Financial firm Baird has revised its price target for Global Medical REIT (GMRE, Financial), bringing it down to $9 from the previous $10, while maintaining a Neutral rating on the stock. This adjustment follows the company's first-quarter results, which outperformed expectations primarily because of net operating income (NOI). Despite the positive performance, the firm's guidance remains unchanged.
GMRE Key Business Developments
Release Date: February 28, 2025
- Portfolio Occupancy: 96.4% with a weighted average lease term of 5.6 years.
- Net Income: $1.4 million or $0.02 per share for Q4 2024.
- FFO: $0.15 per share and unit, down $0.04 from prior year quarter.
- AFFO: $0.22 per share and unit, down $0.01 from prior year quarter.
- Total Revenue: $35.2 million for Q4 2024, a 6.7% increase from prior year.
- Total Expenses: $36.3 million for Q4 2024, up from $31.5 million in prior year quarter.
- G&A Expenses: $7.7 million for Q4 2024, primarily due to $3.2 million in CEO succession plan costs.
- Property Dispositions: Generated $40.5 million in gross proceeds with a $5.8 million gain.
- Gross Investment in Real Estate: $1.5 billion at the end of Q4 2024.
- Debt: $651 million total gross debt with a weighted average interest rate of 3.75%.
- 2025 AFFO Guidance: $0.89 to $0.93 per share and unit.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Global Medical REIT Inc (GMRE, Financial) reported a high portfolio occupancy rate of 96.4% at the end of the fourth quarter.
- The company completed significant acquisitions, including a 15-property portfolio for $80.3 million and a five-property portfolio for $69.6 million, enhancing its asset base.
- GMRE successfully closed a joint venture with Heitman, maintaining a 12.5% ownership stake, which allows for strategic growth and capital access.
- The company achieved a net income attributable to common shareholders of $1.4 million in Q4 2024, a positive turnaround from a net loss in the same quarter of the previous year.
- GMRE's strategic asset recycling program generated $40.5 million in gross proceeds from property sales, resulting in a gain of $5.8 million, demonstrating effective portfolio management.
Negative Points
- Funds from operations (FFO) per share decreased to $0.15 in Q4 2024 from $0.19 in the prior year, primarily due to $3.2 million in severance-related costs.
- Adjusted funds from operations (AFFO) per share also saw a slight decline to $0.22 from $0.23 in the previous year.
- The company faced increased total expenses in Q4 2024, rising to $36.3 million from $31.5 million in the prior year, partly due to CEO succession plan costs.
- Prospect Medical Group, a tenant, filed for Chapter 11 bankruptcy, posing a risk to GMRE's revenue stream, as it represented 0.8% of total annualized base rent.
- GMRE's leverage ratio stood at 44.8%, with a weighted average interest rate of 3.75%, indicating a significant level of debt that could impact financial flexibility.
