Global Medical REIT Inc. (NYSE: GMRE) (the Company or GMRE), a net-lease medical office real estate investment trust (REIT) that acquires purpose-built healthcare facilities and leases those properties to strong healthcare systems and groups with leading market share, announced today that on December 20, 2018 the Company closed on the disposition of its Great Bend Regional Hospital for proceeds of $32.45 million, and that it acquired six medical office net-leased assets during the fourth quarter of 2018 for an aggregate purchase price of $58.6 million.
We are very pleased with the track record we are establishing as prudent medical office investors, stated Jeffrey Busch, Chief Executive Officer, Chairman & President. The disposition of our Great Bend asset is a testament to our disciplined underwriting and the value creation through our net-lease medical portfolio. This, in addition to our fourth quarter acquisition activity, continues to position GMRE well within the marketplace.
Great Bend Disposition
On December 20, 2018, the Company disposed of the Great Bend Regional Hospital for gross proceeds of $32.45 million, achieving a 43% levered internal rate of return (IRR), a 24% unlevered IRR and generating a gain of approximately $8 million. The Company intends to redeploy the proceeds into additional healthcare property acquisitions.
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Fourth Quarter 2018 Acquisitions
During the fourth quarter of 2018, the Company completed six acquisitions, encompassing an aggregate of 206,997 leasable square feet, for an aggregate purchase price of $58.6 million with annualized base rent of $4.5 million and a weighted average capitalization rate of 7.59%. In connection with two of these acquisitions, the Companys operating partnership issued approximately 1.3 million operating partnership units valued at $12.7 million at an average issuance price of $9.89 per unit. See the table below for a description of our fourth quarter 2018 acquisitions.
|Property||City / State|
| Purchase |
Annualized Base Rent(2) (in ˜000)
|Foot and Ankle Specialists||Bountiful, UT||10/12/18||22,335||$ 4,700||$ 380||8.09%|
|Cancer Center of Brevard||Melbourne, FL||11/16/18||19,074||7,650||623||8.14%|
|Heartland Womens Healthcare||Southern, IL||11/30/18||64,966||14,287||1,158||8.11%|
|Prospect ECHN||Vernon, CT||12/19/18||58,800||10,900||774||7.10%|
|Citrus Valley Medical Assoc. Inc.||Corona, CA||12/31/18||41,803||17,200||1,204||7.00%|
(1) Represents the contractual purchase price. (2) Monthly base rent at December 2018 multiplied by 12 and does not give effect to future rent escalations. (3) Capitalization rates are calculated by dividing the Annual Base Rent by the Purchase Price.
About Global Medical REIT Inc.
Global Medical REIT Inc. is net-lease medical office real estate investment trust (REIT) that acquires purpose-built specialized healthcare facilities and leases them to strong healthcare systems and groups with leading market share. GMREs real estate portfolio is comprised of 84 healthcare assets, which are leased on a triple-net basis and contain approximately 2.1 million square feet. These assets are concentrated in secondary and tertiary markets across the United States. The Companys management team has significant healthcare, real estate and REIT experience and has long-established relationships with a wide range of healthcare providers.
This press release contains statements that are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as intend, anticipate, believe, expect, estimate, plan, outlook, and project and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or managements good faith belief as of that time with respect to future events. These forward-looking statements are subject to various risks and uncertainties, not all of which are known to the Company and many of which are beyond the Companys control, which could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements, including, without limitation, the deployment of the proceeds from the disposition of the Great Bend Regional Hospital. These risks and uncertainties are described in greater detail in the Companys filings with the United States Securities and Exchange Commission (the Commission), including, without limitation, the Companys annual and periodic reports and other documents filed with the Commission. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The Company undertakes no obligation to update these statements after the date of this release.
Internal Rate of Return (IRR) Calculation
Our unlevered IRR on our Great Bend Regional Hospital investment is the compound annual rate of return calculated based on the timing and amount of: (i) the gross purchase price of the property plus any direct acquisition costs; (ii) total revenues earned during the Companys ownership period and (iii) the gross sales price of the property net of selling costs. Each of the items (i) through (iii) is calculated in accordance with GAAP.
Our levered IRR on our Great Bend Regional Hospital investment is the compound annual rate of return calculated based on the timing and amount of: (i) the gross purchase price of the property plus any direct acquisition and financing costs; (ii) total revenues earned during the Companys ownership period less interest expense (assuming an annual interest rate of 4.00% and a debt-to-assets ratio of 50%) and (iii) the gross sales price of the property net of loan repayment and selling costs. Each of the items (i) through (iii) is calculated in accordance with GAAP.
The calculation of IRR does not include an adjustment for the Companys general and administrative expenses or other corporate overhead amounts. Additionally, no adjustments were made with respect to property operating expenses or capital expenditures as the property was leased on a triple-net basis and no capital expenditures were incurred on the property. The IRRs achieved on the property as cited in this release should not be viewed as an indication of the gross value created with respect to other properties owned by the Company, and the Company does not represent that it will achieve similar IRRs upon the disposition of other properties.