Community Healthcare Trust Announces Results for the Three Months Ended June 30, 2017

COMMUNITY HEALTHCARE TRUST INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except per share amounts)

June 30, 2017

December 31, 2016

ASSETS

Real estate properties:

Land and land improvements

$

37,277

$

29,884

Buildings, improvements, and lease intangibles

281,408

222,755

Personal property

109

97

Total real estate properties

318,794

252,736

Less accumulated depreciation

(26,610)

(18,404)

Total real estate properties, net

292,184

234,332

Cash and cash equivalents

831

1,568

Mortgage note receivable, net

10,518

10,786

Other assets, net

5,722

4,843

Total assets

$

309,255

$

251,529

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Debt, net

$

117,251

$

51,000

Accounts payable and accrued liabilities

3,057

3,541

Other liabilities

3,533

2,981

Total liabilities

123,841

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; 13,121,163 and 12,988,482 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively

131

130

Additional paid-in capital

214,975

214,323

Cumulative net income

2,644

1,265

Accumulated other comprehensive loss

(436)

—

Cumulative dividends

(31,900)

(21,711)

Total stockholders' equity

185,414

194,007

Total liabilities and stockholders' equity

$

309,255

$

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 SIX MONTHS ENDED JUNE 30, 2017 AND 2016

(Unaudited)

(Dollars in thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

2017

2016

2017

2016

REVENUES

Rental income

$

7,338

$

4,530

$

13,956

$

8,203

Tenant reimbursements

1,334

1,105

2,462

2,062

Mortgage interest

258

561

519

1,097

8,930

6,196

16,937

11,362

EXPENSES

Property operating

2,140

1,228

3,878

2,277

General and administrative

835

895

1,605

1,701

Depreciation and amortization

4,281

3,332

8,205

6,147

Bad debts

—

30

67

30

7,256

5,485

13,755

10,155

OTHER INCOME (EXPENSE)

Interest expense

(1,209)

(222)

(1,806)

(602)

Interest and other income, net

1

19

3

19

(1,208)

(203)

(1,803)

(583)

NET INCOME

$

466

$

508

$

1,379

$

624

NET INCOME PER COMMON SHARE:

Net income per common share – Basic

$

0.04

$

0.04

$

0.11

$

0.06

Net income per common share – Diluted

$

0.04

$

0.04

$

0.11

$

0.06

WEIGHTED AVERAGE COMMON SHARE OUTSTANDING-BASIC

12,686,183

12,038,381

12,686,183

9,774,782

WEIGHTED AVERAGE COMMON SHARE OUTSTANDING-DILUTED

12,815,605

12,064,839

12,840,730

9,834,050

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⁾

(Dollars in thousands, except per share amounts)

(Unaudited)

Three Months Ended June 30,

2017

2016

Net income

$

466

$

508

   Real estate depreciation and amortization

4,276

3,330

   Total adjustments

4,276

3,330

Funds From Operations

$

4,742

$

3,838

   Transaction costs (2)

—

204

Normalized Funds From Operations

$

4,742

$

4,042

   Straight line rent

(270)

(138)

   Deferred compensation

338

140

AFFO

$

4,810

$

4,044

   Funds from Operations per Common Share-Diluted

$

0.37

$

0.32

   Normalized Funds From Operations Per Common Share-Diluted

$

0.37

$

0.34

   AFFO Per Common Share-Diluted

$

0.38

$

0.34

Weighted Average Common Shares Outstanding-Diluted

12,815,605

12,064,839

(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.