Community Healthcare Trust Announces Results for the Three Months Ended December 31, 2017

COMMUNITY HEALTHCARE TRUST INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except per share amounts)

December 31, 2017

December 31, 2016

ASSETS

Real estate properties:

Land and land improvements

$

44,419

$

29,884

Buildings, improvements, and lease intangibles

343,955

222,755

Personal property

112

97

Total real estate properties

388,486

252,736

Less accumulated depreciation

(36,136)

(18,404)

Total real estate properties, net

352,350

234,332

Cash and cash equivalents

2,130

1,568

Mortgage note receivable, net

10,633

10,786

Other assets, net

20,653

4,843

Total assets

$

385,766

$

251,529

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Debt, net

$

93,353

$

51,000

Accounts payable and accrued liabilities

4,056

3,541

Other liabilities

4,983

2,981

Total liabilities

102,392

57,522

Commitments and contingencies

Stockholders' Equity

Preferred stock, $0.01 par value; 50,000,000 shares authorized; none issued and
outstanding

—

—

Common stock, $0.01 par value; 450,000,000 shares authorized; 18,085,798 and
12,988,482 shares issued and outstanding at December 31, 2017 and 2016, respectively

181

130

Additional paid-in capital

324,303

214,323

Cumulative net income

4,775

1,265

Accumulated other comprehensive loss

258

—

Cumulative dividends

(46,143)

(21,711)

Total stockholders' equity

283,374

194,007

Total liabilities and stockholders' equity

$

385,766

$

251,529

The Condensed Consolidated Balance Sheets do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

COMMUNITY HEALTHCARE TRUST INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2017 AND 2016

(Unaudited)

(Amounts in thousands, except per share amounts)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2017

2016

2017

2016

REVENUES

Rental income

$

9,103

$

5,811

$

31,071

$

18,999

Tenant reimbursements

1,451

1,314

5,071

4,564

Mortgage interest

248

267

1,022

1,634

Other operating

160

—

179

—

10,962

7,392

37,343

25,197

EXPENSES

Property operating

2,579

1,504

8,682

4,744

General and administrative

801

856

3,475

3,228

Depreciation and amortization

4,983

3,558

17,732

13,201

Bad debts

—

52

67

155

8,363

5,970

29,956

21,328

OTHER INCOME (EXPENSE)

Interest expense

(1,051)

(391)

(3,948)

(1,178)

Interest and other income, net

4

2

71

30

(1,047)

(389)

(3,877)

(1,148)

NET INCOME

$

1,552

$

1,033

$

3,510

$

2,721

NET INCOME PER COMMON SHARE:

Net income per common share – Basic

$

0.08

$

0.08

$

0.19

$

0.24

Net income per common share – Diluted

$

0.08

$

0.08

$

0.19

$

0.24

WEIGHTED AVERAGE COMMON SHARE OUTSTANDING-
BASIC

17,574

12,686

14,815

11,238

WEIGHTED AVERAGE COMMON SHARE OUTSTANDING-
DILUTED

17,574

12,759

14,815

11,320

The Condensed Consolidated Statements of Income do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

COMMUNITY HEALTHCARE TRUST INCORPORATED

RECONCILIATION OF FFO, NORMALIZED FFO, and AFFO ⁽¹⁾

(Amounts in thousands, except per share amounts)

(Unaudited)

Three Months Ended December 31,

2017

2016

Net income

$

1,552

$

1,033

   Real estate depreciation and amortization

4,978

3,554

   Total adjustments

4,978

3,554

Funds From Operations

$

6,530

$

4,587

   Transaction costs (2)

25

200

Normalized Funds From Operations

$

6,555

$

4,787

   Straight line rent

(351)

(201)

   Deferred compensation

428

221

AFFO

$

6,632

$

4,807

   Funds from Operations per Common Share-Diluted

$

0.37

$

0.36

   Normalized Funds From Operations Per Common Share-Diluted

$

0.37

$

0.38

   AFFO Per Common Share-Diluted

$

0.37

$

0.38

Weighted Average Common Shares Outstanding-Diluted (3)

17,769

12,759

(1)

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time.  However, since real estate values have historically risen or fallen with market conditions, many industry investors deem presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For that reason, the Company considers funds from operations ("FFO"), normalized FFO and adjusted funds from operations ("AFFO") to be appropriate measures of operating performance of an equity real estate investment trust ("REIT"). In particular, the Company believes that normalized FFO and AFFO are useful because they allow investors, analysts and Company management to compare the Company's operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by unanticipated items and other events.

The Company uses the National Association of Real Estate Investment Trusts, Inc. ("NAREIT") definition of FFO. FFO and FFO per share are operating performance measures adopted by NAREIT. NAREIT defines FFO as the most commonly accepted and reported measure of a REIT's operating performance equal to "net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures." The Company has included normalized FFO which it has defined as FFO excluding certain expenses related to closing costs of properties acquired accounted for as business combinations and mortgages funded and has included AFFO which it has defined as normalized FFO excluding straight-line rent and deferred compensation and may include other non-cash items from time to time. Normalized FFO and AFFO presented herein may not be comparable to similar measures presented by other real estate companies due to the fact that not all real estate companies use the same definitions.

FFO, normalized FFO and AFFO should not be considered as alternatives to net income (determined in accordance with GAAP) as indicators of the Company's financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of the Company's liquidity, nor are they necessarily indicative of sufficient cash flow to fund all of the Company's needs. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO, normalized FFO and AFFO should be examined in conjunction with net income as presented elsewhere herein.

(2)

Upon the adoption of Accounting Standards Update ("ASU") No, 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, on January 1, 2017, the Company expects that substantially all of its acquisitions will be accounted for as asset acquisitions. As such, transaction costs related to its acquisitions will be capitalized into the real estate property. The transaction costs of $25,000 above for the three months ended December 31, 2017 relate to costs associated with the acquisition of $8.75 million in promissory notes.

(3)

Diluted weighted average common shares outstanding for FFO are calculated based on the treasury method, rather than the 2-class method.