Community Healthcare Trust Announces Results for the Three Months Ended December 31, 2019

COMMUNITY HEALTHCARE TRUST INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; Dollars in thousands, except per share amounts)

December 31, 2019

December 31, 2018

ASSETS

Real estate properties:

Land and land improvements

$

68,129

$

50,270

Buildings, improvements, and lease intangibles

534,503

394,527

Personal property

220

133

Total real estate properties

602,852

444,930

Less accumulated depreciation

(77,523)

(55,298)

Total real estate properties, net

525,329

389,632

Cash and cash equivalents

1,730

2,007

Restricted cash

293

385

Other assets, net

35,179

34,546

Total assets

$

562,531

$

426,570

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Debt, net

$

194,243

$

147,766

Accounts payable and accrued liabilities

3,606

3,196

Other liabilities

11,271

3,949

Total liabilities

209,120

154,911

Commitments and contingencies

Stockholders' Equity

Preferred stock, $0.01 par value; 50,000,000 shares authorized; none issued and
outstanding

—

—

Common stock, $0.01 par value; 450,000,000 shares authorized; 21,410,578 and
18,634,502 shares issued and outstanding at December 31, 2019 and 2018, respectively

214

186

Additional paid-in capital

447,916

337,180

Cumulative net income

17,554

9,178

Accumulated other comprehensive (loss) income

(4,808)

633

Cumulative dividends

(107,465)

(75,518)

Total stockholders' equity

353,411

271,659

Total liabilities and stockholders' equity

$

562,531

$

426,570

The Condensed Consolidated Balance Sheets do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

COMMUNITY HEALTHCARE TRUST INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2019 AND 2018

(Unaudited; Dollars in thousands, except per share amounts)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2019

2018

2019

2018

REVENUES

Rental income

$

16,292

$

11,710

$

58,269

$

46,453

Other operating interest

541

479

2,580

2,104

16,833

12,189

60,849

48,557

EXPENSES

Property operating

2,840

2,447

12,235

9,944

General and administrative

2,126

1,542

7,719

5,634

Depreciation and amortization

5,906

5,068

22,225

19,539

10,872

9,057

42,179

35,117

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
AND OTHER ITEMS

5,961

3,132

18,670

13,440

Gain on sale of real estate

—

295

—

295

Interest expense

(2,513)

(1,817)

(9,301)

(6,299)

Impairment of note receivable

—

(5,000)

—

(5,000)

        Income tax (expense) benefit

(1,421)

1,547

(1,430)

1,547

Interest and other income, net

186

(42)

437

420

INCOME FROM CONTINUING OPERATIONS

2,213

8,376

4,403

NET INCOME

$

2,213

$

(1,885)

$

8,376

$

4,403

NET INCOME PER COMMON SHARE:

Net income per common share – Basic

$

0.09

$

(0.12)

$

0.37

$

0.19

Net income per common share – Diluted

$

0.09

$

(0.12)

$

0.37

$

0.19

WEIGHTED AVERAGE COMMON SHARE OUTSTANDING-BASIC

19,686

17,848

18,685

17,669

WEIGHTED AVERAGE COMMON SHARE OUTSTANDING-DILUTED

19,686

17,848

18,685

17,669

The Condensed Consolidated Statements of Income do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

COMMUNITY HEALTHCARE TRUST INCORPORATED

RECONCILIATION OF FFO and AFFO ⁽¹⁾

(Unaudited; Amounts in thousands, except per share amounts)

Three Months Ended December 31,

2019

2018

Net income

$

2,213

$

(1,885)

   Real estate depreciation and amortization

5,943

5,109

   Impairment of note receivable ⁽²⁾

—

5,000

   Income tax expense (benefit) ⁽²⁾

1,321

(1,321)

   Gain from sale of depreciable real estate

—

(295)

   Total adjustments

7,264

8,493

Funds From Operations

$

9,477

$

6,608

   Straight-line rent

(699)

(126)

   Stock-based compensation

1,085

747

AFFO

$

9,863

$

7,229

   Funds from Operations per Common Share-Diluted

$

0.47

$

0.37

   AFFO Per Common Share-Diluted

$

0.49

$

0.41

Weighted Average Common Shares Outstanding-Diluted ⁽³⁾

20,220

17,848

(1)

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time.  However, since real estate values have historically risen or fallen with market conditions, many industry investors deem presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For that reason, the Company considers funds from operations ("FFO") and adjusted funds from operations ("AFFO") to be appropriate measures of operating performance of an equity real estate investment trust ("REIT"). In particular, the Company believes that AFFO is useful because it allows investors, analysts and Company management to compare the Company's operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by unanticipated items and other events.

The Company uses the National Association of Real Estate Investment Trusts, Inc. ("NAREIT") definition of FFO. FFO and FFO per share are operating performance measures adopted by 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 and gains or losses from change in control, plus depreciation and amortization related to real estate, plus 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, and after adjustments for unconsolidated partnerships and joint ventures, as well as other items discussed in NAREIT's Funds From Operations White Paper - 2018 Restatement. 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.

FFO and AFFO should not be considered as alternatives to net income (determined in accordance with GAAP) as indicators of the Company's financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of the Company's liquidity, nor are they necessarily indicative of sufficient cash flow to fund all of the Company's needs. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO and AFFO should be examined in conjunction with net income as presented elsewhere herein.
 

(2)

In the fourth quarter of 2018, the Company recorded a $5.0 million impairment related to its mezzanine loan with Highland Hospital and recorded a related tax benefit and deferred tax asset of approximately $1.3 million. This deferred tax asset was impaired in the fourth quarter of 2019 and the tax benefit was reversed resulting in tax expense of $1.3 million. The Company believes that the mezzanine loan is incidental to the main operations of the Company. As such, the Company has excluded the impairment of the note receivable and the related tax impact from its calculation of FFO. The $5.0 million impairment on the loan and related tax benefit of $1.3 million recorded in 2018 was previously recognized as an adjustment to AFFO rather than FFO for the year ended December 31, 2018 and has been reclassified as an adjustment to Funds from Operations rather than to Adjusted Funds from Operations for 2018 to conform to the current year presentation.

(3)

Diluted weighted average common shares outstanding for FFO are calculated based on the treasury method, rather than the 2-class method used to calculate earnings per share.