Community Healthcare Trust, Inc. Aktie

Welcome to Community Healthcare Trust's 2026 Third Quarter Earnings Release Conference Call. On the call today, the company will discuss its 2026 third quarter financial results. It will also discuss progress made in various aspects of its business. [Operator Instructions] The company's earnings release was distributed last evening and has also been posted on its website, www.chct.reit. The company wants to emphasize that some of the information that may be discussed on this call will be based on information as of today, November 4, 2026, and may contain forward-looking statements that involve risks and uncertainties.

Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the company's disclosures regarding forward-looking statements in its earnings release as well as its risk factors and MD&A and its SEC filings. The company undertakes no obligation to update forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law.

During this call, the company will discuss GAAP and non-GAAP financial measures. A reconciliation between the 2 is available in its earnings release, which is posted on its website. Call participants are advised that this conference call is being recorded for playback purposes. An archive of the call will be available on the company's Investor Relations website for approximately 30 days and is the property of the company. This call may not be recorded or otherwise reproduced or distributed without the company's prior written permission.

Now, I would like to turn the call over to Dave Dupuy, CEO of Community Healthcare Trust. Over to you.

Great. Thank you very much, Sagar. Good morning, and thank you for joining us for Community Healthcare Trust's Third Quarter 2026 Conference Call. Joining me on the call today are Bill Monroe, our Chief Financial Officer; Leigh Stach, our Chief Accounting Officer; and Mark Kearns, our SVP of Asset Management.

Before we begin, I'd like to remind everybody that our earnings release and supplemental data report were released last night and furnished on Form 8-K, along with our quarterly report on Form 10-Q. In addition, an investor presentation was posted to our website last night. I would like to start with updates to our key strategic priorities designed to drive durable growth and elevate the overall quality of the portfolio, which are occupancy improvement, portfolio reinvestment through redevelopment and speculative suites, strategic capital recycling and accelerated acquisition growth.

Starting with occupancy improvement, we continue to see robust leasing activity across the portfolio. Occupancy increased from 89.8% in the second quarter to 90.1% in the third quarter. Our leasing pipeline remains strong, and the team is executing well as we work toward our target occupancy.

Turning to portfolio reinvestment, we continue to advance our redevelopment projects on schedule. As noted last quarter, our behavioral hospital redevelopment in Lafayette, Louisiana, commenced its lease early in the third quarter. We have 3 additional redevelopment projects currently under construction with completion expected late in the fourth quarter or early in the first quarter, backed by long-term leases. Following receipt of certificates of occupancy and licensure, these leases are projected to commence late in the first quarter or early in the second quarter of 2027.

Regarding our speculative suite program, we currently have 1 suite under construction, one in permitting and 3 others in the design phase. These suites are strategically positioned in high-demand buildings where tenants are actively seeking turnkey-ready space. Proactively delivering these spaces allows us to capture prospective health care tenants faster, accelerating both occupancy gains and NOI realization.

Our strategic capital recycling program remains active. As highlighted in our press release, we successfully monetized 1 property in the third quarter and 2 additional properties in October, generating total net proceeds of $32.8 million. The largest transaction, an inpatient rehab facility, will result in a $9.1 million gain in the fourth quarter. We are executing this sale through a Section 1031 like-kind exchange using the net proceeds to acquire another high-quality inpatient rehab facility expected to close late in the fourth quarter.

We currently have more than $30 million of properties actively marketed for disposition. These proceeds will fund our high-quality, high-yield acquisition pipeline while maintaining our disciplined leverage profile. Finally, looking at acquisition growth, we have signed definitive purchase and sale agreements for 4 properties to be acquired upon completion and occupancy for an aggregate expected purchase price of $99 million. The expected return on these investments should range from 9.1% to 9.75%.

We anticipate closing the first of these properties in the fourth quarter, a second in the first quarter of '27 and the remaining 2 between mid-'27 and early '28. As visibility into our disposition pipeline solidifies, we are actively evaluating new acquisition candidates. While we do not have additional properties currently under contract, the market is offering compelling opportunities aligned with our quality and return objectives. We anticipate transaction activity to accelerate through 2027 as our disposition proceeds are realized and our retained capital continues to compound.

Next, I'd like to walk through a few key operational updates from the third quarter. The geriatric behavioral hospital operator, which leases 6 of our properties, paid approximately $540,000 in rent this quarter, a $170,000 increase over the second quarter. As previously noted, this tenant has signed a letter of intent with an experienced behavioral health care operator to acquire the operations of all 6 facilities. The prospective buyer is actively working through legal and business due diligence, negotiating definitive purchase agreements with the tenant and finalizing new long-term leases for the 6 hospitals with CHCT.

While the process has encountered multiple delays, the tenant and prospective buyer continue working collaboratively to resolve outstanding issues. We remain actively engaged with all parties and will provide further updates as appropriate regarding the transaction of the certainty. Given buyer's extended due diligence time line, alongside the tenant's improved operating performance, we are also proactively engaging with other parties who previously expressed an interest in buying the business. We did not issue any shares under our ATM last quarter; however, we anticipate having sufficient capital from selected asset sales, coupled with our revolver capacity to fund near-term acquisitions.

Going forward, we will evaluate the best uses of our capital, all while maintaining modest leverage levels. To finish up, we declared our dividend for the third quarter and kept it steady at $0.33 per common share. This equates to an annualized dividend of $1.32 per share. That takes care of the items I wanted to cover, so I will hand things off to Bill to provide additional details on our financial results for the quarter.

Thank you, Dave. I will now provide more details on our third quarter financial performance, which was strong across the board and the result of early execution wins on our strategic plan announced last quarter. I'm pleased to report total revenue grew from $31.1 million in the third quarter of 2025 to $32.4 million in the third quarter of 2026, representing 4.4% annual growth over the same period last year. This growth was a combination of higher occupancy from leasing activity and acquisitions. When compared to our $31.2 million of total revenue in the second quarter of 2026, we achieved 3.9% total revenue growth quarter-over-quarter.

Moving to expenses, property operating expenses increased by only approximately $100,000 quarter-over-quarter to $6 million for the third quarter of 2026, which is actually a smaller increase than we typically see during the summer from higher utility costs compared to the milder temperatures in the second quarter. On a year-over-year basis, property operating expenses increased by less than $50,000 or less than 1%, which demonstrates the strong cost management results our asset management team has achieved this year.

Total general and administrative expense was $4.2 million in the third quarter of 2026, a significant reduction both quarter-over-quarter of approximately $700,000 and year-over-year of approximately $470,000. This G&A expense decline is the culmination of a number of actions we have taken, including changes we've previously made to reduce executive compensation and stock-based compensation as well as fully amortized restricted stock.

We expect to continue to see some quarterly fluctuation in G&A with our typical relatively higher Q1 and Q3 levels due to the timing of salary increases, tax and benefit payments and bonuses, but we believe G&A will consistently be lower year-over-year for the next few quarters. Interest expense increased by less than $100,000 quarter-over-quarter to $7.5 million in the third quarter of 2026. We had no incremental borrowings under our revolving credit facility during the third quarter. And, in fact, our leverage levels decreased by 0.2x of a turn to 5.8x. But interest expense increased slightly from both the 1 extra day of interest in the third quarter compared to the second quarter and the FOMC decision in mid-September to raise interest rates by 25 basis points.

Moving to funds from operations, FFO in the third quarter of 2026 was $15 million, a 10.4% increase year-over-year compared to the $13.5 million of FFO in the third quarter of 2025. On a diluted common share basis, FFO increased $0.04 from $0.50 in the third quarter of 2025 to $0.54 in the third quarter of 2026. FFO also increased 13.2% quarter-over-quarter or $0.06 from the $13.2 million or $0.48 per diluted common share in the second quarter of 2026. These increases are primarily the result of the higher revenues and lower expenses I discussed earlier.

Adjusted funds from operations, or AFFO, which adjusts for straight-line rent and stock-based compensation, totaled $16 million in the third quarter of 2026, a 6.1% increase year-over-year compared to the $15.1 million of AFFO in the third quarter of 2025. AFFO on a diluted common share basis was $0.58 in the third quarter of 2026 or $0.02 higher than the $0.56 of AFFO in the third quarter of 2025. AFFO also increased 4% or $0.02 quarter-over-quarter from $15.4 million or $0.56 per diluted common share in the second quarter of 2026. That concludes our prepared remarks. Sagar, we are now ready to begin the question-and-answer session.

[Operator Instructions] Your first question comes from the line of Rob Stevenson with Huntington.

Dave, how are you guys thinking about the vacancy at this point? Are you going to sell more of the vacant assets or the assets with stubborn vacancy? Or are you still thinking at this point that the market over the next couple of quarters is going to allow you to lease up some more of the vacancy?

Look, Rob, good to hear from you, and thanks for the question. What I would say is we go through a detailed portfolio review on a quarterly basis where we look at our entire portfolio and evaluate leasing activity and opportunities to lease space. And what I would say is our goal is to improve our portfolio over time based on our capital recycling. That said, I think we've got a handful of properties that are still empty. I'd say a couple of those we think are very likely that are going to get leased. And so we will continue to own those buildings.

But there are also a couple of those properties that are smaller that are difficult to lease that would be expensive and aren't good long-term fits for the portfolio. So I think it's going to be a combination. But as you see from the quarterly numbers and what we did in terms of selling a couple of empty buildings, those buildings don't generate a lot of proceeds for us, but it's really a focus on making sure that we're executing on making -- getting the right buildings in the portfolio. And so the leasing activity we're seeing more broadly in the marketplace has been very favorable. And so I think most of our activity is going to be on the leasing side, but there will continue to be a handful of buildings that aren't strategic that we would look to exit if we don't feel like there's a good opportunity to lease those buildings.

Okay. And for the vacant buildings, did you guys wind up shedding any material amount of expenses associated with not having a tenant in them that you guys were paying? Or was it relatively immaterial?

It's relatively immaterial. But look, it's -- there's definitely property taxes and other operating expense of an empty building that we're able to get rid of. But it's a relatively small amount given the size of those buildings.

Okay. And then I guess the other question for me is we've heard from other asset types that there's a very strong buyer pool right now for 1031 and especially the bonus depreciation buyer trying to close up by year-end. Are you guys seeing that much in your type of assets?

I think what I would say is we've been so targeted as far as what we're looking to sell that, yes, in those processes, we've seen a great deal of interest. But it's not like we're -- our goal is to do a smaller number of larger attractive cap rate sales to help fund our pipeline. And so it's been pretty rifle shot. But yes, I mean, it has been a very robust process on both of those larger inpatient rehab facilities we've sold. And I think the gains associated with those sales give credence to the fact that there's certainly a dislocation between where we're valued from a public markets perspective and what the private market views as attractive real estate.

So yes, I mean, the dispositions that we're looking at for high-quality buildings that we're using as capital recycling to fund our pipeline is a very rifle shot approach. But yes, we hear from people, many inbound calls looking to buy properties on a one-off basis. Candidly, we're not interested in doing that.

Okay. And then last one for me. Bill, what -- was there anything -- the $0.54 in the third quarter, what's sort of nonrecurring as we think about rolling forward out of the quarter? Obviously, you'll have the trade out of some of the dispositions, et cetera. But when we're thinking about earnings in fourth quarter and going forward, anything in there that we need to be aware of that's especially not reoccurring?

No, nothing material. I did highlight in my remarks some of the declines we saw in G&A and how we do think that, that is kind of the right level set for the next few quarters. And so we think that's certainly going to provide some benefits and tailwinds to our overall FFO in particular.

The only thing I would add to that, Rob, is we're doing some -- we're doing a capital recycling. We sold one building. We're going to invest in another building. There's going to be a little bit of leakage between when we sold the building and when we invest in the new building because those acquisitions got pushed a little bit. But as far as what we expect going forward, I think the numbers we're showing are consistent and will continue to grow.

[Operator Instructions] Our next question comes from Jim Kammert with Evercore.

David, I don't want to put words in your mouth, but you intimated that I think that maybe as regards to the Assurance assets, there are other people that or other tenants or buyers that might be interested. Is that -- did I hear that properly? And secondly, does that mean you're souring at all on the existing sort of buyer? I'm just trying to clarify.

Yes. Jim, thanks for the question. I guess what I would say, we can't go into details on the negotiations between the current transaction contemplated. But what I can say is their exclusivity has expired. The performance of the business, the underlying business is doing much better today than when the LOI was signed 18 months or so ago. We have had interest from others associated with the process. And just given the fact that it's taken longer and quite frankly, we're a little bit frustrated with the length of time and the amount of due diligence and some of the issues that have gone into this process. We just think it's in the best interest of us and frankly, the tenant to not have all the eggs in this basket if we can't get that indeed over the finish line.

I guess from our perspective, we still are -- we still hope that the deal goes through, but we need to have some alternatives should it not. And so given the outstanding interest that we've had from others, we're going to explore those. So let's see how it plays out. But yes, you did hear correctly.

That's very helpful. And just a second question, perhaps you mentioned also that you're seeing -- obviously, you get the cost of capital improved, hopefully, you get a little bit more offensively on the acquisition pipeline. Do you have any sense of where would those yields compare, let's say, to your known $99 million pipeline of 9.1% to 9.75%? Do you think if you had the cost of capital, could you get middle 9s, high 9s on some of the other deals that are starting to cross the threshold?

Yes, absolutely. We continue to be focused. We've got a high bar, both from a quality perspective, but also from a yield perspective. And so our view is that 9% to 10% range is certainly achievable. And based on some of the activity that we're seeing in the marketplace, yes, we think that, that mid-9 range, anywhere from 9% to 10% is achievable. And so part of what we -- our original expectation was we were going to have 2 inpatient rehab facilities close the second half of this year. And since those have been pushed out and since we have greater clarity around the dispositions we're working on, we're now able to work on some of those other acquisition candidates.

And so that's why I said in my prepared remarks, you should expect some additional activity in the upcoming quarters. And so we're looking at a number of things. And hopefully, we'll have some activity we can share at our next call.

[Operator Instructions] As there are no further questions at the moment, I would now like to turn the conference back to Dave Dupuy for closing comments. Over to you, sir.

Great. Thank you so much, and thank you, everybody, for dialing in. Look forward to seeing those who will be there at REITWorld coming up in just a couple of weeks. Talk soon. Bye.

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

Welcome to Community Healthcare Trust's 2026 Second Quarter Earnings Release Conference Call.

On the call today, the company will discuss its 2026 second quarter financial results. It will also discuss progress made in various aspects of its business. Following the remarks, the phone lines will be opened for a question and answer session. The company's earnings release was distributed last evening and has also been posted on its website, www.chct.reit.

The company wants to emphasize that some of the information that may be discussed on this call will be based on information as of today, August 5, 2026, and may contain forward-looking statements that involve risk and uncertainty. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the company's disclosures regarding forward-looking statements in its earnings release as well as its risk factors and MD&A in its SEC filings. The company undertakes no obligation to update forward-looking statements, whether as the result of new information, future developments or otherwise except as may be required by law.

During this call, the company will discuss GAAP and non-GAAP financial measures. A reconciliation between the 2 is available in its earnings release, which is posted on its website.

All participants are advised that this conference call is being recorded for playback purposes. An archive of the call will be made available on the company's investor relations website for approximately 30 days and is the property of the company. This call may not be recorded or otherwise reproduced or distributed without the company's prior written permission.

Now, I would like to turn the call over to Dave Dupuy, CEO of Community Healthcare Trust.

Great. Thank you, Cindy, and good morning, everyone. Thank you for joining us for Community Healthcare Trust's second quarter 2026 conference call. Joining me on the call today are Bill Monroe, our Chief Financial Officer; Leigh Ann Stach, our Chief Accounting Officer, and Mark Kearns, our SVP of Asset Management.

Before we begin, I'd like to remind everyone that our earnings release and supplemental data report were released last night and furnished on Form 8-K, along with our quarterly report on Form 10-Q. Additionally, we included in our Form 8-K a new strategic plan investor presentation, which is also available in the investor relations section of our website. We encourage you to reference this presentation along with today's remarks.

The Board and senior leadership have spent considerable time developing CHCT's strategic plan for renewed growth, and I'm excited to share an overview with you today. First, we are right-sizing our quarterly dividend from $0.48 to $0.33 per share. This decision allows us to retain capital directly for accretive acquisitions and long-term portfolio growth. We expect this reduction to free up $25 million to $30 million in capital over the next 2 years.

Combined with our capital recycling program, this incremental cash flow will accelerate our portfolio investments and fund our acquisition pipeline. Crucially, we expect these investments to be highly accretive to AFFO growth and shareholder value, all while maintaining our current target leverage levels.

As part of this capital realignment, we are focusing on 4 core strategic priorities to drive growth and elevate the overall quality of our portfolio. Those are occupancy improvement, portfolio reinvestment, strategic capital recycling and accelerated acquisition growth.

Our first priority is occupancy improvement. We see a clear, tangible path to reaching 92% occupancy over the next 18 months. Our 2026 leasing budget targets a 70-basis-point increase in occupancy to 90.5% by year-end. Year-to-date, we have already signed new leases totaling over 100,000 square feet, surpassing our total volume for all of 2025. Leasing activity remains strong across the majority of our footprint, and we expect these tailwinds to continue into 2027. This momentum is driven by the strategic market positioning of our assets, along with a broader supply shortage of quality health care properties. Fully achieving these occupancy gains and rent growth represents up to $6 million in NOI upside.

Our second strategic priority is portfolio reinvestment. We are deploying targeted capital into redevelopment projects alongside high-quality tenants with long-term leases already in place. These projects offer compelling risk-adjusted returns with a 9% to 12% yield on cost. A prime example is our recently completed behavioral hospital in Lafayette, Louisiana, a joint venture between Ochsner Health and Oceans Behavioral Health with a lease commencement that occurred early in the third quarter. Additionally, we are selectively building out speculative suites in high-demand markets. Proactively preparing these spaces allows us to capture prospective healthcare tenants faster, accelerating both occupancy gains and NOI realization.

Our third priority is strategic capital recycling. Since launching this initiative in 2025, CHCT has sold 7 properties generating $38.5 million in net proceeds. We currently have more than $70 million of assets in the market. We expect these disposition proceeds to fund our high-yield acquisition pipeline while keeping leverage modest. We view this as truly strategic recycling, whereby we are exiting select assets to fund high conviction opportunities, like our attractive inpatient rehab facility pipeline, while simultaneously enhancing the credit quality and profile of our overall portfolio.

Finally, our fourth priority is accelerating acquisition growth. In addition to improved occupancy and portfolio performance, acquisitions will be an important growth driver for CHCT. Over the last 2 years, acquisition volume moderated to $64.5 million and $72.1 million. By combining our capital recycling proceeds with the capital freed up from our dividend rightsizing, we have unlocked the liquidity necessary to step up our acquisition velocity. We expect to close on $85 million to $90 million in acquisitions in 2026, and we anticipate activity to increase in 2027, as this newly unlocked growth capital compounds. In short, we believe the strategic plan is clear and achievable, positioning us to improve our portfolio, increase our acquisition cadence and drive accretive AFFO growth.

Next, I'd like to walk through a few key operational updates from the second quarter. During the second quarter, the Geriatric Behavioral Hospital operator, which leases 6 of our properties, paid approximately $370,000 in rent, representing a $70,000 increase over the first quarter. As previously noted, this tenant signed a letter of intent with an experienced behavioral healthcare operator to acquire the operations of all 6 facilities under exclusivity. Since then, the buyer has made significant progress. They are now finalizing legal and business due diligence and have moved into drafting definitive purchase agreements, which includes new leases for CHCT's 6 properties.

Given the steady momentum through the second quarter and into July, we anticipate a signed purchase agreement during the third quarter, targeting a transaction close by year-end. While the deal is progressing constructively, transactions of this nature remain subject to final documentation and closing conditions. We cannot guarantee a closed transaction, but we remain fully committed to keeping you updated as key milestones are reached.

Also, in May, we sold 1 building in Batesville, Mississippi, and received net proceeds of approximately $460,000, resulting in a small gain on the property sale. We also have signed definitive purchase and sale agreements for 4 properties to be acquired after completion and occupancy for an aggregate expected investment of $99 million. The expected return on these investments should range from 9.1% to 9.75%. We expect to close on one of these properties in the third quarter and another in the fourth quarter of 2026 and the remaining 2 in the second half of 2027.

That takes care of the items I wanted to cover, so I'll hand things off to Bill to provide additional details on our financial results for the quarter.

Thank you, Dave. Let me add more detail on our capital allocation policy first, given our new right-size dividend. As Dave mentioned, we expect to retain $25 million to $30 million of capital over the next 2 years, or to put it on an annual basis, up to $15 million of cash flow per year. On a leverage-neutral basis of approximately 40% debt to capitalization, this will allow us to acquire or reinvest up to an incremental $25 million per year, generating an incremental $0.06 to $0.07 of AFFO growth per year, assuming a 9% to 10% yield. As our AFFO grows from this retained cash flow, as well as the occupancy improvements Dave discussed, it also enables our dividend to grow with earnings going forward. Historically, we updated our dividend each quarter, but going forward, we expect to update our dividend on an annual basis while maintaining an AFFO payout ratio of approximately 60% to 65%.

I also want to take a minute to point out the additional disclosures we have included within our filed second quarter 2026 supplemental information. Within our reconciliation tables on page 8, we now include our funds available for distribution, or FAD, calculation, which provides a breakout of capital expenditures across tenant improvements, leasing commissions and recurring capex. And within our portfolio overview tables on page 14, we now include a breakout of our properties by ownership type, fee simple and ground lease, a detailed review of our quarterly leasing activity across new leases, renewals, vacancies and acquisitions, dispositions, and a breakout of our lease types across net leases, modified gross leases and gross leases, as well as a calculation of our portfolio's annual escalators. These additional disclosures are a response to investor and analyst questions, and we are excited to provide more transparency on these items.

And to help save time for Q&A, I'll very briefly review our second quarter financial performance, which on an AFFO per share basis remains steady at $0.56. Total revenue for the second quarter of 2026 was $31.2 million, with property operating expenses of $5.9 million, general and administrative expenses of $4.9 million and interest expense of $7.4 million.

Moving to funds from operations, FFO in the second quarter of 2026 was $13.2 million, and on a diluted common share basis was $0.48. Adjusted funds from operations, or AFFO, which adjusts for straight-line rent and stock-based compensation, totaled $15.4 million in the second quarter of 2026, and on a diluted common share basis was $0.56. As I mentioned earlier, both AFFO and AFFO per share were the same as the first quarter of 2026, but I'm happy to review any of these financials in more detail.

That concludes our prepared remarks. Cindy, we are now ready to begin the question and answer session.

[Operator Instructions] Our first question comes from Rob Stevenson of Huntington.

What is the occupancy on the $70 million of assets that you're marketing? Trying to figure out here if you sell all those if occupancy goes down because those are highly occupied assets or goes up since some of those have the bigger chunks of vacancy.

Rob, thanks for the question. Appreciate you dialing in and glad to have you back. So, as far as the occupancy goes on the buildings, what I would tell you is most of those buildings are 100% occupied. We do have a handful of buildings we're looking to sell that should result in relatively modest proceeds that are empty buildings. So the buildings that we are selling are 100% occupied, you know, with the exception of a small handful, less than 5 buildings that are in market that are empty.

Okay, that's helpful. And then, Bill, it sounded like in your commentary on the dividend that it's now an annual review going forward instead of the small quarterly increases. Is that the takeaway there?

That's right. It's something we and the Board will evaluate on an annual basis.

Okay. And then given your commentary about retaining the cash flow to drive AFFO growth, is there any reason why you guys would increase the dividend from the $0.33 level until you sort of get down towards minimum payout so that you could retain as much as possible for investment?

As I had mentioned in my comments, we're going to be targeting that 60% to 65% AFFO payout ratio, and so that's what we'll be looking at as we evaluate the dividend on an annual basis.

Okay. And then last one for me, Dave, like at this point, how comfortable are you with waiting and seeing what happens here in the third quarter with the 6 behavioral health hospitals? Or are you still running a separate process in parallel just in case something falls through there?

We've -- we've obviously -- over the last year and a half, we've -- the good news is, in this process, the company has performed well. It has recovered significantly. It's been able to pay additional rent. I would anticipate the rent amount in the third quarter to move up from where it is in the second quarter. And so that I think allows us some flexibility if for whatever reason this transaction doesn't go forward. And as you might expect, just given our relationships in the sector, we have other folks that have expressed interest and could be potential suitors. But we think just given the amount of time that the buyer has looked at the business, how it's performed during that time, we believe that, that is going to be the right buyer for the business.

And the delays really don't have as much to do with the buyer as they do with some of the regulatory issues that the company has had to work through in these various states that unfortunately each have their own rules and each have their own hurdles that you have to get through. So I think they've spent a lot of money. They've worked very hard, in fact, engaged their operations team heavily and sort of the onboarding process. And so we feel confident that ultimately they're going to end up being the buyer. But the good news is the business is performing so that if they aren't, we think that somebody else could come in and operate the business and be a potential alternative.

The next question comes from Alexander Goldfarb of Piper Sandler.

Dave, you guys addressed the all-stock comp back in early '24, but the dividend was one of those issues that's been out there for a while. It's been a topic of conference calls over time. What finally made you guys decide now was the time to address it versus, you know, I guess maybe when you did the all-stock comp, maybe, you know, assessing it then?

Alex, thanks for the question. I'm reminded of kind of a funny quote, which is the definition of insanity is doing the same thing over and over again and expecting a different result. We have done a lot of great work. The portfolio continues to perform. For whatever reason, the market is not cooperating as far as where our share price is. And as you might guess, we and the Board have looked at the dividend. It's a topic as part of our regular discussion at every Board meeting. And we just decided that the only way for us to get comfortable in sort of driving performance in the business, which is ultimately what we're here to do, would be to take on some of that capital, redeploy it and start growing the business again. So I think there was no event or there was nothing that was a catalyst. It was just the last 2 years of seeing the stock sort of stuck in this band and recognizing that the only way we were going to be able to pull it out is for us to do something different from a growth perspective.

Okay. And then second is -- obviously, good to hear that you're -- you've taken a reassessment of the portfolio, exit some assets, recycling the better. But -- so we don't get the impression that nothing was going on in the past few years. It seems like right now you guys have taken control again. You're not waiting for Assurance. It almost sounded like you may exit that portfolio if it doesn't get resolved. But can you just give us some commentary over the past few years of like what the leasing was like or stuff? Because what you've announced today sounds really good and sounds like a lot of activity that should put the company in better standing. But at the same time, presumably you guys weren't just waiting around for Assurance to resolve before doing this other stuff. So maybe just some perspective of what's been going on the past few years versus the announcement of today.

Yes, no, I think it's -- that's an important point to bring up. So a couple of things that I'll mention, first of all, just from a leasing perspective. If you look at the expirations that we had built into the portfolio as going from 2024 to 2025 and from 2025 to 2026, those were 2 of the biggest expiration years within our portfolio. And some of that just has to do with the age of the buildings we acquired early on that were these medical office properties. Just after 4 to 6 years of having those buildings, the tenants were turning over. So we had big years. I think it was north of 10% each -- in each of 2025 and 2026. And we knew that we had to perform better as a company. And so that's what prompted us to bring Mark Kearns on board.

He has a significant amount of experience and expertise on the leasing side with companies that we admire. We were convinced that he could help us restart and re-engage from a leasing perspective. But we hired him roughly a little bit over a year ago, and he needed some time to get in his seat, to hire his team and to get some momentum. We're seeing that momentum from a leasing perspective today. And so I think it's important that these building blocks. We were putting in place over the last year or so with Mark and his team. And now, the good news is if you look at our lease expirations into remaining 2026 and into '27, '28 and '29, you see a much lower amount of expiration.

So we've got this sort of combination of the right team in place, a lower than previous years turnover from an expiration standpoint, and we've got great leasing activity in our markets. And so that combination is really sort of the change and the catalyst for us to have confidence that, that 92% occupancy is real and something that's very achievable in the pipeline.

Okay, and just the final question is, in the old days you guys used to do $120 million, $130 million a year, and presumably the corporate overhead and the platform was built for sort of that big aggressive pipeline that's slowed in the past, since the pandemic. Do you feel that the overhead, the platform is appropriately sized? Do you think it's too big? Or in your view, you should be back to a growth perspective that makes where you sit corporately compatible with where the growth will be?

Yes, I think we've got the right team in place. Will we have to add pieces here and there? Yes, but I think we've already done a lot of that. We've added a couple of team members over the last 2 years to our asset management group. We've added a couple of leasing members to our leasing team. So I think we've largely built it out. Of course, we're always going to evaluate talent. And if we think that there's an A-plus talent opportunity out there, we will look at it.

But to answer your question specifically around G&A, we think that we've got the platform in place to be able to handle that $120 million to $150 million of growth. And ultimately that's our goal is to get back there. We're not going to get all the way there in 2026, and probably not even in 2027, although we'll see. I mean, part of what allows us to do those larger -- make that larger acquisition cadence is some of the compounding in that capital we're retaining. And boy, it would be great if we had some currency in our share price to do some ATM as well. But we're going to take it 1 step at a time. We've got to earn our way into seeing that progress from a share perspective, and we think we'll get there.

The next question comes from Michael Lewis of Truist.

First, I wanted to follow up on one of the questions Alex asked about the occupancy. That 92% target, that's been kind of out there for a while. It feels like maybe you sort of formalized it in this presentation, but what gets you there and when, right? So you mentioned low expirations in '27, '28, '29. Do you get to 92% at the end of '27, at the end of '28, and then maybe try to go higher? Is there a timeframe around that target?

I think the timeframe, we feel like we can get to that 92% as early as at the end of 2027. Now, getting spaces leased and getting those spaces to actually generate revenue, there's always going to be a little bit of delay between those 2 things. But I think we can get there. What I've said previously, and I still think it holds true today for our portfolio, I think our full occupancy is between 92% and 93%. So there's always going to be some level of occupancy in a portfolio that's heavily weighted toward our physician clinic medical office type space. But I definitely think that there's an opportunity for us to get to that 92% plus or minus and stay there and even grow beyond that. And that's where we're very focused.

I mean, just given the fact that we haven't had the currency to grow through acquisition as much as we've wanted, part of the reason we brought Mark in and we've augmented our teams both on asset management as well as on leasing is to really drive the performance in our core portfolio. And so, I think, some of these big expiration years are behind us, but we still have work ahead of us to do this. And the good news from our perspective is we're seeing the leasing activity that can get us there.

Okay, and then, it appears that redevelopment is the best yield, at least on average. Just wondering, you gave an example of one of these, maybe talk about how much of this is available to you and also the risk-reward on these speculative suites?

So on redevelopment, they do have good returns. They have the added advantage of -- it's a building, of course, we already own. And so we know the building, we know the market. The trade-off, if there is a trade-off between the redevelopment projects, is, of course, now, we try to build this into our yield on cost or returns. There's a period of time where we are investing in a property where we're not getting anything back unless -- which is different than an acquisition when we acquire something, that NOI starts day 1 or very soon after the acquisition. So that's why we typically look for higher returning projects.

As far as trying to put a number on those, you know, the project that I highlighted, one of the largest redevelopments we've done, we think it's going to be a great project. I was there for the ribbon cutting earlier this summer. It's a great project with 2 strong operators in the Lafayette market. But I think, in general, those redevelopments size profile-wise are going to be more like the other redevelopment projects we've done, anywhere from $3 million to $5 million projects, either full building renovation, redevelopment or partial building renovation, redevelopment.

And Michael, it's tough to -- we're very focused on trying to find the right tenant and the right opportunity to utilize and to do these redevelopment projects. It's tough to tell you. My guess is historically, over the last 3 years, we've had anywhere from $10 million to $15 million worth of those projects going on over time. I think it's reasonable to see anywhere from $10 million to $15 million worth of those types of projects going on over time. But it's tough to be precise with it because a lot of those tend to be opportunistic deals, where we know a tenant, they've asked us for, do we have any space or availability in a current market? And then, we look at doing those projects.

The speculative suites is also very much based on what markets are busy and what buildings do we feel like would be good projects. And so, right now, we've got 3 buildings that we're working on with these speculative suite projects. But again, they're not huge. They're anywhere from 2,500 to 5,000 square feet projects, about the size for a regular-way physician group practice. And we -- so far, we've had one of these projects that we've done in the [indiscernible] market, and that's worked out very well for us.

And so, again, we're going to be selective. We're not going to do 10 of these things, but I think we're going to continue to do projects where we feel like we've got good opportunities, where we're seeing a lot of traffic, and we think speed to market is going to be critical to winning that business. So tough to quantify, but again, it's all of these pieces working together to sort of drive the overall performance of the portfolio.

Okay, great. And then my last question is on acquisitions, right? So you'll have disposition proceeds, the dividend savings will come in over time. You've got this pipeline of developments you're going to purchase upon completion. What do you think about what we might see in terms of, call them speculative acquisitions, right? You mentioned this pipeline of -- if you have the pipeline of inpatient rehab, but what kind of other stuff might you buy? And when do you think you might start pulling the trigger on some of those?

I think we could start seeing some of those additional acquisitions happen in the fourth quarter. It takes a while to identify, and then, close on those types of projects. But I think, our thought process would be you could do anywhere from $5 million to $15 million worth of those deals in the fourth quarter. And then, you know, similarly, in next year, you could do $20 million to $30 million of those types of transactions. So it's -- again, we're going to be very selective and very picky on which projects we do. The good news is we're seeing a lot of opportunities out there, and we think that the opportunities are going to be squarely in our -- squarely in our fairway, those high single-digit returns for quality properties. So, again, $5 million to $15 million probably, toward the end of this year, and then, another $20 million to $30 million next year.

[Operator Instructions] This concludes our question and answer session. I would like to turn the conference back over to Dave Dupuy for any closing remarks.

Great. Thank you all. We appreciate the interest in CHCT, and please, as always, feel free to call us if you have any questions.

Have a great day.

Welcome to Community Healthcare Trust 2026 First Quarter Earnings Release Conference Call. On the call today, the company will discuss its 2026 first quarter financial results. It will also discuss progress made in various aspects of its business. Following the remarks, the phone lines will be opened for a question-and-answer session.

The company's earnings release was distributed last evening and has also been posted on its website, www.chct.reit. The company wants to emphasize that some of the information that may be discussed on this call will be based on information as of today, May 6, 2026, and may contain forward-looking statements that involve risks and uncertainty.

Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the company's disclosures regarding forward-looking statements in its earnings release as well as its risk factors and MD&A in its SEC filings. The company undertakes no obligation to update forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law.

During this call, the company will discuss GAAP and non-GAAP financial measures. A reconciliation between the 2 is available in its earnings release, which is posted on its website. Call participants are advised that this conference call is being recorded for playback purposes. An archive of the call will be made available on the company's Investor Relations website for approximately 30 days and is the property of the company. This call may not be recorded or otherwise reproduced or distributed without the company's prior written permission.

Now I would like to turn the call over to Dupuy, CEO of Community Healthcare Trust.

Great. Thank you very much. Good morning, everyone, and thank you for joining us today for the 2026 first quarter conference call. On the call with me today is Bill Monroe, our Chief Financial Officer; Leigh Ann Stack, our Chief Accounting Officer; and Mark Kearns, our Senior Vice President of Asset Management.

Our earnings announcement and supplemental data report were released last night and furnished on Form 8-K, along with our quarterly report on Form 10-Q. In addition, an updated investor presentation was posted to our website last night. During the first quarter, the geriatric behavioral hospital operator, a tenant in 6 of the company's properties, paid rent of approximately $300,000, an increase of $100,000 over last quarter.

On July 17, 2025, this tenant signed a letter of intent for the sale of the operations of all 6 of its hospitals to an experienced behavioral health care operator and is under exclusivity with that buyer. The buyer is finalizing legal and business due diligence and has entered the drafting phase of the definitive purchase documents, including new leases on the 6 hospitals owned by the company.

We continue to maintain frequent productive communication with the buyer's team to advance the closing process. While the transaction is progressing, we can't provide specific timing or certainty that it will close. However, we remain committed to providing further updates as the process moves forward.

We had a busy first quarter from both an operations and a capital recycling perspective and continue to be selective from an acquisition standpoint. Our occupancy decreased from 90.6% to 89.8% during the quarter due to lease terminations. However, our leasing team is very busy with renewals and new leasing activity, and we expect leased occupancy to grow next quarter.

Our weighted average lease term increased slightly from 7 to 7.1 years, and our asset management team continues to do a great job serving our tenants while focusing on property operating costs. We have 3 properties that are undergoing redevelopment for significant renovations with long-term tenants in place once the redevelopment or renovations are complete. The largest of these projects, a behavioral health care facility, received its certificate of occupancy in March.

Due to health care licensure requirements, we expect this property to commence its lease and contribute NOI during the third quarter of 2026. During the first quarter, we acquired an inpatient rehabilitation facility after completion of construction for a purchase price of $28.5 million. We entered into a new lease with a lease expiration in 2044 an anticipated annual return of approximately 9.3%.

We also have signed definitive purchase and sale agreements for 4 properties to be acquired after completion and occupancy for an aggregate expected investment of $99 million. The expected return on these investments should range from 9.1% to 9.75%. We expect to close on 2 of these properties in the second half of 2026 and the remaining 2 in the second half of 2027.

In February, we sold 1 building in Fort Myers, Florida, and received net proceeds of approximately $5.2 million, resulting in a small loss on the property sale. We also received net proceeds of approximately $700,000 from the disposition of a property at the end of 2025. We did not issue any shares under our ATM last quarter. However, we continue to evaluate capital recycling opportunities, and we would anticipate having sufficient capital from selected asset sales, coupled with our revolver availability to fund near-term acquisitions.

Going forward, we will evaluate the best uses of our capital, all while maintaining modest leverage levels. To wrap up, we declared our first quarter dividend and raised it to $0.48 per common share. This equates to an annualized dividend of $1.92 per share, and we are proud to have raised our dividend every quarter since our IPO. That takes care of the items I wanted to cover, so I'll hand things off to Bill to discuss the numbers.

Thank you, Dave. I will now provide more details on our first quarter financial performance. I'm pleased to report total revenue grew from $30.1 million in the first quarter of 2025 to $31.5 million in the first quarter of 2026, representing 4.8% annual growth over the same period last year. On a quarter-over-quarter basis, total revenue grew 1.9%, primarily from higher rental income from our recent acquisitions and higher property operating expense recoveries, partially offset by recent capital recycling dispositions and net leasing activity.

Moving to expenses. Property operating expenses increased by approximately $360,000 quarter-over-quarter to $6.4 million for the first quarter of 2026. This increase was a result of seasonally higher snowplow and utility expense at several properties that we typically see in January and February in particular.

Total general and administrative expense was $5.1 million in the first quarter of 2026, which was approximately $330,000 higher quarter-over-quarter, primarily as a result of higher noncash amortization of deferred compensation and our typical first quarter adjustments due to the timing of annual employee salary increases, employer HSA and 401(k) contributions and employer tax payments.

On a year-over-year basis, G&A did not increase from the same $5.1 million in the first quarter of 2025. Interest expense decreased by $160,000 quarter-over-quarter to $6.8 million in the first quarter of 2026 due to 2 less days in the first quarter and slightly lower floating rates on our revolving credit facility.

I'll note that we expect our second quarter interest expense to be higher, however, based on an additional day in the second quarter, a full quarter of our current revolver balance, which includes net borrowings from our inpatient rehabilitation facility acquisition in February and the expiration in late March of $75 million of interest rate hedges.

Moving to funds from operations. FFO in the first quarter of 2026 was $13.4 million, a 5.8% increase year-over-year compared to the $12.7 million of FFO in the first quarter of 2025. On a diluted common share basis, FFO increased $0.02 year-over-year from $0.47 in the first quarter of 2025 to $0.49 in the first quarter of 2026 and remained the same quarter-over-quarter from the $0.49 of FFO in the fourth quarter of 2025.

Adjusted funds from operations, or AFFO, which adjusts for straight-line rents and stock-based compensation, totaled $15.4 million in the first quarter of 2026, a 4.1% increase year-over-year compared to the $14.7 million of AFFO in the first quarter of 2025. AFFO on a diluted common share basis was $0.56 in the first quarter of 2026, which was $0.01 higher both year-over-year and quarter-over-quarter from the $0.55 of the AFFO in the first quarter of 2025 and the fourth quarter of 2025, respectively.

That concludes our prepared remarks. Darwin, we are now ready to begin the question-and-answer session.

[Operator Instructions] Our first question comes from Alexander Goldfarb with Piper Sandler.

Dave, you made some promising comments about the Assurance hospital transfer. It sounds like things are progressing, sort of, getting in late stages. Can you just give a little bit more color? Do you feel like we're getting close to the end? Or is this sort of like typical sort of government work where you have to enjoy the process. And at this point, based on the shot clock, you're like, okay, we should be at the point of the shot clock where this should be coming to a conclusion.

Alex, yes, thanks for the question. We are feeling like we have definitely made some progress over the last quarter. Some of the roadblocks that we've seen, as you've alluded to, have been related to some -- getting some confirmation on some outstanding liabilities from a couple of the various governing bodies that pay. So in particular, as it relates to Ohio Medicaid firming up the amount that is owed.

So -- but we do feel like we're making good progress. The company is highly engaged. The buyer is highly engaged in the process. And we do feel like we're hopefully going to get final confirmation on timing and everything very shortly. So we do -- like I said in the prepared remarks, we are currently trading documents and purchase agreements, and we would anticipate getting this thing in a good place, hopefully, in the next quarter.

Okay. That's certainly good to hear. Second question is, obviously, senior housing is all the rage these days and MOB and I think your traditional property types may not be as in vogue at least when you look at the public stock prices. When you guys look in the market for acquisitions, is that the same that you see on the private market? Or is there -- are you -- basically, what I'm asking is your acquisition pipeline is coming down.

I realize that you're managing that relative to your cost of capital. But I'm also trying to understand what's going on in valuation land and if there's sort of all the health care private capital is heading only to senior housing and your traditional target class remains still very attractive and therefore, your decision to pull the pipeline down is more based on just your cost of capital versus everything is once again getting bid up and therefore, there's less product that's of interest to you.

No, it really has to do with the latter, Alex. I mean we see a number of acquisitions. We continue to have investment committee meetings every couple of weeks where we go through opportunities. And yes, if we were in a different position and weren't doing capital recycling and having to sequence those asset sales in order to acquire new assets because we don't want to raise capital through our ATM, we would definitely see the types of properties and the types of opportunities that we'd like to invest in.

And so what we are doing in terms of focusing on capital recycling is we're using this as an opportunity to do 2 things. Obviously, we're using this as an opportunity to trim some of the properties that are in less attractive markets. A lot of these facilities that we sold, we sold 5 properties in 2025. We sold another one in 2026.

And so we're using this as an opportunity to really prune the portfolio and improve the portfolio. And so it's not the most fun in terms of selling a property in order to buy properties, but that's what we're going to focus our time and efforts on. And what we expect is in the second half of the year, as some of these redevelopment projects and other things that we've been working on to come online, we would expect to start posting AFFO growth, and we hope that, that's recognized as a positive in the marketplace and puts us in a position to start doing what we have been doing historically as a company, which is not just growing the portfolio performance through leasing, but also growing the portfolio through acquisitions.

Our next question comes from Jim Kammert with Evercore.

Guys, you noticed if I'm pronouncing that property acquisition. It was quoted about a 9.3% yield, I believe. Is that a GAAP or a cash yield? And if GAAP, I'm just trying to understand perhaps what are the representatives in annual escalators on that long lease.

That is a cash yield, that 9.3% cap rate. And what are the bumps on that? Jim, you weren't coming through very clear. Are you trying to -- are you asking what are the escalators on that property?

Yes, I'm sorry. Yes. What are the -- because you clarified as cash yield going in. And then yes, what are the representative escalators? And are they then representative of say, the other 4 assets in the pipeline?

Yes. It's -- they're 2% escalators and it would be consistent with the other -- what we would anticipate with the other ones that are in the pipeline.

[Operator Instructions] We have no further questions at this time. I would now like to turn the conference back over to management for closing comments. Over to you.

Great. Thanks, Darwin, and thank you, everybody, for dialing in. We hope to see many of you at NAREIT coming up in June. Thank you.

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

Welcome to Community Healthcare Trust 2025 Fourth Quarter Earnings Release Conference Call. On the call today, the company will discuss its 2025 fourth quarter financial results. It will also discuss progress made in various aspects of its business. Following the remarks, the phone lines will be opened for a question-and-answer session.

The company's earnings release was distributed last evening and has also been posted on its website www.chct.reit. The company wants to emphasize that some of the information that may be discussed on this call will be based on information as of today, February 18, 2026 and may contain forward-looking statements that involve risks and uncertainty.

Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the company's disclosures regarding forward-looking statements in its earnings release as well as its risk factors and MD&A in its SEC filings.

The company undertakes no obligation to update forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law. During this call, the company will discuss GAAP and non-GAAP financial measures. A reconciliation between the 2 is available in its earnings release, which is posted on its website.

Call participants are advised that this conference call is being recorded for playback purpose. An archive of the call will be made available on the company's Investor Relations website for approximately 30 days and is property of the company. This call may not be recorded or otherwise reproduced or distributed without the company's prior written permission.

Now I would like to turn the call over to Dave Dupuy, CEO of Community Healthcare Trust. Please go ahead, sir.

Great. Thanks so much, Nick. Good morning, everybody, and thank you for joining us today for our 2025 fourth quarter conference call. On the call with me today is Bill Monroe, our Chief Financial Officer. Leigh Ann Stack, our Chief Accounting Officer; and Mark Kearns, our Senior Vice President of Asset Management.

Our earnings announcement and supplemental data report were released last night and furnished on Form 8-K, along with our annual report on Form 10-K. In addition, an updated investor presentation was posted to our website last night. During the fourth quarter, the geriatric behavioral hospital operator, a tenant in 6 of the company's properties, paid rent of $200,000, consistent with last quarter.

On July 17, 2025, this tenant signed a letter of intent for the sale of the operations of all 6 of its hospitals to an experienced behavioral health care operator and is under exclusivity with that buyer. Among other terms and conditions of the sale, the buyer would sign new or amended leases for the 6 geriatric hospitals owned by CHCT. We continue to maintain frequent productive communication with the buyer's team to advance the closing process. The buyer is finalizing legal and business due diligence. And while the transaction is progressing, we can't provide specific timing or certainty that it will close. We will share more information as we move through the process.

As it relates to our core business, we had a busy fourth quarter from an operations perspective and capital recycling perspective and continue to be selective from an acquisition standpoint. Our occupancy increased from 90.1% to 90.6% during the quarter, and our leasing team is very busy with renewals and new leasing activity. Our weighted average lease term increased from 6.7 to 7 years. We have 3 properties that are undergoing redevelopment or significant renovations with long-term tenants in place when the renovations or redevelopment are complete. We expect the largest of these projects to be completed in the second quarter of 2026, with rent expected to commence in the third quarter after the tenant obtains the appropriate provider license.

As previously disclosed, during the fourth quarter, we sold an inpatient rehab facility at an approximate 7.9% cap rate, resulting in a gain on the sale of approximately $11.5 million with net proceeds reinvested through a 1031 like-kind exchange into a new inpatient rehab facility for a purchase price of $28.5 million.

We entered into a new lease with a lease expiration in 2040 and an anticipated annual return of approximately 9.3%. I will note an additional benefit of the transaction was the reduction of our largest tenant concentration, further enhancing our overall portfolio diversification.

For the year, we acquired 3 properties with a total of 113,000 square feet for an aggregate purchase price of $64.5 million, which were 100% leased with leases running through 2040 and anticipated annual returns of 9.3% to 9.5%. As it relates to other capital recycling activity, we had 2 additional dispositions closed in the fourth quarter and 1 disposition closed in the first quarter, resulting in net proceeds of approximately $7.7 million. We have other properties both in market and under review as part of our capital recycling program. And when appropriate, we would anticipate using a similar 1031 like-kind exchange to accretively reinvest proceeds to fund our pipeline.

Also, we have signed definitive purchase and sale agreements for 5 properties to be acquired after completion and occupancy for an aggregate expected investment of $122.5 million. The expected return on these investments should range from 9.1% to 9.75%. We expect to close on one of these properties in the first quarter with 2 properties expected to close in the second half of 2026 and the remaining 2 closing in the second half of 2027.

We did not issue any shares under our ATM last quarter. However, we anticipate having sufficient capital from selected asset sales, coupled with our revolver capacity to fund near-term acquisitions. Going forward, we will evaluate the best uses of our capital, all while maintaining modest leverage levels.

To finish up, we declared our dividend for the fourth quarter and raised it to $0.4775 per common share. This equates to an annualized dividend of $1.91 per share, and we are proud to have raised our dividend every quarter since our IPO.

That takes care of the items I wanted to cover. So I will hand things off to Bill to discuss the numbers.

Thank you, Dave. I will now provide more details on our fourth quarter financial performance. I am pleased to report total revenue grew from $29.3 million in the fourth quarter of 2024 to $30.9 million in the fourth quarter of 2025, representing 5.6% annual growth over the same period last year. On a quarter-over-quarter basis, the capital recycling and asset disposition progress in the fourth quarter that Dave discussed led to relatively flat quarterly performance across many line items on our income statement as I will review. The $30.9 million of fourth quarter total revenue was a slight decrease of $140,000 quarter-over-quarter versus the $31.1 million in the third quarter of 2025, impacted by the capital recycling and asset disposition activity.

Moving to expenses. Property operating expense increased by less than $100,000 quarter-over-quarter to $6 million for the fourth quarter of 2025. Total general and administrative expense was $4.8 million in the fourth quarter of 2025, which was nearly flat both quarter-over-quarter from the $4.7 million in the third quarter of 2025 and year-over-year from the $4.8 million in the fourth quarter of 2024.

Interest expense decreased slightly by approximately $100,000 quarter-over-quarter to $7 million in the fourth quarter of 2025 due primarily to recent FOMC interest rate cuts and the resulting lower floating rates on our revolving credit facility. Moving to funds from operations.

FFO in the fourth quarter of 2025 was $13.3 million, a 4.6% increase year-over-year compared to the $12.7 million of FFO in the fourth quarter of 2024. On a diluted common share basis, FFO increased from $0.48 in the fourth quarter of 2024 to $0.49 in the fourth quarter of 2025, although this was $0.01 less quarter-over-quarter from the $0.50 of FFO in the third quarter of 2025 as a result of the net impacts to revenue and expenses described earlier.

Adjusted funds from operations, or AFFO, which adjusts for straight-line rent and stock-based compensation, totaled $14.9 million in the fourth quarter of 2025, a 2.1% increase year-over-year compared to the $14.6 million of AFFO in the fourth quarter of 2024. AFFO on a diluted common share basis was $0.55 in the fourth quarter of 2025, even with the $0.55 of AFFO in the fourth quarter of 2024, although this was $0.01 less quarter-over-quarter from the $0.56 of AFFO in the third quarter of 2025, again, as a result of the net impacts to revenue and expenses described earlier. And finally, while it did not impact FFO or AFFO, we did have net gains on sale of $12.1 million from the capital recycling and asset disposition activity during the fourth quarter of 2025 that increased net income.

That concludes our prepared remarks. Nick, we are now ready to begin the question-and-answer session.

[Operator Instructions]. And the first question will come from Connor Mitchell with Piper Sandler.

I guess just focusing first on the geriatric behavioral hospital operator that signed the transaction last summer. Just want to get -- I know you guys can't speak too much about the timing or some details, but just trying to get a little better understanding. Is the transaction on your part essentially supposed to all take place in one bite at the same time? Or is there any chance that the new operator that would come in and sign leases on the properties could do it on a property-by-property time line or even a state-by-state time line instead of kind of all at once?

Connor, thanks for the question. Yes, as it relates to the transaction itself, there was not as much progress as we would have hoped been made in the fourth quarter. And I think a lot of that is the buyer had to confirm various liabilities and was related -- was dependent on the government to get through some of those issues. I think we're seeing significantly more activity in this first quarter as far as the progress made from a due diligence standpoint and site visits and really working on getting the documentation squared away.

What I would say about your question specifically the buyer is still very interested in all 6 hospitals and the goal is for this transaction to happen all at one time. And that's our expectation, that's the buyer's expectation. So there would be no plans to have any sort of a staged closing. I think it just makes it more challenging that way and a little bit messier. And so everybody is moving forward with the acquisition of the operations of all 6 hospitals in the 3 states. And so there would not be a stage closing based on our expectations or the buyers' expectations.

Okay. I appreciate the color. And then turning towards transactions. The pipeline seems pretty stable compared to prior quarters as well. Just curious kind of how you balance the level of transactions, the timing of closing those transactions along with the time needed to find the right dispositions to fund the acquisitions or if you are considering maybe increasing the debt levels or leverage if there's a scale you have there when you see the optimal acquisitions and the time line needs to be sped up, so you can't really wait for the offsetting dispositions?

Our goal is really to execute and sequence the dispositions just like we did in the fourth quarter, where we sold the inpatient rehab facility. There was a little bit of a gap between selling that facility and acquiring the new facility, which had some small impact on our financials. But overall, it worked very, very well. And as I mentioned in the prepared remarks, we're working right now on a handful of other acquisitions so that we could similarly sequence in the same way when we acquire these facilities that we expect, these inpatient rehab facilities that we expect to close sometime in the third quarter.

So the goal is obviously to do it and sequence it in a way that we can do a 1031 like-kind exchange, if that's appropriate because we would anticipate a significant gain on some of the assets that we're looking to sell. But you're right, I mean buying and selling real estate is inherently -- sometimes those time gaps don't always sequence correctly. I think everybody should know there may be some gaps between when we close and when we sell. But the goal is to keep that leverage in sort of the ZIP code that it is today and certainly not add leverage over time. But some of that is going to be dependent on the timing of close. But we feel confident that based on what we have in progress from a capital recycling perspective will allow us to acquire assets without adding meaningful leverage to the balance sheet.

Okay. I appreciate that as well. And maybe just one more, if I could sneak it in. Can you just give an update on if there's really been any change in what you're seeing for cap rates for either acquisitions or dispositions? I know you gave some color in your opening remarks, but just maybe if there's anything you're seeing in the market right now that's really changing drastically from the recent closed transactions?

I think -- look, the good news is I think there's a high level of demand for the assets that we're looking to selectively manage through a disposition process and our capital recycling. We received an indicative 7.9% cap rate on the sale of inpatient rehab. We would expect similar sort of pricing on other types of dispositions that we're looking at. So we feel like that, that disposition capital recycling activity is going to be accretive to us and to the business. And we do see opportunities on the buy side in that 9% to 10% cap rate range. But of course, not having -- not wanting to raise stock through the ATM at these price levels, we're being very, very selective.

What I would say is, in addition to these acquisitions that are in the pipeline, as I mentioned on the prepared remarks, we have some embedded growth in our 2026 numbers because we've got a redevelopment project that we anticipate coming online in mid-2026. And then we've got another redevelopment project that should be coming online at the end of the year. And so those are essentially like acquisitions for us. And so we expect that to be a nice tailwind in the second half of the year for us.

The next question will come from Michael Lewis with Truist.

Dave, last quarter on the call, you said you expected the leased percentage for the portfolio to be up 50 to 100 bps in 4Q, and it was. It was up 50 bps. I was just wondering if you felt compelled to give a little bit of insight into what you might expect for occupancy either over the next quarter or 2 or for the full year? Do you expect that to continue going up this year?

Michael, thanks for the question. I think over the next -- we have had great leasing activity in the portfolio. We've also had some -- we had some terminations toward the end of last year. And so I think Mark and his team are doing a remarkable job of taking some of those terminations, re-leasing the space. I think our view, big picture is that's going to be really good overall for the portfolio. As you know, it takes a little bit of time for those new leases to become economic. But we feel very good about the leasing activity we're seeing.

But the reality of it is, it's probably -- I would say, this range of in the low 90s will continue for the next couple of quarters. I wouldn't suspect that it goes up meaningfully or down meaningfully just because some of the new leases we're getting in place. I think it's really in the second half of the year that we would expect to see some momentum as it relates to growing leased occupancy. So I would anticipate that, that leased occupancy would stay in that general ZIP code of where it is today for the next couple of quarters with it looking to increase second half of this year.

Okay. And then my second question is about the investment pipeline. I remember the days when the annual target was $120 million to $150 million annually. Obviously, with COVID and some changes in the cost of capital, you've been below that in recent years. Is the goal now you have these developments that you'll be taking down? Is that kind of the pipeline? Or if you were going to do $120 million to $150 million annually and you had the cost of capital, is there still that volume of opportunity out there? Or has something changed since the pandemic and maybe there's not as many opportunities in your neck?

Yes. The opportunity is still there, Michael. We're chomping at the bit and see a lot of great opportunities. We're constantly in touch with sort of that core group of brokers that we've worked with routinely over the last 10 years with the company. We've got great relationships. And we're seeing the activity in that 9% to 10% range. And what I would tell you is, if our stock was in a different spot, and we were doing what we have done prior to the last 1.5 years, we would be looking to make those acquisitions. We've always, as you will recall, because you've covered the company for a long time, there's always been sort of half of our business has been client business that we've -- programmatic that we've done, so call it, $50 million to $60 million a year.

And then the other half has been that brokered business with some redevelopment projects mixed in. And I think what you've seen and what we've acted on over the last couple of years with our stock price where it was is we've been focused more on supporting our clients. And as soon as that dynamic changes and the share price gets to a level where we can raise capital accretively, we would absolutely look to augment that client acquisition with the broker deals that we've done historically.

Okay. And then lastly for me, the last few years, you've also had a note in the investor presentation about this dialysis term sheet pipeline. I didn't see that disclosure this time. Is that relationship kind of done? Or is that on the back burner and that could still become something programmatic down the line?

It's on -- I think you nailed it. It is on the back burner. Most of that company's growth has really been buying operations, there hasn't been real estate as part of the -- their overall acquisition cadence, and that has been the case now for a while. And so -- and they have been focused on really their core business over the last couple of years now that they've done several acquisitions.

So putting it in there just didn't seem like it made sense just given the fact that we haven't executed any transactions under that deal. We still have a great relationship and 4 dialysis clinics with the operator, and we'll continue to monitor their acquisition activity. But yes, I would anticipate that, that is an opportunistic and certainly not a focus or an expectation that, that would occur anytime soon.

Thank you, Michael. Appreciate the questions.

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

Thanks, everybody. I appreciate everyone joining us, and feel free to reach out if you have any additional questions. Hope everyone has a good day. Thank you.

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

Welcome to Community Healthcare Trust's 2025 Third Quarter Earnings Release Conference Call. On the call today, the company will discuss its 2025 third quarter financial results. It will also discuss progress made in various aspects of its business. Following the remarks, the phone lines will be open for a question-and-answer session.

The company's earnings release was distributed last evening and has also been posted on its website, www.chct.reit.

The company wants to emphasize that some of the information that may be discussed on this call will be based on information as of today, October 29, 2025, and may contain forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the company's disclosures regarding forward-looking statements in its earnings release as well as its risk factors and MD&A in its SEC filings.

The company undertakes no obligation to update forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law.

During this call, the company will discuss GAAP and non-GAAP financial measures. A reconciliation between the two is available in its earnings release, which is posted on its website.

All participants are advised that this conference call is being recorded for playback purposes. An archive of the call will be made available on the company's Investor Relations website for approximately 30 days and is the property of the company. The call may not be recorded or otherwise reproduced or distributed without the company's prior written permission.

Now I would like to turn the call over to Dave Dupuy, CEO of Community Healthcare Trust.

Great. Thank you, Danielle, and good morning. Thank you for joining us today for our 2025 third quarter conference call. On the call with me today is Bill Monroe, our Chief Financial Officer; Leigh Ann Stach, our Chief Accounting Officer; and Mark Kearns, our Senior Vice President of Asset Management.

Our earnings announcement and supplemental data report were released last night and furnished on Form 8-K, along with our quarterly report on Form 10-Q. In addition, an updated investor presentation was posted to our website last night.

During the third quarter, the geriatric behavioral hospital operator, a tenant in 6 of the company's properties, paid rent of approximately $200,000. On July 17, 2025, this tenant signed a letter of intent for the sale of the operations of all 6 of its hospitals to an experienced behavioral health care operator and is under exclusivity with that buyer. Among other terms and conditions of the sale, the buyer would sign new or amended leases for the 6 geriatric psych hospitals owned by CHCT. The buyer continues to perform legal and business due diligence on the transaction. And while we can't provide certainty that the transaction will close, we will share more information as we move through the process.

As it relates to our core business, we had a busy third quarter from an operations perspective and continue to be selective from an acquisition standpoint. Our occupancy decreased from 90.7% to 90.1% during the quarter. However, our leasing team is very busy with a number of new leases signed so far in October. Based on leasing activity across the portfolio, we would expect our leased occupancy to increase by 50 to 100 basis points by year-end. Our weighted average lease term increased slightly from 6.6 to 6.7 years. We have 3 properties that are undergoing redevelopment or significant renovations when long-term tenants -- with long-term tenants in place when the renovations and redevelopment are complete.

During the third quarter, we acquired 1 inpatient rehab facility after completion of construction for a purchase price of $26.5 million. We entered into a new lease with a lease expiration in 2040 and anticipated annual return of approximately 9.4%. Also, we have signed definitive purchase and sale agreements for 6 properties to be acquired after completion and occupancy for an aggregate expected investment of $146 million. The expected return on these investments should range from 9.1% to 9.75%. We expect to close on one of these properties in the fourth quarter with the remaining 5 properties closing throughout 2026 and 2027.

As it relates to our capital recycling program, we had one disposition in the third quarter, providing approximately $700,000 of proceeds and generating a small loss on the sale. In addition, we have 2 other dispositions in our program that we expect to close in the fourth quarter with anticipated net proceeds of $6.1 million. Also as part of this program, we expect to close on the sale of an inpatient rehab hospital in the fourth quarter with an expected gain of approximately $11.5 million and net proceeds expected to fund our fourth quarter acquisition through a 1031 like-kind exchange. The indicative cap rate associated with the property sale is in the high 7% range. We have other properties with similar expected cap rate ranges both in market and under review as part of our capital recycling program. We would anticipate utilizing a similar 1031 like-kind exchange to accretively reinvest proceeds to fund our pipeline on a leverage-neutral basis.

We did not issue any shares under our ATM last quarter. However, we anticipate having sufficient capital from selected asset sales coupled with our revolver capacity to fund near-term acquisitions. Going forward, we will evaluate the best uses of our capital all while maintaining modest leverage levels.

To finish up, we declared our dividend for the third quarter and raised it to $0.475 per common share. This equates to an annualized dividend of $1.90 per share, and we are proud to have raised our dividend every quarter since our IPO.

That takes care of the items I wanted to cover, so I'll hand things off to Bill to discuss the numbers.

Thank you, Dave. I will now provide more details on our third quarter financial performance. I'm pleased to report total revenue grew from $29.6 million in the third quarter of 2024 to $31.1 million in the third quarter of 2025, representing 4.9% annual growth over the same period last year. When compared to our $29.1 million of total revenue in the second quarter of 2025, we need to consider that the second quarter was negatively impacted by the reversal of $1.7 million of interest receivables from the geriatric behavioral hospital tenant that Dave discussed earlier. Normalizing the second quarter for this, we achieved 1.1% total revenue growth quarter-over-quarter.

Moving to expenses. Property operating expenses increased by approximately $300,000 quarter-over-quarter to $5.9 million for the third quarter of 2025. This quarter-over-quarter increase in the third quarter is typical with a seasonal increase in utility expenses during the summer compared to the milder temperatures in the second quarter.

On a year-over-year basis, property operating expenses decreased by approximately $50,000. Total general and administrative expense was $4.7 million in the third quarter of 2025, which was flat quarter-over-quarter once you exclude the $5.9 million of severance and transition-related payments incurred within the second quarter's $10.6 million of G&A expense. On a year-over-year basis, G&A expense decreased by approximately $300,000 in the third quarter of 2025.

Interest expense increased by approximately $500,000 quarter-over-quarter to $7.1 million in the third quarter of 2025 due to increased borrowings under our revolving credit facility early in the third quarter to fund the $26.5 million property acquisition as well as 1 extra day of interest in the third quarter compared to the second quarter.

We benefited late in the quarter from the FOMC's 25 basis point reduction to the federal funds rate in mid-September, but the full benefit of that cut will be realized in our fourth quarter financials based on the approximately $180 million of floating rate exposure we have within our revolver borrowings. If there are any additional rate cuts by the FOMC later today or during their December meeting, we expect those cuts will reduce our interest expense further.

Moving to funds from operations. FFO in the third quarter of 2025 was $13.5 million, a 5.7% increase year-over-year compared to the $12.8 million of FFO in the third quarter 2024. On the diluted common share basis, FFO increased from $0.48 in the third quarter of 2024 to $0.50 in the third quarter of 2025.

Adjusted funds from operations, or AFFO, which adjusts for straight-line rent and stock-based compensation, totaled $15.1 million in the third quarter of 2025, a 3.1% increase year-over-year compared to the $14.6 million of AFFO in the third quarter of 2024. AFFO on a diluted common share basis was $0.56 in the third quarter of 2025 or $0.01 higher than the $0.55 of AFFO in the third quarter of 2024. I'll note that our third quarter 2025 AFFO dividend payout ratio remains strong at 85%.

That concludes our prepared remarks. Danielle, we are now ready to begin the question-and-answer session.

[Operator Instructions] The first question comes from Alexander Goldfarb from Piper Sandler.

Two questions, Dave. Just the first one, the acquisition pipeline -- well, I guess they're related. The first one is just on the acquisition pipeline, and we'll discuss the funding part on my second question. But it's the same now that it was in the second quarter. Obviously, you guys are balancing the stock where the stock is and your funding needs. But as you look at the opportunity set, would you say it's growing, meaning that if you had a more competitive equity source, that pipeline would have increased quarter-to-quarter? Or is the opportunity set basically this unchanged in which case, even if you had a better cost of capital, that acquisition pipeline would not have changed?

Yes. What I would say is if we are being highly selected -- and hey, Alex, good to talk to you. I appreciate the question. We're being highly selective. We know we have this pipeline of very good quality assets at great returns. We want to make sure that we have the ability to pay for those acquisitions that are coming up over the upcoming quarters. And we don't want to issue shares at these depressed levels. And so that's why we're doing the capital recycling to pay for them.

But yes, I would say we are seeing opportunities that are generally attractive in this market in that 9% to 10% cap rate range that if our currency was different, if our share price was different, we'd be looking to make those acquisitions and they would be very attractive relative to risk return.

So yes, we're being highly selective. We're very focused on making sure we get this pipeline of high-quality assets paid for and do that on a -- without increasing our leverage. So yes, you're reading that right.

Okay. And then just a second question when it goes to funding. If you're doing asset sales, I get it that it sounds like there's maybe 150 bps, maybe 200 bps of positive spread between what you're selling and what you're buying. But if you're basically trading one asset for another and taking on additional debt to help fund, isn't that raising leverage just by taking on more debt because you're swapping one asset for another then you're incrementally taking on more debt, your leverage is naturally going to rise.

So my question is, is there a limit to how much debt you'll take on as long as you're still in this current depressed equity situation? Or your view is you're fine running leverage higher than normal with the hope that once the geriatric situation is resolved, hopefully you have a better currency?

We really feel like based on the pipeline of opportunities from a capital recycling that we have that we are not going to increase leverage over the upcoming quarters. And so yes, we did not have any capital recycling to do ahead of the current acquisition that we did in the third quarter. But future acquisitions, we are very focused on matching up dispositions with acquisitions that are accretive to the company. And so we do not expect to meaningfully increase leverage.

But Bill, I don't know if you want to jump in.

Yes, Alex, just to clarify, the property that we have under held for sale, and we'll recognize $11.5 million capital gain. That will -- we expect that will fully pay for the next acquisition such that there will not be any incremental debt associated with that next acquisition. It will be completely paid for with the proceeds of this larger upcoming disposition.

[Operator Instructions] The next question comes from Rob Stevenson from Janney.

In terms of the behavioral health tenants, so $200,000 paid in the quarter, can you remind us what that tenant was previously paying per quarter before they hit the wall?

Yes, they were paying in rent approximately $800,000 per quarter.

Okay. That's helpful. And then what's the expectations for our timing in terms of closing the -- of the acquisition if it occurs? Is that something that occurs before year-end, if it happens, given the deal was signed in July? Or could that stretch into 2026 from your understanding at this point?

We're very -- we'd love for it -- and hey, Rob, good to talk to you. But we'd love for it to close by year-end. Some of the due diligence process has taken a little bit longer than we would have expected. So it's probably more realistic to expect something to close in the first quarter.

So yes, I think there's still a chance that it gets done by the end of the fourth quarter, but it's probably more likely to happen in the first quarter. But we certainly would love to provide additional detail as soon as we have that.

Okay. And to what extent are you guys actively pursuing plan B, just in case the deal falls through?

Yes. You should expect that we are going down multiple paths simultaneously as we always have. And so yes, we're looking at multiple plans, multiple ways that we can move forward with the goal of ultimately getting paid more rent associated with those tenants.

And so -- and look, I think all of this is upside, right, relative to our performance. The portfolio has been stable. We're growing. I think we're certainly motivated to get this resolved as soon as possible. And we think that it will, but yes, we are looking at all options.

Okay. And then last one on this topic. When you sit there and think about where they are in their life cycle, et cetera, what's the likelihood today of getting back any of the unpaid interest or rents, back rents going forward? Or is a similar couple of hundred thousand in the fourth quarter and a new lease with the buyer of these assets the best case scenario for you guys today?

I would call that, that's probably consistent with where we're head is. And part of the reason we did the additional note write-off that we did because we did not deem that it was likely to be collected. So I think we're operating under that expectation, but we're certainly very focused on, to the extent we do have the ability to get any back rent or back interest, we will. But we do not put a high likelihood on that.

Okay. And then just switching topics here. The 3 properties that are under redevelopment. How material is that? And then when do those leases expected to kick in and impact earnings?

Yes. So I think the one is very significant and at least that was signed a while ago for a behavioral health care facility. That's a large investment by us with a very recognizable operator. My guess is that lease won't commence until sometime after midyear next year, but that's a meaningful one. We don't provide specifics as to what those numbers are, but wouldn't start seeing any tailwind associated with the rent until after -- probably after second quarter. The other one is probably a late 2026 opportunity as well. And then there's one smaller one that will happen first part of 2026. Again, that should start contributing additional rent.

But these are -- they vary in terms of their impact, and we haven't provided details relative to that. But we just -- it's just an example of how we're reinvesting in buildings and with strong tenants based on signed leases, so anyway.

Okay. Just trying to figure out just what type of earnings tailwind because it sounds like you said that you're expecting to see 50 to 100 basis points increase in occupancy in the near term plus this. Just wanted to figure out when that was going to start all hitting in terms of the earnings.

Yes. As far as the 50 to 100 basis points, we're seeing great leasing activity across the portfolio. There's always a delay between signing leases and having those leases commence. And so -- but I think it sort of speaks to the strong activity we're seeing across the portfolio, and I think it will be a tailwind for 2026 in terms of our ability to grow.

The next question comes from Jim Kammert from Evercore.

Obviously, I think the capital recycling shift is well received. And I was just curious, how are you sort of identifying which assets you would like or most likely to dispose? Is that a geographic concentration, tenant concentration? Just trying to understand the mix or how you're lighting upon the candidates.

Jim, thanks for the question. Yes. So as you sort of hit on, you would think about it around tenant concentration, weighted average lease term, size profile, markets. We're looking at all of those sort of criteria as we evaluate what we want to do from a capital recycling perspective. Obviously, with the key components associated with that of paying for this pipeline in a way that's accretive. So those are all the areas that we're focused on.

And what I'd also remind everybody of is we sort of looked at our capital recycling program in 2 buckets. One is the bucket of smaller properties that are noncore that aren't going to drive a substantial amount of proceeds but they are going to get us focused on our better buildings and better markets. And so you're seeing a few of those sales occur and those sales are -- we expect to conclude in the -- at the end of the fourth quarter. And then the larger opportunities where we can have a very accretive cap rate sale to then reinvest in new very attractive buildings.

So yes, you're thinking about it in the right way. We're looking at tenant concentration, [ wallet size ] profile, et cetera, as we look to just push forward with our capital recycling.

That's helpful. And a derivative question then I'll be done is you mentioned that one of the large transactions pending is a 1031, but I'm just trying to assess the depth of buyer interest. You're not restricting your recycling to just 1031 exchanges. I mean there is a depth of buyers presumably for stand up just traditional sales as well.

Yes. Good question, Jim. The 1031 is more on our side than on the potential buyer side as far as we don't want -- we're deferring that capital gain associated with that sale by putting it into a 1031. And then we have, within our acquisition pipeline and other properties that we have identified that will then be the replacement property as part of that 1031 transaction. But no, we're going to a very wide set of potential buyers to make sure that we're maximizing proceeds to us.

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

Thanks, Danielle, and thank you, everybody, for dialing in. Of course, call, if you have any questions, I hope everyone has a good rest of the day. Thank you.

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