(Mark One) | ||
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2019 | |
OR | ||
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO |
Maryland (State or Other Jurisdiction of Incorporation or Organization) | 46-5212033 (I.R.S. Employer Identification No.) |
Title of each Class | Trading Symbol | Name of each exchange on which registered | ||
Common stock, $0.01 par value per share | CHCT | New York Stock Exchange |
Large accelerated filer ¨ | Accelerated filer x | Emerging-growth company x | Non-accelerated filer ¨ | Smaller reporting company x |
Page | ||
(Unaudited) | |||||||
September 30, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Real estate properties | |||||||
Land and land improvements | $ | 63,015 | $ | 50,270 | |||
Buildings, improvements, and lease intangibles | 503,110 | 394,527 | |||||
Personal property | 202 | 133 | |||||
Total real estate properties | 566,327 | 444,930 | |||||
Less accumulated depreciation | (71,617 | ) | (55,298 | ) | |||
Total real estate properties, net | 494,710 | 389,632 | |||||
Cash and cash equivalents | 1,724 | 2,007 | |||||
Restricted cash | 224 | 385 | |||||
Other assets, net | 36,414 | 34,546 | |||||
Total assets | $ | 533,072 | $ | 426,570 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Liabilities | |||||||
Debt, net | $ | 215,460 | $ | 147,766 | |||
Accounts payable and accrued liabilities | 4,004 | 3,196 | |||||
Other liabilities | 12,661 | 3,949 | |||||
Total liabilities | 232,125 | 154,911 | |||||
Commitments and contingencies | |||||||
Stockholders' Equity | |||||||
Preferred stock, $0.01 par value; 50,000,000 shares authorized; none issued and outstanding | — | — | |||||
Common stock, $0.01 par value; 450,000,000 shares authorized; 20,177,693 and 18,634,502 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 202 | 186 | |||||
Additional paid-in capital | 391,247 | 337,180 | |||||
Cumulative net income | 15,341 | 9,178 | |||||
Accumulated other comprehensive (loss) income | (6,826 | ) | 633 | ||||
Cumulative dividends | (99,017 | ) | (75,518 | ) | |||
Total stockholders’ equity | 300,947 | 271,659 | |||||
Total liabilities and stockholders' equity | $ | 533,072 | $ | 426,570 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
REVENUES | |||||||||||||||
Rental income | $ | 15,718 | $ | 11,858 | $ | 41,977 | $ | 34,743 | |||||||
Other operating interest | 541 | 679 | 2,039 | 1,625 | |||||||||||
16,259 | 12,537 | 44,016 | 36,368 | ||||||||||||
EXPENSES | |||||||||||||||
Property operating | 3,327 | 2,627 | 9,395 | 7,497 | |||||||||||
General and administrative | 2,041 | 1,395 | 5,602 | 4,092 | |||||||||||
Depreciation and amortization | 5,774 | 4,925 | 16,319 | 14,471 | |||||||||||
11,142 | 8,947 | 31,316 | 26,060 | ||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND OTHER ITEMS | 5,117 | 3,590 | 12,700 | 10,308 | |||||||||||
Interest expense | (2,483 | ) | (1,643 | ) | (6,788 | ) | (4,482 | ) | |||||||
Interest and other income, net | 13 | 52 | 251 | 462 | |||||||||||
INCOME FROM CONTINUING OPERATIONS | 2,647 | 1,999 | 6,163 | 6,288 | |||||||||||
NET INCOME | $ | 2,647 | $ | 1,999 | $ | 6,163 | $ | 6,288 | |||||||
NET INCOME PER COMMON SHARE: | |||||||||||||||
Net income per common share – Basic | $ | 0.12 | $ | 0.10 | $ | 0.28 | $ | 0.31 | |||||||
Net income per common share – Diluted | $ | 0.12 | $ | 0.10 | $ | 0.28 | $ | 0.31 | |||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-BASIC | 18,832,902 | 17,669,681 | 18,347,630 | 17,695,688 | |||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-DILUTED | 18,832,902 | 17,669,681 | 18,347,630 | 17,695,688 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||
NET INCOME | $ | 2,647 | $ | 1,999 | $ | 6,163 | $ | 6,288 | |||||||||
Other comprehensive (loss) income: | |||||||||||||||||
(Decrease) increase in fair value of cash flow hedges | (2,060 | ) | 527 | (7,305 | ) | 2,152 | |||||||||||
Reclassification for amounts recognized as interest expense | 3 | 46 | (154 | ) | 201 | ||||||||||||
Total other comprehensive (loss) income | (2,057 | ) | 573 | (7,459 | ) | 2,353 | |||||||||||
COMPREHENSIVE INCOME (LOSS) | $ | 590 | $ | 2,572 | $ | (1,296 | ) | $ | 8,641 |
Preferred Stock | Common Stock | Additional Paid in Capital | Cumulative Net Income | Accumulated Other Comprehensive (Loss) Income | Cumulative Dividends | Total Stockholders' Equity | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||
Balance at June 30, 2019 | — | $ | — | 19,401,244 | $ | 194 | $ | 361,913 | $ | 12,694 | $ | (4,769 | ) | $ | (90,912 | ) | $ | 279,120 | |||||||||||||
Issuance of common stock, net of issuance costs | — | — | 680,309 | $ | 7 | $ | 28,333 | $ | — | $ | — | $ | — | $ | 28,340 | ||||||||||||||||
Stock-based compensation | — | — | 96,140 | 1 | 1,001 | — | — | — | 1,002 | ||||||||||||||||||||||
Unrecognized gain on cash flow hedges | — | — | — | — | — | — | (2,060 | ) | — | (2,060 | ) | ||||||||||||||||||||
Reclassification adj for losses included in net income (interest expense) | — | — | — | — | — | — | 3 | — | 3 | ||||||||||||||||||||||
Net income | — | — | — | — | — | 2,647 | — | — | 2,647 | ||||||||||||||||||||||
Dividends to common stockholders ($0.4125 per share) | — | — | — | — | — | — | — | (8,105 | ) | (8,105 | ) | ||||||||||||||||||||
Balance at September 30, 2019 | — | $ | — | 20,177,693 | $ | 202 | $ | 391,247 | $ | 15,341 | $ | (6,826 | ) | $ | (99,017 | ) | $ | 300,947 | |||||||||||||
Balance at December 31, 2018 | — | $ | — | 18,634,502 | $ | 186 | $ | 337,180 | $ | 9,178 | $ | 633 | $ | (75,518 | ) | $ | 271,659 | ||||||||||||||
Issuance of common stock, net of issuance costs | — | — | 1,321,362 | 14 | 51,318 | — | — | — | 51,332 | ||||||||||||||||||||||
Stock-based compensation | — | — | 221,829 | 2 | 2,749 | — | — | — | 2,751 | ||||||||||||||||||||||
Unrecognized loss on cash flow hedges | — | — | — | — | — | — | (7,305 | ) | — | (7,305 | ) | ||||||||||||||||||||
Reclassification adj for gain included in net income (interest expense) | — | — | — | — | — | — | (154 | ) | — | (154 | ) | ||||||||||||||||||||
Net income | — | — | — | — | — | 6,163 | — | — | 6,163 | ||||||||||||||||||||||
Dividends to common stockholders ($1.23 per share) | — | — | — | — | — | — | — | (23,499 | ) | (23,499 | ) | ||||||||||||||||||||
Balance at September 30, 2019 | — | $ | — | 20,177,693 | $ | 202 | $ | 391,247 | $ | 15,341 | $ | (6,826 | ) | $ | (99,017 | ) | $ | 300,947 | |||||||||||||
Balance at June 30, 2018 | — | — | 18,199,975 | 182 | 325,719 | 9,064 | 2,039 | (60,646 | ) | 276,358 | |||||||||||||||||||||
Issuance of common stock, net of issuance costs | — | — | 234,000 | 2 | 7,062 | — | — | — | 7,064 | ||||||||||||||||||||||
Stock-based compensation | — | — | 99,827 | 1 | 687 | — | — | — | 688 | ||||||||||||||||||||||
Unrecognized gain on cash flow hedges | — | — | — | — | — | — | 527 | — | 527 | ||||||||||||||||||||||
Reclassification adj for losses included in net income (interest expense) | — | — | — | — | — | — | 46 | — | 46 | ||||||||||||||||||||||
Net income | — | — | — | — | — | 1,999 | — | — | 1,999 | ||||||||||||||||||||||
Dividends to common stockholders ($0.4025 per share) | — | — | — | — | — | — | — | (7,365 | ) | (7,365 | ) | ||||||||||||||||||||
Balance at September 30, 2018 | — | $ | — | 18,533,802 | 185 | 333,468 | 11,063 | 2,612 | (68,011 | ) | 279,317 | ||||||||||||||||||||
Balance at December 31, 2017 | — | $ | — | 18,085,798 | $ | 181 | $ | 324,303 | $ | 4,775 | $ | 258 | $ | (46,143 | ) | $ | 283,374 | ||||||||||||||
Issuance of common stock, net of issuance costs | — | — | 234,000 | 2 | 7,062 | — | — | — | 7,064 | ||||||||||||||||||||||
Stock-based compensation | — | — | 214,004 | 2 | 2,103 | — | — | — | 2,105 | ||||||||||||||||||||||
Unrecognized gain on cash flow hedges | — | — | — | — | — | — | 2,153 | — | 2,153 | ||||||||||||||||||||||
Reclassification adj for loss included in net income (interest expense) | — | — | — | — | — | — | 201 | — | 201 | ||||||||||||||||||||||
Net income | — | — | — | — | — | 6,288 | — | — | 6,288 | ||||||||||||||||||||||
Dividends to common stockholders ($1.20 per share) | — | — | — | — | — | — | — | (21,868 | ) | (21,868 | ) | ||||||||||||||||||||
Balance at September 30, 2018 | — | $ | — | 18,533,802 | $ | 185 | $ | 333,468 | $ | 11,063 | $ | 2,612 | $ | (68,011 | ) | $ | 279,317 |
Nine Months Ended September 30, | |||||||
2019 | 2018 | ||||||
OPERATING ACTIVITIES | |||||||
Net income | $ | 6,163 | $ | 6,288 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 16,731 | 14,929 | |||||
Stock-based compensation | 2,751 | 2,105 | |||||
Straight-line rent receivable | (1,353 | ) | (1,165 | ) | |||
Deferred income tax expense (benefit) | 9 | (103 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Other assets | (1,889 | ) | (3,332 | ) | |||
Accounts payable and accrued liabilities | 723 | (373 | ) | ||||
Other liabilities | 52 | (427 | ) | ||||
Net cash provided by operating activities | 23,187 | 17,922 | |||||
INVESTING ACTIVITIES | |||||||
Acquisitions of real estate | (115,624 | ) | (26,820 | ) | |||
Acquisitions of notes receivable | — | (2,201 | ) | ||||
Funding of notes receivable | — | (4,833 | ) | ||||
Proceeds from the repayment of notes receivable | 752 | 50 | |||||
Capital expenditures on existing real estate properties | (3,461 | ) | (4,220 | ) | |||
Net cash used in investing activities | (118,333 | ) | (38,024 | ) | |||
FINANCING ACTIVITIES | |||||||
Net repayments on revolving credit facility | (6,750 | ) | (6,000 | ) | |||
Term loan borrowings | 75,000 | 40,000 | |||||
Mortgage note repayments | (77 | ) | — | ||||
Dividends paid | (23,499 | ) | (21,868 | ) | |||
Proceeds from issuance of common stock | 51,640 | 7,147 | |||||
Equity issuance costs | (308 | ) | (83 | ) | |||
Debt issuance costs | (1,304 | ) | (218 | ) | |||
Net cash provided by financing activities | 94,702 | 18,978 | |||||
Decrease in cash and cash equivalents and restricted cash | (444 | ) | (1,124 | ) | |||
Cash and cash equivalents and restricted cash, beginning of period | 2,392 | 2,130 | |||||
Cash and cash equivalents and restricted cash, end of period | $ | 1,948 | $ | 1,006 | |||
Supplemental Cash Flow Information: | |||||||
Interest paid | $ | 6,380 | $ | 3,823 | |||
Invoices accrued for construction, tenant improvement and other capitalized costs | $ | 270 | $ | 102 | |||
Reclassification between accounts and notes receivable | $ | 45 | $ | — | |||
Reclassification of registration statement costs incurred in prior year to equity issuance costs | $ | 321 | $ | 34 | |||
(Decrease) increase in fair value of cash flow hedges | $ | (7,305 | ) | $ | 2,152 | ||
Fair value of property received in foreclosure | $ | — | $ | 4,541 | |||
Notes and mortgage receivable repayments utilized to originate note receivable | $ | — | $ | 18,167 |
(Dollars in thousands) | Number of Facilities | Land and Land Improvements | Buildings, Improvements, and Lease Intangibles | Personal Property | Total | Accumulated Depreciation | ||||||||||||||||
Medical office buildings: | ||||||||||||||||||||||
Florida | 5 | $ | 4,648 | $ | 29,384 | $ | — | $ | 34,032 | $ | 5,328 | |||||||||||
Ohio | 6 | 3,665 | 26,578 | — | 30,243 | 6,209 | ||||||||||||||||
Texas | 3 | 3,164 | 15,591 | — | 18,755 | 4,862 | ||||||||||||||||
Illinois | 3 | 1,918 | 15,019 | — | 16,937 | 3,195 | ||||||||||||||||
Kansas | 3 | 2,455 | 15,539 | — | 17,994 | 4,480 | ||||||||||||||||
Iowa | 1 | 2,241 | 9,062 | — | 11,303 | 2,967 | ||||||||||||||||
Other states | 16 | 5,587 | 40,952 | — | 46,539 | 5,805 | ||||||||||||||||
37 | 23,678 | 152,125 | — | 175,803 | 32,846 | |||||||||||||||||
Physician clinics: | ||||||||||||||||||||||
Kansas | 2 | 610 | 6,921 | — | 7,531 | 1,690 | ||||||||||||||||
Illinois | 6 | 2,888 | 9,709 | — | 12,597 | 838 | ||||||||||||||||
Florida | 5 | 506 | 10,322 | — | 10,828 | 1,101 | ||||||||||||||||
Other states | 9 | 2,903 | 21,742 | — | 24,645 | 3,984 | ||||||||||||||||
22 | 6,907 | 48,694 | — | 55,601 | 7,613 | |||||||||||||||||
Surgical centers and hospitals: | ||||||||||||||||||||||
Louisiana | 1 | 1,683 | 21,353 | — | 23,036 | 1,511 | ||||||||||||||||
Michigan | 2 | 637 | 8,383 | — | 9,020 | 2,623 | ||||||||||||||||
Illinois | 2 | 2,355 | 8,222 | — | 10,577 | 1,797 | ||||||||||||||||
Florida | 1 | 271 | 7,070 | — | 7,341 | 1,043 | ||||||||||||||||
Arizona | 2 | 576 | 5,389 | — | 5,965 | 1,774 | ||||||||||||||||
Other states | 7 | 2,130 | 17,935 | — | 20,065 | 4,534 | ||||||||||||||||
15 | 7,652 | 68,352 | — | 76,004 | 13,282 | |||||||||||||||||
Specialty centers: | ||||||||||||||||||||||
Illinois | 3 | 3,489 | 24,733 | — | 28,222 | 2,916 | ||||||||||||||||
Other states | 22 | 5,207 | 38,623 | — | 43,830 | 8,365 | ||||||||||||||||
25 | 8,696 | 63,356 | — | 72,052 | 11,281 | |||||||||||||||||
Behavioral facilities: | ||||||||||||||||||||||
Massachusetts | 1 | 3,835 | 23,303 | — | 27,138 | 177 | ||||||||||||||||
West Virginia | 1 | 2,138 | 22,897 | — | 25,035 | 1,171 | ||||||||||||||||
Illinois | 1 | 1,300 | 18,803 | — | 20,103 | 1,568 | ||||||||||||||||
Washington | 1 | 2,725 | 25,064 | — | 27,789 | 120 | ||||||||||||||||
Other states | 5 | 2,538 | 18,880 | — | 21,418 | 1,097 | ||||||||||||||||
9 | 12,536 | 108,947 | — | 121,483 | 4,133 | |||||||||||||||||
Inpatient rehabilitation facilities: | ||||||||||||||||||||||
Texas | 2 | 3,023 | 44,530 | — | 47,553 | 548 | ||||||||||||||||
2 | 3,023 | 44,530 | — | 47,553 | 548 | |||||||||||||||||
Long-term acute care hospitals: | ||||||||||||||||||||||
Indiana | 1 | 523 | 14,405 | — | 14,928 | 1,566 | ||||||||||||||||
1 | 523 | 14,405 | — | 14,928 | 1,566 | |||||||||||||||||
Corporate property | — | — | 2,701 | 202 | 2,903 | 348 | ||||||||||||||||
Total real estate investments | 111 | $ | 63,015 | $ | 503,110 | $ | 202 | $ | 566,327 | $ | 71,617 |
2019 (three months ending December 31) | $ | 12,889 | |
2020 | 49,652 | ||
2021 | 46,663 | ||
2022 | 43,440 | ||
2023 | 39,016 | ||
2024 and thereafter | 247,654 | ||
$ | 439,314 |
Relative Fair Value | Estimated Useful Life | |||||
(in thousands) | (In years) | |||||
Land and land improvements | $ | 12,497 | 4.7-18.4 | |||
Building and building improvements | 103,253 | 20-40 | ||||
Intangibles: | ||||||
At-market lease intangibles | 2,186 | 3.8-10.8 | ||||
Below-market lease intangibles | (44 | ) | 8.3 | |||
Total intangibles | 2,142 | |||||
Accounts receivable and other assets assumed | 15 | |||||
Accounts payable, accrued liabilities and other liabilities assumed | (2,198 | ) | ||||
Prorated rent, interest and operating expense reimbursement amounts collected | (85 | ) | ||||
Total cash consideration | $ | 115,624 |
Balance as of | |||||||
(Dollars in thousands) | September 30, 2019 | December 31, 2018 | Maturity Dates | ||||
Revolving Credit Facility | $ | 36,250 | $ | 43,000 | 3/23 | ||
A-1 Term Loan, net | 49,815 | 49,759 | 3/22 | ||||
A-2 Term Loan, net | 49,761 | 49,722 | 3/24 | ||||
A-3 Term Loan, net | 74,411 | — | 3/26 | ||||
Mortgage Note Payable | 5,223 | 5,285 | 5/24 | ||||
$ | 215,460 | $ | 147,766 |
Asset Derivatives Fair Value at | Liability Derivatives Fair Value at | ||||||||||||||
September 30, 2019 | December 31, 2018 | Balance Sheet Classification | September 30, 2019 | December 31, 2018 | Balance Sheet Classification | ||||||||||
Interest rate swaps | $ | — | $ | 902 | Other assets | $ | 6,826 | $ | 98 | Other Liabilities |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
(Dollars in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||
Amount of unrealized (loss) gain recognized in OCI on derivative | $ | (2,060 | ) | $ | 527 | $ | (7,305 | ) | $ | 2,152 | |||
Amount of (gain) loss reclassified from accumulated OCI into interest expense | $ | 3 | $ | 46 | $ | (154 | ) | $ | 201 | ||||
Total Interest Expense presented in the Condensed Consolidated Statements of Income in which the effects of the cash flow hedges are recorded | $ | 2,483 | $ | 1,643 | $ | 6,788 | $ | 4,482 |
Nine Months Ended September 30, 2019 | Year Ended December 31, 2018 | |||
Balance, beginning of period | 18,634,502 | 18,085,798 | ||
Issuance of common stock | 1,321,362 | 334,700 | ||
Restricted stock-based awards | 221,829 | 214,004 | ||
Balance, end of period | 20,177,693 | 18,634,502 |
Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | ||||||
Shares issued | 680,309 | 1,321,362 | |||||
Proceeds received (in millions) | $ | 28.5 | $ | 51.6 | |||
Average gross sales price per share ($) | $ | 42.70 | $ | 39.88 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in thousands, except per share data) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net income | $ | 2,647 | $ | 1,999 | $ | 6,163 | $ | 6,288 | |||||||
Participating securities' share in earnings | (373 | ) | (287 | ) | (1,024 | ) | (769 | ) | |||||||
Net income, less participating securities' share in earnings | $ | 2,274 | $ | 1,712 | $ | 5,139 | $ | 5,519 | |||||||
Weighted average Common Shares outstanding | |||||||||||||||
Weighted average Common Shares outstanding | 19,697,574 | 18,330,340 | 19,166,309 | 18,228,006 | |||||||||||
Unvested restricted shares | (864,672 | ) | (660,659 | ) | (818,679 | ) | (532,318 | ) | |||||||
Weighted average Common Shares outstanding–Basic | 18,832,902 | 17,669,681 | 18,347,630 | 17,695,688 | |||||||||||
Dilutive potential common shares | — | — | — | — | |||||||||||
Weighted average Common Shares outstanding –Diluted | 18,832,902 | 17,669,681 | 18,347,630 | 17,695,688 | |||||||||||
Basic Net Income per Common Share | $ | 0.12 | $ | 0.10 | $ | 0.28 | $ | 0.31 | |||||||
Diluted Net Income per Common Share | $ | 0.12 | $ | 0.10 | $ | 0.28 | $ | 0.31 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||
2019 | 2018 | 2019 | 2018 | |||||||
Stock-based awards, beginning of period | 813,752 | 609,660 | 709,487 | 512,115 | ||||||
Stock in lieu of compensation | 14,862 | 17,420 | 72,391 | 69,767 | ||||||
Stock awards | 81,278 | 82,407 | 149,438 | 144,237 | ||||||
Total stock granted | 96,140 | 99,827 | 221,829 | 214,004 | ||||||
Vested shares | — | — | (21,424 | ) | (16,632 | ) | ||||
Stock-based awards, end of period | 909,892 | 709,487 | 909,892 | 709,487 |
Balance as of | ||||||
(Dollars in thousands) | September 30, 2019 | December 31, 2018 | ||||
Notes receivable | $ | 23,402 | $ | 24,110 | ||
Accounts and interest receivables | 3,573 | 2,158 | ||||
Straight-line rent receivables | 4,567 | 3,254 | ||||
Prepaid assets | 688 | 487 | ||||
Deferred financing costs, net | 746 | 318 | ||||
Leasing commissions, net | 900 | 790 | ||||
Deferred tax asset | 2,016 | 2,024 | ||||
Fair value of interest rate swaps | — | 902 | ||||
Above-market intangible assets, net | 150 | 168 | ||||
Right-of-use leased asset | 140 | — | ||||
Other | 232 | 335 | ||||
$ | 36,414 | $ | 34,546 |
• | On April 25, 2018, the Company provided a $23.0 million loan to a newly formed company, secured by all assets and ownership interests in seven long-term acute care hospitals and one inpatient rehabilitation hospital. The loan, which matures on May 1, 2031, currently bears interest at 9% per annum, with principal payments beginning in May 2021. |
• | On December 31, 2018, the Company entered into notes with a tenant totaling $0.9 million. The notes bear interest at 9% per annum and mature on December 31, 2019. |
Classification | Carrying Amount (in millions) | Maximum Exposure to Loss (in millions) | ||||
Notes receivable | $ | 0.4 | $ | 0.4 | ||
Note receivable | $ | 23.0 | $ | 23.0 |
September 30, 2019 | December 31, 2018 | ||||||||||||
(Dollars in thousands) | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||
Notes receivable | $ | 23,402 | $ | 23,494 | $ | 24,110 | $ | 23,936 | |||||
Interest rate swap asset | $ | — | $ | — | $ | 902 | $ | 902 | |||||
Interest rate swap liability | $ | 6,826 | $ | 6,826 | $ | 269 | $ | 269 | |||||
Mortgage note payable | $ | 5,314 | $ | 5,323 | $ | 5,391 | $ | 5,307 |
Three Months Ended September 30, | Increase (Decrease) to Net Income | ||||||||||||
(dollars in thousands) | 2019 | 2018 | $ | % | |||||||||
REVENUES | |||||||||||||
Rental income | $ | 15,718 | $ | 11,858 | $ | 3,860 | 32.6 | % | |||||
Other operating interest | 541 | 679 | (138 | ) | (20.3 | )% | |||||||
16,259 | 12,537 | 3,722 | 29.7 | % | |||||||||
EXPENSES | |||||||||||||
Property operating | 3,327 | 2,627 | (700 | ) | (26.6 | )% | |||||||
General and administrative | 2,041 | 1,395 | (646 | ) | (46.3 | )% | |||||||
Depreciation and amortization | 5,774 | 4,925 | (849 | ) | (17.2 | )% | |||||||
11,142 | 8,947 | (2,195 | ) | (24.5 | )% | ||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND OTHER ITEMS | 5,117 | 3,590 | 1,527 | 42.5 | % | ||||||||
Interest expense | (2,483 | ) | (1,643 | ) | (840 | ) | (51.1 | )% | |||||
Other income | 13 | 52 | (39 | ) | (75.0 | )% | |||||||
INCOME FROM CONTINUING OPERATIONS | 2,647 | 1,999 | 648 | 32.4 | % | ||||||||
NET INCOME | $ | 2,647 | $ | 1,999 | $ | 648 | 32.4 | % |
Nine Months Ended September 30, | Increase (Decrease) to Net Income | ||||||||||||
(dollars in thousands) | 2019 | 2018 | $ | % | |||||||||
REVENUES | |||||||||||||
Rental income | $ | 41,977 | $ | 34,743 | $ | 7,234 | 20.8 | % | |||||
Other operating interest | 2,039 | 1,625 | 414 | 25.5 | % | ||||||||
44,016 | 36,368 | 7,648 | 21.0 | % | |||||||||
EXPENSES | |||||||||||||
Property operating | 9,395 | 7,497 | (1,898 | ) | (25.3 | )% | |||||||
General and administrative | 5,602 | 4,092 | (1,510 | ) | (36.9 | )% | |||||||
Depreciation and amortization | 16,319 | 14,471 | (1,848 | ) | (12.8 | )% | |||||||
31,316 | 26,060 | (5,256 | ) | (20.2 | )% | ||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND OTHER ITEMS | 12,700 | 10,308 | 2,392 | 23.2 | % | ||||||||
Interest expense | (6,788 | ) | (4,482 | ) | (2,306 | ) | 51.5 | % | |||||
Other income | 251 | 462 | (211 | ) | (45.7 | )% | |||||||
INCOME FROM CONTINUING OPERATIONS | 6,163 | 6,288 | (125 | ) | (2.0 | )% | |||||||
NET INCOME | $ | 6,163 | $ | 6,288 | $ | (125 | ) | (2.0 | )% |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in thousands, excepts per share amounts) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net income | $ | 2,647 | $ | 1,999 | $ | 6,163 | $ | 6,288 | |||||||
Real estate depreciation and amortization | 5,812 | 4,918 | 16,434 | 14,453 | |||||||||||
Total adjustments | 5,812 | 4,918 | 16,434 | 14,453 | |||||||||||
Funds from Operations | $ | 8,459 | $ | 6,917 | $ | 22,597 | $ | 20,741 | |||||||
Funds from Operations per Common Share-Basic | $ | 0.45 | $ | 0.39 | $ | 1.23 | $ | 1.17 | |||||||
Funds from Operations per Common Share-Diluted | $ | 0.44 | $ | 0.39 | $ | 1.20 | $ | 1.16 | |||||||
Weighted Average Common Shares Outstanding-Basic | 18,832,902 | 17,669,681 | 18,347,630 | 17,695,688 | |||||||||||
Weighted Average Common Shares Outstanding-Diluted (1) | 19,315,354 | 17,947,568 | 18,769,670 | 17,839,014 |
• | Leverage ratios and financial covenants included in our Credit Facility; |
• | Dividend payout percentage; and |
• | Interest rates, underlying treasury rates, debt market spreads and equity markets. |
• | the requirement that our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002; |
• | compliance with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements; |
• | the requirement that we provide full and more detailed disclosures regarding executive compensation; and |
• | the requirement that we hold a non-binding advisory vote on executive compensation and obtain stockholder approval of any golden parachute payments not previously approved. |
Exhibit Number | Description | ||
3.1 | |||
3.2 | |||
31.1 * | |||
31.2 * | |||
32.1 ** | |||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Taxonomy Extension Schema Document | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ||
(1) | Filed as Exhibit 3.1 to Amendment No. 2 to the Registration Statement on Form S-11 of the Company filed with the Securities and Exchange Commission on May 6, 2015 (Registration No. 333-203210) and incorporated herein by reference. |
(2) | Filed as Exhibit 3.2 to the Registration Statement on Form S-11 of the Company filed with the Securities and Exchange Commission on April 2, 2015 (Registration No. 333-203210) and incorporated herein by reference. |
* | Filed herewith. |
** | Furnished herewith. |
COMMUNITY HEALTHCARE TRUST INCORPORATED | ||
By: | /s/ Timothy G. Wallace | |
Timothy G. Wallace | ||
Chief Executive Officer and President | ||
By: | /s/ David H. Dupuy | |
David H. Dupuy | ||
Executive Vice President and Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Community Healthcare Trust Incorporated; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Timothy G. Wallace | |
Timothy G. Wallace | |
Chief Executive Officer and President |
1. | I have reviewed this Quarterly Report on Form 10-Q of Community Healthcare Trust Incorporated; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ David H. Dupuy | |
David H. Dupuy | |
Executive Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Timothy G. Wallace | |
Timothy G. Wallace | |
Chief Executive Officer and President | |
/s/ David H. Dupuy | |
David H. Dupuy | |
Executive Vice President and Chief Financial Officer |
Net Income Per Common Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share | The following table sets forth the computation of basic and diluted net income per common share.
|
Real Estate Acquisitions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets acquired and liabilities assumed | The following table summarizes the relative fair values of the assets acquired and liabilities assumed in the property acquisitions for the nine months ended September 30, 2019.
|
Subsequent Events |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Dividend Declared On October 31, 2019, the Company’s Board of Directors declared a quarterly common stock dividend in the amount of $0.4150 per share. The dividend is payable on November 29, 2019 to stockholders of record on November 15, 2019. Subsequent Acquisitions Subsequent to September 30, 2019, the Company acquired seven real estate properties, including one that was previously under construction, totaling approximately 114,000 square feet for a purchase price of approximately $34.8 million and cash consideration of approximately $34.4 million. Upon acquisition, the properties were 100% leased in the aggregate with lease expiration through 2034. The Company funded the acquisitions with cash from operations, net proceeds from the ATM Program, and proceeds from the Company's Revolving Credit Facility. |
Derivative Financial Instruments - Fair Value Balance Sheet (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Derivative asset | $ 0 | $ 902 |
Cash Flow Hedging | Interest Rate Swap | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 7,200 | |
Cash Flow Hedging | Interest Rate Swap | Designated as Hedging Instrument | Other Assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 0 | 902 |
Cash Flow Hedging | Interest Rate Swap | Designated as Hedging Instrument | Other Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | $ 6,826 | $ 98 |
Other Assets - Narrative (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Apr. 25, 2018
USD ($)
hospital
|
Dec. 31, 2018
USD ($)
|
Sep. 30, 2019
USD ($)
|
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Notes receivable | $ 24,110 | $ 23,402 | |
Promissory Notes, Secured By Facilities Owned By Borrower | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Notes receivable | $ 23,000 | ||
Note receivable interest rate | 9.00% | ||
Notes Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Notes receivable | $ 900 | ||
Note receivable interest rate | 9.00% | ||
Long-Term Acute Care Hospitals | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Number of properties used to secure notes by borrower | hospital | 7 | ||
Inpatient Rehabilitation Facilities | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Number of properties used to secure notes by borrower | hospital | 1 |
Other Assets - VIEs (Details) - Notes Receivable $ in Millions |
Sep. 30, 2019
USD ($)
|
---|---|
Variable Interest Entity One | |
Variable Interest Entity [Line Items] | |
Carrying Amount | $ 0.4 |
Maximum Exposure to Loss | 0.4 |
Variable Interest Entity Two | |
Variable Interest Entity [Line Items] | |
Carrying Amount | 23.0 |
Maximum Exposure to Loss | $ 23.0 |
Net Income Per Common Share |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Common Share | Net Income Per Common Share The following table sets forth the computation of basic and diluted net income per common share.
|
Real Estate Acquisitions |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Acquisitions | Real Estate Acquisitions During the third quarter of 2019, the Company acquired three real estate properties totaling approximately 130,000 square feet for an aggregate purchase price of approximately $52.6 million and cash consideration of approximately $52.2 million. Upon acquisition, the properties were 100% leased in the aggregate with lease expirations through 2034. Amounts reflected in revenues and net income for the nine months ended September 30, 2019 for these properties were approximately $1.0 million and $0.7 million, respectively. Transaction costs totaling approximately $0.4 million related to these asset acquisitions were capitalized in the period and included in real estate assets. During the second quarter of 2019, the Company acquired three real estate properties totaling approximately 110,000 square feet for an aggregate purchase price of approximately $31.9 million and cash consideration of approximately $30.7 million. Upon acquisition, the properties were approximately 97.1% leased in the aggregate with lease expirations through 2034. Amounts reflected in revenues and net income for the nine months ended September 30, 2019 for these properties were approximately $1.4 million and $1.0 million, respectively. Due to the original structuring of one of the acquisitions in April 2019, the Company recorded interest income for the second quarter of 2019 totaling approximately $0.4 million that was included in other operating interest on the Condensed Consolidated Statements of Income, rather than rental income. Transaction costs totaling approximately $0.2 million related to these asset acquisitions were capitalized in the period and included in real estate assets. During the first quarter of 2019, the Company acquired two real estate properties totaling approximately 83,000 square feet for an aggregate purchase price and cash consideration of approximately $32.7 million. Upon acquisition, the properties were 100% leased in the aggregate with lease expirations in 2029. Amounts reflected in revenues and net income for the nine months ended September 30, 2019 for these properties were approximately $2.0 million and $1.5 million, respectively. Transaction costs totaling approximately $0.1 million related to these asset acquisitions were capitalized in the period and included in real estate assets. The following table summarizes the relative fair values of the assets acquired and liabilities assumed in the property acquisitions for the nine months ended September 30, 2019.
|
Fair Value of Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, by Balance Sheet Grouping | The table below details the fair values and carrying values for our notes receivable, interest rate swaps, and mortgage note payable at September 30, 2019 and December 31, 2018, using level 2 inputs.
|
Condensed Consolidated Statements of Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
REVENUES | ||||
Rental income | $ 15,718 | $ 11,858 | $ 41,977 | $ 34,743 |
Revenues | 16,259 | 12,537 | 44,016 | 36,368 |
EXPENSES | ||||
Property operating | 3,327 | 2,627 | 9,395 | 7,497 |
General and administrative | 2,041 | 1,395 | 5,602 | 4,092 |
Depreciation and amortization | 5,774 | 4,925 | 16,319 | 14,471 |
Expenses | 11,142 | 8,947 | 31,316 | 26,060 |
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND OTHER ITEMS | 5,117 | 3,590 | 12,700 | 10,308 |
Interest expense | (2,483) | (1,643) | (6,788) | (4,482) |
Interest and other income, net | 13 | 52 | 251 | 462 |
INCOME FROM CONTINUING OPERATIONS | 2,647 | 1,999 | 6,163 | 6,288 |
NET INCOME | $ 2,647 | $ 1,999 | $ 6,163 | $ 6,288 |
NET INCOME PER COMMON SHARE: | ||||
Net income per common share – Basic (in dollars per share) | $ 0.12 | $ 0.10 | $ 0.28 | $ 0.31 |
Net income per common share – Diluted (in dollars per share) | $ 0.12 | $ 0.10 | $ 0.28 | $ 0.31 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-BASIC (in shares) | 18,832,902 | 17,669,681 | 18,347,630 | 17,695,688 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-DILUTED (in shares) | 18,832,902 | 17,669,681 | 18,347,630 | 17,695,688 |
Other operating interest | ||||
REVENUES | ||||
Other operating interest | $ 541 | $ 679 | $ 2,039 | $ 1,625 |
Real Estate Leases (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
Real Estate [Line Items] | |||||
2019 (three months ending December 31) | $ 12,889 | $ 12,889 | |||
2020 | 49,652 | 49,652 | |||
2021 | 46,663 | 46,663 | |||
2022 | 43,440 | 43,440 | |||
2023 | 39,016 | 39,016 | |||
2024 and thereafter | 247,654 | 247,654 | |||
Total | 439,314 | 439,314 | |||
Straight Line rent | 600 | $ 400 | 1,353 | $ 1,165 | |
Other Liabilities | |||||
Real Estate [Line Items] | |||||
Deferred revenue | $ 2,000 | $ 2,000 | $ 1,600 |
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes receivable | $ 23,402 | $ 24,110 |
Interest rate swap asset | 0 | 902 |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes receivable | 23,402 | 24,110 |
Mortgage note payable | 5,314 | 5,391 |
Carrying Value | Interest Rate Swap | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate swap asset | 0 | 902 |
Interest rate swap liability | 6,826 | 269 |
Fair Value | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes receivable | 23,494 | 23,936 |
Mortgage note payable | 5,323 | 5,307 |
Fair Value | Interest Rate Swap | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate swap asset | 0 | 902 |
Interest rate swap liability | $ 6,826 | $ 269 |
Incentive Plan |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Incentive Plan | Incentive Plan Under the Company's 2014 Incentive Plan, as amended, awards may be made in the form of restricted stock, cash or a combination of both. Compensation expense recognized from the amortization of the value of the Company's officer, employee and director shares over the applicable vesting periods during the three months ended September 30, 2019 and 2018 was approximately $1.0 million and $0.7 million, respectively, and during the nine months ended September 30, 2019 and 2018 was approximately $2.8 million and $2.1 million, respectively. Included in general and administrative expense for the nine months ended September 30, 2018 was approximately $0.2 million related to fully amortized shares previously granted to a board member who did not stand for re-election to the Company's board. A summary of the activity under the 2014 Incentive Plan for the three and nine months ended September 30, 2019 and 2018 is included in the table below.
|
Debt, net |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt, net | Debt, net The table below details the Company's debt as of September 30, 2019 and December 31, 2018.
The Company's second amended and restated credit facility (the "Credit Facility") is by and among Community Healthcare OP, LP, the Company, the lenders from time to time party thereto, and SunTrust Bank, as Administrative Agent. The Company’s material subsidiaries are guarantors of the obligations under the Credit Facility. The Company entered into a third amendment to its Credit Facility (the "Third Amendment") on March 29, 2019, which added a $75.0 million term loan (the "A-3 Term Loan"), which matures on March 29, 2026, extended the maturity of the revolving credit facility (the "Revolving Credit Facility") to March 29, 2023, improved pricing on the Credit Facility, and adjusted certain financial covenants. The Company paid approximately $1.3 million in fees and expenses related to the Third Amendment, of which $0.7 million was related to the Revolving Credit Facility and was recorded as deferred financing costs, included in Other Assets, and $0.6 million was related to the A-3 Term Loan and was recorded as deferred financing costs, included in Debt, net, on the Company's Condensed Consolidated Balance Sheets. The Credit Facility, as amended, provides for a $150.0 million Revolving Credit Facility and $175.0 million in term loans (the "Term Loans"). The Credit Facility, through the accordion feature, allows borrowings up to a total of $525.0 million including the ability to add and fund additional term loans. The Revolving Credit Facility matures on March 29, 2023 and includes one 12-month option to extend the maturity date of the Revolving Credit Facility, subject to the satisfaction of certain conditions. The Term Loans include a five-year term loan facility in the aggregate principal amount of $50.0 million (the "A-1 Term Loan"), which matures on March 29, 2022, a seven-year term loan facility in the aggregate principal amount of $50.0 million (the "A-2 Term Loan"), which matures on March 29, 2024 and the new seven-year, $75.0 million A-3 Term Loan, which matures on March 29, 2026. Amounts outstanding under the Revolving Credit Facility, as amended, bear annual interest at a floating rate that is based, at the Company’s option, on either: (i) LIBOR plus 1.25% to 1.90% or (ii) a base rate plus 0.25% to 0.90% in each case, depending upon the Company’s leverage ratio. In addition, the Company is obligated to pay an annual fee equal to 0.25% of the amount of the unused portion of the Revolving Credit Facility if amounts borrowed are greater than 33.3% of the borrowing capacity under the Revolving Credit Facility and 0.35% of the unused portion of the Revolving Credit Facility if amounts borrowed are less than or equal to 33.3% of the borrowing capacity under the Revolving Credit Facility. The Company had $36.3 million outstanding under the Revolving Credit Facility with a borrowing capacity remaining of approximately $113.8 million at September 30, 2019. Amounts outstanding under the Term Loans, as amended, bear annual interest at a floating rate that is based, at the Company’s option, on either: (i) LIBOR plus 1.25% to 2.30% or (ii) a base rate plus 0.25% to 1.30%, in each case, depending upon the Company’s leverage ratio. In addition, the Company is obligated to pay an annual fee equal to 0.35% of the amount of the unused portion of the Term Loans. The Company has entered into interest rate swaps to fix the interest rates on the Term Loans. See Note 6 for more details on the interest rate swaps. At September 30, 2019, the Company had drawn the full $175.0 million under the Term Loans which had a fixed weighted average interest rate under the swaps of approximately 4.569%. The Company’s ability to borrow under the Credit Facility is subject to its ongoing compliance with a number of customary affirmative and negative covenants, including limitations with respect to liens, indebtedness, distributions, mergers, consolidations, investments, restricted payments and asset sales, as well as financial maintenance covenants. The Company was in compliance with its financial covenants under its Credit Facility as of September 30, 2019. |
Summary of Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Business Overview Community Healthcare Trust Incorporated (the ‘‘Company’’, ‘‘we’’, ‘‘our’’) was organized in the State of Maryland on March 28, 2014. The Company is a fully-integrated healthcare real estate company that owns and acquires real estate properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers in our target submarkets. As of September 30, 2019, the Company had investments of approximately $566.3 million in 111 real estate properties, located in 32 states, totaling approximately 2.5 million square feet in the aggregate. Basis of Presentation The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. This interim financial information should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2019. All material intercompany accounts and transactions have been eliminated. Use of Estimates in the Condensed Consolidated Financial Statements Preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Actual results may materially differ from those estimates. Reclassifications Tenant reimbursements totaling $1.7 million and $4.7 million, respectively, on the Company's Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2018 were reclassified into rental income. Income Taxes The Company has elected to be taxed as a real estate investment trust ("REIT"), as defined under the Internal Revenue Code of 1986, as amended (the "Code"). The Company and one subsidiary have also elected for that subsidiary to be treated as a taxable REIT subsidiary ("TRS"), which is subject to federal and state income taxes. No provision has been made for federal income taxes for the REIT; however, the Company has recorded income tax expense or benefit for the TRS to the extent applicable. The Company intends at all times to qualify as a REIT under the Code. The Company must distribute at least 90% per annum of its REIT taxable income to its stockholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP) and meet other requirements to continue to qualify as a REIT. New Accounting Pronouncements Recently Adopted Accounting Pronouncements Lease Accounting In February 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases; in January 2018, the FASB issued ASU 2018-01, Leases - Land Easement Practical Expedient for Transition to Topic 842; in July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases - Targeted Improvements; and in December 2018, the FASB issued ASU 2018-20, Narrow-Scope Improvements for Lessors. The Company adopted this group of ASUs, collectively referred to as Topic 842, on January 1, 2019. Topic 842 superseded the existing standard for lease accounting (Topic 840, Leases). The Company elected to utilize the following practical expedients provided by Topic 842: • the package of practical expedients that allows an entity not to reassess upon adoption (i) whether an expired or existing contract contains a lease, (ii) whether a lease classification related to expired or existing lease arrangements, and (iii) whether costs incurred on expired or existing leases qualify as initial direct costs, and • as a lessor, the practical expedient not to separate certain non-lease components, such as common area maintenance, from the lease component if (i) the timing and pattern of transfer are the same for the nonlease component and associated lease component, and (ii) the lease component would be classified as an operating lease if accounted for separately. Topic 842 requires lessees to record most leases on their balance sheet through a right-of-use ("ROU") model, in which a lessee records a ROU asset and a lease liability on their balance sheet. Leases with terms that are 12 months or less or leases that are clearly insignificant have not been accounted for under the ROU model. Lessees will account for leases as financing or operating leases, with the classification affecting the timing and pattern of expense recognition in the income statement. Lease expense will be recognized based on the effective interest method for leases accounted for as finance leases and on a straight-line basis over the term of the lease for leases accounted for as operating leases. The accounting by a lessor under Topic 842 is largely unchanged from that of Topic 840. Under Topic 842, lessors will continue to account for leases as a sales-type, direct-financing, or operating. A lease will be treated as a sale if it is considered to transfer control of the underlying asset to the lessee. A lease will be classified as direct-financing if risks and rewards are conveyed without the transfer of control. Otherwise, the lease is treated as an operating lease. Topic 842 requires accounting for a transaction as a financing in a sale leaseback when the seller-lessee is provided an option to purchase the property from the landlord at the tenant's option. The Company expects that this provision could change the accounting for these types of leases in the future. Topic 842 also includes the concept of separating lease and nonlease components. Under Topic 842, nonlease components, such as common area maintenance, would be accounted for under Topic 606 and separated from the lease payments. However, the Company elected the lessor practical expedient allowing the Company to not separate these components when certain conditions are met. With this election, the Company combined tenant reimbursements with rental income on its Condensed Consolidated Statements of Income. Additionally, we will recognize a charge to rental income for amounts deemed uncollectible. Further, the Company has historically only capitalized direct leasing costs, such as leasing commissions. While the new standard revises the treatment of indirect leasing costs and permits the capitalization and amortization only of direct leasing costs, the Company does not expect an impact to its financial statements related to the capitalization of leasing costs. Also, the Narrow-Scope Improvements for Lessors under ASU 2018-20 allows the Company to continue to exclude from revenue costs paid by our tenants on our behalf directly to third parties, such as property taxes and insurance. Topic 842 provided two transition alternatives. The Company adopted the standard based on the prospective optional transition method, in which leases for comparative periods continue to be accounted for in accordance with Topic 840. Upon adoption, where the Company is the lessee, we recorded a ROU asset and a related operating lease liability, each totaling approximately $0.1 million, related to one ground lease which will have minimal impact on the recognition of future ground lease expense. The ROU lease asset is included in other assets and the operating lease liability is included in other liabilities on the Company's Condensed Consolidated Balance Sheets. Derivatives and Hedge Accounting In October 2018, the FASB issued an update, ASU 2018-16, Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes to ASC Topic 815, Derivatives and Hedging. ASU 2018-16 expands the list of U.S. benchmark interest rates permitted in the application of hedge accounting by adding the OIS rate based on SOFR as an eligible benchmark interest rate. ASU 2018-16 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018. We adopted this update effective January 1, 2019. The adoption of this update did not have an impact on our Condensed Consolidated Financial Statements. Recently Issued Accounting Pronouncements Financial Instruments-Credit Losses In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses, which changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, companies will be required to use a new current expected credit loss ("CECL") model that generally will result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, companies will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than as reductions in the amortized cost of the securities. Companies will have to disclose significantly more information, including information they use to track credit quality by year of origination for most financing receivables. Companies will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. This standard is effective for the Company on January 1, 2020 with early adoption permitted. In August 2018, the FASB issued a proposal that would amend the ASU to clarify that receivables arising from leases would not be within the scope of the ASU but rather would be accounted for under the leasing standard. The Company continues to monitor the FASB's activity relating to this ASU and the effects that it could have on our Consolidated Financial Statements. |
Debt, net - Schedule of Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Debt, net | $ 215,460 | $ 147,766 |
Term Loan | Third Amended And Restated Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt, net | 175,000 | |
Mortgage Note Payable | ||
Debt Instrument [Line Items] | ||
Debt, net | 5,223 | 5,285 |
Revolving Credit Facility | Line of Credit | Third Amended And Restated Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt, net | 36,250 | 43,000 |
A-1 Term Loan, net | Term Loan | Third Amended And Restated Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt, net | 49,815 | 49,759 |
A-2 Term Loan, net | Term Loan | Third Amended And Restated Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt, net | 49,761 | 49,722 |
A-3 Term Loan, net | Term Loan | Third Amended And Restated Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt, net | $ 74,411 | $ 0 |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Oct. 31, 2019 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Community Healthcare Trust Inc | |
Entity Central Index Key | 0001631569 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 20,177,693 | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false |
Other Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets | Items included in Other assets, net on the Company's Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018 are detailed in the table below.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of VIEs | The VIEs that we have identified at September 30, 2019 are summarized in the table below.
|
Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||||
NET INCOME | $ 2,647 | $ 1,999 | $ 6,163 | $ 6,288 |
Other comprehensive (loss) income: | ||||
(Decrease) increase in fair value of cash flow hedges | (2,060) | 527 | (7,305) | 2,152 |
Reclassification for amounts recognized as interest expense | 3 | 46 | (154) | 201 |
Total other comprehensive (loss) income | (2,057) | 573 | (7,459) | 2,353 |
COMPREHENSIVE INCOME (LOSS) | $ 590 | $ 2,572 | $ (1,296) | $ 8,641 |
Debt, net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | The table below details the Company's debt as of September 30, 2019 and December 31, 2018.
|
Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. This interim financial information should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2019. All material intercompany accounts and transactions have been eliminated. |
Use of Estimates in the Condensed Consolidated Financial Statements | Use of Estimates in the Condensed Consolidated Financial Statements Preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Actual results may materially differ from those estimates. |
Reclassifications | Reclassifications Tenant reimbursements totaling $1.7 million and $4.7 million, respectively, on the Company's Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2018 were reclassified into rental income. |
Income Taxes | Income Taxes The Company has elected to be taxed as a real estate investment trust ("REIT"), as defined under the Internal Revenue Code of 1986, as amended (the "Code"). The Company and one subsidiary have also elected for that subsidiary to be treated as a taxable REIT subsidiary ("TRS"), which is subject to federal and state income taxes. No provision has been made for federal income taxes for the REIT; however, the Company has recorded income tax expense or benefit for the TRS to the extent applicable. The Company intends at all times to qualify as a REIT under the Code. The Company must distribute at least 90% per annum of its REIT taxable income to its stockholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP) and meet other requirements to continue to qualify as a REIT. |
New Accounting Pronouncements | New Accounting Pronouncements Recently Adopted Accounting Pronouncements Lease Accounting In February 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases; in January 2018, the FASB issued ASU 2018-01, Leases - Land Easement Practical Expedient for Transition to Topic 842; in July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases - Targeted Improvements; and in December 2018, the FASB issued ASU 2018-20, Narrow-Scope Improvements for Lessors. The Company adopted this group of ASUs, collectively referred to as Topic 842, on January 1, 2019. Topic 842 superseded the existing standard for lease accounting (Topic 840, Leases). The Company elected to utilize the following practical expedients provided by Topic 842: • the package of practical expedients that allows an entity not to reassess upon adoption (i) whether an expired or existing contract contains a lease, (ii) whether a lease classification related to expired or existing lease arrangements, and (iii) whether costs incurred on expired or existing leases qualify as initial direct costs, and • as a lessor, the practical expedient not to separate certain non-lease components, such as common area maintenance, from the lease component if (i) the timing and pattern of transfer are the same for the nonlease component and associated lease component, and (ii) the lease component would be classified as an operating lease if accounted for separately. Topic 842 requires lessees to record most leases on their balance sheet through a right-of-use ("ROU") model, in which a lessee records a ROU asset and a lease liability on their balance sheet. Leases with terms that are 12 months or less or leases that are clearly insignificant have not been accounted for under the ROU model. Lessees will account for leases as financing or operating leases, with the classification affecting the timing and pattern of expense recognition in the income statement. Lease expense will be recognized based on the effective interest method for leases accounted for as finance leases and on a straight-line basis over the term of the lease for leases accounted for as operating leases. The accounting by a lessor under Topic 842 is largely unchanged from that of Topic 840. Under Topic 842, lessors will continue to account for leases as a sales-type, direct-financing, or operating. A lease will be treated as a sale if it is considered to transfer control of the underlying asset to the lessee. A lease will be classified as direct-financing if risks and rewards are conveyed without the transfer of control. Otherwise, the lease is treated as an operating lease. Topic 842 requires accounting for a transaction as a financing in a sale leaseback when the seller-lessee is provided an option to purchase the property from the landlord at the tenant's option. The Company expects that this provision could change the accounting for these types of leases in the future. Topic 842 also includes the concept of separating lease and nonlease components. Under Topic 842, nonlease components, such as common area maintenance, would be accounted for under Topic 606 and separated from the lease payments. However, the Company elected the lessor practical expedient allowing the Company to not separate these components when certain conditions are met. With this election, the Company combined tenant reimbursements with rental income on its Condensed Consolidated Statements of Income. Additionally, we will recognize a charge to rental income for amounts deemed uncollectible. Further, the Company has historically only capitalized direct leasing costs, such as leasing commissions. While the new standard revises the treatment of indirect leasing costs and permits the capitalization and amortization only of direct leasing costs, the Company does not expect an impact to its financial statements related to the capitalization of leasing costs. Also, the Narrow-Scope Improvements for Lessors under ASU 2018-20 allows the Company to continue to exclude from revenue costs paid by our tenants on our behalf directly to third parties, such as property taxes and insurance. Topic 842 provided two transition alternatives. The Company adopted the standard based on the prospective optional transition method, in which leases for comparative periods continue to be accounted for in accordance with Topic 840. Upon adoption, where the Company is the lessee, we recorded a ROU asset and a related operating lease liability, each totaling approximately $0.1 million, related to one ground lease which will have minimal impact on the recognition of future ground lease expense. The ROU lease asset is included in other assets and the operating lease liability is included in other liabilities on the Company's Condensed Consolidated Balance Sheets. Derivatives and Hedge Accounting In October 2018, the FASB issued an update, ASU 2018-16, Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes to ASC Topic 815, Derivatives and Hedging. ASU 2018-16 expands the list of U.S. benchmark interest rates permitted in the application of hedge accounting by adding the OIS rate based on SOFR as an eligible benchmark interest rate. ASU 2018-16 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018. We adopted this update effective January 1, 2019. The adoption of this update did not have an impact on our Condensed Consolidated Financial Statements. Recently Issued Accounting Pronouncements Financial Instruments-Credit Losses In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses, which changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, companies will be required to use a new current expected credit loss ("CECL") model that generally will result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, companies will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than as reductions in the amortized cost of the securities. Companies will have to disclose significantly more information, including information they use to track credit quality by year of origination for most financing receivables. Companies will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. This standard is effective for the Company on January 1, 2020 with early adoption permitted. In August 2018, the FASB issued a proposal that would amend the ASU to clarify that receivables arising from leases would not be within the scope of the ASU but rather would be accounted for under the leasing standard. The Company continues to monitor the FASB's activity relating to this ASU and the effects that it could have on our Consolidated Financial Statements. |
Incentive Plan (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of nonvested restricted stock activity | A summary of the activity under the 2014 Incentive Plan for the three and nine months ended September 30, 2019 and 2018 is included in the table below.
|
Other Assets - Other Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Notes receivable | $ 23,402 | $ 24,110 |
Accounts and interest receivables | 3,573 | 2,158 |
Straight-line rent receivables | 4,567 | 3,254 |
Prepaid assets | 688 | 487 |
Deferred financing costs, net | 746 | 318 |
Leasing commissions, net | 900 | 790 |
Deferred tax asset | 2,016 | 2,024 |
Fair value of interest rate swaps | 0 | 902 |
Above-market intangible assets, net | 150 | 168 |
Right-of-use leased asset | 140 | 0 |
Other | 232 | 335 |
Other assets, net | $ 36,414 | $ 34,546 |
Derivative Financial Instruments - Narrative (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
derivative_instrument
| |
Derivative [Line Items] | |
Cash flow hedges reclassified to interest expense | $ 1.1 |
Cash Flow Hedging | Interest Rate Contract | |
Derivative [Line Items] | |
Number outstanding interest rate derivatives | derivative_instrument | 7 |
Notional amount | $ 175.0 |
Termination value | $ 7.2 |
Stockholders' Equity - Equity Offering (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 07, 2018 |
Sep. 30, 2019 |
Sep. 30, 2019 |
Dec. 31, 2018 |
|
Subsidiary, Sale of Stock [Line Items] | ||||
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |
At The Market Offering Program | Common Stock | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Common Stock, par value (in dollars per share) | $ 0.01 | |||
Value of shares authorized | $ 100,000,000 | |||
Remaining availability under ATM program | $ 36,900,000 | $ 36,900,000 | ||
Shares issued (in shares) | 680,309 | 1,321,362 | ||
Proceeds received | $ 28,500,000 | $ 51,600,000 | ||
Average gross sales price per share (in dollars per share) | $ 42.70 | $ 39.88 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred Stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred Stock, shares issued (in shares) | 0 | 0 |
Preferred Stock, shares outstanding (in shares) | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares authorized (in shares) | 450,000,000 | 450,000,000 |
Common Stock, shares issued (in shares) | 20,177,693 | 18,634,502 |
Common Stock, shares outstanding (in shares) | 20,177,693 | 18,634,502 |
Summary of Significant Accounting Policies - Business Overview/Segment Reporting (Details) $ in Thousands, ft² in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2019
USD ($)
ft²
state
real_estate_property
|
Jan. 01, 2019
USD ($)
lease
|
Dec. 31, 2018
USD ($)
|
|
Disaggregation of Revenue [Line Items] | |||||
Value of real estate property investments and mortgages | $ 566,300 | ||||
Number of real estate properties | real_estate_property | 111 | ||||
Number of states in which real estate investments are in | state | 32 | ||||
Area of real estate property (in square feet) | ft² | 2.5 | ||||
Operating lease ROU assets | $ 140 | $ 0 | |||
Tenant reimbursements | |||||
Disaggregation of Revenue [Line Items] | |||||
Other operating interest | $ 1,700 | $ 4,700 | |||
ASU 2016-02 | |||||
Disaggregation of Revenue [Line Items] | |||||
Operating lease ROU assets | $ 100 | ||||
Operating lease liabilities | $ 100 | ||||
Number of ground leases | lease | 1 |
Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Cumulative Dividends | ||||
Dividends to common stockholders, per share (in dollars per share) | $ 0.4125 | $ 0.4025 | $ 1.23 | $ 1.20 |
Fair Value of Financial Instruments |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practical to estimate the fair value. Cash and cash equivalents and restricted cash - The carrying amount approximates the fair value. Notes receivable - The fair value is estimated using cash flow analyses, based on an assumed market rate of interest or at a rate consistent with the rates on notes carried by the Company and are classified as level 2 in the hierarchy. Borrowings under our Credit Facility - The carrying amount approximates the fair value because the borrowings are based on variable market interest rates. Derivative financial instruments - The fair value is estimated using discounted cash flow techniques. These techniques incorporate primarily level 2 inputs. The market inputs are utilized in the discounted cash flow calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative valuation model for interest rate swaps are observable in active markets and are classified as level 2 in the hierarchy. Mortgage note payable - The fair value is estimated using cash flow analyses which are based on an assumed market rate of interest or at a rate consistent with the rates on mortgage notes assumed by the Company and are classified as level 2 in the hierarchy. The table below details the fair values and carrying values for our notes receivable, interest rate swaps, and mortgage note payable at September 30, 2019 and December 31, 2018, using level 2 inputs.
|
Stockholders' Equity |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity Common Stock The following table provides a reconciliation of the beginning and ending common stock balances for the nine months ended September 30, 2019 and for the year ended December 31, 2018:
ATM Program On August 7, 2018, the Company entered into an at-the-market offering program ("ATM Program") with Sandler O’Neill & Partners, L.P., Evercore Group L.L.C., SunTrust Robinson Humphrey, Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, Fifth Third Securities, Inc. and Janney Montgomery Scott LLC, as sales agents (collectively, the “Agents”), under which the Company may issue and sell shares of its common stock, par value $0.01 per share (the “Common Stock”), having an aggregate gross sales price of up to $100.0 million (the “Shares”) from time to time through or to one or more of the Agents, as may be determined by the Company in its sole discretion, subject to the terms and conditions of the Agreement and applicable law. The Company's activity under the ATM Program for the three and nine months ended September 30, 2019 is detailed in the table below. As of September 30, 2019, the Company had approximately $36.9 million remaining that may be issued under the ATM Program.
|
Real Estate Leases |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||
Real Estate Leases | Real Estate Leases The Company’s properties are generally leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2034. The Company’s leases generally require the lessee to pay minimum rent, with fixed rent renewal terms or increases based on a Consumer Price Index and and may also include additional rent, which may include taxes (including property taxes), insurance, maintenance and other operating costs associated with the leased property. Some leases provide the lessee, during the term of the lease, with an option or right of first refusal to purchase the leased property. Some leases also allow the lessee to renew or extend their lease term or in some cases terminate their lease, based on conditions provided in the lease. Future minimum lease payments under the non-cancelable operating leases due the Company for the years ending December 31, as of September 30, 2019, are as follows (in thousands):
Straight-line rental income Rental income is recognized as earned over the life of the lease agreement on a straight-line basis. Straight-line rent included in rental income was approximately $0.6 million and $0.4 million, respectively, for the three months ended September 30, 2019 and 2018 and was approximately $1.4 million and $1.2 million, respectively, for the nine months ended September 30, 2019 and 2018. Deferred revenue Rent received but not yet earned is deferred until such time it is earned. Deferred revenue, included in other liabilities, was approximately $2.0 million and $1.6 million, respectively, at September 30, 2019 and December 31, 2018. |
Stockholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reconciliation of common stock | The following table provides a reconciliation of the beginning and ending common stock balances for the nine months ended September 30, 2019 and for the year ended December 31, 2018:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of ATM Program | As of September 30, 2019, the Company had approximately $36.9 million remaining that may be issued under the ATM Program.
|
Real Estate Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of future minimum lease payments for operating leases | Future minimum lease payments under the non-cancelable operating leases due the Company for the years ending December 31, as of September 30, 2019, are as follows (in thousands):
|
26-1L@JI+F36%/0:A[0N<>4:2*LEEP;/!]5K=\3
MD3-B;3#!QU-CNM3XUPUP^:2FX\./YQ>?_QP^O-_?%B",>#3^];93@$9)+UY'
M)6P,H6";P6-1'+C)6AR9\(P%HWVD;BV5R'-2B3R22E=%EBW3B0QZ6]#)H03Q
MN? "^$G:H,'/,\!4'%P9KJE<2R?ZG'2B.Z03+;:A$^:,,$Q#,$8Z&H12TD?D
MD:!4":GI?NBT'"4=S J$*X:28+04]]IH^KLAV(+1>B&"1<&]I-);ZBAG
M(NB P;/6WH"[(D,U5"A?DEZ)P5)NZN=\G')&'F[^FJL3-@0R3N;\RW#\CYLX
M+#YF(=U ">]>(M\+D=Q2&P*FUGH2$'&>*>D 3CA&26!85> $>3&2ZX.0Z8@-
M4Q93!^X;MXZ90!CE*)6)H896@T!$O2#!#D&FK5'"LXBL!IH%X33 +^.=3@C6
M!UN]LAD]G6!%UCFO7H=0>^SAX?ZOO1;.7G1EN2(V(F8,L$Z4P#>8.^*XEA28
M2
M!6>C2)O3NW/((B;A+>#J82G4-7T,%0&^E[=D(31*=FT7"7SL+[/)X)_GDQ'
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MB8?--3M-*IR+%(HG6>\62DD=H$:1*KTQIB("W5^A<)T-MFZ&ZDM\W1;^/Y
M%,9^]6[L&%765[5R4;POJ@'\!%%I2[^GG 5DF[P!(\\MBT632 P',!WB1C%?VH8+%G
MEIFBS39!3#>8[U..;=.\^12B0S-&/9-,>RN,P5U28X+F8*X;\T9Y=_,VF173
M]_VO^('<+ZN_]D?S(I;3P6@RG5 +C[.UT.N^/!T7-
M&E;$7DA-?\(>8LS>;N !Q2AGUU6];^_M.XYEO_'&?V/#$+[E9JOP]@._GI?5
MT,%KPUII/BSNV0]7G[_EMEB.!MRB6H GN
M[XP\1TW[K;20PAHKIH/BJ;0E!I3":=)"E@J;4HYV9 ]>(^V?J'A$2JSW'!DG
M!?=$ZJA"=.G&6^( !=:FP[THY:=[U?\WZYWUT@[(15X>,2JC6#.OT SF3QK!
ML]OKAYL'#RV4Q94F !^]H3%R+I2RD7H?J)-!444KD9I4SI[3=6OP=#+M:QW.
M!N/.X#*'QB^T$O
-HZ\LNH\-":L>%=X$[D<[E
M&1R%Q0K4L6&58^24<+:D?9L&\MCAKKS13^O@A&)"@.^$D-!"N0A,1S4*A/KJ
M':-5&F>MJ[
M^S]_S@$+@M-P]R[[FO47WG;?YFQP
K_>=@KX>GK]FFS'
MB(,'\ 3..Y$JI)@R@3T%+0E'ZF*$.$:8I]U%2Y2K8Y$_L:
MZ!J/C8-K!AB2.Y^N=9E
KLHC#204S<& 05ZRM@BT@/E']KP2)"K()H4H'\L)"]C)Q1
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MB-@@FC
4\@T'$LN2;7H/#^8W25!\X>UQ)"/B>PS)>TD6*J/MY>MRR!*R7-[/$C
M17&?Y'": !,G$X3+3E(/41;17.04 :2.Z6A\I)+)
M[#ESDDLAD[$ '6VS3P;8N;;K.[S+@]ASA,L!?^
_ZJU 3_V%7#M%6-\4 /2^T 0BT&]];>0@RKR Z>O
M>D@5.GG\073TX1-_5%KZ4W_<7[0' S4HDXM;GC4&T]F[@.>=3Z]"C%\P^*[[S,-RK2W:
M]9NGS9D\A%K2-Z3[5=6-:.2-[E0TI.S32YBL\C/@!W3[EAR""9C.#FN/83BB
M6Z2KHL[!QPV4A;[T,9]CV2!RKPU_YJEX=&P%R)3RHUX?WE]45MG4!17BQ
MG$W7'W&%ZZ_UF]WUFP'7R;B;$A<_]:O!^>W:9K;#0ARO>E_.R\%Y#VP:JD\W
M O^[EF](#]XV:BM'=I\G]F9X?#6:],=7:*\<:7WWQ^MA7."=-M"(@T+?LGM\
M/^C!2BR6+0[IXOHZWI7Z5C