Greetings, and welcome to the Global Medical REIT First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Swett, Investor Relations. Thank you, sir. You may begin.

Thank you. Good morning, everyone, and welcome to Global Medical REIT's first quarter 2025 earnings conference call. On the call today are Jeff Busch, Chief Executive Officer; Alfonzo Leon, Chief Investment Officer; and Bob Kiernan, Chief Financial Officer. Please note the use of forward-looking statements by the company on this conference call. Statements made on this call may include statements which are not historical facts and are considered forward-looking. The company intends these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is making this statement for the purpose of complying with those safe harbor provisions. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond the company's control, including, without limitation, those contained in the company's 10-K for the year ended December 31, 2024, and its other SEC filings. The company assumes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. Additionally, on this call, the company may refer to certain non-GAAP financial measures such as funds from operations, attributable to common shareholders and non-controlling interest, adjusted funds from operations attributable to common stockholders and non-controlling interest, EBITDAre, and adjusted EBITDAre, you can find a tabular reconciliation of these non-GAAP financial measures to the currently comparable GAAP numbers in the company's earnings release and in its filings with the SEC. Additional information may be found on the Investor Relations page of the company's website at www.globalmedicalreit.com. I would now like to turn the call over to Jeff Busch, Chief Executive Officer of Global Medical REIT. Jeff?

Thank you, Steve. Good morning, and thank you for joining our first quarter 2025 earnings call. Our high-quality diversified portfolio continues to produce steady results. At the end of the first quarter, portfolio occupancy was 95.6% with a weighted average lease term of 5.6 years and a portfolio average rent coverage ratio of 4.4x. For the first quarter, net income attributable to common shareholders was $2.1 million or $0.03 per share compared to $800,000 or $0.01 per share in the first quarter of 2024. FFO attributable to common shareholders and non-controlling interest in the first quarter was $0.20 per share and unit, down $0.01 from the prior year quarter. AFFO attributable to common stockholders and non-controlling interest was $0.22 per share and unit, down $0.01 from the prior year quarter. Regarding our acquisition activity, last year we entered into a purchase agreement to acquire a five-property portfolio of medical facilities for an aggregate purchase price of $69.6 million at a 9% cap rate. These properties are a great strategic fit for our overall portfolio given the procedure-based nature of the tenant specialties. The close proximity of the buildings to the hospital campuses promotes tenant retention, and almost 70% of the leases are triple net leases. During the first quarter, we closed on the first tranche of this acquisition consisting of three properties for $31.5 million and, subsequent to the quarter end in April, we completed the acquisition of the remaining two properties. We are pleased about the addition of these assets and will continue to monitor the transaction market and remain disciplined in executing our acquisition strategy. Turning to dispositions, during the quarter, we completed the sale of two medical properties, generating aggregate gross proceeds of $8.2 million, resulting in an aggregate gain of $1.4 million. Finally, I would like to update everyone on the progress we have made in our CEO succession plan. The Nominating and Corporate Governance Committee has done an excellent job conducting multiple interviews with highly qualified candidates to become the company's next CEO. The committee has narrowed the candidate pool to a few final candidates and expects to have a new CEO in place by June 30, 2025. As this is my last earnings call as I transition from my role as CEO, I would like to thank the entire GMRE team for their dedication and contributions to our success over the years. I'm deeply grateful to have served as CEO and Founder and proud of what we have built together, and I'm confident in where the company is positioned today and look forward to continuing in my role as Chairman. We have built a highly experienced team, robust infrastructure, and maintained our core focus on generating consistent results and creating value for our shareholders. With that, I turn the call over to Alfonzo to discuss our investment activity and the current market conditions in more detail.

Thank you, Jeff. As Jeff mentioned, in February and in April, we closed on a previously announced five-property 487,000-square-foot portfolio with an aggregate purchase price of $69.6 million with an aggregate annualized base rent of $6.3 million, equating to a 9% cap rate. At this pricing, we acquired this portfolio at approximately $143 per square foot, which is substantially below replacement cost. Relative to the condition of the properties, note that we acquired these properties from the original developer who has maintained them to institutional quality standards. In addition, these properties are each approximately 100,000 square feet outpatient facilities, four of which are on campus. Following are some additional details on the properties. In the February closing, we acquired two on-campus multi-tenant medical facilities located in Tucson, Arizona, with St. Joseph's Hospital as the primary tenant at one of the facilities. St. Joseph's Hospital is part of Tenet Healthcare, a publicly traded healthcare system. Services performed at these facilities include cardiology, oncology, urology, and orthopedics. In addition, we acquired one off-campus multi-tenant medical facility located in Slippery Rock, Pennsylvania. Services performed at this facility include physical therapy, musculoskeletal, and orthopedics. In the April closing, we acquired two on-campus multi-tenant medical facilities located in Des Moines, Iowa, with MercyOne as a primary tenant. MercyOne is a credit-rated hospital system ranked as the number two hospital in Iowa per U.S. News and World Report. GMRE has extensive relationships with Mercy, which represents 55% of the portfolio. Services performed at these facilities include gastroenterology, orthopedics, cardiology, oncology, and endocrinology. I would also like to mention that the portfolio was approximately 92% leased upon acquisition, and we are working to lease up the acquired vacancy, which will provide additional returns above the 9% in-place cap rate at acquisition. We are very excited about this transaction as most of these facilities are on campus with a good tenant mix of procedural-based practices that squarely fit within our investment criteria. We believe this transaction showcases our ability to find accretive acquisition opportunities in a higher cost of capital environment. On a disposition front, during the quarter, we closed on the sale of two medical facilities for gross proceeds of $8.2 million, resulting in a gain of $1.4 million. Included in these dispositions was our facility located in Coos Bay, Oregon, receiving gross proceeds of $7.2 million, resulting in a gain of $1.3 million and reflecting a cap rate of 6.7%. This sale was part of our capital recycling strategy, and we are pleased with the outcome of this transaction. Looking ahead, we remain persistent and disciplined in seeking opportunities that align with our investment strategy and underwriting standards or would be attractive additions to our joint venture with Heitman. We plan to leverage our competitive advantages of scale, capital access, and OP unit structuring capabilities to secure high-quality acquisitions that allow us to grow our portfolio while maintaining our commitment to quality. I'd now like to turn the call over to Bob to discuss our financial results. Bob?

Thank you, Alfonzo. At the end of the first quarter 2025, our portfolio consisted of gross investments in real estate of $1.5 billion that included 4.9 million total leasable square feet, 95.6% occupancy, 5.6 years of weighted average lease term, 4.4x rent coverage with 2.2% weighted average contractual rent escalations. In the first quarter of 2025, our total revenues decreased by approximately 1.4% compared to the prior year quarter to $34.6 million, and our total expenses for the first quarter of 2025 were $32.2 million compared to $32.8 million in the prior year quarter. Our operating expenses for the first quarter of 2025 were $7.6 million compared to $7.4 million in the prior year quarter. Regarding the first quarter 2025 expenses, $5.2 million related to net leases where the company recognized the comparable amount of expense recovery revenue, and $1.4 million related to gross leases. G&A expenses for the first quarter of 2025 were $3.6 million compared to $4.4 million in the prior year quarter. The decrease primarily resulted from a decrease in non-cash LTIP compensation expense related to the accounting treatment for Jeff's unvested LTIP awards pursuant to his transition and separation agreement. Cash G&A expenses, excluding CEO transition-related costs, were $3.4 million in the first quarter. Looking ahead, we expect our run rate for comparable cash G&A expenses to range between $3.4 million and $3.6 million on a quarterly basis for the remainder of 2025. Relative to non-cash LTIP compensation expense, based on grants to date and the impact of the accounting treatment for Jeff's awards, we expect to recognize $4.2 million of non-cash LTIP expense over the remainder of the year, including $1.8 million in the second quarter. Also during the first quarter, we completed two property dispositions that generated aggregate gross proceeds of $8.2 million, resulting in an aggregate gain of $1.4 million. Net income attributable to common stockholders in the first quarter of 2025 was $2.1 million or $0.03 per share compared to $800,000 or $0.01 per share in the first quarter of 2024. FFO attributable to common stockholders and non-controlling interest in the first quarter of 2025 was $14.8 million or $0.20 per share in unit compared to $14.9 million or $0.21 per share in unit in the first quarter of 2024. AFFO attributable to common stockholders and non-controlling interest in the first quarter of 2025 was $16 million or $0.22 per share in unit compared to $16.5 million or $0.23 per share in unit in the first quarter of 2024. Regarding capital expenditures on the portfolio, in the first quarter of 2025, our cash spend was approximately $2.6 million, with approximately 27% of that related to tenant improvements. Currently, we're projecting full-year 2025 capital expenditures of approximately $12 million to $14 million. In terms of tenant-related items, on January 11, 2025, Prospect Medical Group filed for Chapter 11 bankruptcy reorganization. At that time, Prospect had approximately $2.4 million of outstanding lease payments related to three of our healthcare facilities, including $2.2 million related to our facility in East Orange, New Jersey, which had been accounted for on a cash basis since the fourth quarter of 2023. As of year-end 2024, Prospect represented 0.8% of our total ABR. Regarding our exposure to Prospect Medical, we entered into a stipulation and agreed order with the bankruptcy courts, whereby Prospect rejected its lease at our East Orange facility. In accordance with the order, we received all post-petition amounts due from Prospect from January 11, 2025, through February 28, 2025, totaling $250,000. In addition, effective in April, we gained access to the property, allowing us to work directly with existing subtenants and market the remainder of the facility for leasing. As of May 6, 2025, Prospect had not decided it was going to accept or reject its remaining leases with us. During the first quarter of 2025, we had 115,000 square feet of expiring leases. We're able to renew 71,000 square feet or 62% of these expiring leases. For our expiring leases for the full year 2025, we expect to retain 75% on a square foot basis. Other activities impacting occupancy during the quarter, including absorption, tenant bankruptcies as well as the impact on vacancies from acquisitions and dispositions largely offset each other. Moving on to the balance sheet. As of March 31, 2025, our gross investment in real estate was $1.5 billion. Additionally, we had $681 million of total gross debt with a weighted average remaining term of 1.8 years. 75% of our total debt was fixed-rate debt. Our leverage ratio was 46.1% and our weighted average interest rate was 3.84%. As of today, the current unutilized borrowing capacity under the credit facility is $187 million. Relative to equity, we did not issue any shares of our common stock under our ATM program during the first quarter or to date in the second quarter of this year. Turning to our guidance, we are reaffirming our full-year 2025 AFFO per share and unit range of $0.89 to $0.93. As a reminder, our 2025 guidance assumes no additional acquisition or disposition activity other than what has been either completed or announced and no additional equity or debt issuances other than normal course revolver activity. AFFO guidance excludes one-time expenses related to the CEO succession plan. In conclusion, we believe that our high-quality portfolio positions us well to navigate the current environment, while our liquidity allows us to selectively acquire properties that align with our strategic objectives. We remain confident in our disciplined execution of our business strategy and look forward to sharing our continued progress with you throughout the year. This concludes our prepared remarks. Operator, please open the call for questions.

Thank you. We will now be conducting a question-and-answer session. Thank you. Our first question comes from the line of Austin Wurschmidt with KeyBanc. Please proceed with your question.

Thanks. Good morning, everybody. No, it's still pretty early in the process, but can you just talk about the potential timeline and amount of rent that you'd expect to collect upon re-leasing the East Orange facility?

Sorry. You said the East Orange facility?

Yes. Correct.

Yes. So, right, the first step we have to take and just to kind of outline the timeline that we're going to have to go here is convert the subtenants that are in there to direct tenants. And that's going to take some time. It's in process. We're also working to get a budget prepared for the property and also looking to get taxes reassessed. We've hired a broker to help us with the leasing effort. The hospital next door is in the process of getting a new operator that has a lot of surgical facilities in the area, which is very positive. They've expressed interest in leasing space in our building. There's been a group that's reached out to us that also wants to take a nice amount of space in the building. So we're pretty encouraged with the activity that we're experiencing in the facility. And roughly rents in that building are in the mid-30s on a gross basis. And so if we can get expenses in line, our hope is to get a net rent in the mid, high $13 million to $15 million range for that building, which would get us pretty close to where we were before. But it's going to take time to kind of work through all this activity. And, we're not expecting it to change over the next few months dramatically. But as we approach year-end, I think we're feeling pretty encouraged that we're going to build the NOI in that property back up again. And by next year then it should be at a point that's approaching where we were before.

So is it fair to assume that there's nothing in guidance related to re-leasing this facility, one? And then more broadly related to the other prospect facilities in Connecticut, I mean, is it your sense that the outcome there might be tied to what ultimately happens with the operations or real estate for other hospitals Prospect leases within that region?

I mean, first, in terms of the guidance, the impact of Prospect and the re-leasing that Alfonso mentioned is factored into our guidance. It's not a significant component of our outlook for this year. And, in fact, it's relative to an overall NOI, again, very limited overall perspective. So I mean, that's really from a store perspective. As it relates to our properties in Vernon, I mean, to this point, we have not had any indication of the lease rejection. And I don't know if there's more we could say about the outlook for Prospect's strategy relative to those facilities. But to this point, from our perspective, there hasn't been any new activity.

Understood. And then, I'm just curious, Jeff, if you can speak to it sounds like you have a successor in place, but just curious moving towards a path of announcing that here soon, but curious, you had mentioned last quarter that the Board is always evaluating other strategic options. Curious if you went down that path and if there's anything you can share on that front as well. Thank you.

Thank you. Yes, Austin. We always evaluate various options out there and it's always potential given the low price of the stock, the market, the value of our assets in our belief are well above what it's trading for. So that's always a potential out there. On the transition, we are in the process of having multiple good candidates. We're in the process of evaluating them. And we do expect, in a very relatively short time, to have a final candidate that we pick. So the nomination committee has been very active with it. We're excited about bringing in somebody to add new skills and others. I'm going over to be the Chairman, so I'll still be involved with what I bring to the table. So I'm very excited about what goes on in the future.

Appreciate the time and thanks for the thoughts. All the best to you.

Our next question comes from the line of Wes Golladay with Baird. Please proceed with your question.

Hey, good morning guys. And maybe just sticking with Prospect for the $250,000 you're going to get, did you report anything in the first quarter for that or is it going to be in the second quarter?

Hi, Wes. There was $150,000 in the first quarter and the $100,000 will be in the second quarter.

Okay. And then can maybe you talk about the outlook for dispositions and overall maybe capital markets activity for the second half to get the line balance. Will you keep it at the same level? Will you take it down? I guess how are you thinking about that as well?

Just on the disposition side, I mean, we have regular discussions about with the asset management team and with Bob and Jeff in terms of just seeing where we are as a company and seeing if it makes sense to sell assets. So that's ongoing. But in the near term, what we have is what we've put in a press release, just roughly $8 million in process and nothing in the near term that we're planning on selling, but it's something that we discuss regularly.

Okay. And then I guess on the line balance, will you just keep it at the same levels? Will you look to maybe term it out with some another term loan? What do you think in there?

So relative to the financing side, we've been in active discussions with our lenders on updating and extending the facility including the term loan that comes up next year. So all that is on the table. At a high level, the CEO succession plan is really driving our timing a bit on that. And we would look to execute something in that in the third quarter, early fourth quarter type of timeframe to move forward with those. But I think we'd be looking to do something relatively consistent with what we have today.

Okay. And then just one last one. I think in the original guide you had, I think $4.5 million to $4.7 million per quarter, but it was ex the LTIP, I believe. So how are we thinking about GAAP G&A for the back half of the year?

So from a GAAP G&A perspective, it would again, it will be a little bit from the perspective of the swing in stock compensation. But it could from with the cash G&A running in that 3.4% to 3.6% and with again 4.2% of LTIP compensation expense, it will be from the second quarter will be elevated into the 5.1% to 5.3% type of range and then prospectively be back in that range that we talked about previously of the kind of the 4.5% to 4.7% type range.

Our next question comes from the line of Juan Sanabria with BMO. Please proceed with your question.

Hi. Just curious as part of the search process and just supposed to stay on the Board hoping you could give some insights here. How are you guys thinking about the dividend? I mean, has it necessarily been covered if you think about CapEx, which was some guidance was given for. So how are you thinking about the sustainability of that and the ability to do acquisitions when leverage is high? Just curious on the discussions.

Well, we've been interviewing people for the CEO position, and that is in line with everything else we are doing at the time. It’s a dividend discussion, which is happening in almost all the REITs that refinanced at very low rates is happening. But it's sort of being held off until we know our direction, some of our strategic direction, which we're sort of excited about from some of the candidates, is in line with what we do. The refinance is in line with what we do. So there's multiple factors in there.

Understood. Fair enough. And just curious on the first quarter, it seemed like retention was a bit lower than what you're expecting for the balance of the year. Just curious if you can give any insights on to why that was the case and if there's any known move outs we should be kind of thinking of kind of looking forward?

Sure, Juan. So in the first quarter, yes, retention at that lower 60% was lower than our typical. And if I look at the 40,000 or so square feet that didn't renew in the first quarter, just note about 80% of that is progressing well toward re-leasing. So overall, again, we're going to start to trend back a little bit with again the specific expirations that were there in the first quarter. But relative to the overall occupancy percentage, when we talked at year end, we expected there to be some volatility in this number from quarter-to-quarter this year based on our outlook on expiring leases. And we factored that into our guidance for our AFFO guidance for the full year. As we look ahead, in the second quarter, there will be a negative impact of things like the acquired vacancy from the portfolio acquisition that will be there in Q2. We have a 50,000 square foot lease that's expiring in the second quarter that is not expected to renew. So there's going to be some volatility in the number from period to period and expect that to go into again probably into the 94% to 95% range in the second and third quarters. But really as we get our traction in those events and those activities, we expect that to move back up as we progress towards the back part of the year and look to have that back above 95% with the goal to be at 96% again at year-end.

Thanks. And when you said that 80% is progressing towards re-leasing, does that mean there was your short-term extensions? It did look like the '26 expirations picked up. I'm not sure if there were some shorter-term extensions or just hoping you could just give a little bit more color around that?

Sure. What that is, those were two leases that have termination options in them. So that really was the short-term renewal. These are two leases that have termination options. And so those were in, because that termination option could have affected us in 2025, it was in our 2025 expiration or our lease expiration number. Those are leases that go out through 2029. But they have termination options that are in them. And so we continue to put them again, that's now in the 2026 number. So that's the unusual activity that you're seeing in that line.

Thank you. Good luck with everything, and congratulations and best of luck with everything, Jeff.

Thank you. Appreciate it.

Our next question comes from the line of Gaurav Mehta with Alliance Global Partners. Please proceed with your question.

Thank you. Good morning.

Good morning.

I wanted to go back to your balance sheet, maybe touch upon leverage again at 46.1%. If you were to find the right acquisition opportunities this year, how high are you willing to take that leverage?

We are not planning to increase our leverage significantly from its current level. Considering the acquisitions we completed in the second quarter, our overall leverage will rise to around 47 percent. Our target leverage is still between 40 and 45 percent, but for exceptional opportunities like the Grand portfolio purchase, we are open to exceeding that target range. However, we are not inclined to move substantially beyond our current range.

Okay.

Going high, they tend to go significantly higher than where we are.

Okay. And then maybe follow-up on the acquisition market, just hoping to get some color on how your pipeline is looking?

The investment market began the year on a positive note, but a combination of factors has led to a quiet transaction volume in 2023 and 2024, with some data indicating a decline of 70% to 80% at its lowest point. There was a slight increase at the end of 2024, and it was thought that the bid-ask spread had become narrower. There is a significant amount of capital waiting on the sidelines, and expectations are for a higher transaction volume this year compared to 2024. There has been an increase in portfolios coming to market, creating a sense of optimism. In April, market volatility and tariffs caused some concern among market participants, but overall, demand appears strong, and there is renewed optimism for a healthy volume of transactions this year. The market has plenty of supply, and there's an interesting trend regarding the cap rate spread between high-quality and low-quality assets. The gap is wider than previously seen, with high-quality assets sometimes trading below a six cap rate, while lower-quality assets are trading in the high 7s and even 8s. There's a good supply of assets that fit our portfolio criteria in the high 7% cap rate range we have targeted before. However, our acquisition strategy depends on our cost of capital. We are closely monitoring the market. If our cost of capital aligns, we will proceed with our acquisitions as we have in the past.

All right. That's all I had. Thanks for taking my questions.

Our next question comes from the line of John Massocca with B. Riley. Please proceed with your question.

Good morning. Kind of maybe with that last question in mind, I guess, are there opportunities then to move a lot of that potential deal flow into the Heitman JV? Or are there any kind of other gating factors on maybe that being a source of where you pursue some of the stuff you traditionally would have where your cost of capital is not kind of where it is today?

Yes, absolutely. We're pretty actively looking for opportunities for them and are actively pursuing opportunities. And our hope is that we can try to get some deals with the Heitman joint venture for sure.

Okay. We discussed the outlook, but I understand that the non-Beaumont part of the portfolio is quite small. Is there any update on re-leasing the other Stewart assets or the former Stewart assets?

So yes, the other Steward assets are in Hermitage, Pennsylvania. Those are about 23,000 square feet, and we're actively working to get those under lease and are optimistic that that will be done by June 30. The impact of those properties is really minimal from an overall perspective.

Okay. And then anything you're seeing on the policy front, that either kind of the government policy front, that's either kind of a positive or negative for credit tenant health. I know there's not life science isn't really a big focus, but that's been called out in kind of competitor calls. Anything maybe kind of you can provide about how the macro is impacting how your tenants are performing positive or negative?

Well, the great thing about our portfolio is one, being relatively recession-proof and also being the type of tenants we have, we're not a Medicaid-based portfolio or we have more Medicare, which is not being touched. Medicaid is being evaded, but that's very, very limited. The most interesting thing to learn about our portfolio is when the pandemic occurred and our tenants couldn't operate or anything else, we still collected 99% of the rent. And that shows the strength of the portfolio. So in a recession, I do expect us to be a safety investment at that time also.

Okay. That's it for me. Thank you very much.

Thank you. We have reached the end of the question-and-answer session. And with that, the conclusion of today's call. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.