Chiron Real Estate (XRN) Q2 2024 earnings summary

Executive summary

• Portfolio occupancy at quarter end was 96.2% with a weighted average lease term of 5.8 years and a rent coverage ratio of 4.6x; portfolio comprised $1.4B gross real estate investment, 4.7M leasable sq. ft., and $106M annualized base rent.

• Net loss attributable to common shareholders was $3.1 million ($0.05 per share) for Q2 2024, compared to net income of $11.8 million ($0.18 per share) in Q2 2023, mainly due to a $3.4 million loss on sale of a property.

• FFO for Q2 2024 was $13.9 million ($0.20 per share/unit), AFFO was $15.7 million ($0.22 per share/unit), both down slightly year-over-year; dividends per share remained at $0.21.

• Acquisition of a 15-property outpatient medical real estate portfolio for $80.3 million at an 8% cap rate, with the first tranche of 5 properties ($30.8 million) closed post-quarter and 10 properties ($49.5 million) expected in Q4 2024.

• Dispositions included sales in Indiana ($8.1 million, $3.4 million loss) and Florida ($11 million), as part of asset recycling, generating $19.1 million in gross proceeds.

Financial highlights

• Total revenues for Q2 2024 were $34.2 million, down 6% year-over-year, primarily due to 2023 dispositions and $800,000 in rent reserves related to Steward Health Care.

• Total expenses decreased to $32.8 million from $35 million, driven by lower interest expense and completed dispositions.

• Interest expense was $7 million, down from $8.5 million in Q2 2023, reflecting lower leverage and effective interest rate swaps.

• Adjusted EBITDAre for Q2 2024 was $24.0 million, down from $26.1 million in Q2 2023.

• Six-month 2024 FFO was $28.8 million ($0.41 per share/unit), AFFO was $32.2 million ($0.46 per share/unit).

Outlook and guidance

• Projected occupancy to remain steady at or above 96% for the remainder of 2024.

• G&A expenses expected to be $4.4–$4.6 million per quarter in the second half of 2024.

• Full-year 2024 capital expenditures projected at $11–$13 million.

• Expect to complete the acquisition of the remaining 10 properties in the 15-property portfolio in Q4 2024, subject to customary conditions.

• Investment pipeline of $120 million in medical office assets, not including the second tranche of the 15-property portfolio, with targeted cap rates in the high 8% to 9% range.