Global Medical REIT Inc. (GMRE) is a net-lease medical real estate investment trust (REIT) that acquires healthcare facilities and leases them to physician groups and regional and national healthcare systems. The company has established itself as a reliable player in the medical real estate sector, delivering consistent financial performance and strategic growth despite the challenges posed by the evolving healthcare landscape.
Business Overview and Historical Context
Global Medical REIT was founded in 2016 and elected to be taxed as a REIT in the same year. The company is an internally managed REIT that focuses on acquiring healthcare facilities and leasing them to healthcare providers. GMRE holds its facilities and conducts its operations through a Delaware limited partnership subsidiary, Global Medical REIT L.P. In 2016, the company completed its initial public offering and listed its common stock on the New York Stock Exchange under the ticker symbol GMRE.
Over the years, Global Medical REIT has executed its strategy of acquiring healthcare facilities and leasing them to healthcare providers. By the end of 2021, the company had grown its portfolio to over $1.2 billion in total assets. One of the key challenges GMRE faced early on was the COVID-19 pandemic, which significantly impacted the healthcare industry and some of the company's tenants. In 2020, the company worked closely with its tenants to provide rent relief and ensure the stability of its portfolio. Despite the disruption, Global Medical REIT was able to maintain its operations and continue acquiring properties.
In 2022 and 2023, the company navigated a period of rising interest rates, which increased its borrowing costs. Global Medical REIT responded by actively managing its capital structure, including refinancing debt and selectively disposing of properties, in order to maintain a strong balance sheet. The company also continued to grow its portfolio, completing several accretive acquisitions during this time.
Financial Performance and Liquidity
As of December 31, 2024, GMRE had gross investments in real estate of $1.5 billion, with a weighted average lease term of 5.6 years and a portfolio occupancy rate of 96.4%. The company's financial discipline and strategic asset management have enabled it to maintain a healthy balance sheet, with a leverage ratio of 44.8% and a weighted average interest rate of 3.75% as of the end of 2024.
For the full year 2024, GMRE reported total revenue of $138.4 million, a slight decrease from the prior year's $140.9 million. Net income attributable to common stockholders was $811,000, or $0.01 per share, compared to $14.8 million, or $0.23 per share, in 2023. The decline in net income was primarily due to one-time expenses related to the company's CEO succession plan.
GMRE's funds from operations (FFO) for the full year 2024 was $53.6 million, or $0.75 per share and unit, down from $58.4 million, or $0.83 per share and unit, in the previous year. Adjusted funds from operations (AFFO), a key metric for REITs, was $63.4 million, or $0.89 per share and unit, compared to $64.3 million, or $0.91 per share and unit, in 2023.
The company's liquidity position remains strong, with $6.8 million in cash and cash equivalents as of December 31, 2024. GMRE also had $219.4 million in available borrowing capacity under its $900 million unsecured credit facility as of February 2025, providing ample flexibility to pursue strategic growth opportunities. The company's debt-to-equity ratio stands at 1.22, while its current ratio and quick ratio are both 0.03.
In the fourth quarter of 2024, GMRE reported revenue of $35.2 million, representing a 6.7% increase compared to the same period in 2023. Net income for the quarter was $1.4 million. The company's FFO for Q4 2024 was $0.15 per share and unit, down $0.04 from the prior year quarter, primarily due to $3.2 million in severance-related costs. AFFO for Q4 2024 was $0.22 per share and unit, down $0.01 from the prior year quarter.
Portfolio Composition and Geographic Diversification
GMRE's portfolio consists of approximately 4.8 million leasable square feet across 190 healthcare buildings, generating $110 million in annualized base rent. The portfolio is diversified across various property types, with medical office buildings (MOBs) comprising the largest portion at 76.7% of leasable square feet and 71.5% of annualized base rent. Inpatient rehabilitation facilities (IRFs) account for 10.5% of leasable square feet and 17.4% of annualized base rent, while healthcare administrative offices represent 2.9% of leasable square feet and 2.5% of annualized base rent.
Geographically, GMRE's properties are spread across numerous states, with the largest concentrations in Texas (14.9% of leasable square feet, 16.2% of annualized base rent), Florida (12.4% of leasable square feet, 11.9% of annualized base rent), Ohio (8.8% of leasable square feet, 8.8% of annualized base rent), Pennsylvania (6.0% of leasable square feet, 6.6% of annualized base rent), and Illinois (6.5% of leasable square feet, 6.3% of annualized base rent). The remaining 41.1% of leasable square feet and 38.8% of annualized base rent are distributed across 30 other states.
Acquisition and Disposition Activity
In 2024, GMRE completed the acquisition of a 15-property portfolio of outpatient medical real estate for an aggregate purchase price of $80.3 million at an 8% capitalization rate. The properties, totaling approximately 254,000 leasable square feet, are fully leased under triple-net or absolute triple-net structures and added $6.4 million in annualized base rent to the company's portfolio.
Additionally, the company entered into a purchase agreement in the fourth quarter of 2024 to acquire a five-property portfolio of medical outpatient facilities for an aggregate purchase price of $69.6 million at a 9% capitalization rate. The first tranche of this acquisition, consisting of three properties, was completed in early 2025, with the remaining two properties expected to close in the second quarter of 2025.
On the disposition front, GMRE completed seven property sales in 2024, generating aggregate gross proceeds of $60.7 million at a weighted average capitalization rate of 9%. This included the sale of two properties to a joint venture formed with Heitman, a leading real estate investment management firm, in which GMRE maintains a 12.5% ownership stake. The company recognized a net gain of $4.2 million from these dispositions.
Tenant and Lease Expirations
GMRE's tenant base remains well-diversified, with its top three tenants accounting for approximately 19% of the company's annualized base rent as of December 31, 2024. LifePoint Health represents 7.2% of annualized base rent, Encompass Health Corporation accounts for 6.7%, and Memorial Health System makes up 5.4%. The company's exposure to Prospect Medical Group, which filed for Chapter 11 bankruptcy in January 2025, represents less than 1% of its total annualized base rent.
Looking ahead, GMRE has approximately 508,000 square feet of leases scheduled to expire in 2025, representing 9% of its total annualized base rent. Based on activity to date, the company is currently estimating a 70% to 80% retention rate on these expiring leases. Leases representing 10.0% and 11.1% of annualized base rent are set to expire in 2026 and 2027, respectively.
Guidance and Outlook
For the full year 2025, GMRE is providing AFFO guidance in the range of $0.89 to $0.93 per share and unit. This guidance assumes no additional acquisition or disposition activity, other than what has been completed or announced, and no further equity or debt issuances beyond normal course revolver activity. The 2025 AFFO guidance excludes one-time expenses related to the CEO succession plan.
The company's stable portfolio, with a weighted average lease term of 10 years and 96.4% occupancy, positions GMRE well to navigate the current market environment. Furthermore, the company's liquidity, with $219.4 million in available borrowing capacity, allows it to selectively pursue accretive acquisition opportunities that align with its strategic objectives.
Industry Trends and Competitive Positioning
Global Medical REIT is well-positioned to benefit from industry trends such as an aging population and the shift towards decentralized outpatient healthcare, which are driving demand for its properties. The company's focus on acquiring and leasing healthcare facilities to physician groups and regional/national healthcare systems allows it to capitalize on these long-term demographic and healthcare delivery trends.
Conclusion
Global Medical REIT has demonstrated its ability to deliver consistent financial performance and strategic growth in the face of evolving market conditions. The company's diversified portfolio, focus on credit-quality tenants, and disciplined financial management have been key drivers of its success. As GMRE navigates the challenges and opportunities in the healthcare real estate sector, investors can expect the company to continue its track record of reliable results and prudent capital allocation, supported by its strong liquidity position and strategic asset management approach.