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Good morning, ladies and gentlemen, and welcome to the Chiron Real Estate Inc. 1st quarter 2026 earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator. This call is being recorded on Thursday, May 7th, 2026. I would now like to turn the conference call over to Mr. Jamie Barber, General Counsel. Please go ahead.

Good morning, everyone, and welcome to Chiron Real Estate's first quarter 2026 earnings conference call. My name is Jamie Barber, and I am Chiron's General Counsel. On the call today are Mark Decker Jr., Chief Executive Officer; Robert Kiernan, Chief Financial Officer; Alfonzo Leon, Chief Investment Officer; and Danica Holley, Chief Operating Officer. Statements or comments made on this conference call may be forward-looking statements. Forward-looking statements may include, but are not necessarily limited to, financial projections or other statements of the company's plans, objectives, expectations, or intentions. These matters involve certain risks and uncertainties. The company's actual results may differ significantly from those projected or suggested from any forward-looking statements due to a variety of factors which are discussed in detail in our SEC filings. Additionally, on this call, the company may refer to certain non-GAAP financial measures.

You can find a tabular reconciliation of these non-GAAP financial measures and the most current comparable GAAP numbers in the company's earnings release and filings with the SEC. Additional information may be found on the investor relations page of the company's website at www.chironre.com. I would like to now turn the call over to Mark.

Thank you, Jamie, and good morning, everyone. The first quarter marks a pivotal moment for Chiron as we thoughtfully reposition into a leading platform designed to deliver exceptional value to essential healthcare operators. While the company continued to perform across its existing outpatient medical portfolio, the more consequential development was the significant progress made in repositioning Chiron for growth. The quality and pace of these investments reinforces our conviction that there is a great opportunity for a focused, solutions-oriented capital provider capable of creativity and speed. Senior housing remains a highly fragmented and relationship-driven business, and Chiron is establishing itself as a credible and constructive partner within that ecosystem, and this matters. Studies show that seniors in well-designed communities experience a 20% reduction in social isolation and a 15% increase in cognitive function.

We envision Chiron as a trusted partner to leading operators, driving innovation and setting new standards in the industry by focusing on evidence-based design and care models. We believe we can build something truly special. Following the transactions announced last night, Chiron will have over 25% of our asset value in senior housing operating properties or SHOP, representing a substantial advancement of the plans we announced in February. We believe this transition improves Chiron's relevance within the healthcare delivery universe, positively altering our long-term earnings growth profile, portfolio quality, and opportunity set. Over time, these elements will result in a better business that should support a stronger and more differentiated cost of capital. We published updated investor materials last night that provide additional detail on each of the announced investments. I'd like to briefly highlight our strategic rationale.

Our key criteria when evaluating senior housing investments are the operator, market, and real estate. Beginning with the operating team, our partners on each of these investments will be Silverstone Senior Living, the original developer and asset manager, and Greystone, which will continue as the operator. Preserving continuity across development, ownership, and operations was an important consideration for us. We believe maintaining an aligned and experienced team optimizes resident and associate experience, lease-up execution, and long-term financial performance. Our evaluation of these opportunities began in January when dialogue with Silverstone revealed an opportunity to solve a capital structure issue. Silverstone had developed two exceptional communities in Potomac Yards, but the existing ownership was split between two institutions, jeopardizing the best outcome due to fund life challenges and evolving strategic priorities.

Chiron was able to provide a permanent capital solution that aligns and consolidates these communities while preserving the operating platform that's thriving. The first of these communities, The Landing, features 163 luxury homes that offer independent, assisted, and memory care living. The Landing achieved occupancy stabilization in 2025 and is now approaching financial stabilization through the burn off of lease-up concessions. Situated across a shared courtyard on the same land parcel is The Riviera, a newly delivered 129 home luxury independent living community that opened in March of 2026 and is now in the early stages of lease-up. Together, The Landing and Riviera comprise a vibrant community of 292 highly differentiated senior homes in one of the most affluent and supply-constrained submarkets in the Washington, D.C. Metro.

From a financial perspective, the pairing is particularly attractive because the communities sit at opposite ends of the maturation curve. The Landing is entering stabilized cash flow while The Riviera is beginning lease-up. This creates a natural internal earnings progression over the next several years. We underwrote both communities to stabilize yields in excess of 7 using untrended rents. This basis implies the assets have potential to deliver a double-digit unlevered return, and we believe the long-term durability of demand is supported by favorable household wealth characteristics, strong home values, and a very limited forward development pipeline. Chiron's ability to execute efficiently as capital partner with Silverstone and Greystone earned us the opportunity to expand our relationship and acquire the Pinnacle.

At 175 home luxury senior housing community currently nearing completion of construction in North Bethesda, directly across from Federal Realty's Pike & Rose, one of the strongest mixed-use destinations in the region. Because the community remains under construction, our contract provides flexibility around closing timing this fall, with anticipated settlement windows from August to November. As with The Riviera and The Landing, we believe that the Pinnacle sits in an exceptionally attractive demographic pocket characterized by high household income, strong barriers to entry, and limited competing supply. It is exactly the type of highly desirable and relevant senior housing that we believe will form the foundation of Chiron's long-term growth strategy.

Given the magnitude of our portfolio transition, the board has made the decision to reduce the monthly distribution to a new annual run rate of $1.92 per share, or $0.16 per month, starting with the July payment. While current income remains an important part of our value proposition to shareholders, we believe retained cash flow represents one of our most valuable internal sources of equity. This change provides Chiron with $15 million in additional capital per year, which alongside capital recycling, gives us an ability to self-fund accretive investments and better control the pace of our strategic evolution. This is a capital allocation decision. In the current environment, every dollar retained and deployed into growth investments has the potential to create more long-term value than every dollar distributed, all without relying on equity capital markets. Private market transactions continue to highlight our recycling opportunity.

While Chiron's current share price implies a cap rate of 9%, recent comparable transactions, specifically the Cela take private and the NHP outpatient medical sale, have been executed at cap rates between 7.3% and 7.9%, a 100-150 basis point arbitrage. By prioritizing internal capital recycling and retained cash flow over common equity issuance at these levels, we're ensuring that the long-term value created by the execution of our strategic plan accrues directly to our existing shareholders. Next, I'd like to talk about Maewyn Capital Partners' $100 million strategic investment into Chiron, as this transaction provides us growth capital, an attractive price, and more. Maewyn's investment provides Chiron with dedicated, long-duration growth capital from a sponsor with deep public real estate experience and a singular focus on per share value creation.

Just as importantly, Charles P. Fitzgerald, Founder and Managing Partner at Maewyn, is expected to join Chiron's Board of Directors later this month. Charles brings nearly three decades of investing experience across listed real estate securities, with a career built around valuation discipline, underwriting rigor, and identifying opportunities that create alpha. As Chiron transitions from a historically passive net lease owner into a more active capital recycling and external growth platform, that perspective becomes increasingly valuable. The next chapter of value creation for Chiron will be determined by our ability to consistently allocate capital towards the highest risk-adjusted opportunities across acquisitions, dispositions, development funding, and portfolio repositioning. We believe Charles' addition to the Board strengthens that framework by adding an experienced shareholder lens. Charles knows this space well and shares our view that we can build something special.

Best-in-class companies have demonstrated that superior long-term shareholder returns are created through active portfolio construction and disciplined capital deployment. Chiron is building that capability. With Maewyn as both capital partner and board-level strategic advisor, the company gains funding flexibility and an experienced external investor perspective. This also extends our ability to think like owners. On a fully diluted as converted basis, over 20% of our company's ownership is sitting around the board table. Between Maewyn's capital commitment and disposition subject to LOI, Chiron has approximately $300 million of capital sources to fund the roughly $425 million of identified investments. Because the $176 billion Pinnacle closing is not anticipated until this fall, we do have some time to execute upon further outpatient medical sales to advance the portfolio transition.

Together, all this means Chiron has the assets, capital, and investment alignment necessary to pursue this transition with greater speed, rigor, and accountability to shareholder returns. We're already moving fast, leading to a lot of progress in a very short period of time. I want to recognize the efforts of our team, board, partners, and counterparties in bringing these ideas into reality. Thank you all. I know you're listening. With that, I'll turn it over to Bob to provide an update on first quarter operating performance across the portfolio.

Thanks, Mark. Net redefined FFO per share and unit was $0.97 for the quarter. Core FFO was $1.11 per share and unit. Net debt to adjusted EBITDA was 6.6 times for the quarter, a reduction of 0.4 times from the first quarter of last year. Same-store cash NOI, which includes all assets owned by Chiron for at least 15 months, increased 3.2% on a year-over-year basis. As we embark on the portfolio changes highlighted by Mark, we withdrew our 2026 earnings guidance. It is important to note this change wasn't due to any negative event, but was done to better focus on our portfolio transition and building long-term shareholder value.

As it relates to items like our cash and non-cash G&A expenses, as well as our capital expenditures included in FAD, our full-year expectations are in line with our previous communications. Mark, would you like to provide some closing thoughts?

Thanks, Bob. These announcements represent the beginning of Chiron's repositioning. The work ahead now centers on disciplined execution, lease-up performance, capital recycling, and continued sourcing of investments that further enhance our ability to create value.

Finally, I'd like to thank Henry Cole and Ronald Marston for their service as directors. They're both leaving the board at our upcoming election. Our team appreciates the creativity, wisdom, and care they brought to the boardroom, and we wish them the very best. With that, operator, we'll take questions. Thank you.

Thank you. Ladies and gentlemen, we'll now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. 1 moment, please, for your first question. Your first question comes from John Massocca from B. Riley. Please go ahead.

Apologies there. I was on mute. Good morning.

Morning.

Maybe kind of going to the $450 million of investments. Understanding, you know, capital recycling is part of this. You have the Maewyn preferred investment. Is there anything else you kind of have out there or thoughts in mind to kind of bridge the funding gap maybe to fully kind of pay for those investments over time? I'm just kind of curious if everything is going to be kind of accounted for with some of your historical transaction activity, capital recycling in the Maewyn funds.

Just to make sure I understand the question, you're saying do we have the funds for the $425 we just announced, or are you asking about something in the future?

Yeah, just for the $425 announced.

Yeah. We have $200 million under LOI. We talked last quarter about the IRF JV as well as the CHRISTUS asset in Beaumont, Texas. The IRFs are under LOI. They're not done yet. That would be our most likely use of proceeds. The CHRISTUS ought to follow after that. Between now and I'd say November 1 at the latest, we'll likely dispose of some other outpatient medical. That would get you to leverage neutral proceeds.

Okay. I guess kinda maybe, you know, going forward as you look to kinda grow the senior housing portfolio, where do you kind of view Chiron's niche within that kind of investment universe? Are you gonna be primarily focused on, like, early-stage development type transactions? Just kinda curious how you kind of expect to play in the larger universe of senior housing, especially given how kind of competitive it can be with some of the larger REITs?

Yeah. Well, I think where you're least likely to find us competing is just in an auction. I think the way we are trying to be valuable and interesting to operators and developers is by being thoughtful and creative and listening well and trying to help them find solutions. You know, if you're selling something and all you care about is cash, then it's really simple. It's just about who can pay the most and who can do it the fastest and who's the most certain. I think in many instances, we can compete well on those dynamics.

If you add any other variable, you know, it starts to get complicated, and you might be able to derive more value there, or you might just be able to, by caring about that fourth or fifth thing that the seller cares about, you might be able to do something that other people can't do. It's super situational. I mean, what we've done here, with Silverstone is, in my mind, spectacular, and we're gonna try to do more of these, but these are hard to do. You know, if it's for sale, you just have to pay the most. We're trying not to just do that. We're trying to find ways where we can build relationships that are truly additive for both parties. We're, we're seeking win-wins.

I think there's lots of room in the market for people that have capital thoughtfulness and are actually interested in a long-term relationship and a win-win. We'll compete on that basis, and I think we'll win our fair share.

Okay. Given some of the M&A activity you talked about earlier in the call and just overall kind of asset sales, I mean, is there a plan for additional kind of strategic dispositions of some of the historical assets, you know, as you look to kinda transition the portfolio more towards senior housing? I mean, would this be something you'd sell in a granular fashion, or would you look to kinda larger strategic transactions?

Yes. Yeah. I mean, look, I'm not trying to be coy. You know, we know I would say that we think of our outpatient medical as a strong performing store of value. To the extent we can find things that we think drive higher and better, higher quality, better growing cash flows, we will trade out of them. You know, that's the arbitrage that exists. I think, you know, in a perfect world, you know, a girl can dream, we actually get a cost of capital, and we can externally grow like many of the other folks in our space. We don't need that to effectuate a pretty powerful change in the portfolio.

You know, we have rough and tough $1.25 billion of capital to play with, if you will.

Okay. I'll hop back onto you. Thank you very much.

Thank you.

Thank you. Your next question comes from Wes Golladay, from Baird. Please go ahead.

Hey, good morning, everyone. I guess can you talk about how you see leverage going over the next, call it, year? What do you ultimately wanna get to, understanding that these are stabilizing assets.

Yeah. Well, I'll take the last one first. The ultimate goal would be investment grade, you know, access to the bond market. We're too small for that. From a metrics perspective, that's what we're after. That way we always have a little bit of capacity. Specifically how that goes over the next 12 months really depends on, you know, what comes in front of us from an opportunity perspective.

Okay. Then on the investment front, you had these unique opportunities that came your way. Do you still have a pipeline you're working on? Do you wanna digest these acquisitions for a little while and get the funding secured for these? Do you keep going after it?

I mean, both, right? Job one is get these closed, integrate them, execute on the plan that we've underwritten and are excited about. But we can do more than one thing at once, we'll also I mean, listen, we're always looking, I think there's lots of interesting things out there, it's about finding good situations where we can sync up. We're absolutely gonna continue to do that. First things first, we gotta do a good job with what. You don't get more stuff if you break the toys you have.

Okay. Thanks for that.

Thank you. Your last question comes from Gaurav Mehta from Alliance Global Partners. Please go ahead.

Yeah, thank you. Good morning. I wanted to ask you on the pending acquisitions, it seems like the three of them are in D.C. metro area. Is that something by choice or is that just the opportunity presented in that area?

I would say that that's kind of a happy coincidence. It feels good. That's a home game for us. We're based here in D.C. I'm from this area, so are many of the folks on our team. I wouldn't say, you know, that was because we said we have to do the first thing in Washington. It worked out that way and that probably may have helped us with more comfort with respect to specific sub-markets and things like that. We can underwrite things anywhere.

Okay. second question on dispositions. Outside of $200 million of pending asset sales, I think you also list $125 million of, maybe expected additional dispositions. Are those pending or those are the target dispositions that can happen in the future?

Those are in the future.

Okay. Lastly, in the earnings deck, you point out your long-term earnings growth of 6%. When should we expect your portfolio to get to that sort of long-term growth rate?

Honestly, it kinda depends on what else comes up on the buy side and how we fund that. You know, I'd say our present trough is probably next quarter, and we probably start to stabilize, you know, in 2027, 2028.

Okay, understood. Thank you very much.

I mean, as we say, I think we put it in our book second half of 2028.

Okay. Understood. Thank you.

Thank you.

Thank you. Just as a reminder, if you wish to ask another question, just please press star 1. At this time, there are no further questions. I will turn the conference back over to Mr. Mark Decker, Jr.

Well, thanks everybody. We appreciate the interest and, if you're gonna be at BMO's conference next week, we'll hope to see you there. Otherwise, we'll see you, maybe at Nareit in New York. Thanks, everybody.

Ladies and gentlemen, this does conclude your conference call for today. We thank you very much for your participation. You may now disconnect. Have a great day, everyone.

Greetings, and welcome to the Chiron Real Estate Fourth Quarter 2025 Earnings Call. [Operator Instructions] It is now my pleasure to introduce your host, Jamie Barber. Thank you. You may begin.

Good morning, everyone, and welcome to Chiron Real Estate's Fourth Quarter 2025 Earnings Conference Call. My name is Jamie Barber, and I'm Chiron's General Counsel. On the call today are Mark Decker, Jr., Chief Executive Officer; Bob Kiernan, Chief Financial Officer; Juan de Leon, Chief Investment Officer; and Danica Holley, Chief Operating Officer. Statements or comments made on this conference call may be forward-looking statements. Forward-looking statements may include, but are not necessarily limited to, financial projections or other statements of the company's plans, objectives, expectations or intentions. These matters involve certain risks and uncertainties. The company's actual results may differ significantly from those projected or suggested from any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings. Additionally, on this call, the company may refer to certain non-GAAP financial measures. You can find a tabular reconciliation of these non-GAAP financial measures to the most current comparable GAAP numbers in the company's earnings release and in filings with the SEC. Additionally, information may be found on the Investor Relations page of the company's website at www.chironre.com. I would now like to turn the call over to Mark.

Good morning, everyone. I'm thrilled to welcome each of you to Chiron's inaugural earnings call. This quarter was a busy one with meaningful achievements across all verticals. Bob will discuss our fourth quarter performance in a moment. But before that, I'd like to use my time to summarize what we intend to achieve as an engaged and reinvigorated organization. Yesterday, we published a full investor presentation outlining how the Chiron team is building for the future. I'll walk us through a subset of those slides this morning, but encourage you to take a moment to review the full deck. We trust that you'll find it to be direct, transparent and thought. We'll start with a quick mythology note. In Greek lore, our namesake, the venerable centaur Chiron is the father of medicine and the architect of medical education. We like the imagery and believe his legend aligns well with our new mission statement of delivering value at the intersection of care, capital and real estate. Our team is well positioned to execute on this mission with strong leadership across operations, finance and investments. We have a deep bench of talent beyond the familiar names, and I believe that we can punch above our weight. Before looking at where we're going as Chiron, it's important to acknowledge what we've done as GMRE. From the date of our IPO, GMRE has meaningfully exceeded the total return profile of our closest MOB peers. That's a good thing, and we intend to keep outperforming. What's not good is that medical office has been in a bear market for years. This bear market has had more to do with interest rates than asset performance, but we need to be prepared for a world where 4% 10-year treasuries is the new normal and 2% to 3% rent growth may be sub-inflationary. So we've rewritten our playbook to prioritize earnings growth on top of our stable existing portfolio. We've already made an incredible amount of progress. This progress includes establishing a long-term strategy to guide our decision-making and hold ourselves accountable as well as a comprehensive review of our existing portfolio. Our findings have informed our decision to reimagine the way we approach asset management, leading to the appointment of Alex Wilburn as Portfolio Manager. Alex is one of our longest tenured team members, most recently serving as a senior investment professional. We're excited for him to apply his capital allocation and market-oriented mind to the portfolio management function and know that he will thrive in his new role. We also took time to think about how our existing portfolio stacks up against the field, drawing a few conclusions. First, it's important to acknowledge the overall return profile of medical office. Rent growth is incredibly consistent but modest due to our fixed rate escalators and long average lease term. This growth is partially offset by the capital and leasing costs. We found that our performance is in line with the sector generally. One key difference is entry price. We believe that if you're going to face limited growth, it's important to realize more yield going in. Second, we believe that the benefit of the health care sector is that you can find great investment opportunities outside of primary markets. When comparing the demographic profile of our assets to that of the United States at large, we found that we're biased towards higher prosperity markets. Third, the vast majority of our portfolio is owned fee simple, meaning that it's not encumbered by a ground lease. This is critical as outpatient medical owners often operate in an environment where their building tenant is their land lessor. This has the predictable effect of reducing your opportunity when negotiating renewals. When the ground owner is your health care system, they often have the ability to dictate leasing outcomes. Finally, rising construction costs and undeniable demographic shifts have given us an outstanding opportunity to push rents in the years to come. We think that an improved emphasis on driving portfolio performance, including a more proactive approach to pruning underperforming assets will put us in a great position to capitalize on this opportunity. Bob and his team have also been working hard in the capital markets to position our balance sheet for offense. I'm proud to share that we now have no debt maturing before 2028, a big change from where we were 6 months ago, and our current maturity schedule is well laddered and manageable. Looking toward the road ahead, it's our ambition to build an organization that can routinely deliver earnings growth in the upper quartile of the equity REIT universe. Doing that has historically meant growing cash flow by 6% per year. This will be a process requiring active management of the existing portfolio and investing more broadly across the health care sector. We've put a lot of thought towards how we're going to approach each of these considerations. Importantly, we are still firm believers in the economic and demographic tailwinds benefiting our existing portfolio. That said, we also believe that these same tailwinds benefit other subsets of health care real estate, namely active adult and seniors housing. Our entire team has spent considerable time thinking through whether we should pursue investments in the senior space, concluding that the answer is an enthusiastic yes. The silver tsunami is just building with the first baby boomers now just entering their 80s. More broadly, the population of Americans aged 70 or older will expand for decades to come. Existing supply is severely constrained and project deliveries are expected to be far short of what is needed to satisfy demand. Once we knew that we wanted to explore seniors, the next question was how. We believe there's an opportunity to assemble a differentiated portfolio of premium newly built active adult and shop investments in the public markets. There's a lot that went into that decision, but I'll highlight a few components. The lack of new supply through COVID and the GFC have led to an average age of 24 years for existing senior housing assets. These facilities were designed for a different generation of residents, and we think that newer assets with great operators will have a competitive advantage. This is especially true in the active adult segment where high-end amenities and programming are the defining component of the resident experience. Second, the cohort of highest income seniors is sizable and growing, providing us with the comfort that demand for premium facilities will prove resilient. And finally, our lack of incumbency and small size converge an advantage. We can focus solely on the products we want and relatively small transactions move the needle, enabling the potential for stronger growth. It's the early days of the silver tsunami, and there's lots of room on that wave. Our team has a sound understanding of the space and believe our boutique approach to partnership with operators and developers gives us a broad opportunity as we enter these verticals. Many existing owners, operators and developers of senior housing facilities are middle market in nature. So that decision of who to partner with on their business is a monumental one, and there are many considerations beyond who's willing to pay the most. This obvious value proposition has allowed us to build an attractive pipeline, each with strong return profile and opportunity to build a larger relationship. For now, we'll be thoughtful in limiting investments to those that we can fund through capital recycling, but we're ready for more when that changes. Our announced active adult investment in Minneapolis is a great example of the opportunity available to Chiron. We've taken a 49% interest in the development of a new community with an expected delivery of 2027 and a stabilized double-digit unlevered IRR. This investment was sourced off market through a relationship with an experienced luxury housing developer that we've transacted with in the past and known for a decade. We believe this relationship provides us with future pipeline of great communities. As mentioned earlier, we're being thoughtful about how we fund these acquisitions, given our current cost of capital. During the quarter, we sold an early vintage medical office for a sales price of $10 million, bearing our team the outsized execution risk and capital required to stabilize a poorly positioned building. We used these proceeds to repurchase stock in a leverage-neutral fashion, which we view to be a sound capital allocation decision. We'll be very conscious of debt levels as we execute our pipeline and have already identified approximately $250 million of prospective dispositions. These dispositions are likely to focus on assets that we believe will demonstrate the overall quality of our book, including a portfolio of IRF assets and the Beaumont Surgical Hospital. We've begun marketing efforts on each and believe that we will realize proceeds meaningfully above our basis, demonstrating our ability to make sound investments. Thank you for allowing me to take you through that. Bob, would you please walk us through some of our quarterly highlights?

Thanks, Mark. Our NAREIT-defined FFO per share and unit was $0.97 for the quarter. Core FFO, which we previously referred to as AFFO, was $1.16 per share and unit. Net debt to adjusted EBITDA REIT was 6.2x for the quarter, a reduction of 0.7x from the prior period, which was driven by our recent preferred equity issuance. Same-store cash NOI, which includes all assets owned by Chiron for at least 15 months, increased 5.4% on a year-over-year basis. Sequential performance was also strong at 2.9%. I'm pleased to share that Chiron will be transitioning to a monthly dividend with no change to the annual $3 per share rate. We believe that the dividend will provide our shareholders with a more frequent income stream while also reducing frictional costs for the company. I'm also pleased to share our initial 2026 core FFO guidance range of $4.30 to $4.45 per share and unit. This range includes $0.36 of anticipated headwinds due to the results of our balance sheet fortification efforts throughout the back half of last year. Notably, this guidance does not reflect any speculative acquisition or disposition activity. Mark, would you like to provide some closing thoughts?

Yes. If you're just joining the call, you need to know that it's been a busy quarter, and we've accomplished a lot, and we're well positioned in the care delivery universe and broadening our aperture to add growth from senior housing to our quality cash flows. The care universe has undeniable tailwinds that make a nimble player like Chiron well positioned to grow quickly through internal and external cash flows, and we're excited for our future and believe strongly in what we're doing. We wouldn't ask you to endorse a strategy that we ourselves are unwilling to invest in. And with that, we look forward to seeing some of you at Citi next week. And operator, we're ready to take questions.

[Operator Instructions] Our first question comes from the line of Juan Sanabria with BMO Capital Markets.

Congratulations on laying out the new strategy and thesis. I guess the big question in my mind is just there's obviously a lot of enthusiasm around seniors housing and why do you think Chiron is positioned to execute over and above what some of your peers are doing. And the focus in seniors, is that more assisted independent living? How do you plan to pick the operators, the market focus? So if you could just give us a little sense of kind of what we should expect going forward in seniors and why Chiron is the platform to outexecute some of your peers?

Sure. Juan, thanks. Listen, it's a big universe out there, and operators have lots of options. I think the way that we'll have to compete is by delivering value, as we've articulated sort of as the main mission. But I mean, there's lots of considerations that go into who the real estate partner is going to be. And I think if I'm on the other side of the table, choice is good. And so we're one more choice. We'll have to win the business just like anyone else on the merits of our value proposition. And why do we think we can? I mean, we talk about this a lot around the water cooler. I mean there's a version of the universe where we're like the smallest, most relevant company in the space. And then there's the real world where we have an unsecured balance sheet and $100 million of EBITDA and a great team with good gray matter. And if I was describing that company to just a normal person that say, it sounds like a pretty good business. It is a good business. And it's possible the public market will appreciate that, and we can use that tool to our advantage or not. But either way, we're going to build a great business.

And the focus on seniors would be on what kind of product side, kind of putting active adults to one side, independent assistance of communities, markets, et cetera, what's the focus, I guess, day 1?

I mean we're really focusing on the operator and the real estate, and we're really looking at independent and assisted, some memory care stay away from skilled.

Okay. And then on the disposition side, the $250 million of assets that you're potentially looking to capital recycle, just you kind of put some yield targets for the investments, but how should we think about the yield associated with those potential sales? And if you could talk maybe about the timing of the selling versus buying and how we should think about kind of the cadence of recycling that capital?

Yes. Well, we can't force anything. So everything takes two good willing parties. But we have launched a JV. We like the inpatient rehab facility space. We'd like to express that like of that space by hoping to find a capital partner with us. We have a good track record and a decent sized portfolio in that niche, and we think we can do some interesting things and grow that. And we'd like to do it with a capital partner. So we're out in the market looking for a joint venture. It's possible someone comes and says, we've got to have this at a price that makes it a full sale, but that's not our objective. And I would imagine that happens in the second or third quarter. And then on the MOB sale, we are working with a buyer there, and I would expect we'd announce an LOI on that in the next, I don't know, 60 days and probably have that off the books by the third quarter. That asset has been a real strong contributor to our same store. So we kind of hate to see it go, but I mean, we just signed a 15-year lease with an A-rated credit, and it's a really good recycling candidate for that reason.

And then just the last question for me. On the White Rock bankruptcy, I guess, have they paid first quarter rents? Or how should we think about the impact to financials at this point in time?

Yes. They have paid -- they are currently -- current on what they've been paying us. I mean this is a situation where we have a great basis in that property. It's a 14-acre property just east of Dallas, kind of looking at the city and on a reservoir lake. We're in it for about $105. The operator there purchased that out of a bankruptcy in 2023 and took some pretty tough terms from their counterparty and the bankruptcy is really about trying to free up some of their financial capacity by eliminating some of the seller financing that they took. So we believe that they have a good chance to do that. We're supportive. We went down and met with them in December. This was on their menu of options, and we're working very hard to be a good collaborative partner. We would like to see them win. And if they can't win, then we'll make sure that we have a good alternative prepared. But it's an evolving situation. We're in close contact with them and monitoring it and doing everything we can to help them be successful.

Our next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets Inc.

Mark, I was just hoping you could start by discussing when this strategy shift discussions with the executive team and the Board really started to come about.

Sure. We really started in August using a consultant that I've used in the past called [ RCLCO ]. We put together kind of the top 10 folks at the company and our Board, and we did a bit of a 360 evaluation where we had people who don't work here tell us what they thought about the business, and we all considered it. And we had really a multi-month process where we kind of beat up lots of different ideas and ultimately laid out a strategy for the Board in December, which they're supportive of and helped collaborate in. And so we've really been at it since August and feel great about where we are relative to our plan in that timeline.

Helpful. And then Bob had highlighted there's no real capital recycling that's assumed in guidance. But I guess, how are you just thinking through the near-term earnings impact from executing the strategy of selling some of these legacy [ OEM ] assets and then recycling into that development, which obviously tends to have some downtime from an earnings perspective as well as just being able to compete on the senior side and redeploy that capital at kind of minimizing that spread versus the sales?

Yes. I mean I think the truth is we'd like to get through that period as soon as possible, and we'd like the market to see what we can cook up. So I mean, hopefully, we can get through that sort of valley as fast as we possibly can. But again, we don't get to dictate all the timing. So in terms of earnings impact, I mean, as you can imagine, as we're trying to delever the business and we're selling assets, there definitely could be, there should be, there will be dilution there. But we're really thinking about it like it's our own money and imagining what the best business looks like. And frankly, the returns that are available in the housing space are superior to those in outpatient medical. So we're not, by any means, abandoning outpatient medical, but deals are going to compete on return.

And just one more for me. There's some efficiency and other savings that's outlined in the 2026 guidance. Can you discuss what that includes? And then also as you build out the senior side, I mean, how are you thinking about the asset management side of that business, given as you move along the higher acuity spectrum, the operating intensiveness of that business obviously picks up? So just curious some of the puts and takes from an overhead perspective.

Rob, do you want to?

Yes. I'll start out relative to the outlook and the efficiencies in the 2026 guidance. And the efficiencies are largely items that won't recur in 2026 as much as any 2025 items that won't recur in 2026. As Mark mentioned, the time we spent working through the strategy and some of the other one-off type items like that, that are -- that were in our 2025 numbers, that won't repeat in '26, is the primary driver.

And then to get to your question on sort of building out seniors, I mean, some of that will be a function of how fast we're able to make investments and it could go slower than we want, and we want to be mindful of how we're staffed. And as you know, the road is sort of littered with smart real estate people who didn't appreciate the operating intensity and leverage embedded in running a senior housing operating property. And we have a lot of respect for that. So I mean, it's really about picking great partners that we have confidence in and can learn from. And look, we're -- we don't have all the answers, and we'll learn and we'll make some mistakes. I think we'll make more good decisions than bad ones, but it will be a new business line for us. So we have a healthy respect for what that means, and we'll be very focused on mitigating our risk there really through choosing partners that we bet extensively.

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

I just want to build off Austin's last question. Maybe on the investment team, is that team for the senior side all built out now or mostly built out?

No. I mean, right now, we're using our investment team, Alfonzo is on the line here. He's dressed in the senior housing gear right now. But I would imagine we could add to that team as we progress. But we do have some relationships that are -- that reside here already, and we're working on those.

Okay. And then when you look at how you want to approach it, I know it's early innings, but do you have a sense of how many operators you want to work with? Are you going to be more regionally focused? Will you target mainly new, I guess, developments? Would there be any potential for redevelopments? Just trying to get a little bit better sense on how you're approaching it.

Yes. It's a great question. Right now, the operators we're focused with, I would call them kind of regional or single-market operators with good track record and generally speaking, newer assets. So as we said in our prepared remarks, we're focused on newer products. We believe that's a place where we can possibly differentiate. But right now, it's -- the answer to your question is as few and as good as possible. But obviously, if we can get some size, I mean, it would be great to have a stable of operators that we can share ideas with across and so forth. But that's ambition today.

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

I wanted to ask you on the portfolio allocation as you build your [ SHOP ] active adult portfolio, how would the allocation look like between medical office and the housing part?

Yes, that's a great question. I mean some of that will be -- thanks for the question, Gaurav. A lot of that's going to be dictated by the opportunity set. So we don't have like a pie chart in mind that we're going to manage to. We're going to manage to the opportunities and be somewhat opportunistic there. But active adult, in particular, sort of "modern active adult", which has kind of really only been around for 10 years or so, is a relatively small niche, the hunting grounds in seniors, much larger. But we really like that active space. So we'll see. I mean I wouldn't hazard a guess, to be honest.

Okay. And I guess for the acquisitions, should we expect primarily to be focused on [ SHOP ]? Or would you be open to medical office as well?

I mean, as we said earlier, like everything competes on return. And today, [ SHOP ] is winning that competition.

Okay. And I guess what are cap rates like on [ SHOP ] versus medical office?

I think cap rates are actually pretty similar. It's the character of the forward-looking growth that's much different. So call it, plus or minus 6% on forward going in, but one has 2% to 3% growth and one has 4% to 8% and some really sustainable headwinds -- or excuse me, tailwinds.

Our next question comes from the line of Juan Sanabria with BMO Capital Markets.

Just curious on the active adult, I think one of the prior callers had a question with regards to how we should be thinking about your entry there. I mean development historically is a drag until the asset leases up, although I recognize the lease-up is a lot shorter than in seniors housing. But are you guys getting a preferred return on the capital you're investing to kind of bridge the gap until the asset can start to cash flow? Or just how are you thinking about that segment of the opportunity set with active adult?

Yes. Well, welcome back, Juan. We're glad to have you, and we love the curiosity. Yes. The answer to your specific question on this first opportunity in Minneapolis is no. We are not getting a preferred return. However, that would be our goal in the future. That situation was an interesting one. They were actually -- they were under construction already. So -- and they preferred a 50-50 scheme. So we went with it. It was a relatively low dollar amount. So did some of this at Centerspace where we had kind of a build core strategy, if you will, where we employed a preferred element, and we would endeavor to do that again here. So I would expect you'd see more of that. And obviously, we'll be mindful of sort of overall sizing of that loan book, if you will, and risk.

And then the medical office, there was a Steward bankruptcy last year and you took some vacancy that was an opportunity as you relet that space. So just curious on the update on kind of the opportunity there, and how much has been backfilled? And how that has contributed or could contribute to growth in the core business today?

Yes. The Steward piece is really resolved. It was really that -- what is now the [ Cruse-Two ] asset, the Beaumont asset that we talked about disposing of, I might one other small lease, but it is not material for any...

Yes, there are 2 other small leases, but nothing to...

And then we have Prospect, which is still going. So that -- our East Orange asset has been affected by that materially. So that's one we're still working out.

Okay...

I'm sorry, Juan, say that again, forgive me.

No, I'm sorry. I was going to ask the Prospect that upside is still to come if you are able to backfill that?

Correct. Yes, that would show up today as negative NOI.

Okay. And then last question for me. Anything on the watch list to call out over and above the White Rock?

No. No. I mean in the past, White Rock would have been the one when people asked us about watch list that was kind of top of mind. And again, we're -- that's a great entrepreneurial group. We're in good touch with them. We believe in their ability to be successful. But there's nothing past them that we're spending a lot of time on right now.

And we have reached the end of the question-and-answer session. I'll now turn the call back over to CEO, Mark Decker, for closing comments.

Thanks very much. Well, thanks, everyone, for your time and attention, and we look forward to talking to you next quarter.

Thank you. And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation. Have a great day.

Good day, and welcome to the Global Medical REIT Third Quarter 2025 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jamie Barber, Global Medical REIT's General Counsel. Please go ahead.

Good morning, everyone, and welcome to Global Medical REIT's Third Quarter 2025 Earnings Conference Call. My name is Jamie Barber, and I'm Global Medical REIT's General Counsel. On the call today are Mark Decker, Jr., Chief Executive Officer; Alfonzo Leon, Chief Investment Officer; Danica Holley, Chief Operating Officer; and Bob Kiernan, Chief Financial Officer. Statements or comments made on this conference call may be forward-looking statements. Forward-looking statements may include, but are not necessarily limited to, financial projections or other statements of the company's plans, objectives, expectations or intentions. These matters involve certain risks and uncertainties. The company's actual results may differ significantly from those projected or suggested from any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings. Additionally, on this call, the company may refer to certain non-GAAP financial measures. You can find a tabular reconciliation of these non-GAAP financial measures to the most currently comparable GAAP numbers in the company's earnings release and in 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 Mark.

Thank you, Jamie. Good morning, everyone, and thank you for joining us today as we share the results of our first full quarter together as a management team. As you review our materials, I hope you'll find growing evidence of our focus on driving shareholder value. We're going to achieve this by delivering internal earnings growth, demonstrating disciplined capital allocation and capital markets acumen and executing on external growth opportunities when they present themselves. The team was highly productive on each of these fronts during the third quarter. The portfolio performed well, posting 2.7% same-store NOI growth. This is our first quarter reporting on this key metric and an improved focus on property performance will help our asset management team deliver stronger and more consistent results. On the balance sheet, we were able to address our upcoming debt maturities by recasting the revolver to 2029 and extending our $350 million Term Loan A and dividing the term loan into 3 distinct loans while extending our weighted average debt term by 3 years. Thanks again to our lending group and great work by our finance team. In investments, Alfonzo and team have built a pipeline of highly desirable opportunities, which we will only act upon with a green light from the market. Our current cost of capital dictates that we will remain disciplined, pursuing only our highest conviction ideas and funding those transactions with proceeds from asset recycling, but we hope that will soon change. More broadly, our full team is in the midst of developing a strategic plan to deliver outsized shareholder return in the years ahead. We're excited to share more when we're able to. On the whole, it's been an outstanding first 4 months as a new team. I'm appreciative to everyone for their pedal to the metal efforts. The journey is just beginning, but I'm ecstatic with our progress so far. Before passing the call to Bob, I'd like to comment on the large outpatient medical transaction recently announced by one of our public sector peers. First, the transaction demonstrates the meaningful institutional demand that exists for health care infrastructure assets, a huge plus for our existing owners. Second, we've been asked by many investors for a read-through on the mark-to-market value of our own real estate, which is a fair question. Answering that question requires agreement on what defines quality. We believe that quality assets are those that deliver cash flows that are predictable, reliable and growing. By that yardstick, we like our portfolio quite a bit. The GMRE portfolio is 95% leased with over 5 years of remaining WAULT. Our leases have an embedded annual escalator of 2.1%, and this quarter's 2.7% same-store print is repeatable and achieved without any carve-outs for redevelopments or assets that we don't wish to count. We'll let others speak to what that means in terms of cap rate, but any reasonable assumptions would indicate that we trade at a substantial discount to the fair value of our assets. Bob, can you please run through the numbers?

Thank you, Mark. During the quarter, we delivered funds from operations of $14.5 million or $1 per share in unit. Adjusted funds from operations, which excludes straight-line rent among other noncash and nonrecurring items, was $16.2 million or $1.12 per share in unit. Each of these metrics grew 4% on a per share basis relative to the prior year equivalent. Year-to-date, funds available for distribution, which accounts for CapEx, tenant improvements and leasing commissions, totaled $39.2 million, resulting in a payout ratio of 84% in our current annual dividend rate. In October, we amended our credit facility to extend the term of our revolver to October 2029 and to extend the term of our $350 million Term Loan A by breaking it up into 3 tranches with maturities ranging from October 2029 to April 2031. The amendment also removed the 10 basis point SOFR credit spread from all of our credit facility borrowings. We are extremely pleased with the execution of the facility amendment, I would like to thank our lending group for their support and confidence. In connection with the credit facility amendment, we entered into forward starting interest rate swaps to hedge the SOFR component of our Term Loan A through its new maturity dates. Based on the current leverage levels, the weighted average fixed rate on these new swaps will result in a weighted average effective interest rate of approximately 4.8%. It's important to note that our previously existing swaps on Term Loan A will remain in effect until the maturity in April of 2026. As discussed last quarter, we are also looking to expand our sources of debt capital to include longer-term debt providers such as insurance companies. By diversifying our lender and tenor mix, we will improve the quality of our earnings and broaden our access to debt capital. This diversification alongside our extended debt maturities and sound dividend coverage ratio has fortified our balance sheet and marks an important step on our journey toward earning an investment-grade credit rating. Danica?

Thank you, Bob. The third quarter was a productive one for our asset management team, headlined by same-store NOI growth of 2.7% for our portfolio. This performance was supported by positive year-to-date absorption and the successful re-leasing of our 85,000 square foot facility in Beaumont, Texas that was previously leased to Steward Health. Beyond Beaumont, we're seeing positive leasing outcomes across the portfolio as high construction costs have constrained new supply, enhancing our leverage when negotiating lease renewals. We disposed of 2 assets during the quarter, including 50,000 square foot freestanding health system administrative facility located in Aurora, Illinois. Following this disposition, our portfolio exposure to dedicated health system administrative space is reduced to less than 2% of total ABR. As of quarter end, the GMRE portfolio was 95.2% leased with a remaining term of 5.3 years. We have strong visibility on our near-term leasing pipeline and expect occupancy to trend towards 96% at year-end. CapEx and leasing costs have totaled $9.7 million on a year-to-date basis, putting us in a position to land within our full year guidance range of between $12 million and $14 million. I would now like to turn the call over to Alfonzo to discuss our investments. Alfonzo?

Thank you, Danica. On the investments front, we have remained patient on new acquisitions in light of our cost of capital. Still, the team has been busy underwriting deals to keep an active pulse on the market, evaluating $11.5 billion in prospective transactions so far this year. This deal flow has provided us with a near-term pipeline of almost $500 million in potential deals at first year cash returns that blend to a 7.5% to 8% range. For now, execution on those deals will be limited to those which we can fund via asset recycling, but our team remains ready to pounce on this attractive market opportunity once we receive a green light from the capital markets. Mark?

Thanks, Alfonzo. I've been involved in the outpatient medical sector since 2001 and I don't think the setup for our niche has ever been better. We're poised to benefit from increasing demand for outpatient services, rising construction costs that limit new supply and competitors that are either out of the game or have lots going on internally. GMRE has the right team and skill set to drive FFO and FAD earnings growth, especially if pricing power continues to come our way. That said, we know that we'll need to keep on executing to earn a currency that enables external growth and we're ready and excited to do that work. Operator, let's open it up for Q&A.

[Operator Instructions] your first question today will come from Wes Golladay with Baird.

I have a question on the -- you talked about the positive leasing momentum. Can you talk about the pipeline of leases that you have signed but will still need to commence rent over the next few quarters? Would you have like an ABR number for that?

I don't know that we have an exact ABR number, but Danica, do you want to speak to that?

Yes. I think in terms of an exact ABR number, I'm not sort of comfortable nailing that exactly down, but I would give you encouragement that the performance of the portfolio will continue to be consistent with what we reported out this quarter and that there's no surprises or any sort of bogeys in there. So I hope you're able to sort of go from that.

Okay. And then when you look at -- you mentioned about maybe sourcing insurance debt. Would you have, I guess, a framework for thinking about timing of when you may pursue that?

Yes, Wes, I mean, honestly, I think it would be to our benefit to have it sooner rather than later. It's just another market and another place where we could get financing and it allows us to go past 5 years. So I mean we have urgency around it but I mean, the trick is it's sort of binary. We're either able to access the market or not and it comes down to the view of our credit. It's our belief and expectation that the counterparty will price us like kind of a BBB- credit. And so if and when we can get that as we work through it, we will. And if we can't, we'll have to do a few things here and there to get ourselves in position for that, including possibly going to the agencies. But we feel like it's within reach to get that done.

And your next question today will come from Juan Sanabria with BMO Capital Markets.

This is Robin Haneland sitting in for Juan. I was curious what drove the occupancy increase during the quarter? And then on top of that, is it the year-end occupancy of 96% that is driving the sequential benefit to FFO in the fourth quarter or something else?

Yes. On the occupancy, I mean, it was mainly just driven by selling the empty facility at Aurora. That's the kind of math of it. And in terms of sequential Q4, it's probably the benefit of CHRISTUS but I don't know, Bob, do you want to chime in?

From an occupancy perspective, Q4 will have lease-up in it. We've got a number of lease-ups that are projected to come in during the fourth quarter. From an earnings perspective, we'll continue -- I think it is CHRISTUS, from a property NOI perspective, again, continuing that into the fourth quarter. This was our first full quarter with that in the numbers and we'll continue on that path.

And then on the acquisition front, how low do you think leverage would have to get for you to look to flip to being a net acquirer? And what scale could you possibly be a net buyer?

Yes. I think, Robin, for how low do we want to leverage, I mean, our overall target leverage, I'd say, in the near term is sub-6x. And ideally, we could be in a spot where we could fund with permanent capital and then put it on our line, take it off with permanent capital and some longer-term debt would be an ideal state. We're not there today. I mean if we had access to capital, I think we could easily put $200 million to $500 million of external growth up per year and that would be mathematically compelling, I think, and as well as just improving the overall quality of the business. But for now, we're going to be kind of -- we're going to get a little bit less levered ideally and then probably be funding from recycling.

On the topic of recycling and deleveraging here, could you maybe just help us understand the quantum of assets you're considering selling? And maybe like any rough expectations on yields would be helpful.

Yes, it really depends on type, but I'd say we have some things that we think would sell in the low 6s and others that we would put probably closer to 7, and we would be seeking to redeploy that kind of plus 100 to 200 basis points, taking the 2 ends of those spectrums.

And your next question today will come from Austin Wurschmidt with KeyBanc Capital Markets.

So Mark or Alfonzo, you highlighted the pipeline of acquisition opportunities as much as $500 million that sort of meet that criteria in the 7.5% to 8% cap rate range. I mean, how big is the disposition pipeline today that you think that you could sort of execute on that, maybe the near-term opportunity of capital recycling at a positive spread?

I think near term, it's probably 50 to 100, and we could probably do more -- I mean it all depends, Austin, because we have to get the sale we like. And so it's a lot of triple net leases that we have to kind of pull off to get the sales and the buys we like. But I mean, everything we have, I think, is salable. It's just a question of trying to manage it all together, the leverage, earnings and so forth. But I'd say we won't get at that $500 million in full without some meaningful change. So my guess is -- my hope would be we get 20% to 40% of that done. Pipelines, as you know, evolve. So if we have something nailed down now, we can't move on unless we have a sale pretty close to wind up.

Fair enough. Are there other assets in that disposition pool that are underleased or the lease yield is meaningfully below where it kind of helps both deleverage as well as allows you to reinvest at a positive spread?

The more likely scenario is, I'd say the underleased ones probably aren't as attractive a sale candidate. So our best sales will be well leased sort of sleep at night type items. And we actually probably will get -- I mean the way our leverage is counted in our facility is actually on a gross book basis. So if we bought something for $1 and we sold it for $1.15 as an example, we'd actually be chipping away a little bit more at our leverage just on the margin. So that would work kind of both ways for us. So yes, I'd say there's a little of that possible but it's more likely the fuller assets, not the opportunistic ones.

Appreciate it. And then maybe the last one. You mentioned the team is in the early stages of developing the strategic plan. But since you teased out the idea, anything you can share for just the central tenants of the plan at kind of a high level?

Yes. I mean, honestly, the central tenants will be unsurprising to you. It will be about capital allocation and balance sheet management and just execution. But yes, I guess I'd rather wait. But I don't think there'll be a huge reveal. We're not going to start getting into the metal stamping business or anything like that or data centers. We'll be focused in kind of what we would call health care infrastructure.

And the next question will come from Rob Stevenson with Janney.

Bob, how much -- so the implied fourth quarter guidance is $1.13 to $1.23, if I'm doing my math right. When you're taking a look at that sort of $0.10 range, you talked about lease-ups benefiting fourth quarter earnings, but is that basically the predominant driver? Or is there some other stuff in there? Because that's like $700,000 plus sequentially just to get you to the midpoint of that.

I think it's a combination of things, Rob, but it's certainly -- I mean, it's some elements of the lease-up activity. It's -- there's a number of moving pieces to it. So it's really hard to flag any in particular. But from a run rate perspective, this -- the run rate that we're on from an AFFO perspective, this quarter, the incremental growth, I think the number is maybe a little bit lower than what you're citing in terms of what we need to get towards that range. But we have a number of opportunities from both rent growth and also from a cost side to fall into that range.

Okay. Because I mean, it looks like from the supplemental that you guys are $3.37 of 9-month AFFO and the guidance is $4.50 to $4.60. So my math is failing me here is that it just seemed like a big jump sequentially even if you got -- because you -- it's not like you're going from 80% occupancy to 95% or some sort of huge jump because you don't have that much vacancy.

The one other piece to keep in mind is interest also. I mean with the curve -- with some of the rate reductions that are there, that does have a pickup for us. The credit facility refinancing, we also pick up -- we no longer are subject to the 10 bps SOFR credit spread adjustment. So that's a piece there as well.

Okay. And then I don't know who's best to answer the question, but you guys talk about the tenant credit watch list today. I mean, even if it's not who's on it, but is that watch list expanding, shrinking? How should we be thinking about that at this point in time given some of the re-tenanting, given a couple of sales, et cetera? And how are you guys thinking about that internally?

I mean I'd say on the whole, Rob, it's shrinking. Our 2 main issues there, we're obviously Steward and Prospect. And I mean, we're always watching what our tenants are doing obviously to the extent we can. But those -- that was a pretty good size event for us. And for the portfolio, we don't have anything brewing that we're aware of at this time.

Okay. And then just last one for me. Mark, how are you and the Board thinking about preferred? Is that to you guys, is that expensive debt? Is that quasi-equity? Is that something with the common here that you could expand either reopening the existing or a new issuance to fund? How are you thinking about that capital stack, assuming that the -- if the common equity stays here for any prolonged period of time?

Yes. Candidly, I'm amazed at where the common is, but I guess we're in a decent company. The REIT market as a whole is pretty challenged. And among them, we are some of the most challenged as it relates to earnings multiples. But Listen, I like preferred. I think it is equity and I will go to my grave arguing that with anyone. It's -- we don't have to pay it back. So I can't understand how it would be debt. And in our capital stack, I think it's possible today that would be attractive equity. So I mean, I'd say it's definitely something we'd consider. And I would say the people who would argue with us that this said don't probably own our stock right now anyway. So...

And the next question will come from Gaurav Mehta with Alliance Global Partners.

I wanted to ask you on your occupancy comments. I think you mentioned 96% by year-end from 95.2% as of this quarter. Does that assume any sale of any vacant property?

No.

Okay. And so when you say 96%, does that mean that the tenants are paying the rent? Or is it like you're signing 96% and tenants will probably start paying the rents later?

Those are all -- Gaurav, thanks for the question. It's really -- those are kind of leases that are underway. We're trading paper. So those are situations where we have a line of sight and have belief that it will get -- the lease will get signed by the end of the year. And by the way, I think we did sell one small building, although it wouldn't meaningfully move occupancy. So I retract my firm no. I think we sold a very small asset actually just yesterday. So...

Understood. And as a follow-up on the G&A for fourth quarter, should we expect that to be in line with where third quarter was?

Gaurav, yes, it's -- from a cash G&A perspective, we're forecasting in that same type of range and similar on the cash.

And your next question today will come from John Massocca with B. Riley.

Maybe thinking about the buyback and kind of where your stock is trading today, as you look at dispositions and kind of capital recycling, how are you kind of thinking about utilizing the buyback, paying down debt or actually buying assets? I mean, kind of where are we today maybe within those 3 options?

Yes. Good question. Look, the stock is really attractive right now. We're trading over a 9% cap on an implied basis and that we can't find a portfolio that we have so much information on for that price. So that's a very attractive option. Obviously, that's permanent capital. It's precious. We have a lot of respect for that and are not trying to shrink it. But if -- but you could say the universe is telling us to sell assets and buy our stock back, and that's certainly under consideration, we'd want to do it. I think we talked about when we announced the buyback on a leverage-neutral basis. And just -- yes, so I guess I'd say that. So I mean, ideally, we could do a little from each delever, buy some stock back, buy some assets that are accretive, that would be ideal. That's what I'd say we're working on generally.

As we think about and this maybe even be part of the strategic plan, I mean, is there an opportunity set to sell big chunks of assets within the portfolio? Or should we expect kind of disposition activity near term to be kind of granular like it has been in quarters past?

I think it's possible we could do big chunks. I mean it's just about getting a buyer you like. And I'd say the bigger it is, just the more complex it is because it really -- it really affects our corporate math. So -- kind of time that well.

And then longer term, particularly as you're thinking about kind of strategy for GMRE, is there potential to do investments maybe outside of the traditional aperture or traditional focus of MOB? What are your kind of big longer-term thoughts on where you want to focus property level investments?

Yes. I mean I think that's a great question. I think the long term for us, I mean, we're trying to manufacture the best cash flow stream we can. And by that, we mean really FAD and ideally free cash flow generated back to the company to start to fund some internal growth, which we're really able to do for the first time, I think, in the company's history this quarter, albeit a modest amount. And so I think we would look at health care broadly, and we're not, I think, in most people's definition, a pure-play MOB or we're not pure-play medical office already. And I think that's an opportunity. And so yes, we are exploring that. And I'd say thinking where else in health care, we think we could craft an edge. Where I think our sort of strength as an investment team is, and I think this is real is we have some very thoughtful folks that know the business well and really go deep on underwriting and those are skills that are transferable.

This concludes our question-and-answer session. I would like to turn the conference back over to Mark Decker for any closing remarks.

I'll just pause on to thank everyone for spending time with us this morning. And hopefully, we'll see you this winter. Thanks so much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, everyone, and welcome to today's Global Medical REIT's Second Quarter 2025 Earnings Call. [Operator Instructions] Please note, this call may be recorded, and I will. It is now my pleasure to turn the conference over to Jamie Barber, Global Medical REIT's General Counsel. Please go ahead.

Good morning, everyone, and welcome to Global Medical REIT's Second Quarter 2025 Earnings Conference Call. My name is Jamie Barber, and I'm Global Medical REIT's General Counsel. On the call today are Mark Decker, Jr., Chief Executive Officer; Alfonzo Leon, Chief Investment Officer; Danica Holley, Chief Operating Officer; and Bob Kiernan, Chief Financial Officer. Statements or comments made on this conference call may be forward-looking statements. Forward-looking statements may include, but are not necessarily limited to, financial projections or other statements of the company's plans, objectives, expectations or intentions. These matters involve certain risks and uncertainties. Company's actual results may differ significantly from those projected or suggested from any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings. Additionally, on this call, the company may refer to certain non-GAAP financial measures. You can find a tabular reconciliation of these non-GAAP financial measures to the most currently comparable GAAP numbers in the company's earnings release and in filings with the SEC. Additional information may also 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 Mark.

Thank you, Jamie. Welcome, everyone, and thanks for joining us today. It's my pleasure to provide our quarterly update as the new CEO of Global Medical REIT. To begin, I have a few thank you. First, I'd like to thank the Board for placing their confidence in me to lead our business into the next chapter. I'd also like to thank Jeff Busch for his work as the company's founder. Jeff built a strong foundation that we will take to the next level. And finally, I want to thank our talented team here for their hard work, grace and efforts to keep things moving during the transition that started in January when we announced the CEO transition plan. I'm excited to work together with them to reimagine our business and unlock new opportunities for growth and value creation and they are excited to get back in gear. So it's a great time for our company. I will now turn the call over to Danica Holley, our Chief Operating Officer. Danica?

Thank you, Mark. As many of you are aware, earlier this year, we successfully retenanted our Beaumont, Texas facility with CHRISTUS Health as our new tenant. I'm pleased to announce that as of May, CHRISTUS is fully operating in the facility and is paying rent. This is a huge success story given the status of the previous tenant, Steward Health Care, and an example of our team's ability to navigate obstacles to a successful conclusion. More broadly on the portfolio. As of June 30, 2025, our occupancy stood at 94.5%, which is down from the first quarter, primarily due to the expiration of the lease at our 50,000 square foot Aurora, Illinois property and the rejection of the master lease at our 60,000 square foot East Orange, New Jersey property related to the Prospect Medical bankruptcy. We touched on both of these in prior calls, but I'd like to offer a little more color. In Aurora, this was a health care administrative building adjacent to one of the system's new outpatient facilities. We purchased this building pre-COVID with an expectation that the system would expand and unfortunately, COVID changed the system's utilization of the administrative space. We are currently looking to sell or retenant this facility. On the flip side, after almost 2 years of negative cash flows, the developments at East Orange are positive. We now have control over the space, which is 40% occupied and are working directly with former subtenants and prospective tenants, including the new adjacent hospital operator. We expect this property to recover to stabilized occupancy of over 90% in the next 24 to 36 months. Turning to our leasing activity. We expect total occupancy to end the year over 95%, which includes 150,000 square feet of new leases, 130,000 of which are complete. Regarding CapEx and leasing commissions, year-to-date spend is $5.2 million, and our guidance for the full year is between $12 million to $14 million. So we are well positioned. I would now like to turn the call over to Alfonzo to discuss our investments. Alfonzo?

Thank you, Danica. During the quarter, we completed the acquisition of a five-property portfolio of outpatient medical real estate, which brings our total acquisition volume for 2024 and 2025 to approximately $150 million at a blended going-in cash yield of 8.5%. While we are ecstatic about the cash yields, we are even more excited about our ability to find differentiated investment opportunities. First and foremost, we were able to achieve portfolio discounts with our execution capabilities, including our balance sheet strength when lending for portfolios was unavailable. On the real estate side, we were able to achieve wide discounts to replacement cost, and we believe in-place rents are more than 30% below market, which will allow us to grow future rents at faster than market rates while still providing a significant value proposition to our tenants. Based on our proprietary data, portfolio volumes, which averaged $300 million per quarter from 2022 to 2024, spiked in the second quarter of 2025 to $2.1 billion, over 7x recent levels, and we expect this level of activity to continue due to the large activity in 2020 and 2021 by levered short-term owners. We are excited to compete in this market because in our experience, a flood of opportunities like this offers inefficiencies that we can benefit from with our proven middle market expertise, track record and reputation as a great counterpart. With that, I'd like to turn the call over to Bob.

Thank you, Alfonzo. As we look at the remainder of 2025, our highest priority on the balance sheet front is to renew the portions of our credit facility that are coming due in 2026, namely the Revolver and our $350 million Term Loan. We are in active discussions with our lending group regarding renewal and expect to complete the renewal during the fourth quarter of 2025. We value the strong relationships we have with our current bank lending group. And over time, we are looking to expand our lender relationships to potentially include longer-term debt providers such as insurance companies. By diversifying our lender and tenor mix, we will improve the quality of our earnings and broaden our access to debt capital. As reported earlier this year, the company lowered its second quarter 2025 dividend from $0.21 per share to $0.15 per share. We view this as the rightsizing of our dividend as our dividend coverage went from 110% during the first quarter of 2025 to 79% during the second quarter of 2025 on a FAD basis. And as you'll see in our supplemental, when we say FAD, we are talking about our cash flow after all capital expenditures and leasing commissions. Additionally, the dividend reduction is expected to generate approximately $17 million per year that can be allocated to our best ideas. Given the dearth of the equity capital markets in recent years, we are looking at alternative sources for growth. The rightsizing of our dividend is the most important action we took in this regard, and we will continue asset recycling. We have identified several assets that are candidates for capital recycling. Our portfolio contains organic growth opportunities that can sustain us until the equity capital markets open up again and look forward to what is to come under Mark's leadership. With that, I'll turn the call back over to Mark for final comments.

Thanks, Bob. I'm happy to say I know many of those on this call, but for those who don't know me, I have almost 30 years of capital markets real estate and leadership experience, nearly 20 years in investment banking, building teams to serve middle market real estate companies that were undergoing some growth and/or transition and 7 years in the C-suite at Centerspace, mostly as CEO. Centerspace was another smaller public real estate company that needed to meaningfully reposition their business. If nothing else, that makes me experienced and hopefully a little wise. I sought out this role because I love the work of [Audio Gap] delivering results and communicating clearly to our 3 key audiences: our team, our customers and the capital markets. If we can do this, be formidable in our niche, post results and communicate well, we'll be in a great spot. So that's why I'm here and happy to be underway. It's early days for me, but you can expect that we will fully review our portfolio with an eye towards identifying opportunities. We'll also be working to take our 100% unsecured balance sheet and turning it into more of a competitive advantage with the establishment of a long debt maturity lateral. And we'll be looking inwards to our team to see how and where we can improve, all with the goal of owning the middle market health care real estate space, providing great results to our business owners and growth for our team. Lastly, I hope you'll notice our supplemental in this call, we're seeking to be more transparent and easy to evaluate and understand, starting with improved clarity of our disclosure. We understand these are table stakes as a smaller public company. If you have suggestions, as [indiscernible] says, we're all ears. Please call or send an e-mail with your suggestions. Thank you for listening. And operator, please open the call for Q&A.

[Operator Instructions] Our first question will come from Austin Wurschmidt with KeyBanc Capital Markets.

Welcome to the call, Mark. There was a little bit of a technical issue. So sorry if I missed this. But I guess, Mark, could you just lay out kind of what the immediate strategic priorities are for you and that you think that the company could be doing differently on a go- forward basis?

Sure. Yes. Thanks, Austin. That was not me playing saxophone. But can you hear me okay?

Yes, I can hear you fine. Thanks.

Yes. Immediate strategic priorities are to come together on a strategy with the team and the Board. We have a bunch of good ingredients, I think, in the business as we sit today, and I think we can organize those a little bit more thoughtfully. Obviously, we want to get the refinancing of the line and the Term Loan A done. We feel really good about where we are on that, but nothing is done until it's done. And then we're going to be looking at some capital recycling. So those are the immediate priorities.

I appreciate that. And then I think, Bob, you kind of outlined continued asset recycling and that you've identified some assets. Could you just give us a sense of what types of assets these are from an occupancy perspective or whether there's a capital need and where you think you can sell assets as it sounds like there's a little bit of a pickup in liquidity in the transaction market.

Yes, I'll take that one. Austin, I think the ideal candidates would be the lowest yielding or best priced things. So if you could imagine things that had long-term leases with high-grade tenants, those would probably be first to go. And then I'd say on the other side, to the extent we have assets that we don't believe in long term after a portfolio review, which we are undergoing. We've got this new car smell for a little bit. We're going to take it for a ride. And so if there's anything that doesn't look long term now, we'll work to get rid of that as well. I don't honestly see a ton of that so far. But -- so I'd say it's more offensive capital recycling in mind, maybe a little bit of deleveraging, maybe a little bit of enhancing cash flows while taking advantage of some of those high-quality assets that are well bid today.

So where do you think you can ultimately -- what type of spread do you ultimately think you can reinvest those proceeds? Alfonzo, I think you referenced sourcing assets at wide discounts, replacement costs with really attractive mark-to-market opportunities. Are those out there? And what does that spread look like on a going-in basis? And then I'll leave the floor.

Sure. So the market is -- there's a range of cap rates in the market. The higher quality stuff is trading in the low and sometimes sub-6 cap. But the bulk of the market is trading in the mid-6 to higher 6. And there's a good chunk of deals that are trading north of 7%. And selectively, there are deals that are higher than mid-7s. So we've always played in that higher range of the cap rate range. And with the flood of deals that have come to market, I mean there's a lot of opportunities out there that fit in that bucket.

I'd just add to that. I think we're using the word quality in a way that is market convention. I mean, I think something that's sub-5 that grows at 2% is not as good as something that's 7.5% and grows at 2%. And what I think can be observed based on historical facts is that some of those really tight yields don't actually grow more. And in many instances, your landlord probably has more leverage over you than maybe otherwise. So it's our contention, and I think Alfonzo and his team have done a fantastic job over the last several years of doing this well of finding good properties that yield more, which, in my view, are higher quality and better risk-adjusted returns. So we're going to lean into where we have been because I think it's worked well for us. And then we're going to be working very hard on producing better- than-average per share FFO growth, which we got to put a plan and a formula together to do that. But I think this is an area where kind of the law of small numbers helps us. $15 million is 1% of enterprise value and $720,000 is penny. So we can get this thing going, I think, without moving heaven and earth. And we are buying in my estimation and what we just recently purchased the last bit of that portfolio is a fantastic deal in terms of price per pound opportunity for rent upside, great tenancy. So we're going to try to do more like that. Those are hard to find. We don't need to find a ton of them to make a difference.

Our next question comes from Juan Sanabria with BMO Capital Markets.

Just curious what initial thoughts on where leverage is targeted to be, recognizing it sounds like whatever strategic review is more ongoing versus finalized, but just curious on how we should think about leverage over the medium term.

Yes. I mean I think ideally, we'd like to have a balance sheet that has more capacity for growth. And in my mind, that means stake a ground sub-40% or sub-6x would be a great spot. I think if you look at our pricing grid from the banks, they would say we're nearly but not quite investment grade. I think if you were to talk to the private placement community, they would say we're cuspy, but I think it's more probably size than quantum of debt. So I mean, obviously, we have relatively more debt for a public company and a lot less debt than our private peers would have. I mean we're -- we sleep like babies. We've got great cash flows. We will stretch out our maturity ladder and that will feel better. 4x debt if it expires tomorrow is worse than 9x debt if your weighted average maturity is 7 years from now, we're not at either of those extremes. But we do have a large maturity obviously coming, and we're working on that, and we have all the confidence that, that will be achievable in the near term.

And just a quick follow-up on that. Would that be inclusive of the 6x of preferreds?

Man, I thought we were going to stay off this religious bait for today, but let's go there. Look, preferred, in my opinion, doesn't have a redemption date. So it is more like equity than debt. And I know that not everyone agrees with that. But -- for the time being and given our small size and cost of capital, the preferred is something we could look at. It'd be a great use of proceeds down the road if we had a cost of capital that made sense. But today, forever is a long time. So if you're going to call it debt, then I'd say you've added to our weighted average maturities. And if you're going to call it equity, then I'd say I agree. But no, my [ 6 ] doesn't include that, but I understand that the equity buyers will think that way, and we're mindful of that.

Fair enough. And just on the occupancy perspective, I think you shared some thoughts, apologies for missing the numbers on kind of how you expect occupancy in the portfolio to trend. And the general trend has been one that we've seen some modest slippage as some leases expired and retention levels just naturally have some chance. But just curious on how we should think about that going forward? Any known large move-outs. And as part of that answer, if you don't mind, with the Beaumont facility, what's the incremental pickup we should be modeling third quarter to second quarter on that asset specifically?

Hi, Juan. On occupancy, I think you can think of us in that 95% and above range. We're consistently seeing trends with our tenants to re-lease at those levels. So I think consistency and occupancy is what you should look for. There will be episodic downturns that are followed by re-leasing. So it can be a little bit bumpy. But overall, I think that's the way to think of it. I'm going to actually turn to Bob to talk about the modeling for how we thought of CHRISTUS.

So for the Beaumont asset, for the second quarter, they fully occupied beginning in mid-May. So in the second quarter, you'll have May and June. So again, there will be a modest pickup in the third quarter from a run rate perspective, all of which is in our guidance.

Our next question comes from Wes Golladay with Baird.

Maybe just sticking with the quarter-to-quarter changes. Will you also have a pickup in reimbursed costs in the third quarter? Or were the move-outs impact that at all? How should we think about unreimbursed costs going forward?

So Wes, there really wasn't anything in particular of note relative to rental revenue versus the reimbursed cost from an overall NOI perspective, the way that the trend was consistent with our -- with where we were forecasting, and there really wasn't anything significant or unusual from the dynamic between reimbursed costs and the rental revenue side.

Okay. And then you mentioned tackling the balance sheet, I think, in the fourth quarter. Were you going to do both, I guess, term loans and private placements? Or is it an and/or? Or how are you thinking about that?

To be determined. For sure, we're going to refi the Term Loan A and the Revolver and how exactly that gets done isn't set in stone just yet.

Okay. And then G&A for the back half of the year, should it be comparable, I guess, on a quarterly basis to what we saw in the second quarter outside the onetime items?

Yes. There should be -- yes, that's a good run rate from a G&A perspective. That's what we're flagging those outliers from the transition costs, backing those down from both the stock comp and the cash G&A will line it up.

Our next question comes from Gaurav Mehta with Alliance Global Partners.

I wanted to go back to your comments around asset recycling. Hoping to get some more color on what kind of size of disposition are you guys looking at? And then does the asset recycling depends on you finding the right acquisition targets or you would consider selling and lowering leverage in the near term?

Gaurav, just your line is a little faint. Did you say what kind of acquisitions are we looking for?

No. My question was what kind of size of dispositions are you looking at? And then would you consider selling and lowering leverage in the near term or the disposition depends on finding the right acquisition targets?

Got it. So I mean, I don't want to -- I think our goal would be, call it, $50 million to $100 million. But if we don't get prices we like, we may not be selling. And then how those proceeds got redeployed would be likely a mix of some debt repayment and some new investment. I mean, at a minimum, we'd pay down debt. That would probably be a good use, but we probably have some other ideas as well.

Okay. And then, Mark, as you look at the next chapter for the company as far as acquisitions and the portfolio mix, do you expect any changes in specialty type and provider type? Or you want to stick with where the portfolio is as far as that mix is concerned?

I'd say we generally like the mix the way it is. I mean it will move around...

I agree. So we've always been opportunistic. We always try to find the best value in the market. MOBs are by far the largest -- that is the asset type that has the largest supply in the market. But we've been pretty good at finding and patient and playing in that space. So I would assume that going forward, the portfolio mix should stay roughly consistent.

[Operator Instructions] Our next question comes from John Massocca with B. Riley Securities.

So maybe with kind of cost of capital in mind, you talked a little bit about capital recycling as a way to kind of fund future investments. How are you thinking about JVs, either the one you currently have in place or maybe even future different de novo JVs? Just curious your thoughts there.

Yes. Good question. We'd like to grow the Heitman JV, but they're thoughtful and disciplined [Audio Gap] investments with strong [Audio Gap] practice groups that have dominant market share alignment of, I'd say, view of the world. And I think [Audio Gap] there are other potential capital structures we could look at [Audio Gap] write these smaller opportunities and deliver that to people that maybe don't have that skill. So how that takes shape if it takes [Audio Gap]...

And then I guess, given -- I know it's a little bit unfair because it only was kind of put in place earlier this year. But given the amount of activity you're seeing in the space in 2Q, any reason that JV hasn't been more active?

No. I mean if there's one deal you like among one, then that one is worth doing, I mean, we have to be disciplined and they are disciplined with us in that regard. So they're picky and we're picky. And when it's right, we'll do it. And if it's not, we don't have any unnatural reason to do anything with Heitman, and they certainly don't either. They're fiduciaries and so are we.

That's fair. And then maybe on a much smaller level, as we think about the East Orange kind of success leasing up there, can you remind us maybe what the impact kind of run rate numbers is going to be from that lease-up? And if there is any impact, what kind of timing you're expecting?

So the old run rate on that building was roughly about $1.2 million, $1.3 million of ABR. And again, as we talked about, that's been a cash flow drag over the last couple of years. And so what we're seeing right now is we've gotten the building to 40% or so from an occupied status. And as we work at that level, we start to again, turn the corner and breakeven relative to the property and over time, kind of build that base and increase to that 80%, 90% and above percent occupancy. But from an overall perspective, from a sizing, just to give you the context, that's where it was. It was around kind of -- again, from a contribution, it was about $1.2 million. And again, we're trying to get on the path back toward that level.

I do think, though, John, this is something we've been talking about as we've been out with investors that is -- everything I'm telling you is publicly available, but requires work to put it together. And I think there's a perception to the extent people are paying attention about '26 earnings that we have a big hit coming from this refi, and we will absolutely refi at a much higher rate. We currently have SOFR locked at 1.35%, and it's obviously at 4.35%. But when you consider that we weren't getting cash flow really for much of any in '25, and we will get some of that direct in -- from East Orange, and we will have the full impact of CHRISTUS and the forward curve is looking pretty good, and we did make some acquisitions. Our year-over-year kind of FAD and FFO are actually going to be, I think, pretty good. We're not here to give '26 guidance. But I do think that's something that's a little bit misunderstood about us today.

It appears we have no further questions at this time. I'll turn the program back to Mark for any closing remarks.

Super. Well, we appreciate everyone's time and interest, and have a great day. Thank you.

This concludes today's program. Thank you for your participation, and you may disconnect at any time.

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. [Operator Instructions]. 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 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 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 to our overall portfolio given the procedure based nature of the tenant specialties. The close proximity of the buildings to the hospital campuses, each of which promotes tenant retention and that 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 made in our CEO succession plan. The Nominating and Corporate Government 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 transitioned 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 Alfonso 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 health care system. Services performed at these facilities include cardiology, oncology, urology, and orthopedics. In addition, we acquired one off campus multitenant 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 multitenant 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 of 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. And 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 sub tenants and market the remainder of the facility for leasing. As of May 06, 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. [Operator Instructions]. 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 sub tenants 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 has -- is in a 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 -- call it mid, high $13 million, $14 million, $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 releasing 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 on in terms of the guidance, the impact of Prospect and the releasing 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, I mean, 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 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 from. 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 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 and 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, call it, 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.

Got it. Thank you so much.

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 are 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 I mean 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 releasing. 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 from for our AFFO guidance for the full year. And 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 was could have affected us in 2025, it was in our 2025 expiration or our lease expiration number. That is a lease -- those are two 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 right acquisition opportunities this year, how high are you willing to take that leverage?

We're really not looking to take the leverage very much higher than where we are. I think when you factor in the second -- the acquisitions that we closed in the second quarter, that will move us up into 47-ish percent from an overall perspective. And our target leverage remains 40% to 45%, but for at moments like this and for opportunities like the Grand portfolio purchase, we're willing to go above that target range. But again, we don't really -- we're not looking to move materially outside this band that we're in right now.

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?

Sure. So, the investment market is started off pretty upbeat at the beginning of the year and really as a combination of many factors like the transaction volume has been relative to past years quiet in 2023 and 2024, down significantly depending on what data set you look at down 70%, 80% at its worst. And so there was an uptick at the end of '24 and the thought was that the bid ask spread has narrowed. There is a lot of money sitting on the sidelines and there's -- the expectation that there's going to be a lot more volume this year, at least more than there was in '24. There's been an uptick in portfolios that are coming to market and there's optimism in that regard. In the month of April, with the tariffs and the volatility in the market, it seems like there is a few weeks when there was concern among participants in the market. But, it seems like there's just a lot of demand, and I think there's sort of renewed optimism that there's going to be a good amount of transactions this year. So there is a lot of supply that's in the market. And what's interesting is the spread in terms of cap rate from higher quality assets and lower quality assets. I mean, it's -- that spreads about as wide as I think I've ever seen it, where like the really higher quality assets are in some cases trading even below six. And on the lower end of the spectrum, there are some assets that are trading in the high 7s and even 8s. So it's a pretty widespread. In terms of the assets that would fit our portfolio, there's a pretty good supply in that high 7% cap rate range that we've targeted in the past. So but our acquisitions is contingent on our cost of capital. So we continue monitoring the market. There is good supply and to the extent that we have the cost of capital to pursue then we'll do the -- we'll take our share and do what we've done 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, is there opportunities then to move a lot of that potential deal flow into the Heitman JV? Or is that 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 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. And then, we talked about the prospect, but I know it's -- the non-Beaumont element of the portfolio is pretty small, but anything -- any update on releasing of the kind of the other Stewart assets or former Stewart assets?

So yes, the other Steward assets is 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 strong 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.