Global Medical REIT Inc. (NYSE:GMRE) Q4 2022 Earnings Call Transcript

Jeffrey Busch: I will start with this one. We are just looking at the opportunities out there, not necessarily ready to do one. It depends on how much we can add to AFFO and what we do. Is the partner somebody we can grow with and get capital? We would need to be doing assets that are not in what we normally buy right now, possibly buy the lower price core for them — I mean lower cap rate core, not to compete with what we do, which is we add value, we buy a couple of points above what the core is and our properties often turn out the way we buy them. As you can see with our sales, often creditors come in, they add higher credits to them. When we extend the leases suddenly, there’s a lot more value and it becomes sort of core. So we wouldn’t do exactly the same, but we’re just looking out in the market to see what the opportunities are and what it would add to our AFFO. Alfonzo, do you want to add?

Alfonzo Leon: Yes. And we’ve had a good number of conversations with different parties and have been, I would characterize it as exploratory thus far. But there are some opportunities that could make sense for us just depending on how the year shapes up. And I would say even on the private equity side, it’s pretty clear that at the beginning of the year, everyone adopted a more cautious standby mode and a lot of the conversations I’ve had with those groups, it sounds like they’re also targeting kind of second half of the year for them to really start getting active.

Juan Sanabria: Okay. Then — thank you for that. I was hoping for the second question to get a little bit more color on the slight downtick in occupancy, kind of what drove that? And I think you highlighted you want to be above 96% for 2023 and so if you could maybe just help us bridge to how you get back there and the visibility in that improvement from the year end levels that’d be fantastic?

Jeffrey Busch: Yes. Before I turn that over to Bob, I just wanted to say that we do buy vacancy a little unusual for REIT, but we do go out and buy core really strong properties that we find sometimes 80% occupied and we now have the history of renting them up over time. So, the occupancy is we’re trying to stay within that level, but we do see some really great opportunities that have vacancy that we believe we can rent up over time and we have a history of doing that like with our Fairfax property. I’ll turn this over to Bob.

Robert Kiernan: Yes. Relative to the Q4 vacancy change, this really reflected the fact that one of our cash basis tenants — our tenant in Westland, Michigan, it’s been on cash basis since 2021. We were able to evict them in the period. So, the change that you’re seeing in Q4, that was the vast majority of the change. And so really from a — it doesn’t really have a big financial impact on us from a prospective basis because it’s already — it’s really been with us for some time at this point and this was just the actual eviction and moving them out of the facility.

Juan Sanabria: And then you kind of mentioned — sorry.

Robert Kiernan: Sorry. So, prospectively, as we’re looking at our lease-up activity for 2023, I mean, things are progressing really well relative to our lease-up activity. And again, we’re forecasting that between that we will retain between 85% and 90 percent of the expiring square feet that are out there for 2023 and then we’re making progress on vacant space. So, the combination of those things is what we’re forecasting how things look as we head through 2023 that we’ll try to really be in that 96% and above from an occupancy perspective.