Community Healthcare Trust Incorporated (NYSE:CHCT) Q3 2023 Earnings Call Transcript

Robert Stevenson: Okay. And then how are you — if you were — those 2 assets and any others that you were to get back, how is your confidence level in re-tenanting those versus selling vacant and just moving on, how are you guys sort of juggling those balls?

David Dupuy: Well, as I said in the prepared remarks, we’re getting good leasing activity at both the Asheville and Fort Myers locations. So we’re actively looking to re-lease those spaces. So we feel good about those. We have also done market studies at the other locations just to determine kind of what the market rents are. And I think our teams feel very good about being able to move quickly to re-lease those spaces to the extent we need to. But we also have done some views and made sure that those tenants are actually providing health care in those locations, and they are. And so our hope and our expectation is whoever the next buyer is for these assets, those leases would continue to move forward under the new ownership.

Robert Stevenson: Is there anything in particular about the Fort Myers asset that lends itself to medical back office? Or could that just as easily be tenanted to a law firm or a financials firm or some other sort of non-medical tenant that then would not probably fit with your portfolio longer term?

David Dupuy: Yes. I mean, look, it’s — we’re looking at all options as it relates to that. So ultimately, based on the final user, we may decide that, that isn’t the right fit for the portfolio, but we’re certainly talking to all different kinds of users there. There’s nothing magical about that being a health care space, although we’re talking to both potential health care tenants as well as other tenants.

Robert Stevenson: Okay. That’s helpful. And then while we’re on the subject, any other sort of watch list tenants of note that you’re focused on that is becoming more delinquent or that you’re worried may not meet its rent obligations over the next quarter or 2?

David Dupuy: Rob — and we’ve mentioned this on the last call, too. We have a watch list. We manage that watch list. I would tell you that it’s consistent. The names are different, but it’s usually 8 to 10 folks that we’re working with at any 1 time that could be issues that we’re working through. But there’s nothing that I would say we’re seeing that is concerning or relates to a specific sector or anything along those lines. It’s sort of a, kind of a normal process when you’re in the real estate business that you’ve got to manage your some delinquent tenants. But in general, our receivables are in really good shape, and we feel good about where we are vis-a-vis our tenants. And so nothing meaningful has changed or is different today than it was a quarter or 2 ago.

Robert Stevenson: Okay. And then last 1 for me. Bill, how are you thinking about debt financing over the next 6 months? Is it just fund on the line and leave it there? Is there some other debt, be it term loans or some floating to fixed swaps that’s attractive to you today that you would put in place over the next quarter or 2 to push the term out and replenish the line? How should we be thinking about that?

William Monroe: With our revolver balance currently outstanding at the end of the quarter at $48 million, we have $102 million of availability under that revolver. And so I think, certainly, over the next 6 months, we will look to continue to use our revolver as our primary debt financing mechanism and certainly appreciate the support of all of our banks in that facility. So nothing on the near-term horizon. But certainly, we continue to monitor the debt markets. Our next maturity isn’t until 2026, and so feel fortunate that there’s no near-term maturities. But certainly, we will continue to monitor the markets. And if there is an opportunistic opportunity to further extend maturities, we certainly will look at that.