Community Healthcare Trust Q4 Earnings Call Highlights

Key Points

• Geriatric behavioral hospital tenant: The operator paid $200,000 in Q4 and has a letter of intent (signed July 17, 2025) to sell all six hospitals to a buyer now completing legal and government-related due diligence, but timing and certainty of closing remain unclear with the company expecting a single closing for all six assets.
• Portfolio and leasing: Occupancy rose to 90.6% and weighted average lease term increased to 7 years; three properties are under redevelopment (largest completing in Q2 2026 with rent starting Q3) and management expects occupancy to stay in the “low nineties” near-term as re-leasing from year-end terminations unfolds.
• Capital recycling and results: Management sold an inpatient rehab at an ~7.9% cap rate realizing an ~$11.5M gain and reinvested via a 1031 exchange into a $28.5M facility with ~9.3% expected return; Q4 FFO was $13.3M ($0.49 per share), AFFO $14.9M, and the quarterly dividend was raised to $0.4775 (annualized $1.91).

Community Healthcare Trust NYSE: CHCT executives used the company’s fourth-quarter conference call to discuss portfolio leasing trends, capital recycling activity, and the status of a key tenant situation involving a geriatric behavioral hospital operator. Management also reviewed quarterly financial results, including revenue growth and funds from operations metrics.

Update on geriatric behavioral hospital tenant

CEO Dave Dupuy said a geriatric behavioral hospital operator that leases six properties from the company paid rent of $200,000 during the fourth quarter, consistent with the prior quarter. The tenant signed a letter of intent on July 17, 2025 to sell the operations of all six hospitals to an “experienced behavioral healthcare operator” and remains under exclusivity with that buyer.

Dupuy said Community Healthcare Trust has maintained frequent communication with the buyer as it works to advance the transaction. The buyer is finalizing legal and business due diligence, and the company did not provide specific timing or certainty that the sale will close.

In response to a question from Piper Sandler’s Connor Mitchell, Dupuy said progress in the fourth quarter was “not as much” as hoped, citing the buyer’s need to confirm liabilities and work through government-related issues. He added that activity increased in the first quarter, including site visits and documentation work. Dupuy said the expectation remains that the transaction would close for all six hospitals at once, with no plans for a staged closing.

Portfolio operations: occupancy, leasing, and redevelopment

Dupuy said occupancy increased to 90.6% in the fourth quarter from 90.1% in the prior quarter. He added that the leasing team has been active with renewals and new leasing, and that the weighted average lease term increased to seven years from 6.7 years.

Management also discussed redevelopment and renovation projects. Dupuy said the company has three properties undergoing redevelopment or significant renovations, with long-term tenants lined up once work is complete. The largest project is expected to be completed in the second quarter of 2026, with rent expected to start in the third quarter after the tenant receives the appropriate provider license.

On the outlook for leased occupancy, Dupuy told Truist’s Michael Lewis that the company has seen strong leasing activity, but that terminations toward the end of last year will take time to re-lease and become “economic.” He said he expects occupancy to remain in the “low nineties” for the next couple of quarters, with momentum potentially building in the second half of the year.

Capital recycling, acquisitions, dispositions, and cap rates

The company highlighted capital recycling activity during the quarter. Dupuy said Community Healthcare Trust sold an inpatient rehab facility at an approximate 7.9% cap rate, generating an approximate $11.5 million gain. Net proceeds were reinvested via a 1031 like-kind exchange into a new inpatient rehab facility purchased for $28.5 million. The company entered into a new lease expiring in 2040, with an anticipated annual return of about 9.3%. Dupuy added that the transaction also reduced the company’s largest tenant concentration, improving portfolio diversification.

For the full year, Dupuy said the company acquired three properties totaling 113,000 square feet for an aggregate purchase price of $64.5 million. Those properties were described as 100% leased, with leases through 2040 and anticipated annual returns ranging from 9.3% to 9.5%.

Dupuy also noted two additional dispositions closed in the fourth quarter and one closed in the first quarter, producing net proceeds of approximately $7.7 million. He said additional properties are being marketed or reviewed under the capital recycling program, and that the company would anticipate using 1031 exchanges when appropriate to reinvest proceeds into its acquisition pipeline.

Looking forward, Dupuy said the company has definitive purchase and sale agreements for five properties to be acquired after completion and occupancy, representing an aggregate expected investment of $122.5 million. Expected returns were stated as a range of 9.1% to 9.75%. The company expects to close on one property in the first quarter, with two closings expected in the second half of 2026 and the remaining two in the second half of 2027.

When asked about market pricing, Dupuy said there has been strong demand for the assets the company is looking to sell, and he expects similar pricing on other dispositions. On the acquisition side, he said the company continues to see opportunities in the 9% to 10% cap rate range, but is being selective given its position on equity issuance.

Capital and leverage approach; dividend increase

Dupuy said the company did not issue shares under its at-the-market (ATM) program during the quarter. He added that management expects to have sufficient capital from selected asset sales along with revolving credit facility capacity to fund near-term acquisitions, and said the company will evaluate capital allocation while maintaining “modest leverage levels.” In Q&A, Dupuy said the goal is to sequence dispositions and acquisitions in a way that supports 1031 exchange execution, while keeping leverage “in the zip code that it is today.”

Management also discussed external growth capacity in the context of cost of capital. Dupuy told Truist that the company continues to see acquisition opportunities, but indicated that equity market conditions and the share price have influenced the mix of activity. He said that historically the business has included programmatic client activity as well as brokered deals, but recent focus has leaned more toward supporting clients. Dupuy said that if the share price returned to a level where capital could be raised accretively, the company would look to augment client acquisitions with brokered transactions.

On shareholder returns, Dupuy said the company declared its fourth-quarter dividend and increased it to $0.4775 per common share, equating to an annualized dividend of $1.91. He added that the company has raised its dividend every quarter since its IPO.

Fourth-quarter financial results

CFO Bill Monroe reported fourth-quarter 2025 total revenue of $30.9 million, up from $29.3 million in the fourth quarter of 2024, representing 5.6% year-over-year growth. On a sequential basis, revenue decreased by $140,000 from $31.1 million in the third quarter of 2025, which Monroe attributed to capital recycling and disposition activity.

• Property operating expense: approximately $6.0 million, up by less than $100,000 quarter over quarter.
• General and administrative expense: $4.8 million, nearly flat versus both the prior quarter and the year-ago period.
• Interest expense: approximately $7.0 million, down about $100,000 sequentially, which Monroe said reflected recent FOMC rate cuts and lower floating rates on the revolver.

Monroe said fourth-quarter 2025 funds from operations (FFO) totaled $13.3 million, up 4.6% from $12.7 million in the prior-year quarter. On a diluted per-share basis, FFO was $0.49, compared with $0.48 a year earlier, but down one cent from $0.50 in the third quarter due to the quarter’s revenue and expense impacts.

Adjusted funds from operations (AFFO) totaled $14.9 million, up 2.1% from $14.6 million in the fourth quarter of 2024. AFFO per diluted share was $0.55, unchanged year over year but down one cent from $0.56 in the third quarter.

Monroe also said the company recorded $12.1 million of net gains on sale during the fourth quarter from capital recycling and dispositions, which increased net income but did not impact FFO or AFFO.

About Community Healthcare Trust NYSE: CHCT

Community Healthcare Trust Incorporated NYSE: CHCT is a real estate investment trust that specializes in owning and leasing healthcare-related properties. The company's portfolio is focused primarily on senior housing and care facilities, including skilled nursing centers, assisted living communities, memory care units, independent living apartments and continuing care retirement communities. Through long‐term, triple‐net leases, Community Healthcare Trust seeks stable, predictable cash flows by partnering with experienced operators that manage day-to-day resident care and property operations.

As of the latest reporting, Community Healthcare Trust's holdings span multiple regions across the United States, with properties located in both urban and suburban markets.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.