termination of Service.
(a)Termination of Service. Subject to Section 6(b) below, in the event of the Participant’s Termination of Service for any reason, any and all RSUs that have not vested as of the date of such Termination of Service (after taking into account any accelerated vesting that occurs in connection with such termination) will automatically and without further action be cancelled and forfeited without payment of any consideration therefor, and the Participant shall have no further right to or interest in such RSUs. No RSUs which have not vested as of the date of the Participant’s Termination of Service shall thereafter become vested.
(b)Qualifying Termination. In the event that the Participant incurs a Qualifying Termination, the RSUs will vest in full and become nonforfeitable upon such Qualifying Termination.
7.Payment. Payments in respect of any RSUs that vest in accordance herewith shall be made to the Participant (or in the event of the Participant’s death, to his or her estate) in whole Shares, and any fractional Share will be rounded as determined by the Company; provided, however, that in no event shall the aggregate number of RSUs that vest or become payable hereunder exceed the total number of RSUs set forth in Section 1 of this Agreement (as adjusted, if applicable, by Section 8 of this Agreement). The Company shall make such payments as soon as practicable after the applicable vesting date, but in any event within twenty (20) days after such vesting date, provided that, in the event of vesting upon a Change in Control under Section 5(b) above, such payment shall be made or deemed made immediately preceding and effective upon the occurrence of such Change in Control.
8.Restrictions on New RSUs or Shares. In the event that the RSUs or the Shares underlying the RSUs are changed into or exchanged for a different number or kind of securities of the Company or of another corporation or other entity by reason of merger, consolidation, recapitalization, reclassification, stock split, stock dividend or combination of shares, such new or additional or different securities which are issued upon conversion of or in exchange or substitution for RSUs or the Shares underlying the RSUs which are then subject to vesting shall be subject to the same vesting conditions as such RSUs or Shares, as applicable, unless the Committee provides for the vesting of the RSUs or the Shares underlying the RSUs, as applicable.
9.Conditions to Issuance of Shares. Shares issued as payment for the RSUs will be issued out of the Company’s authorized but unissued Shares. Upon issuance, such Shares shall be fully paid and nonassessable. The Shares issued pursuant to this Agreement shall be held in book-entry form and no certificates shall be issued therefor. In addition to the other requirements set forth herein, the Shares issued as payment for the RSUs shall be issued only upon the fulfillment of all of the following conditions:
(a)The admission of such Shares to listing on all stock exchanges on which such class of stock is then listed;
(b)The completion of any registration or other qualification of such shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Committee shall, in its absolute discretion, deem necessary or advisable;
(c)The obtaining of any approval or other clearance from any state or federal governmental agency which the Committee shall, in its absolute discretion, determine to be necessary or advisable;
(d)The lapse of such reasonable period of time as the Committee may from time to time establish for reasons of administrative convenience; and
(e)The receipt by the Company of full payment for any applicable withholding or other employment tax or required payments with respect to any such Shares to the Company with respect to the issuance or vesting of such Shares.
In the event that the Company delays a distribution or payment in settlement of RSUs because it reasonably determines that the issuance of Shares in settlement of RSUs will violate federal securities laws or other applicable law, such distribution or payment shall be made at the earliest date at which the Company reasonably determines that the making of such distribution or payment will not cause such violation, as required by Treasury Regulation Section 1.409A-2(b)(7)(ii). The Company shall not delay any payment if such delay will result in a violation of Section 409A of the Code.
10.Rights as Stockholder. Neither the Participant nor any person claiming under or through the Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until such Shares will have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Participant or any person claiming under or through the Participant.
11.Tax Withholding. The Company or any Subsidiary shall have the authority and the right to deduct or withhold, or require the Participant to remit to such entity, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to the issuance, vesting or payment of the RSUs and the Dividend Equivalents. In satisfaction of the foregoing requirement or in satisfaction of any additional tax withholding, the Company or any Subsidiary may, or the Committee may in its discretion allow the Participant to elect to have the Company or any Subsidiary (as applicable), withhold Shares otherwise issuable under such award (or allow the return of Shares) having a fair market value equal to the sums required to be withheld. Notwithstanding any other provision of the Plan or this Agreement, the number of Shares which may be withheld with respect to the issuance, vesting or payment of the RSUs and the Dividend Equivalents in order to satisfy the Participant’s income and payroll tax liabilities with respect thereto shall be limited to the number of shares which have a fair market value on the date of withholding no greater than the aggregate amount of such liabilities based on the maximum individual statutory withholding rates in the applicable jurisdiction.
12.Remedies. The Participant shall be liable to the Company for all costs and damages, including incidental and consequential damages, resulting from a disposition of the RSUs which is in violation of the provisions of this Agreement. Without limiting the generality of the foregoing, the Participant agrees that the Company shall be entitled to obtain specific performance of the obligations of the Participant under this Agreement and immediate injunctive relief in the event any action or proceeding is brought in equity to enforce the same. The Participant will not urge as a defense that there is an adequate remedy at law.
13.Restrictions on Public Sale by the Participant. To the extent not inconsistent with applicable law, the Participant agrees not to effect any sale or distribution of the RSUs or the Shares underlying the RSUs or any similar security of the Company, or any securities convertible into or exchangeable or exercisable for such securities, including a sale pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), during the fourteen (14) days prior to, and during the up to 90-day period beginning on, the date of the pricing of any public or private debt or equity securities offering by the Company (except as part of such offering), if and to the extent requested in writing by the Company in the case of a non-underwritten public or private offering or if and to the extent requested in writing by the managing underwriter or underwriters (or initial purchaser or initial purchasers, as the case may be) and consented to by the Company, which consent may be given or withheld in the Company’s sole and absolute discretion, in the case of an underwritten public or private offering (such agreement to be in the form of a lock-up agreement provided by the Company, managing underwriter or underwriters, or initial purchaser or initial purchasers, as the case may be).
14.Conformity to Securities Laws. The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of all applicable federal and state laws, rules and regulations (including, but not limited to the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, including without limitation the applicable exemptive conditions of Rule 16b-3 of the Exchange Act) and to such approvals by any listing, regulatory or other governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the RSUs are granted, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan, this Agreement and the RSUs shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.
15.Code Section 409A. To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the effective date of this Agreement. Notwithstanding any provision of this Agreement to the contrary, in the event that following the effective date of this Agreement, the Company determines that the RSUs may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the effective date of this Agreement ), the Company may adopt such amendments to this Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect ), or take any other actions, that the Company determines are necessary or appropriate to (a) exempt the RSUs from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the RSUs, or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance; provided, however, that this Section 15 shall not create any obligation on the part of the Company or any Subsidiary to adopt any such amendment, policy or procedure or take any such other action. For purposes of Section 409A of the Code, any right to a series of payments pursuant to this Agreement shall be treated as a right to a series of separate payments.
16.No Right to Continued Service. Nothing in this Agreement shall confer upon the Participant any right to continue as a Service Provider of the Company or any Subsidiary, or shall interfere with or restrict in any way the rights of the Company or any Subsidiary, which rights are hereby expressly reserved, to discharge the Participant at any time for any reason whatsoever, with or without cause.
17.Miscellaneous.
(a)Incorporation of the Plan. This Agreement is made under and subject to and governed by all of the terms and conditions of the Plan. In the event of any discrepancy or inconsistency between this Agreement and the Plan, the terms and conditions of the Plan shall control. By signing this Agreement, the Participant confirms that he or she has received access to a copy of the Plan and has had an opportunity to review the contents thereof.
(b)Clawback. This award, the RSUs and the Shares issuable with respect to the RSUs shall be subject to any clawback or recoupment policy currently in effect or as may be adopted by the Company, as may be amended from time to time.
(c)Successors and Assigns. Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors and assigns of the parties hereto, including, without limitation, any business entity that succeeds to the business of the Company.
(d)Entire Agreement; Amendments and Waivers. This Agreement, together with the Plan, constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. In the event that the provisions of such other agreement or letter conflict or are inconsistent with the provisions of this Agreement, the provisions of this Agreement shall control. Except as set forth in Section 15 above, this Agreement may not be amended except in an instrument in writing signed on behalf of each of the parties hereto and approved by the Committee. No amendment, supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.
(e)Severability. If for any reason one or more of the provisions contained in this Agreement or in any other instrument referred to herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other such instrument.
(f)Titles. The titles, captions or headings of the Sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.
(g)Counterparts. This Agreement may be executed in any number of counterparts, any of which may be executed and transmitted by facsimile (including, without limitation, transfer by .pdf), and each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same instrument.
(h)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland applicable to contracts entered into and wholly to be performed within the State of Maryland by Maryland residents, without regard to any otherwise governing principles of conflicts of law that would choose the law of any state other than the State of Maryland.
(i)Notices. Any notice to be given by the Participant under the terms of this Agreement shall be addressed to the Secretary of the Company at the Company’s address set forth in Exhibit A attached hereto. Any notice to be given to the Participant shall be addressed to him or her at the Participant’s then current address on the books and records of the Company. By a notice given pursuant to this Section 17(i), either party may hereafter designate a different address for notices to be given to him or her. Any notice which is required to be given to the Participant shall, if the Participant is then deceased, be given to the Participant’s personal representative if such representative has previously informed the Company of his or her status and address by written notice under this Section 17(i) (and the Company shall be entitled to rely on any such notice provided to it that it in good faith believes to be true and correct, with no duty of inquiry). Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed as set forth above or upon confirmation of delivery by a nationally recognized overnight delivery service.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.
COMMUNITY HEALTHCARE TRUST INCORPORATED, | |||||
| a Maryland corporation | |||||
| By: | |||||
| Name: | |||||
| Title: | |||||
| The Participant hereby accepts and agrees to be bound by all of the terms and conditions of this Agreement. | |||||
| By: | |||||
| Name: | |||||
Exhibit A
Vesting Schedule and Notice Address
Vesting Commencement Date: July 1, 20__
Vesting Schedule
| Vesting Dates | Percentage of Total Award Vesting | |||||||
| Day Prior to the First Anniversary of the Vesting Commencement Date | 33.33% | |||||||
| Day Prior to the Second Anniversary of the Vesting Commencement Date | 33.33% | |||||||
| Day Prior to the Third Anniversary of the Vesting Commencement Date | 33.34% | |||||||
Company Address
3326 Aspen Grove Drive
Suite 150
Franklin, Tennessee 37067
Exhibit 10.3
PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT
This Restricted Stock Unit Agreement (this “Agreement”), dated as of ________, 20__ (the “Grant Date”), is made by and between Community Healthcare Trust Incorporated, a Maryland corporation (the “Company”), and __________ (the “Participant”).
WHEREAS, the Company maintains the 2024 Incentive Plan (as amended from time to time, the “Plan”);
WHEREAS, the Company wishes to carry out the Plan (the terms of which are hereby incorporated by reference and made a part of this Agreement);
WHEREAS, Section 10 of the Plan provides for the issuance of Restricted Stock Units (“RSUs”); and
WHEREAS, the Committee has determined that it would be to the advantage and in the best interest of the Company to issue RSUs to the Participant as an inducement to enter into or remain in the service of the Company or any Subsidiary, and as an additional incentive during such service, and has advised the Company thereof.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:
1.Issuance of Award of RSUs. Pursuant to the Plan, in consideration of the Participant’s agreement to provide services to the Company or any Subsidiary (as applicable), the Company hereby issues to the Participant an award of ____ RSUs (at target level). Each RSU that vests (and ceases to be subject to the Restrictions) shall represent the right to receive payment, in accordance with this Agreement, of one share of the Company’s common stock, par value $0.01 per share (the “Common Stock”). Unless and until an RSU vests, the Participant will have no right to payment in respect of any such RSU. Prior to actual payment in respect of any vested RSU, such RSU will represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.
2.Dividend Equivalents. Each RSU granted hereunder that becomes a Performance Vested RSU is hereby granted in tandem with a corresponding Dividend Equivalent, which Dividend Equivalent shall remain outstanding from the Grant Date until the earlier of the payment or forfeiture of the RSU to which it corresponds. Pursuant to each outstanding Dividend Equivalent, with respect to each dividend paid by the Company with respect to the Performance Period, the Participant shall be entitled to receive payment equal to the amount of such dividend, if any, on the Shares underlying the Performance Vested RSU to which such Dividend Equivalent relates, payable in the same form and amounts as dividends paid to each holder of a Share. Each such payment shall be made no later than thirty (30) days following the applicable dividend payment date, provided that no such payments shall be made prior to the date on which the RSU becomes a Performance Vested RSU, and any Dividend Equivalent payments that would have been made prior to such date had the RSU been a Performance Vested RSU shall be paid in a single lump sum no later than forty-five (45) days following the date on which the RSU becomes a Performance Vested RSU. Dividend Equivalents shall not entitle the Participant to any payments relating to dividends for which the record date occurs after the payment of the Performance Vested RSU underlying such Dividend Equivalent, and the Participant shall not be entitled to any Dividend Equivalent payments with respect to any RSU that does not become a Performance Vested RSU. Dividend Equivalents and any amounts that may become distributable in respect thereof shall be treated separately from the RSUs and the rights arising in connection therewith for purposes of the designation of time and form of payments required by Section 409A of the Code.
3.Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Plan.
(a)“Absolute TSR Performance Vesting Percentage” means the percentage determined as set forth on Exhibit A attached hereto, which is a function of the Company TSR Percentage during the Performance Period.
(b)“Absolute TSR RSUs” means the number of RSUs designated as Absolute TSR RSUs on Exhibit A attached hereto.
(c)“Absolute TSR Vested RSUs” means the product of (i) the total number of Absolute TSR RSUs, and (iii) the applicable Absolute TSR Performance Vesting Percentage.
(d)“Cause” shall have the same meaning as the same or similar terms in any written employment agreement between the Participant and CHCT or Subsidiary. In the absence of such a written agreement, “Cause” shall mean involuntary termination of employment due to: (i) conviction of a crime of moral turpitude that adversely affects the reasonable business interests of CHCT, (ii) commission of an act of fraud, embezzlement, or material dishonesty against CHCT or any Subsidiary, or (iii) intentional neglect of the responsibilities of employment, and such neglect remains uncorrected for more than 30 days following written notice from CHCT detailing the acts of neglect.
(e)“Company TSR Percentage” means the compounded annual growth rate, expressed as a percentage (rounded to the nearest tenth of a percent (0.1%)), in the value per Share during the Performance Period due to the appreciation in the price per Share plus dividends declared during the Performance Period. The Company TSR Percentage shall be calculated in accordance with the total shareholder return calculation methodology used in the MSCI REIT Index (but, for the avoidance of doubt, not assuming the reinvestment of all dividends paid on Common Stock); provided, however, that for purposes of calculating total shareholder return for any Performance Period, the initial share price shall be equal to the Share Value on the first trading day occurring within the Performance Period, and the final share price as of any given date shall be equal to the Share Value.
(f)“Dividend Equivalent” means a right to receive the equivalent value (in cash or Shares) of dividends paid on Shares, awarded under Section 2 hereof.
(g)“Good Reason” shall have the same meaning as the same or similar terms (such as Constructive Termination) in any written employment agreement between the Participant and CHCT or Subsidiary. In the absence of such a written agreement, “Good Reason” shall mean voluntary termination of employment by the Participant because the terms of employment are modified so that the position is not substantially equivalent to the position held immediately prior to the time of the Change in Control. A position is “substantially equivalent” if it is the same or better than the position to which it is being compared. A position is not substantially equivalent unless (i) the cash compensation offered is the same or higher than that earned immediately prior to the Change in Control, (ii) deferred compensation, incentive and equity compensation, and health and welfare benefits are, in the aggregate, similar to those provided immediately prior to the Change in Control, (iii) the duties are similar to the duties performed prior to the Change in Control; and (iv) the position does not require the Participant to relocate or to commute more than 35 miles each way to the place of employment. The Participant’s right to voluntarily terminate employment for “Good Reason” expires 180 days after beginning employment in the position that is not “substantially equivalent” to the Participant’s prior position.
(h)“MSCI REIT Index” means the total return version of the MSCI US REIT Index (currently known as the “RMS”), or, in the event such index is discontinued or its methodology is significantly changed, a comparable index selected by the Committee in good faith.
(i)“Peer Group Companies” means the entities listed as the Peer Group Companies in the Compensation Committee resolutions approving the RSUs awarded under this Agreement. If (i) the common stock of any of such entities ceases to be listed on a nationally recognized stock exchange at any time during the Performance Period, or (ii) on the last day of the Performance Period any of such entities is under a definitive agreement to be acquired or merged out of existence during the next 12 months, then such entity shall be excluded from the Peer Group Companies for purposes of this Agreement and the remaining Peer Group Companies shall remain unchanged; provided, however, that the Committee shall have the discretion in good faith to substitute another publicly traded REIT in similar business as the Company and other Peer Group Companies, in lieu of the entity that has been excluded from the Peer Group Companies.
(j)“Peer Group Relative Performance” means the Company TSR Percentage compared to the Peer Group TSR Percentages, expressed as a continuous percentile ranking against the Peer Group Companies.
(k)“Peer Group TSR Percentage” means the compounded annual growth rate, expressed as a percentage (rounded to the nearest tenth of a percent (0.1%)), of each of the Peer Group Companies during the Performance Period, calculated in a manner consistent with Section 3(e) above from publicly available information.
(l)“Performance Period” means the period set forth on Exhibit A attached hereto.
(m)“Performance Vested RSUs” means (i) the Absolute TSR Vested RSUs, plus (ii) the Relative TSR Vested RSUs.
(n)“Qualifying Termination” means a Termination of Service by reason of (i) the Participant’s death, (ii) a termination by the Company or any Subsidiary due to the Participant’s Disability, (iii) a termination by the Company or any Subsidiary other than for Cause, (iv) a termination by the Participant for Good Reason, or (v) a termination by the Participant following attainment of both (a) his or her Retirement Eligibility and (b) at least one year of continuous employment with the Company from the Grant Date, provided the Participant also delivered to the Company written notice of the Participant’s intention to retire at least one year prior to the date of retirement.
(o)“Relative TSR Performance Vesting Percentage” means the percentage determined as set forth on Exhibit A attached hereto, which is a function of the Peer Group Relative Performance during the Performance Period.
(p)“Relative TSR RSUs” means the number of RSUs designated as Relative TSR RSUs on Exhibit A attached hereto.
(q)“Relative TSR Vested RSUs” means the product of (i) the total number of Relative TSR RSUs and (ii) the applicable Relative TSR Performance Vesting Percentage.
(r)“Restrictions” means the exposure to forfeiture set forth in Sections 5(a) and 6(a).
(s)“Retirement Eligibility” shall have the meaning set forth in Participant’s written employment agreement with the Company.
(t)“Service Provider” means an Employee of the Company or any of its Subsidiaries.
(u)“Share Value,” as of any given date, means the average of the closing trading prices of a Share on the principal exchange on which such shares are then traded for each trading day during the ten (10) consecutive trading days prior to such date; provided, however, that if a Change in Control occurs prior to the completion of the Performance Period, Share Value shall mean the price per
Share paid by the acquiror in the Change in Control transaction or, to the extent that the consideration in the Change in Control transaction is paid in stock of the acquiror or its affiliates, then, unless otherwise determined by the Committee, Share Value shall mean the value of the consideration paid per Share based on the average of the high and low trading prices of a share of such acquiror stock on the principal exchange on which such shares are then traded on the date on which a Change in Control occurs.
(v)“Shares” means shares of Common Stock.
(w)“Termination of Service” means, unless otherwise determined by the Committee, the time when the employee-employer relationship between a Participant and the Company and its affiliates is terminated for any reason, including, without limitation, a termination by resignation, discharge, death, disability or retirement.
(x)“Unvested RSU” means any RSU that has not become fully vested pursuant to Section 5 hereof and remains subject to the Restrictions.
4.RSUs and Dividend Equivalents Subject to the Plan; Ownership and Transfer Restrictions.
(a)The RSUs and Dividend Equivalents are subject to the terms, definitions and provisions of the Plan, which is incorporated herein by reference, including, without limitation, the restrictions on transfer set forth in Section 10.2 of the Plan.
(b)Without limiting the foregoing, the RSUs and Common Stock issuable with respect thereto shall be subject to the restrictions on ownership and transfer set forth in the charter of the Company, as amended and supplemented from time to time.
5.Vesting.
(a)Performance Vesting. As soon as reasonably practicable (but in no event more than 45 days) following the completion of the Performance Period, the Committee shall determine the Company TSR Percentage, the Peer Group TSR Percentages, the Peer Group Relative Performance, the Absolute TSR Performance Vesting Percentage, the Relative TSR Performance Vesting Percentage and the number of RSUs granted hereby that have become Absolute TSR Vested RSUs, Relative TSR Vested RSUs and Performance Vested RSUs, in each case as of the completion of the Performance Period. Subject to Sections 5(b) and 6(b) below, upon such determination by the Committee, the Restrictions set forth in Section 6(a) below applicable to any outstanding Performance Vested RSUs (if any) shall lapse and such Performance Vested RSUs shall become fully vested, subject to Participant’s continued status as a Service Provider through such vesting date. Any RSUs granted hereby which do not satisfy the requirements to become Performance Vested RSUs as of the completion of the Performance Period will automatically be cancelled and forfeited without payment of any consideration therefor, and the Participant shall have no further right to or interest in such RSUs.
(b)Change in Control. Notwithstanding the foregoing, in the event that (i) a Change in Control occurs prior to the completion of the Performance Period, (ii) the Participant has not incurred a Termination of Service prior to such Change in Control and (iii) this award of RSUs is not continued, converted, assumed or replaced by the surviving or successor entity in an equitable manner as approved by the Committee in good faith, the Restrictions shall lapse with respect to a number of RSUs equal to the greater of (A) the number of RSUs which would be Performance Vested RSUs (if any) assuming the completion of the Performance Period as of the date of the Change in Control and (B) the number of RSUs which would be Performance Vested RSUs assuming that the Company TSR Percentage and the Peer Group Relative Performance were each achieved at “Target Level” (as set forth on Exhibit A attached hereto) (such greater number of
RSUs, the “CIC RSUs”), and such RSUs shall, immediately prior to such Change in Control, become fully vested and shall be deemed to be Performance Vested RSUs. Any RSUs that do not become fully vested in accordance with the preceding sentence (other than RSUs that are continued, converted, assumed or replaced by the surviving or successor entity in an equitable manner as approved by the Committee in good faith) will automatically be cancelled and forfeited as of the date of the Change in Control without payment of any consideration therefor, and the Participant shall have no further right to or interest in such RSUs. In the event that (i) a Change in Control occurs prior to the completion of the Performance Period, (ii) the Participant has not incurred a Termination of Service prior to such Change in Control and (iii) this award of RSUs is continued, converted, assumed or replaced by the surviving or successor entity in an equitable manner as approved by the Committee in good faith, then the vesting provisions in Section 23 of the Plan shall govern.
6.Effect of Termination of Service.
(a)Termination of Service. Subject to Section 6(b) below, in the event of the Participant’s Termination of Service for any reason, any and all Unvested RSUs as of the date of such Termination of Service (after taking into account any accelerated vesting that occurs in connection with such termination) will automatically and without further action be cancelled and forfeited without payment of any consideration therefor, and the Participant shall have no further right to or interest in such Unvested RSUs. No RSUs which have not vested as of the date of the Participant’s Termination of Service shall thereafter become vested.
(b)Qualifying Termination. In the event that the Participant incurs a Qualifying Termination prior to the completion of the Performance Period, the Restrictions shall lapse with respect to a number of RSUs equal to the greater of (A) the product of (x) the number of RSUs which would be Performance Vested RSUs (if any) assuming the completion of the Performance Period as of the date of the Participant’s Qualifying Termination, and (y) a fraction, the numerator of which is the number of days elapsed from the first day of the Performance Period through and including the date of the Participant’s Qualifying Termination, and the denominator of which is 1095, and (B) the number of RSUs which would be Performance Vested RSUs (if any) assuming that the Company TSR Percentage and the Peer Group Relative Performance were each achieved at “Target Level” (as set forth on Exhibit A attached hereto) (such greater number of RSUs, the “Qualifying Termination RSUs”), and such RSUs shall become fully vested and shall be deemed to be Performance Vested RSUs upon the Committee’s determination, within 45 days following the date of the Participant’s Qualifying Termination, of the number of Qualifying Termination RSUs. Any RSUs that do not become fully vested in accordance with the preceding sentence will automatically be cancelled and forfeited as of the date of the Committee’s determination of the number of Qualifying Termination RSUs without payment of any consideration therefor, and the Participant shall have no further right to or interest in such RSUs.
7.Payment. Payments in respect of any RSUs that vest in accordance herewith shall be made to the Participant (or in the event of the Participant’s death, to his or her estate) in whole Shares, and any fractional Share will be rounded as determined by the Company. The Company shall make such payments as soon as practicable after the applicable vesting date, but in any event within twenty (20) days after such vesting date, provided that, in the event of vesting upon a Change in Control under Section 5(b) above, such payment shall be made or deemed made immediately preceding and effective upon the occurrence of such Change in Control.
8.Determinations by Committee. Notwithstanding anything contained herein, all determinations, interpretations and assumptions relating to the vesting of the RSUs (including, without limitation, determinations, interpretations and assumptions with respect to Company TSR Percentage and Peer Group TSR Percentages) shall be made by the Committee and shall be applied consistently and uniformly to all similar Awards granted under the Plan. In making such determinations, the Committee may employ
attorneys, consultants, accountants, appraisers, brokers, or other persons, and the Committee, the Board, the Company and their officers and directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Committee in good faith and absent manifest error shall be final and binding upon the Participant, the Company and all other interested persons. In addition, the Committee, in its discretion, may adjust or modify the methodology for calculations relating to the vesting of the RSUs (including, without limitation, the methodology for calculating Company TSR Percentage and Peer Group TSR Percentages), other than the Absolute TSR Performance Vesting Percentage and Relative TSR Performance Vesting Percentage, as necessary or desirable to account for events affecting the value of the Common Stock which, in the discretion of the Committee, are not considered indicative of Company performance, which may include events such as the issuance of new Common Stock, stock repurchases, stock splits, issuances and/or exercises of stock grants or stock options, and similar events, all in order to properly reflect the Company’s intent with respect to the performance objectives underlying the RSUs or to prevent dilution or enlargement of the benefits or potential benefits intended to be made available with respect to the RSUs. The Committee has the discretion to make equitable adjustments to the Peer Group TSR Percentage to take into account any extraordinary, unusual or non-recurring corporate events such as those described in Section 16 of the Plan affecting such Peer Companies, including but not limited to stock splits, reverse stock splits, stock dividends, recapitalizations, reclassifications and similar events. The Committee has discretion in how the required adjustments are determined as long as they are done equitably.
9.Restrictions on New RSUs or Shares. In the event that the RSUs or the Shares underlying the RSUs are changed into or exchanged for a different number or kind of securities of the Company or of another corporation or other entity by reason of merger, consolidation, recapitalization, reclassification, stock split, stock dividend or combination of shares, such new or additional or different securities which are issued upon conversion of or in exchange or substitution for RSUs or the Shares underlying the RSUs which are then subject to vesting shall be subject to the same vesting conditions as such RSUs or Shares, as applicable, unless the Committee provides for the vesting of the RSUs or the Shares underlying the RSUs, as applicable.
10.Conditions to Issuance of Shares. Shares issued as payment for the RSUs will be issued out of the Company’s authorized but unissued Shares. Upon issuance, such Shares shall be fully paid and nonassessable. The Shares issued pursuant to this Agreement shall be held in book-entry form and no certificates shall be issued therefor. In addition to the other requirements set forth herein, the Shares issued as payment for the RSUs shall be issued only upon the fulfillment of all of the following conditions:
(a)The admission of such Shares to listing on all stock exchanges on which such class of stock is then listed;
(b)The completion of any registration or other qualification of such shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Committee shall, in its absolute discretion, deem necessary or advisable;
(c)The obtaining of any approval or other clearance from any state or federal governmental agency which the Committee shall, in its absolute discretion, determine to be necessary or advisable;
(d)The lapse of such reasonable period of time as the Committee may from time to time establish for reasons of administrative convenience; and
(e)The receipt by the Company of full payment for any applicable withholding or other employment tax or required payments with respect to any such Shares to the Company with respect to the issuance or vesting of such Shares.
In the event that the Company delays a distribution or payment in settlement of RSUs because it reasonably determines that the issuance of Shares in settlement of RSUs will violate federal securities laws or other applicable law, such distribution or payment shall be made at the earliest date at which the Company reasonably determines that the making of such distribution or payment will not cause such violation, as required by Treasury Regulation Section 1.409A-2(b)(7)(ii). The Company shall not delay any payment if such delay will result in a violation of Section 409A of the Code.
11.Rights as Stockholder. Neither the Participant nor any person claiming under or through the Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until such Shares will have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Participant or any person claiming under or through the Participant.
12.Tax Withholding. The Company or any Subsidiary shall have the authority and the right to deduct or withhold, or require the Participant to remit to such entity, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to the issuance, vesting or payment of the RSUs and the Dividend Equivalents. In satisfaction of the foregoing requirement or in satisfaction of any additional tax withholding, the Company or any Subsidiary may, or the Committee may in its discretion allow the Participant to elect to have the Company or any Subsidiary (as applicable), withhold Shares otherwise issuable under such award (or allow the return of Shares) having a fair market value equal to the sums required to be withheld. Notwithstanding any other provision of the Plan or this Agreement, the number of Shares which may be withheld with respect to the issuance, vesting or payment of the RSUs and the Dividend Equivalents in order to satisfy the Participant’s income and payroll tax liabilities with respect thereto shall be limited to the number of shares which have a fair market value on the date of withholding no greater than the aggregate amount of such liabilities based on the maximum individual statutory withholding rates in the applicable jurisdiction.
13.Remedies. The Participant shall be liable to the Company for all costs and damages, including incidental and consequential damages, resulting from a disposition of the RSUs which is in violation of the provisions of this Agreement. Without limiting the generality of the foregoing, the Participant agrees that the Company shall be entitled to obtain specific performance of the obligations of the Participant under this Agreement and immediate injunctive relief in the event any action or proceeding is brought in equity to enforce the same. The Participant will not urge as a defense that there is an adequate remedy at law.
14.Restrictions on Public Sale by the Participant. To the extent not inconsistent with applicable law, the Participant agrees not to effect any sale or distribution of the RSUs or the Shares underlying the RSUs or any similar security of the Company, or any securities convertible into or exchangeable or exercisable for such securities, including a sale pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), during the fourteen (14) days prior to, and during the up to 90 day period beginning on, the date of the pricing of any public or private debt or equity securities offering by the Company (except as part of such offering), if and to the extent requested in writing by the Company in the case of a non-underwritten public or private offering or if and to the extent requested in writing by the managing underwriter or underwriters (or initial purchaser or initial purchasers, as the case may be) and consented to by the Company, which consent may be given or withheld in the Company’s sole and absolute discretion, in the case of an underwritten public or private offering (such agreement to be in the form of a lock-up agreement provided by the Company, managing underwriter or underwriters, or initial purchaser or initial purchasers, as the case may be).
15.Conformity to Securities Laws. The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of all applicable federal and state laws, rules and regulations (including, but not limited to the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, including without limitation the applicable exemptive conditions of Rule 16b-3 of the Exchange Act) and to such approvals by any listing, regulatory or other governmental
authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the RSUs are granted, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan, this Agreement and the RSUs shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.
16.Code Section 409A. To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the effective date of this Agreement. Notwithstanding any provision of this Agreement to the contrary, in the event that following the effective date of this Agreement, the Company determines that the RSUs may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the effective date of this Agreement ), the Company may adopt such amendments to this Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect ), or take any other actions, that the Company determines are necessary or appropriate to (a) exempt the RSUs from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the RSUs, or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance; provided, however, that this Section 16 shall not create any obligation on the part of the Company or any Subsidiary to adopt any such amendment, policy or procedure or take any such other action. For purposes of Section 409A of the Code, any right to a series of payments pursuant to this Agreement shall be treated as a right to a series of separate payments. Notwithstanding anything to the contrary in this Agreement, no amounts shall be paid to the Participant under this Agreement during the six-month period following the Participant’s “separation from service” to the extent that the Committee determines that the Participant is a “specified employee” (each within the meaning of Section 409A of the Code) at the time of such separation from service and that paying such amounts at the time or times indicated in this Agreement would be a prohibited distribution under Code Section 409A(a)(2)(b)(i). If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such six-month period (or such earlier date upon which such amount can be paid under Section 409A of the Code without being subject to such additional taxes), the Company shall pay to the Participant in a lump-sum all amounts that would have otherwise been payable to the Participant during such six-month period under this Agreement.
17.No Right to Continued Service. Nothing in this Agreement shall confer upon the Participant any right to continue as a Service Provider of the Company or any Subsidiary, or shall interfere with or restrict in any way the rights of the Company or any Subsidiary, which rights are hereby expressly reserved, to discharge the Participant at any time for any reason whatsoever, with or without cause.
18.Miscellaneous.
(a)Incorporation of the Plan. This Agreement is made under and subject to and governed by all of the terms and conditions of the Plan. In the event of any discrepancy or inconsistency between this Agreement and the Plan, the terms and conditions of the Plan shall control. By signing this Agreement, the Participant confirms that he or she has received access to a copy of the Plan and has had an opportunity to review the contents thereof.
(b)Clawback. This award, the RSUs and the Shares issuable with respect to the RSUs shall be subject to any clawback or recoupment policy currently in effect or as may be adopted by the Company, as may be amended from time to time.
(c)Successors and Assigns. Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors and assigns of the parties hereto, including, without limitation, any business entity that succeeds to the business of the Company.
(d)Entire Agreement; Amendments and Waivers. This Agreement, together with the Plan, constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. In the event that the provisions of such other agreement or letter conflict or are inconsistent with the provisions of this Agreement, the provisions of this Agreement shall control. Except as set forth in Section 16 above, this Agreement may not be amended except in an instrument in writing signed on behalf of each of the parties hereto and approved by the Committee. No amendment, supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.
(e)Severability. If for any reason one or more of the provisions contained in this Agreement or in any other instrument referred to herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other such instrument.
(f)Titles. The titles, captions or headings of the Sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.
(g)Counterparts. This Agreement may be executed in any number of counterparts, any of which may be executed and transmitted by facsimile (including, without limitation, transfer by .pdf), and each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same instrument.
(h)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland applicable to contracts entered into and wholly to be performed within the State of Maryland by Maryland residents, without regard to any otherwise governing principles of conflicts of law that would choose the law of any state other than the State of Maryland.
(i)Notices. Any notice to be given by the Participant under the terms of this Agreement shall be addressed to the Secretary of the Company at the Company’s address set forth in Exhibit A attached hereto. Any notice to be given to the Participant shall be addressed to him or her at the Participant’s then current address on the books and records of the Company. By a notice given pursuant to this Section 18(i), either party may hereafter designate a different address for notices to be given to him or her. Any notice which is required to be given to the Participant shall, if the Participant is then deceased, be given to the Participant’s personal representative if such representative has previously informed the Company of his or her status and address by written notice under this Section 18(i) (and the Company shall be entitled to rely on any such notice provided to it that it in good faith believes to be true and correct, with no duty of inquiry). Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed as set forth above or upon confirmation of delivery by a nationally recognized overnight delivery service.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.
COMMUNITY HEALTHCARE TRUST INCORPORATED, | |||||
| a Maryland corporation | |||||
| By: | |||||
| Name: | |||||
| Title: | |||||
| The Participant hereby accepts and agrees to be bound by all of the terms and conditions of this Agreement. | |||||
| By: | |||||
| Name: | |||||
Exhibit A
Definitions and Notice Address
Definitions
Capitalized terms not defined herein shall have the meanings set forth in the Performance-Based Restricted Stock Unit Agreement to which this Exhibit is attached.
“Absolute TSR RSUs” means _______ RSUs.
“Absolute TSR Performance Vesting Percentage” means a function of the Company TSR Percentage during the Performance Period, and shall be determined as set forth below:
| Company TSR Percentage | Absolute TSR Performance Vesting Percentage | |||||||||||||
| < 4.0% | 0% | |||||||||||||
| “Threshold Level” | 4.0% | 50% | ||||||||||||
| “Target Level” | 8.0% | 100% | ||||||||||||
| “Maximum Level” | > 12.0% | 200% | ||||||||||||
In the event that the Company TSR Percentage falls between the Threshold Level and the Target Level, the Absolute TSR Performance Vesting Percentage shall be determined using straight line linear interpolation between the Threshold Level and Target Level Absolute TSR Performance Vesting Percentage specified above; and in the event that the Company TSR Percentage falls between the Target Level and the Maximum Level, the Absolute TSR Performance Vesting Percentage shall be determined using straight line linear interpolation between the Target Level and Maximum Level Absolute TSR Performance Vesting Percentage specified above.
“Performance Period” means the period commencing on July 1, 20__ (the “Performance Commencement Date”) and ending on the day prior to the third anniversary of the Performance Commencement Date.
“Relative TSR RSUs” means _______ RSUs.
“Relative TSR Performance Vesting Percentage” means a function of the Peer Group Relative Performance during the Performance Period, and shall be determined as set forth below:
| Peer Group Relative Performance | Relative TSR Performance Vesting Percentage | |||||||||||||
< 25th Percentile | 0% | |||||||||||||
| “Threshold Level” | 25th Percentile | 50% | ||||||||||||
| “Target Level” | 55th Percentile | 100% | ||||||||||||
| “Maximum Level” | > 80th Percentile | 200% | ||||||||||||
In the event that the Peer Group Relative Performance falls between the Threshold Level and the Target Level, the Relative TSR Performance Vesting Percentage shall be determined using straight line linear interpolation between the Threshold Level and Target Level Relative TSR Performance Vesting Percentages specified above; and in the event that the Peer Group Relative Performance falls between the Target Level and the Maximum Level, the Relative TSR Performance Vesting Percentage shall be determined using straight line linear interpolation between the Target Level and Maximum Level Relative TSR Performance Vesting Percentages specified above.
Company Address
3326 Aspen Grove Drive
Suite 150
Franklin, Tennessee 37067
Exhibit 10.4
COMMUNITY HEALTHCARE TRUST INCORPORATED
RESTRICTED STOCK AGREEMENT- AWARD SHARES
PURSUANT TO THE
FOURTH AMENDED AND RESTATED ALIGNMENT OF INTEREST PROGRAM
This RESTRICTED STOCK AGREEMENT (the “Agreement”) is made and is effective as of the __ day of ______________, 20 , by and between Community Healthcare Trust Incorporated (“CHCT”) and ______________ (the “Participant”).
Upon and subject to the terms of CHCT’s Fourth Amended and Restated Alignment of Interest Program (the “Program”), 2024 Incentive Plan, as amended (the “Plan”), Participant’s currently effective Compensation Reduction Election Form (the “Election Form”) and the Additional Terms and Conditions attached hereto and incorporated herein by reference as part of this Agreement, CHCT hereby acknowledges providing to the Participant the Restricted Stock (as defined below) in consideration of the Participant’s services to CHCT and Participant’s election to participate in the Program.
A. Restricted Period/Forfeiture: Unless forfeited pursuant to the terms hereof, the Restricted Stock shall become 100% unrestricted upon the end of the Restriction Period as elected by the Participant pursuant to the Election Form or as otherwise provided by this Agreement.
B. Restricted Stock: Pursuant to the Participant’s election to receive the amount of compensation set forth on the Participant’s election form for calendar year 20____ (the “Election Year”) as restricted shares of CHCT’s common stock, par value $0.01 per share, in accordance with Participant's valid compensation reduction election, CHCT hereby awards Participant ____________ shares of CHCT’s common stock, par value $0.01 per share (“Award Stock” or “Restricted Stock”) as an award for Participant's subjecting the Award Stock to the Restriction Period set forth in the Participant's Election Form.
C. Program and Plan: This Agreement is entered into pursuant to the Program under the Plan. The Restricted Stock which becomes unrestricted pursuant to this Agreement is herein referred to as the “Unrestricted Shares.” Any portion of the Restricted Stock which does not become Unrestricted Shares in accordance with this Agreement shall be forfeited.
D. Status as Shareholder: During the Restriction Period, Participant will be paid all dividends on all Restricted Stock in the same manner as other shareholders and shall have voting rights for all Restricted Stock.
IN WITNESS WHEREOF, CHCT and Participant have signed this Agreement as of the date set forth above.
| Community Healthcare Trust Incorporated | Participant | |||||||||||||
| By: | By: | |||||||||||||
| Name: | Name: | |||||||||||||
| Title: | ||||||||||||||
COMMUNITY HEALTHCARE TRUST INCORPORATED
ADDITIONAL TERMS AND CONDITIONS OF
RESTRICTED STOCK AGREEMENT
PURSUANT TO THE
FOURTH AMENDED AND RESTATED ALIGNMENT OF INTEREST PROGRAM
1. Issuance of Restricted Stock.
1.1. CHCT shall issue the Restricted Stock by documenting the issuance in book-entry form on CHCT’s stock records. Evidence of the Restricted Stock in book entry shall be held by CHCT until the Restricted Stock becomes Unrestricted Shares in accordance with this Agreement and the Program.
1.2. In the event that the Participant forfeits any of the Restricted Stock, CHCT shall cancel the issuance on its stock records.
1.3. Participant hereby irrevocably appoints CHCT’s Chief Executive Officer and Chief Financial Officer, and each of them singly, as the true and lawful attorneys-in-fact of Participant with full power and authority to execute any stock transfer power or other instrument necessary to transfer any Restricted Stock in accordance with this Agreement, in the name, place, and stead of the Participant. The term of such appointment shall commence on the date of this Agreement and shall continue until the last shares of the Restricted Stock are delivered to the Participant as Unrestricted Shares or are forfeited.
2. Restrictions on Transfer of Restricted Stock.
2.1. The Participant shall not have the right to, directly or indirectly, transfer, offer to sell, sell, dispose, pledge, mortgage, hypothecate or otherwise encumber, whether outright or as security, with or without consideration, voluntarily or involuntarily, all or any part of any right, title, or interest in or to any Restricted Stock prior to the date all Restricted Stock become Unrestricted Shares as provided pursuant to this Agreement. After all Restricted Stock has become Unrestricted Shares pursuant to this Agreement there shall be no restrictions on the transfer of the Unrestricted Shares other than those restrictions imposed by any applicable laws.
2.2. The restrictions contained herein will not apply with respect to transfers of Restricted Stock pursuant to the laws of descent and distribution governing the state in which the Participant is domiciled at the time of the Participant’s death; provided that the restrictions contained herein will continue to be applicable to the Restricted Stock after any such transfer; and provided further that the transferee(s) of such Restricted Stock pursuant to such laws of descent and distribution must agree in writing to be bound by the provisions of this Agreement.
3. Effect of Termination Events
3.1. In the event of termination of the Participant’s employment and the Participant is not employed pursuant to an Employment Agreement, then the disposition of any unvested Restricted Stock will be determined in accordance with Section 5 of the Program. In the event of termination of the Participant’s employment and Participant is employed pursuant to an Employment Agreement, then the disposition of any unvested Restricted Stock will be determined in accordance with the Participant’s Employment Agreement; provided, however, that Award Stock issued hereunder will be forfeited in connection with Participant’s retirement upon attainment of Retirement Eligibility (as defined in Participant’s Employment Agreement) unless the Participant has provided at least one year of continuous employment with the Company from the date of this Agreement and delivered to the Company written notice of the Participant’s intention to retire at least one year prior to the date of retirement. The provisions of Section 23 of the Plan will govern in the event of a Change of Control (as defined in the Plan).
3.2. Accelerated Release – If Participant is not employed pursuant to an Employment Agreement and requests an accelerated release, then subject to the approval of the Chief Executive Officer of CHCT in his sole discretion, the Participant may have an accelerated release (“Accelerated Release”) of shares. Upon election of an Accelerated Release, the total amount of Award Shares will be forfeited and/or released to reflect an accelerated release For example purposes only, if the Participant elected an 8-year Restriction Period and the departure event relating to the Accelerated Release occurs in year 6, the participant would receive Award Shares as if a 5 year election had been made; if the departure event occurred in year 4, the participant would receive Award Shares as if a 3 year election had been made; and if the departure event occurred in year 3, no Award shares would be released. Any Award Shares that are not released, would be forfeited by the Participant or their estate.
4. Compliance With Laws
4.1. The Plan, the Program, the provision and vesting of Restricted Stock under the Plan, the issuance and delivery of the Restricted Stock, and the payment of money or other consideration allowable under the Plan are subject to compliance with all applicable federal and state laws, rules and regulations (including, but not limited to, state and federal securities laws and federal margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Compensation Committee of the Board (the “Committee”), the Board or CHCT, be necessary or advisable in connection therewith. Any securities delivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by CHCT, provide such assurances and representations to CHCT as the Committee, the Board or CHCT may deem necessary or desirable to assure compliance with all applicable legal requirements.
4.2. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations. Nothing in the Plan or in this agreement shall require CHCT to issue any stock with respect to the Agreement if, in the opinion of counsel for CHCT, that issuance could constitute a violation of any applicable laws. To the extent that CHCT determines it cannot provide the Restricted Stock pursuant to the Agreement, then CHCT must return the Participants compensation it elected to reduce and take all other measures required to ensure that the Participant is not harmed due to CHCT’s inability to provide the Restricted Stock.
4.3. As a condition to the provision of the Restricted Stock, CHCT may require the Participant (or, in the event of the Participant’s death, the Participant’s legal representatives, heirs, legatees or distributees) to provide written representations concerning the Participant’s (or such other person’s) intentions with regard to the retention or disposition of the Restricted Stock and written covenants as to the manner of disposal of such Restricted Stock as may be necessary or useful to ensure that the provision of or disposition thereof will not violate the Securities Act, any other law or any rule of any applicable securities exchange or securities association then in effect. CHCT shall not be required to register any stock under the Securities Act of 1933, as amended, or register or qualify any stock under any state or other securities laws.
5. Participant Continuing Obligations
5.1. Participant shall not, subject to risk of forfeiture, so long as there is any Restricted Stock pursuant to this Agreement, either directly or indirectly, whether on behalf of Participant or any other person, firm or corporation, contact, solicit, take away, or accept any business from, or attempt to contact, solicit or take away any of the customers or clients of the Company, or any potential customers or clients of the Company with whom Participant interacted on behalf of the Company.
5.2. Participant shall not, subject to risk of forfeiture, so long as there is any Restricted Stock pursuant to this Agreement, disclose or authorize or permit anyone under Participant’s direction to disclose any of the Company’s confidential information. Participant further agrees that Participant will not take or
retain any papers, procedural or technical manuals, customer lists, customer account analyses (including, without limitation, accounts receivable aging, customer payment histories and customer account activity reports), price books, file or other documents or copies thereof belonging to the Company or to any affiliate of the Company, or any materials, supplies, equipment or furnishings belonging to the Company or to any affiliate of the Company, or any other confidential information of any kind belonging to the Company or any affiliate of the Company.
5.3. Participant shall, subject to risk of forfeiture, so long as there is any Restricted Stock pursuant to this Agreement, agree to enter into a consulting agreement with the Company, subject to the approval of the Chief Executive Officer of CHCT in his sole discretion, that requires reasonable hours and reasonable pay to provide Company with Participant’s expertise.
Exhibit 31.1
Community Healthcare Trust Incorporated
Quarterly Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, David H. Dupuy, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Community Healthcare Trust Incorporated;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: October 28, 2025
| David H. Dupuy | |||||
| Chief Executive Officer and President | |||||
Exhibit 31.2
Community Healthcare Trust Incorporated
Quarterly Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, William G. Monroe IV, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Community Healthcare Trust Incorporated;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: October 28, 2025
| /s/ William G. Monroe IV | |||||
| William G. Monroe IV | |||||
| Executive Vice President and Chief Financial Officer | |||||
Exhibit 32.1
Community Healthcare Trust Incorporated
Certification Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Community Healthcare Trust Incorporated (the "Company") for the period ended September 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David H. Dupuy, Chief Executive Officer and President of the Company, and I, William G. Monroe IV, Executive Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
i.The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
ii.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: October 28, 2025
| /s/ David H. Dupuy | |||||
| David H. Dupuy | |||||
| Chief Executive Officer and President | |||||
| /s/ William G. Monroe IV | |||||
| William G. Monroe IV | |||||
| Executive Vice President and Chief Financial Officer | |||||