Community Healthcare Trust ((CHCT)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Community Healthcare Trust’s recent earnings call painted a picture of cautious optimism. The company reported growth in revenue and strategic acquisitions, which are bolstering its performance. However, challenges such as decreased occupancy and issues with a tenant in the geriatric behavioral health segment pose risks. Despite these hurdles, the company’s proactive approach to capital recycling and dividend increases provides a balanced view of its future prospects.
Revenue Growth
Community Healthcare Trust reported a significant increase in total revenue, growing from $29.6 million in Q3 2024 to $31.1 million in Q3 2025. This 4.9% annual growth underscores the company’s ability to enhance its financial performance despite market challenges.
Dividend Increase
In a move to reward its shareholders, the company declared a dividend for Q3, raising it to $0.475 per common share. This increase brings the annualized dividend to $1.90 per share, reflecting the company’s commitment to returning value to its investors.
New Acquisition
The company completed the acquisition of an inpatient rehab facility for $26.5 million. This strategic purchase is expected to yield an impressive annual return of approximately 9.4%, highlighting the company’s focus on high-return investments.
Capital Recycling Program
Community Healthcare Trust is actively engaged in a capital recycling program, which is expected to close on the sale of an inpatient rehab hospital. This transaction is anticipated to result in a gain of approximately $11.5 million, demonstrating the company’s strategic asset management.
Leasing Activity
The company is optimistic about its leasing activity, with expectations for leased occupancy to increase by 50 to 100 basis points by year-end. This anticipated rise is due to new leases signed, which could mitigate some of the occupancy challenges faced.
Funds from Operations (FFO)
Funds from Operations in Q3 2025 reached $13.5 million, marking a 5.7% increase year-over-year. This growth in FFO indicates the company’s strong operational performance and ability to generate cash flow.
Decrease in Occupancy
Occupancy levels saw a slight decline, decreasing from 90.7% to 90.1% during the quarter. This drop highlights a challenge the company is addressing through its active leasing efforts.
Challenges with Geriatric Behavioral Hospital Tenant
The company faced difficulties with a tenant in the geriatric behavioral health segment, who paid only $200,000 in rent compared to the expected $800,000. This shortfall underscores the risks associated with tenant performance.
Increased Interest Expense
Interest expenses rose by approximately $500,000 quarter-over-quarter, reaching $7.1 million in Q3 2025. This increase reflects the broader economic environment and its impact on the company’s financials.
Forward-Looking Guidance
Looking ahead, Community Healthcare Trust has set forth a robust outlook. The company anticipates a continued increase in revenue and has a strong acquisition pipeline with expected investments totaling $146 million. The leasing team is active, with expectations for occupancy rates to improve by year-end. Additionally, the company is focused on maintaining leverage neutrality while funding acquisitions through asset sales and existing revolver capacity.
In summary, Community Healthcare Trust’s earnings call reveals a company navigating growth and challenges with a strategic focus. The positive sentiment is driven by revenue growth and strategic acquisitions, while the proactive approach to capital recycling and dividend increases provides a balanced outlook. Despite some challenges, the company’s forward-looking guidance suggests a commitment to maintaining financial stability and enhancing shareholder value.