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What changed in Global Medical REIT Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Global Medical REIT Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+280 added−231 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-28)

Top changes in Global Medical REIT Inc.'s 2024 10-K

280 paragraphs added · 231 removed · 181 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

37 edited+16 added−19 removed37 unchanged
Biggest changeSee “Risk Factors— The inability of any of our significant tenants to pay rent to us could have a disproportionate negative affect on our revenues ” and “ Risk Factors— Most of our healthcare facilities are occupied by a single tenant, and we may have difficulty finding suitable replacement tenants in the event of a tenant default or non-renewal of our leases, especially for our healthcare facilities located in smaller markets. ” ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leasable Square ​ Annualized Base Rent (ABR) ​ Tenant ​ Feet (LSF) ​ % of LSF ​ (in thousands) (1) ​ % of ABR ​ LifePoint Health ​ 157,151 ​ 3.3 % $ 7,754 ​ 7.0 % Encompass Health Corporation 254,006 5.3 % ​ 7,389 6.7 % Memorial Health System 155,600 3.3 % ​ 5,532 5.0 % Total 566,757 11.9 % $ 20,675 18.7 % (1) Monthly base rent for December 2023, multiplied by 12 (or base rent net of annualized expenses for properties with gross leases). ​ Lease Expirations The following table contains information regarding the lease expiration dates of the leases in our portfolio as of December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Annualized Base Rent (ABR) ​ Year ​ Number of Leases ​ Leased Square Feet ​ (in thousands) (1) ​ % of ABR ​ 2024 ​ 76 ​ 665,487 ​ $ 14,092 ​ 12.8 % 2025 50 352,536 ​ 7,969 ​ 7.2 % 2026 70 519,350 ​ 10,199 ​ 9.3 % 2027 44 464,583 ​ 11,742 ​ 10.7 % 2028 32 334,543 ​ 8,629 ​ 7.8 % 2029 25 480,994 ​ 11,749 ​ 10.7 % 2030 29 402,520 ​ 10,061 ​ 9.1 % 2031 18 324,127 ​ 7,055 ​ 6.4 % 2032 6 72,284 ​ 2,295 ​ 2.1 % 2033 ​ 17 ​ 162,354 ​ ​ 4,221 ​ 3.8 % Thereafter 29 802,633 ​ 22,218 ​ 20.1 % Total 396 4,581,411 (2) ​ $ 110,230 100.0 % (1) Monthly base rent for December 2023, multiplied by 12 (or base rent net of annualized expenses for properties with gross leases).
Biggest changeSee “Risk Factors— The inability of any of our significant tenants to pay rent to us could have a disproportionate negative affect on our revenues ” and “ Risk Factors— Most of our healthcare facilities are occupied by a single tenant, and we may have difficulty finding suitable replacement tenants in the event of a tenant default or non-renewal of our leases, especially for our healthcare facilities located in smaller markets. ” ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leasable Square ​ Annualized Base Rent (ABR) ​ Tenant ​ Feet (LSF) ​ % of LSF ​ (in thousands) (1) ​ % of ABR ​ LifePoint Health ​ 157,151 ​ 3.3 % $ 7,931 ​ 7.2 % Encompass Health Corporation 254,006 5.3 % ​ 7,318 6.7 % Memorial Health System 155,600 3.3 % ​ 5,938 5.4 % Total 566,757 11.9 % $ 21,187 19.3 % (1) Monthly base rent for December 2024, multiplied by 12 (or base rent net of annualized expenses for properties with gross leases). 7 Table of Contents Lease Expirations The following table contains information regarding the lease expiration dates of the leases in our portfolio as of December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Annualized Base Rent (ABR) ​ Year ​ Number of Leases ​ Leased Square Feet ​ (in thousands) (1) ​ % of ABR ​ 2025 ​ 63 ​ 507,602 ​ $ 9,860 ​ 9.0 % 2026 72 497,259 ​ 10,559 ​ 9.6 % 2027 50 470,171 ​ 12,204 ​ 11.1 % 2028 36 261,753 ​ 7,283 ​ 6.6 % 2029 60 769,921 ​ 19,077 ​ 17.3 % 2030 39 492,601 ​ 12,208 ​ 11.1 % 2031 22 377,993 ​ 7,830 ​ 7.1 % 2032 6 64,510 ​ 2,056 ​ 1.9 % 2033 18 179,954 ​ 4,767 ​ 4.3 % 2034 ​ 12 ​ 234,770 ​ ​ 7,343 ​ 6.7 % Thereafter 25 729,389 ​ 16,815 ​ 15.3 % Total 403 4,585,923 (2) ​ $ 110,002 100.0 % (1) Monthly base rent for December 2024, multiplied by 12 (or base rent net of annualized expenses for properties with gross leases).
ITEM 1. BUSINESS ​ Organization Global Medical REIT Inc. (the “Company,” “us,” “we,” or “our”) is a Maryland corporation and internally managed REIT that owns and acquires healthcare facilities and leases those facilities to physician groups and regional and national healthcare systems. The Company’s common stock is listed on the New York Stock Exchange.
ITEM 1. BUSINESS ​ Organization Global Medical REIT Inc. (the “Company,” “us,” “we,” or “our”) is a Maryland corporation and internally managed REIT that acquires healthcare facilities and leases those facilities to physician groups and regional and national healthcare systems. The Company’s common stock is listed on the New York Stock Exchange.
To implement this strategy, we seek to invest: ● in medical office buildings and other de-centralized components of the healthcare delivery system because we believe that healthcare delivery trends in the U.S. are increasingly moving away from centralized hospital locations; ● in small to mid-sized healthcare facilities located in secondary markets and suburbs of primary markets and that provide services needed for an aging population, such as cardiovascular treatment, rehabilitation, eye surgery, gastroenterology, oncology treatment and orthopedics.
To implement this strategy, we seek to invest: ● in medical office buildings and other decentralized components of the healthcare delivery system because we believe that healthcare delivery trends in the U.S. are increasingly moving away from centralized hospital locations; ● in small to mid-sized healthcare facilities located in secondary markets and suburbs of primary markets and that provide services needed for an aging population, such as cardiovascular treatment, rehabilitation, eye surgery, gastroenterology, oncology treatment and orthopedics.
We make available, free of charge through the Investor Relations portion of the website, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We make available, free of charge through the Investor Relations 12 Table of Contents portion of the website, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We believe this strategy allows us to attain our goals of providing stockholders with (i) reliable dividends and (ii) stock price appreciation.
We believe this strategy allows us to attain our goals of providing stockholders with (i) attractive dividends and (ii) stock price appreciation.
Continuing Impact of COVID-19 The COVID-19 epidemic has affected the healthcare industry in many ways. Many stories exist about U.S. healthcare workers, especially nurses, experiencing burnout due to the length and severity of the epidemic, and this has caused many nurses and other medical professionals to switch jobs within the medical profession or quit the profession altogether.
Continuing Impact of Healthcare Wage Inflation The COVID-19 epidemic affected the healthcare industry in many ways. Many stories exist about U.S. healthcare workers, especially nurses, experiencing burnout due to the length and severity of the epidemic, and this has caused many nurses and other medical professionals to switch jobs within the medical profession or quit their professions altogether.
Reports of beneficial ownership filed pursuant to Section 16(a) of the Exchange Act are also available on our website. These reports and other information are also available, free of charge, at www.sec.gov. ​ 12 Table of Contents
Reports of beneficial ownership filed pursuant to Section 16(a) of the Exchange Act are also available on our website. These reports and other information are also available, free of charge, at www.sec.gov. ​
Our wholly owned subsidiary, Global Medical REIT GP LLC, is the sole general partner of our Operating Partnership and, as of December 31, 2023, we owned 92.91% of the outstanding common operating partnership units (“OP Units”) of our Operating Partnership, with an aggregate of 7.09% of the Operating Partnership owned by holders of long-term incentive plan units (“LTIP Units”) and third-party limited partners who contributed properties or services to the Operating Partnership in exchange for OP Units.
Our wholly owned subsidiary, Global Medical REIT GP LLC, is the sole general partner of our Operating Partnership and, as of December 31, 2024, we owned 92.6% of the outstanding common operating partnership units (“OP Units”) of our Operating Partnership, with an aggregate of 7.4% of the Operating Partnership owned by holders of long-term incentive plan units (“LTIP Units”) and third-party limited partners who contributed properties or services to the Operating Partnership in exchange for OP Units.
Historically, states have often attempted to reduce Medicaid spending by limiting benefits and tightening Medicaid eligibility requirements. Efforts by Medicare and Medicaid to reduce reimbursements will likely continue, which could negatively affect our tenant’s revenues and their ability to pay rent to us.
Historically, states have often attempted to reduce Medicaid spending by limiting benefits and tightening Medicaid eligibility requirements. 9 Table of Contents Efforts by Medicare and Medicaid to reduce reimbursements will likely continue, which could negatively affect our tenant’s revenues and their ability to pay rent to us.
The contents of our Corporate Social Responsibility Report are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC. ​ Our commitment to employee engagement remains a high-priority, as we continue to make accommodations for health, safety, and work-life balance, including at our headquarters which is LEED platinum certified and includes a fitness center, café and rooftop lounge.
The contents of our Corporate Social Responsibility Report are not incorporated by reference into this Report or in any other report or document we file with the SEC. ​ Our commitment to employee engagement remains a high-priority, as we continue to make accommodations for health, safety, and work-life balance, including at our headquarters which is LEED platinum certified and includes a fitness center, café and roof-top lounge.
These laws include, without limitation: ● The Federal Anti-Kickback Statute, which prohibits, among other things, the offer, payment, solicitation or receipt of any form of remuneration in return for, or to induce, the referral of any U.S. federal or state healthcare program patients; ● The Federal Physician Self-Referral Prohibition (commonly called the “Stark Law”), which, subject to specific exceptions, restricts physicians who have financial relationships with healthcare providers from making referrals for designated health services for which payment may be made under Medicare or Medicaid programs to an entity with which the physician, or an immediate family member, has a financial relationship; ● The False Claims Act, which prohibits any person from knowingly presenting false or fraudulent claims for payment to the federal government, including under the Medicare and Medicaid programs; ● The Civil Monetary Penalties Law, which authorizes the Department of Health and Human Services to impose monetary penalties for certain fraudulent acts; and ● State anti-kickback, anti-inducement, anti-referral and insurance fraud laws which may be generally similar to, and potentially more expansive than, the federal laws set forth above.
These laws include, without limitation: ● The Federal Anti-Kickback Statute, which prohibits, among other things, the offer, payment, solicitation or receipt of any form of remuneration in return for, or to induce, the referral of any U.S. federal or state healthcare program patients; ● The Federal Physician Self-Referral Prohibition (commonly called the “Stark Law”), which, subject to specific exceptions, restricts physicians who have financial relationships with healthcare providers from making referrals for designated health services for which payment may be made under Medicare or Medicaid programs to an entity with which the physician, or an immediate family member, has a financial relationship; ● The False Claims Act, which prohibits any person from knowingly presenting false or fraudulent claims for payment to the federal government, including under the Medicare and Medicaid programs; ● The Civil Monetary Penalties Law, which authorizes the Department of Health and Human Services to impose monetary penalties for certain fraudulent acts; and ● State anti-kickback, anti-inducement, anti-referral and insurance fraud laws which may be generally similar to, and potentially more expansive than, the federal laws set forth above. 10 Table of Contents Violations of these laws may result in criminal and/or civil penalties that range from punitive sanctions, damage assessments, penalties, imprisonment, denial of Medicare and Medicaid payments and/or exclusion from the Medicare and Medicaid programs.
(2) Our remaining properties are located in 28 other states, with no state accounting for more than 5% of our ABR. 7 Table of Contents Significant Tenants The following tenants each account for at least 5% of our annualized base rent as of December 31, 2023.
(2) Our remaining properties are located in 30 other states, with no state accounting for more than 5% of our ABR. Significant Tenants The following tenants each account for at least 5% of our annualized base rent as of December 31, 2024.
Certain environmental laws impose compliance obligations on owners and tenants of real property with respect to the management of hazardous substances and other regulated materials. For example, environmental laws govern the management and removal of asbestos-containing materials and lead-based paint. Failure to comply with these laws can result in penalties or other sanctions.
Certain environmental laws impose compliance obligations on owners and tenants of real property with respect to the management of hazardous substances and other regulated materials. For example, environmental laws govern the management and removal of asbestos-containing materials and lead-based paint.
(2) The remaining 167,215 of leasable square feet, or 3.5% of our overall leasable square feet, is vacant. Ground Leases As of December 31, 2023, we had seven buildings located on land that is subject to operating ground leases, representing approximately 3.9% of our total leasable square feet and approximately 4.3% of our December 2023 annualized base rent.
Ground Leases As of December 31, 2024, we had seven buildings located on land that is subject to operating ground leases, representing approximately 3.9% of our total leasable square feet and approximately 4.5% of our December 2024 annualized base rent.
The primary purpose of the ESG committee is to assist the Board in fulfilling its responsibilities to provide oversight and support of our commitment to ESG matters by overseeing: (1) our general ESG strategy and policies as set by our management, (2) communications with our employees, investors, and other stakeholders with respect to ESG matters, (3) developments relating to, and improving our understanding of, ESG matters, (4) our compliance with certain ESG-related legal and regulatory requirements, and (5) coordination with our other Board committees on ESG matters of common import. 5 Table of Contents In June 2023, we released our second Corporate Social Responsibility Report, which detailed our progress and areas of focus in the ESG realm.
The primary purpose of the ESG committee is to assist the Board in fulfilling its responsibilities to provide oversight and support of our commitment to ESG matters by overseeing: (1) our general ESG strategy and policies as set by our management, (2) communications with our employees, investors, and other stakeholders with respect to ESG matters, (3) developments relating to, and improving our understanding of, ESG matters, (4) our compliance with certain ESG-related legal and regulatory requirements, and (5) coordination with our other Board committees on ESG matters of common import.
In addition, new laws and regulations, changes in existing laws and regulations or changes in the interpretation of such laws or regulations could negatively affect our financial condition and the financial condition of our tenants. These changes, in some cases, could apply retroactively.
In addition, new laws and regulations, changes in existing laws and regulations or changes in the interpretation of such laws or regulations could negatively affect our financial condition and the financial condition of our tenants. These changes, in some cases, could apply retroactively. The enactment, timing or effect of legislative or regulatory changes cannot be predicted.
We believe that we have been organized and have operated in such a manner as to qualify for taxation as a REIT, and we intend to continue to operate in such a manner.
We believe that we have been organized and have operated in such a manner as to qualify for taxation as a REIT, and we intend to continue to operate in such a manner. However, we cannot provide assurances that we will continue to operate in a manner to remain qualified as a REIT.
The enactment, timing or effect of legislative or regulatory changes cannot be predicted. 11 Table of Contents Many states regulate the construction of healthcare facilities, the expansion of healthcare facilities, the construction or expansion of certain services, including by way of example specific bed types and medical equipment, as well as certain capital expenditures through certificate of need, or CON, laws.
Many states regulate the construction of healthcare facilities, the expansion of healthcare facilities, the construction or expansion of certain services, including by way of example specific bed types and medical equipment, as well as certain capital expenditures through certificate of need, or CON, laws.
This phenomenon has led to material increases in labor costs for healthcare systems, especially hospital systems, as some employers have had to rely on higher cost contract nursing labor to sustain their businesses.
This phenomenon has led to material increases in labor costs for healthcare systems, especially hospital systems, as some employers have had to rely on higher cost contract nursing labor to sustain their businesses. Although reliance on contract nursing and overall healthcare wage inflation moderated during 2024, the overall increase in healthcare labor costs remains.
Subject to a number of significant exceptions, a corporation that qualifies as a REIT generally is not subject to U.S. federal income tax on income and gains that it distributes to its stockholders, thereby reducing its corporate-level taxes.
Qualification as a REIT We elected to be taxed as a REIT commencing with our taxable year ended December 31, 2016. Subject to a number of significant exceptions, a corporation that qualifies as a REIT generally is not subject to U.S. federal income tax on income and gains that it distributes to its stockholders, thereby reducing its corporate-level taxes.
Summary of Investments by Type The following table contains information about our portfolio by type of property as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leasable Square % of Annualized Base Rent (ABR) ​ Type ​ Feet (LSF) ​ LSF ​ (in thousands) (1) ​ % of ABR ​ Medical Office Building (MOB) (2) ​ 3,589,494 ​ 75.6 % $ 75,152 ​ 68.2 % Inpatient Rehab.
Summary of Investments by Type The following table contains information about our portfolio by type of property as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leasable Square % of Annualized Base Rent (ABR) ​ Type ​ Feet (LSF) ​ LSF ​ (in thousands) (1) ​ % of ABR ​ Medical Office Building (MOB) (2) ​ 3,648,612 ​ 76.7 % $ 78,694 ​ 71.5 % Inpatient Rehab.
However, we cannot provide assurances that we will continue to operate in a manner to remain qualified as a REIT. 9 Table of Contents Competition We compete with many other real estate investors for acquisitions of healthcare properties, including healthcare operators, and real estate investors such as private equity firms and other REITs, some of whom may have greater financial resources and lower costs of capital than we do.
Competition We compete with many other real estate investors for acquisitions of healthcare properties, including healthcare operators, and real estate investors such as private equity firms and other REITs, some of whom may have greater financial resources and lower costs of capital than we do.
We believe these facilities and markets are typically overlooked by larger REITs and other healthcare investors but contain tenant credit profiles that are like those of larger, more expensive facilities in primary markets; and ● to a lesser extent, in opportunistic acquisitions, including (i) certain acute-care hospitals and long-term acute care facilities (LTACs) that we believe provide premium, risk-adjusted returns, (ii) health system corporate office and administrative buildings, which we believe will help us develop relationships with larger health systems and (iii) behavioral and mental health facilities that are operated by national or regional operators and are located in markets that demonstrate a need for such services.
We believe these facilities and markets are typically overlooked by larger REITs and other healthcare investors but contain tenant credit profiles that are like those of larger, more expensive facilities in primary markets; and ● to a lesser extent, in opportunistic acquisitions, including behavioral and mental health facilities that are operated by national or regional operators and are located in markets that demonstrate a need for such services.
Additionally, although the migration from Medicare fee-for-service, or volume-based, payments to an outcome-based reimbursement model may lower overall healthcare costs, these changes could negatively affect our tenants if they are unable to adapt to a more outcome-oriented healthcare delivery model. 10 Table of Contents The future of the Affordable Care Act is uncertain and any changes to existing laws and regulations, including the Affordable Care Act’s repeal, modification or replacement, could have a long-term financial impact on the delivery of and payment for healthcare.
Additionally, although the migration from Medicare fee-for-service, or volume-based, payments to an outcome-based reimbursement model may lower overall healthcare costs, these changes could negatively affect our tenants if they are unable to adapt to a more outcome-oriented healthcare delivery model.
We file registration statements, proxy statements, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, with the SEC.
The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive textual reference only. We file registration statements, proxy statements, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, with the SEC.
Economic and other conditions that negatively affect those states and our tenants in those states could have a greater effect on our revenues than if our properties were more geographically diverse .” ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leasable Square ​ Annualized Base Rent (ABR) ​ State ​ Feet (LSF) ​ % of LSF ​ (in thousands) (1) ​ % of ABR ​ Texas ​ 727,176 ​ 15.3 % $ 20,577 ​ 18.7 % Florida ​ 553,068 11.6 % ​ 11,631 10.6 % Ohio 418,533 8.8 % ​ 9,466 8.6 % Pennsylvania 286,339 6.0 % ​ 7,180 6.5 % Arizona 183,835 3.9 % ​ 6,759 6.1 % Illinois 308,813 6.5 % ​ 6,665 6.0 % Other (2) 2,270,862 47.9 % ​ 47,952 43.5 % Total 4,748,626 100.0 % $ 110,230 100.0 % (1) Monthly base rent for December 2023, multiplied by 12 (or base rent net of annualized expenses for properties with gross leases).
Economic and other conditions that negatively affect those states and our tenants in those states could have a greater effect on our revenues than if our properties were more geographically diverse .” ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leasable Square ​ Annualized Base Rent (ABR) ​ State ​ Feet (LSF) ​ % of LSF ​ (in thousands) (1) ​ % of ABR ​ Texas ​ 709,092 ​ 14.9 % $ 17,815 ​ 16.2 % Florida ​ 588,567 12.4 % ​ 13,060 11.9 % Ohio 419,221 8.8 % ​ 9,636 8.8 % Pennsylvania 286,339 6.0 % ​ 7,307 6.6 % Illinois 308,813 6.5 % ​ 6,964 6.3 % Arizona 183,835 3.9 % ​ 6,682 6.1 % Michigan ​ 306,190 ​ 6.4 % ​ 5,785 ​ 5.3 % Other (2) 1,954,051 41.1 % ​ 42,753 ​ 38.8 % Total 4,756,108 100.0 % $ 110,002 100.0 % (1) Monthly base rent for December 2024, multiplied by 12 (or base rent net of annualized expenses for properties with gross leases).
We have established policies to provide a safe, harassment-free work environment and have fostered a corporate culture based on fair and equal treatment. As a result, we believe our employees are committed to building strong, innovative and long-term relationships with each other and with our tenants. Our employees at our corporate office are permitted to work remotely.
As a result, we believe our employees are committed to building strong, innovative and long-term relationships with each other and with our tenants. Our employees at our corporate office are permitted to work remotely. Available Information We maintain a website at www.globalmedicalreit.com .
See “Risk Factors— We have significant geographic concentration in a small number of states, including Texas, Florida, Ohio, Pennsylvania, Arizona, and Illinois.
Adverse economic or other conditions (including significant weather events) in the states that contain a high concentration of our facilities could adversely affect us. See “Risk Factors— We have significant geographic concentration in a small number of states, including Texas, Florida, Ohio, Pennsylvania, Illinois, Arizona, and Michigan.
Facility (IRF) 547,007 11.5 % ​ 20,518 18.6 % Surgical Hospital 108,674 2.3 % ​ 4,162 3.8 % Other (3) 503,451 10.6 % ​ 10,398 9.4 % Total 4,748,626 100.0 % $ 110,230 100.0 % (1) Monthly base rent for December 2023, multiplied by 12 (or base rent net of annualized expenses for properties with gross leases).
Facility (IRF) 501,087 10.5 % ​ 19,136 17.4 % Healthcare Administrative Office 137,891 2.9 % ​ 2,800 2.5 % Other (3) 468,518 9.9 % ​ 9,372 8.6 % Total 4,756,108 100.0 % $ 110,002 100.0 % (1) Monthly base rent for December 2024, multiplied by 12 (or base rent net of annualized expenses for properties with gross leases).
Our Properties As of December 31, 2023, we had gross investments of approximately $1.4 billion in real estate properties, consisting of 185 buildings with an aggregate of (i) approximately 4.7 million leasable square feet and (ii) approximately $110.2 million of annualized base rent. The tables below summarize information about our portfolio as of December 31, 2023.
Whether enhanced technology and cost-saving measures and increased reimbursements from payors will help offset these costs remains to be seen. ​ Our Properties As of December 31, 2024, we had gross investments of approximately $1.5 billion in real estate properties, consisting of 190 buildings with an aggregate of (i) approximately 4.8 million leasable square feet and (ii) approximately $110 million of annualized base rent.
(2) Our MOB category includes buildings with special uses such as surgery centers, imaging, labs, urgent care, dialysis, and plasma centers, among others. (3) Other includes healthcare administrative office ($2,735), acute-care hospital ($2,541), long-term acute care hospital ($2,539), behavioral hospital ($1,372), free-standing emergency department ($992) and retail space ($219).
(2) Our MOB category includes buildings with special uses such as surgery centers, imaging, labs, urgent care, dialysis, and plasma centers, among others.
As we continue to grow our portfolio and the competition for single-tenant, triple-net leased properties has intensified, we have added to our portfolio some multi-tenant properties with gross lease or modified gross lease structures. ​ Corporate Sustainability and Social Responsibility Our business values integrate environmental sustainability, social responsibility, and strong governance practices throughout our Company. ​ Our Board of Directors (the “Board”) continues to lead our environmental, social and governance (“ESG”) efforts through a standing ESG committee.
Failure to comply with these laws can result in penalties or other sanctions. 11 Table of Contents Corporate Sustainability and Social Responsibility Our business values integrate environmental sustainability, social responsibility, and strong governance practices throughout our Company. ​ Our Board of Directors (the “Board”) continues to lead our environmental, social and governance (“ESG”) efforts through a standing ESG committee.
We believe we offer a competitive pay and benefits package, with nearly all of our employees participating in our equity incentive plans. We also foster the development of our employees’ expertise and skillsets, and encourage our employees to build new skill sets, such as in the ESG space.
As of December 31, 2024, 35% of our workforce were women and 31% of our workforce was ethnically diverse. We believe we offer a competitive pay and benefits package, with nearly all of our employees participating in our equity incentive plans.
Also see “Schedule III – Consolidated Real Estate and Accumulated Depreciation,” for additional information about our properties.
The tables below summarize information about our portfolio as of December 31, 2024. Also see “Schedule III – Consolidated Real Estate and Accumulated Depreciation,” for additional information about our properties. In addition, as of December 31, 2024 we had an investment in an unconsolidated joint venture of approximately $2.1 million.
We stand with our communities, tenants, and stockholders in supporting meaningful solutions that address this global challenge and contribute to the sustainability of our business objectives. Impact of Increased Interest Rates and Inflation After many years of low inflation, the U.S. inflation rate increased substantially during 2022 and remained elevated during 2023. In response to elevated inflation, the U.S.
We stand with our communities, tenants, and stockholders in supporting meaningful solutions that address this global challenge and contribute to the sustainability of our business objectives. ​ Human Capital Resources Our success is dependent on the success of our employees. As of December 31, 2024, the Company had 26 employees.
Federal Reserve (the “Fed”) increased the target range for the Federal Funds Rate from 0.25% – 0.50% in the first quarter of 2022 to 5.25% – 5.50% as of January 2024.
Federal Reserve (the “Fed”) began lowering the Federal Funds Rate after many quarters of increasing the target range for the rate to combat inflation. Beginning in September 2024 through December 2024, the Federal Funds Rate dropped from a range of 5.25% – 5.50% to 4.25% - 4.50%. However, U.S.
Both our tenants and us may be adversely affected by the law or its repeal, modification or replacement.
The future of the Affordable Care Act is uncertain and any changes to existing laws and regulations, including the Affordable Care Act’s repeal, modification or replacement, could have a long-term financial impact on the delivery of and payment for healthcare. Both our tenants and us may be adversely affected by the law or its repeal, modification or replacement.
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Most of our healthcare facilities are leased to single-tenants under triple-net leases.
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Most of our healthcare facilities are leased to single-tenants under triple-net leases. Our portfolio also contains some multi-tenant properties with gross lease or modified gross lease structures. In addition, we have an interest in an unconsolidated joint venture that owns two healthcare facilities. Impact of Elevated Interest Rates and Inflation During 2024 the U.S.
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Many market participants had anticipated that the high trajectory of interest rates during 2022 and throughout 2023 would lead to an economic recession towards the end of 2023 that would have caused the Fed to begin lowering the Federal Funds Rate.
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Treasury yields and Secured Overnight Financing Rate (“SOFR”) swap rates have not responded in kind with 10-Year U.S. Treasury yields increasing from 3.79% at September 30, 2024 to 4.57% at December 31, 2024 and the five-year forward SOFR swap rates increasing from 3.21% to 3.97%, during the same period.
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However, certain components of the U.S. economy have outperformed expectations and inflation continues to remain higher than the Fed’s target rate, which has caused the Fed to take a “wait-and-see” approach to monetary policy rather than beginning a process of lowering the Federal Funds Rate.
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The difference between the changes in the Federal Funds Rate and U.S. Treasury yields and forward SOFR swap rates reflect market expectations of increased inflationary pressures in the coming months and years.
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The increase in the Federal Funds Rate, along with other actions taken by the Fed, had a ripple effect on other benchmark interest rates, including one-month term Secured Overnight Financing Rate (“SOFR”), which is the reference rate for our indebtedness under our Second Amended and Restated Credit Facility (the “Credit Facility”) .
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Consequently, the Fed may maintain an elevated Federal Funds Rate, or determine to raise the Federal Funds Rate again, in 2025 and beyond if inflation begins to rise. ​ 5 Table of Contents Currently, interest rate swaps with respect to our $350 million term loan (“Term Loan A”) on our Second Amended and Restated Credit Facility (the “Credit Facility”) are set to expire on the maturity of Term Loan A in April 2026.
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During 2023, one-month term SOFR increased from 4.36% to 5.36%.
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If we refinance our Term Loan A and enter into new interest rate swaps, any related interest rate swap would likely be based on the five-year SOFR swap rate at the time of refinancing, which is likely to be much higher than our current SOFR swap rate on our Term Loan A.
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Such elevated SOFR results in higher interest costs on our floating rate borrowings, which negatively affects our operating profits and contributes to the delay in our ability to grow our investment portfolio. ​ Additionally, as most of our leases are triple-net leases, we are somewhat insulated from the effects of inflation on our operating expenses.
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Additionally, although one-month SOFR, which is the base rate of the unhedged revolver component of our Credit Facility (our “Revolver”), has decreased during 2024 in line with the decrease in the Federal Funds Rate, one-month SOFR remains elevated compared to 2021 and there is no assurance that one-month SOFR will continue to decrease in 2025 and beyond. ​ In summary, interest expense on our Revolver, which is based on the short-term interest rate of one-month SOFR, has decreased in recent months along with the decrease in the Federal Funds Rate.
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However, due to the longer-term nature of our leases, we are not able to quickly increase rents to offset fully the effects of increased interest rates and inflation on our interest expense and other costs. Also, we may not be able to renew expiring leases at lease rates that reflect increases in inflation.
Added
With respect to our Term Loan A and its related interest rate swaps, if we refinance that loan and wish to hedge our prospective interest rate risk by entering into new interest rate swaps, the swap rates at the time of refinancing will be significantly higher than our current interest rate swaps due to (i) the general increase in SOFR since 2021 and (ii) the significant widening between short-term and long-term rates based on renewed inflationary pressures.
Removed
This increase in labor costs, among various other factors, contributed to the rapid increase in inflation during 2022, which remained elevated through 2023. 6 Table of Contents Furthermore, the continued spread of variants and subvariants of COVID-19 in the U.S. has prolonged the COVID-19 epidemic, which could continue to disrupt our operations and the operations of our tenants and third-party service providers.
Added
The information in the tables below does not include data based on properties held in our unconsolidated joint venture.
Removed
Geographic Concentration The following table contains information regarding the geographic concentration of our portfolio as of December 31, 2023. Adverse economic or other conditions (including significant weather events) in the states that contain a high concentration of our facilities could adversely affect us.
Added
(3) Other ABR includes acute-care hospital ($2,608), long-term acute care hospital ($2,608), surgical hospital ($1,519), behavioral hospital ($1,393), free-standing emergency department ($1,022) and retail space ($222). 6 Table of Contents Geographic Concentration The following table contains information regarding the geographic concentration of our portfolio as of December 31, 2024.
Removed
Opportunistic Acquisitions Despite the continued shift in the delivery of healthcare services to smaller, more specialized facilities, we believe opportunities exist to acquire larger, acute-care facilities, such as acute-care hospitals and LTACs, with very attractive submarket fundamentals at compelling valuations.
Added
(2) The remaining 170,185 of leasable square feet, or 3.6% of our overall leasable square feet, is vacant. Joint Venture In December 2024, we entered into a joint venture (the “Joint Venture”) with Heitman, a real estate investment firm with over $48 billion of assets under management.
Removed
Despite the trends away from acute-care facilities, we believe that certain, well-located acute-care hospitals and LTACs will still be critical components of the U.S. healthcare system. We also opportunistically invest in large health system’s corporate and administrative office buildings.
Added
Pursuant to the Joint Venture operating agreement, we maintain a 12.5% investment in the Joint Venture and also serve as its managing member and Heitman maintains an 87.5% investment. Most economic decisions related to the Joint Venture are determined by the majority vote of an executive committee that consists of three members representing Heitman and two members representing our Company.
Removed
We believe investments in these types of facilities helps us build relationships with large health systems, which could lead to us becoming a preferred landlord for such health systems’ medical facilities. We also invest in behavioral and mental health facilities that are operated by national or regional operators and are in markets that demonstrate a need for such services.
Added
As the managing member, we source new investments for the Joint Venture, manage the day-to-day activities of the Joint Venture and its assets, earn fees as compensation for such services, and are entitled to reimbursement of certain expenses we incur in the performance of such services for the Joint Venture.
Removed
Although not the primary focus of our investment strategy, we believe allocating a portion of our portfolio to opportunistic acquisitions helps diversify our portfolio and is consistent with our strategy of aligning ourselves with strong operators.
Added
Pursuant to the terms of the Joint Venture operating agreement, we have the right to purchase investment opportunities for the Company before offering such opportunities to the Joint Venture. In connection with the formation of the Joint Venture, we sold two of our assets to the Joint Venture receiving aggregate gross proceeds of $35.2 million.
Removed
Dispositions We believe in certain circumstances dispositions help to strengthen our portfolio and provide cash flow and gains from the sales that can be used for re-investment or to reduce indebtedness. During the year ended December 31, 2023, we completed three dispositions.
Added
We used $2.1 million of the proceeds from the sales to finance our initial 12.5% capital investment in the Joint Venture. In connection with the acquisition of the two assets, the Joint Venture entered into a mortgage loan with a principal amount of $17.6 million.
Removed
In August 2023, we sold a medical office building located in North Charleston, South Carolina receiving gross proceeds of $10.1 million, resulting in a gain of $2.3 million. In June 2023, we sold a portfolio of four medical office buildings located in Oklahoma City, Oklahoma receiving gross proceeds of $66.0 million, resulting in a gain of $12.8 million.
Added
In June 2024, we released our third Corporate Social Responsibility Report, which detailed our progress and areas of focus in the ESG realm.
Removed
In March 2023, we sold a medical office building located in Jacksonville, Florida receiving gross proceeds of $4.4 million, resulting in a gain of $0.5 million. Qualification as a REIT We elected to be taxed as a REIT commencing with our taxable year ended December 31, 2016.
Added
We also foster the development of our employees’ expertise and skillsets, and encourage our employees to build new skill sets, such as in the sustainability space. We have established policies to provide a safe, harassment-free work environment and have fostered a corporate culture based on fair and equal treatment.
Removed
Violations of these laws may result in criminal and/or civil penalties that range from punitive sanctions, damage assessments, penalties, imprisonment, denial of Medicare and Medicaid payments and/or exclusion from the Medicare and Medicaid programs.
Removed
Human Capital Resources Our success is dependent on the success of our employees. As of December 31, 2023, the Company had 26 employees. We support diversity, equality, and inclusion in our workforce. As of December 31, 2023, 46% of our workforce were women and 38% of our workforce was ethnically diverse.
Removed
Available Information We maintain a website at www.globalmedicalreit.com . The information on our website is not incorporated by reference in this Annual Report on Form 10-K, and our web address is included as an inactive textual reference only.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

72 edited+46 added−9 removed235 unchanged
Biggest changeIn addition to interest rate risk, we are subject to additional risks associated with our Credit Facility generally, including covenant restrictions. ​ ● Our assets are concentrated in healthcare-related facilities, making us more economically vulnerable to specific industry-related risks than if our assets were diversified across different industries. ​ ● The inability of any of our significant tenants to pay rent to us could have a disproportionate negative affect on our business. ​ ● Most of our healthcare facilities are occupied by a single tenant, and we may have difficulty finding suitable replacement tenants in the event of a tenant default or non-renewal of our leases, especially for our healthcare facilities located in smaller markets. ​ ● Our tenants’ businesses have in the past and could again in the future be materially and adversely affected by the effects of the COVID-19 virus, including labor shortages that have resulted from nurses and other medical personnel switching jobs within the medical profession or quitting the medical profession altogether, and other viruses or pandemics could cause similar effects in the future. ​ ● We have significant geographic concentration in a small number of states, including Texas, Florida, Ohio, Pennsylvania, Arizona, and Illinois.
Biggest changeIn addition to interest rate risk, we are subject to additional risks associated with our Credit Facility generally, including covenant restrictions. ● Our assets are concentrated in healthcare-related facilities, making us more economically vulnerable to specific industry-related risks than if our assets were diversified across different industries. ​ ● The inability of any of our significant tenants to pay rent to us could have a disproportionate negative affect on our business. ​ ● Most of our healthcare facilities are occupied by a single tenant, and we may have difficulty finding suitable replacement tenants in the event of a tenant default or non-renewal of our leases, especially for our healthcare facilities located in smaller markets. ​ ● Healthcare wage inflation increased dramatically due to the COVID-19 virus and remained elevated throughout 2024, which has in the past and could continue to materially and adversely affect certain of our tenants’ businesses.
An epidemic or pandemic (such as the outbreak and worldwide spread of COVID-19), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, may precipitate or materially exacerbate one or more of the other risks, and may significantly disrupt our business.
An epidemic or pandemic (such as the outbreak and worldwide spread of COVID-19), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, may precipitate or materially exacerbate one or more of our other risks, and may significantly disrupt our business.
All these risks may be greater in smaller markets, where there may be fewer potential replacement tenants, making it more difficult to replace tenants, especially for specialized space. We have significant geographic concentration in a small number of states, including Texas, Florida, Ohio, Pennsylvania, Arizona, and Illinois.
All these risks may be greater in smaller markets, where there may be fewer potential replacement tenants, making it more difficult to replace tenants, especially for specialized space. We have significant geographic concentration in a small number of states, including Texas, Florida, Ohio, Pennsylvania, Illinois, Arizona, and Michigan.
Economic and other conditions that negatively affect those states and our tenants in those states could have a greater effect on our revenues than if our properties were more geographically diverse. ​ ● We rely on external sources of capital to fund future capital needs, and, if we encounter difficulty in obtaining such capital, we may not be able to make future acquisitions necessary to grow our business or meet maturing obligations. ​ ● Subject to certain requirements under Maryland law and REIT requirements, the Board has sole discretion to determine if we will pay distributions and the amount and frequency of such distributions, and past distribution amounts may not be indicative of future distribution amounts. ​ ● Failure to remain qualified as a REIT would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distributions to our stockholders. ​ Risks Related to our Business and Healthcare Facilities ​ We are dependent on our tenants for our revenues.
Economic and other conditions that negatively affect those states and our tenants in those states could have a greater effect on our revenues than if our properties were more geographically diverse. ​ ● We rely on external sources of capital to fund future capital needs, and, if we encounter difficulty in obtaining such capital, we may not be able to make future acquisitions necessary to grow our business or meet maturing obligations. ​ ● Subject to certain requirements under Maryland law and REIT requirements, the Board has sole discretion to determine if we will pay distributions and the amount and frequency of such distributions, and past distribution amounts may not be indicative of future distribution amounts. ​ ● Failure to remain qualified as a REIT would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distributions to our stockholders. ​ 13 Table of Contents Risks Related to our Business and Healthcare Facilities ​ We are dependent on our tenants for our revenues.
Adverse economic or other conditions in our geographic markets, including periods of economic slowdown or recession, industry slowdowns, periods of deflation, relocation of businesses, changing demographics, earthquakes and other natural disasters, 15 Table of Contents fires, terrorist acts, public health crisis, pandemics and epidemics, such as the COVID-19 pandemic, and civil disturbances or acts of war and other man-made disasters which may result in uninsured or underinsured losses, and changes in tax, real estate, zoning and other laws and regulations, may negatively affect our tenants’ businesses and ability to pay rents to us and, therefore, could have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock.
Adverse economic or other conditions in our geographic markets, including periods of economic slowdown or recession, industry slowdowns, periods of deflation, relocation of businesses, changing demographics, earthquakes and other natural disasters, fires, terrorist acts, public health crisis, pandemics and epidemics, such as the COVID-19 pandemic, and civil disturbances or acts of war and other man-made disasters which may result in uninsured or underinsured losses, and changes in tax, real estate, zoning and other laws and regulations, may negatively affect our tenants’ businesses and ability to pay rents to us and, therefore, could have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock.
These provisions include, among others: ● Redemption rights; ● A requirement that we may not be removed as the general partner of our Operating Partnership without our consent; ● Transfer restrictions on OP Units; 27 Table of Contents ● Our ability, as the sole member of the general partner of our Operating Partnership, in some cases, to amend the partnership agreement and to cause the Operating Partnership to issue units with terms that could delay, defer or prevent a merger or other change of control of us or our Operating Partnership without the consent of the limited partners; and ● The right of the limited partners to consent to direct or indirect transfers of the general partnership interest, including as a result of a merger or a sale of all or substantially all of our assets, in the event that such transfer requires approval by our common stockholders.
These provisions include, among others: ● Redemption rights; ● A requirement that we may not be removed as the general partner of our Operating Partnership without our consent; ● Transfer restrictions on OP Units; ● Our ability, as the sole member of the general partner of our Operating Partnership, in some cases, to amend the partnership agreement and to cause the Operating Partnership to issue units with terms that could delay, defer or prevent a merger or other change of control of us or our Operating Partnership without the consent of the limited partners; and ● The right of the limited partners to consent to direct or indirect transfers of the general partnership interest, including as a result of a merger or a sale of all or substantially all of our assets, in the event that such transfer requires approval by our common stockholders.
Certain market conditions that may affect our business are as follows: ● National or regional economic upturns could increase the value of real estate generally, which could make it more difficult for us to acquire new healthcare properties at attractive prices or prevent us from purchasing additional facilities at all; ● National or regional economic downturns could adversely affect our tenants’ businesses, or the businesses located in our tenants’ geographic region, which could adversely affect our tenants’ ability to pay rent and the value of our healthcare properties; 22 Table of Contents ● A decrease in interest rates and financing costs could increase demand for real estate and, thus, the price of real estate.
Certain market conditions that may affect our business are as follows: ● National or regional economic upturns could increase the value of real estate generally, which could make it more difficult for us to acquire new healthcare properties at attractive prices or prevent us from purchasing additional facilities at all; ● National or regional economic downturns could adversely affect our tenants’ businesses, or the businesses located in our tenants’ geographic region, which could adversely affect our tenants’ ability to pay rent and the value of our healthcare properties; ● A decrease in interest rates and financing costs could increase demand for real estate and, thus, the price of real estate.
We may change our business, investment, and financing strategies without a vote of, or notice to, our stockholders, which could result in our making investments and engaging in business activities that are different from, and possibly riskier than, the investments and businesses described in this annual report.
We may change our business, investment, and financing strategies without stockholder approval. We may change our business, investment, and financing strategies without a vote of, or notice to, our stockholders, which could result in our making investments and engaging in business activities that are different from, and possibly riskier than, the investments and businesses described in this annual report.
Also, the failure of our Operating Partnership or any subsidiary partnership to qualify as a partnership for U.S. federal income tax purposes could cause it to become subject to U.S. federal and state corporate income 32 Table of Contents tax, which, in turn, could materially adversely affect our business, financial condition, results of operations, ability to make distributions to our stockholders and the trading price of our common and preferred stock.
Also, the failure of our Operating Partnership or any subsidiary partnership to qualify as a partnership for U.S. federal income tax purposes could cause it to become subject to U.S. federal and state corporate income tax, which, in turn, could materially adversely affect our business, financial condition, results of operations, ability to make distributions to our stockholders and the trading price of our common and preferred stock.
If we are held liable under these laws, our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock may be materially adversely affected. The income from certain of our properties is dependent on the ability of our property managers to successfully manage those properties.
If we are held liable under these laws, our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock may be materially adversely affected. 19 Table of Contents The income from certain of our properties is dependent on the ability of our property managers to successfully manage those properties.
As of December 31, 2023, the annualized base rent from our top three tenants represented approximately 19% of our portfolio-wide annualized base rent, including our LifePoint Health facilities, which comprised approximately 7% of our annualized base rent; our Encompass facilities, which comprised approximately 7% of our annualized base rent; and our Memorial Health facilities, which comprised approximately 5% of our annualized base rent.
As of December 31, 2024, the annualized base rent from our top three tenants represented approximately 19% of our portfolio-wide annualized base rent, including our LifePoint Health facilities, which comprised approximately 7% of our annualized base rent; our Encompass facilities, which comprised approximately 7% of our annualized base rent; and our Memorial Health facilities, which comprised approximately 5% of our annualized base rent.
These actions could materially adversely affect our 29 Table of Contents business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock. Certain taxes may limit our ability to dispose of our healthcare facilities. A REIT’s net income from prohibited transactions is subject to a 100% tax.
These actions could materially adversely affect our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock. Certain taxes may limit our ability to dispose of our healthcare facilities. A REIT’s net income from prohibited transactions is subject to a 100% tax.
These changes, in some cases, could apply retroactively. The enactment, timing, or effect of legislative or regulatory changes cannot be predicted. Violations of healthcare laws may result in criminal and/or civil penalties that range from punitive sanctions, damage assessments, penalties, imprisonment, denial of Medicare and Medicaid payments and/or exclusion from the Medicare and Medicaid programs.
These changes, in some cases, could apply retroactively. The enactment, timing, or effect of legislative or regulatory changes cannot be predicted. Violations of healthcare laws may result in criminal and/or civil penalties that range from punitive sanctions, damage assessments, penalties, imprisonment, denial of Medicare and Medicaid payments and/or exclusion from the Medicare and Medicaid 23 Table of Contents programs.
If any of our tenants were unable to pay their rent to us, our revenues and operating cash flows could be materially 13 Table of Contents adversely affected, which in turn could affect our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock.
If any of our tenants were unable to pay their rent to us, our revenues and operating cash flows could be materially adversely affected, which in turn could affect our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock.
Provisions in the partnership agreement of our Operating Partnership may delay, or make more difficult, unsolicited acquisitions of us or changes of our control. These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control, although some stockholders might consider such proposals, if made, desirable.
Provisions in the partnership agreement of our Operating Partnership may delay, or make more difficult, unsolicited acquisitions of us or changes of our control. These provisions could discourage third parties from making proposals involving an 29 Table of Contents unsolicited acquisition of us or change of our control, although some stockholders might consider such proposals, if made, desirable.
Specifically, the Code imposes a disallowance of deductions for business interest expense (even if paid to third parties) in excess of the sum of a taxpayer’s business 28 Table of Contents interest income and 30% of the adjusted taxable income of the business, which is its taxable income computed without regard to business interest income or expense, net operating losses or the pass-through income deduction.
Specifically, the Code imposes a disallowance of deductions for business interest expense (even if paid to third parties) in excess of the sum of a taxpayer’s business interest income and 30% of the adjusted taxable income of the business, which is its taxable income computed without regard to business interest income or expense, net operating losses or the pass-through income deduction.
Because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud, effective internal control over financial 24 Table of Contents reporting may not prevent or detect misstatements and can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.
Because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud, effective internal control over financial reporting may not prevent or detect misstatements and can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.
As a result of all these factors, our failure to maintain our qualification as a REIT could impair our ability to expand our business and raise capital, and it could materially, adversely affect our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock.
As a result of all these factors, our failure to maintain our qualification as a REIT could impair our ability to expand our business and raise capital, 30 Table of Contents and it could materially, adversely affect our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock.
Our tenant mix could become even more concentrated if a significant portion of our tenants’ practice in a particular medical field or are reliant upon a particular healthcare delivery system.
Our tenant mix could become even more concentrated if a significant portion of our tenants practice in a particular medical field or are reliant upon a particular healthcare delivery system.
We cannot assure you that our distribution policy will not change in the future or that the Board will continue to declare dividends at the same rate as in 2023.
We cannot assure you that our distribution policy will not change in the future or that the Board will continue to declare dividends at the same rate as in 2024.
The Board, without stockholder approval, has the power under our charter to amend our charter to increase or decrease the aggregate number of shares or the number of shares of any class or series that we are authorized to issue, to authorize us to issue authorized but unissued shares of our common stock or preferred stock.
The Board, without stockholder approval, has the power under our charter to amend our charter to increase or decrease the aggregate number of shares or the number of shares of any class or series that we are authorized to issue, to authorize us to issue 28 Table of Contents authorized but unissued shares of our common stock or preferred stock.
Holders of shares of our common stock will generally not have any voting rights with respect to activities of our Operating Partnership, including issuances of additional OP Units in amounts that do not exceed 20% of our outstanding shares of common stock. As of December 31, 2023, we owned 92.91% of the outstanding OP Units.
Holders of shares of our common stock will generally not have any voting rights with respect to activities of our Operating Partnership, including issuances of additional OP Units in amounts that do not exceed 20% of our outstanding shares of common stock. As of December 31, 2024, we owned 92.6% of the outstanding OP Units.
In some cases, private insurers rely on all or portions of the Medicare payment systems to determine 21 Table of Contents payment rates, which may result in decreased reimbursement from private insurers.
In some cases, private insurers rely on all or portions of the Medicare payment systems to determine payment rates, which may result in decreased reimbursement from private insurers.
There can be no assurance, however, that we will be able to comply with the 20% limitation or to avoid application of the 100% excise 30 Table of Contents taxes.
There can be no assurance, however, that we will be able to comply with the 20% limitation or to avoid application of the 100% excise taxes.
Accordingly, we and our tenants may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and it is therefore impossible to entirely mitigate the risk. 18 Table of Contents A security breach or other significant disruption involving our or our tenants’ IT networks and related systems could: ● Disrupt the proper functioning of our or our tenants’ networks and systems and therefore our operations and/or those of our tenants; ● Result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive, or otherwise valuable information about us, our tenants or our tenants’ patients, which others could use to compete against us or our tenants or which could expose us or our tenants to regulatory action or damage claims by third-parties; ● Result in misstated financial reports, violations of loan covenants, missed reporting deadlines, and/or missed permitting deadlines; ● Result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT; ● Jeopardize the building systems relied upon by our tenants for the efficient use of their leased space; ● Require significant management attention and resources to remedy any damages that result; ● Subject us or our tenants to claims for breach of contract, damages, credits, penalties, or termination of leases or other agreements; or ● Damage our and our tenants’ reputations.
A security breach or other significant disruption involving our or our tenants’ IT networks and related systems could: ● Disrupt the proper functioning of our or our tenants’ networks and systems and therefore our operations and/or those of our tenants; ● Result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive, or otherwise valuable information about us, our tenants or our tenants’ patients, which others could use to compete against us or our tenants or which could expose us or our tenants to regulatory action or damage claims by third-parties; ● Result in misstated financial reports, violations of loan covenants, missed reporting deadlines, and/or missed permitting deadlines; ● Result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT; ● Jeopardize the building systems relied upon by our tenants for the efficient use of their leased space; ● Require significant management attention and resources to remedy any damages that result; ● Subject us or our tenants to claims for breach of contract, damages, credits, penalties, or termination of leases or other agreements; or 20 Table of Contents ● Damage our and our tenants’ reputations.
The ability of the Board to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders. Our charter provides that the Board may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT.
Our charter provides that the Board may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT.
If we are unable to obtain needed capital on satisfactory terms or at all, we may not be able to make the investments needed to expand our business or to meet our obligations and commitments as they mature, which, in turn, could materially adversely affect our business, financial conditions, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock. 20 Table of Contents Risks Related to the Healthcare Industry Adverse trends in the healthcare industry may negatively affect our tenants’ businesses.
If we are unable to obtain needed capital on satisfactory terms or at all, we may not be able to make the investments needed to expand our business or to meet our obligations and commitments as they mature, which, in turn, could materially adversely affect our 22 Table of Contents business, financial conditions, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock.
If a tenant is unable to obtain or maintain insurance coverage, if judgments are obtained or settlements reached in excess of the insurance coverage, if a tenant is required to pay uninsured punitive damages, or if a tenant is subject to an uninsurable government enforcement action or investigation, the tenant could be exposed to substantial additional liabilities, which may affect the tenant’s ability to pay rent, which in turn could have a material adverse effect on our business, financial condition and results of operations, our ability to pay distributions to our stockholders and the trading price of our common and preferred stock.
If a tenant is unable to obtain or maintain insurance coverage, if judgments are obtained or settlements reached in excess of the insurance coverage, if a tenant is required to pay uninsured punitive damages, or if a tenant is subject to an uninsurable government enforcement action or investigation, the tenant could be exposed to substantial additional liabilities, which may affect the tenant’s ability to pay rent, which in turn could have a material adverse effect on our business, financial condition and results of operations, our ability to pay distributions to our stockholders and the trading price of our common and preferred stock. 24 Table of Contents Risks Related to the Real Estate Industry Changes in the general real estate market conditions may adversely affect us.
Our revenues are generated by our leases, which are typically medium-to-long-term leases with fixed rental rates, subject to annual rent escalators. The unhedged portion of our Credit Facility debt is subject to SOFR, which has increased substantially since early 2022 and continued to rise in 2023.
Our revenues are generated by our leases, which are typically medium-to-long-term leases with fixed rental rates, subject to annual rent escalators. The unhedged portion of our Credit Facility debt is subject to SOFR, which has increased substantially since early 2022 and remained elevated during 2024.
As a result, the one-month term SOFR, which serves as the base rate for the Revolver, increased from just over 0% at the start of 2022 to 5.36% in December 2023.
As a result, the one-month term SOFR, which serves as the base rate for the Revolver, increased from just over 0% at the start of 2022 to 4.33% in December 2024.
Our healthcare buildings that are subject to ground leases could restrict our use of such healthcare facilities. We have seven buildings located on land that is subject to operating ground leases, representing approximately 4.3% of our December 2023 annualized base rent. These ground leases contain certain restrictions.
Our healthcare buildings that are subject to ground leases could restrict our use of such healthcare facilities. As of December 31, 2024, we had seven buildings located on land that is subject to operating ground leases, representing approximately 4.5% of our December 2024 annualized base rent. These ground leases contain certain restrictions.
The judgment regarding the existence of impairment indicators is based upon factors such as market conditions, lease re-negotiations, tenant performance and legal structure. For example, the termination of a lease by a major tenant may lead to an impairment charge.
We periodically evaluate our real estate investments and other assets for impairment indicators. The judgment regarding the existence of impairment indicators is based upon factors such as market conditions, lease re-negotiations, tenant performance and legal structure. For example, the termination of a lease by a major tenant may lead to an impairment charge.
If interest rates are higher when we refinance debt, our income could be reduced. We may be unable to refinance debt at appropriate times, which may require us to sell healthcare facilities on terms that are not advantageous to us or could result in the foreclosure of such healthcare facilities.
We may be unable to refinance debt at appropriate times, which may require us to sell healthcare facilities on terms that are not advantageous to us or could result in the foreclosure of such healthcare facilities.
Stockholders’ claims will consequently be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our Operating Partnership and its subsidiaries.
We also rely on distributions from our Operating Partnership to meet our obligations. Stockholders’ claims will consequently be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our Operating Partnership and its subsidiaries.
As of December 31, 2023, we had 13 interest rate swap agreements with a total notional amount of $500 million that fixed the SOFR component of the interest rate on the $350 million and $150 million term loan components under our Credit Facility (the “Term Loans”).
As of December 31, 2024, we had nine interest rate swap agreements with a total notional amount of $500 million that fixed the SOFR component of the interest rate on our Term Loan A and the $150 million term loan component under our Credit Facility (“Term Loan B,” and, together with Term Loan A, the “Term Loans”).
The more favorable rates applicable to regular corporate qualified dividends could cause investors who are taxed at individual rates to perceive investments in REITs to be relatively less attractive than investments in the stock of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common and preferred stock.
The more favorable rates applicable to regular corporate qualified dividends could cause investors who are taxed at individual rates to perceive investments in REITs to be relatively less attractive than investments in the stock of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common and preferred stock. 34 Table of Contents We may be subject to adverse legislative or regulatory tax changes.
Although the Board has no such intention at the present time, it could establish a class or series of preferred stock that could, depending on the terms of such series, delay, defer or prevent a transaction or a change of control that might involve a premium price for shares of our common stock or that our stockholders otherwise believe to be in their best interests. 26 Table of Contents We may change our business, investment, and financing strategies without stockholder approval.
Although the Board has no such intention at the present time, it could establish a class or series of preferred stock that could, depending on the terms of such series, delay, defer or prevent a transaction or a change of control that might involve a premium price for shares of our common stock or that our stockholders otherwise believe to be in their best interests.
If we were to experience uninsured losses or if any of our insurance carriers were unable to pay insurance claims, we may lose all or a portion of our investment in a property and the revenues associated with such property, which could materially adversely affect our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock. 17 Table of Contents We may incur environmental compliance costs and liabilities associated with owning, leasing, developing and operating our healthcare facilities.
If we were to experience uninsured losses or if any of our insurance carriers were unable to pay insurance claims, we may lose all or a portion of our investment in a property and the revenues associated with such property, which could materially adversely affect our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock.
As of December 31, 2023, leases representing 12.8%, 7.2% and 9.3% of our portfolio annualized base rent expire in 2024, 2025 and 2026, respectively. Most of our healthcare facilities are occupied by a single tenant.
As of December 31, 2024, leases representing 9%, 10% and 11% of our portfolio annualized base rent expire in 2025, 2026 and 2027, respectively. Most of our healthcare facilities are occupied by a single tenant.
We may be subject to adverse legislative or regulatory tax changes. At any time, the U.S. federal income tax laws or regulations governing REITs, or the administrative interpretations of those laws or regulations, may be amended.
At any time, the U.S. federal income tax laws or regulations governing REITs, or the administrative interpretations of those laws or regulations, may be amended.
Any inability to sell a healthcare facility could materially, adversely affect our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock. Our assets may become subject to impairment charges. We periodically evaluate our real estate investments and other assets for impairment indicators.
Any inability to sell a healthcare facility could materially, 25 Table of Contents adversely affect our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock. Our assets may become subject to impairment charges.
Although we would monitor ownership of our shares of common stock by any facility operators and their owners, there can be no assurance that these ownership levels will not be exceeded. 31 Table of Contents You may be restricted from acquiring or transferring certain amounts of our common stock.
The ownership attribution rules that apply for purposes of these 35% thresholds are complex. Although we would monitor ownership of our shares of common stock by any facility operators and their owners, there can be no assurance that these ownership levels will not be exceeded. You may be restricted from acquiring or transferring certain amounts of our common stock.
The rapid increase in inflation during 2022, which remained elevated during 2023, led to a rapid increase in market interest rates, which materially increased the interest rate on our floating rate debt. In addition to interest rate risk, we are subject to additional risks associated with our Credit Facility generally, including covenant restrictions.
Since 2022, market interest rates have increased, which materially increased the interest rate on our floating rate debt. In addition to interest rate risk, we are subject to additional risks associated with our Credit Facility generally, including covenant restrictions.
Any reduction in rental revenues resulting from the inability of our tenants or their associated healthcare delivery systems to compete or due to a reduced need for healthcare facilities generally may have a material adverse effect on our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock.
Any reduction in rental revenues resulting from the inability of our tenants or their associated healthcare delivery systems to compete or due to a reduced need for healthcare facilities generally may have a material adverse effect on our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock. 18 Table of Contents We may incur uninsured losses or losses in excess of our insurance coverage, which may result in us having to absorb all or a portion of such loss.
If we make a taxable dividend payable in cash and our common stock and a significant number of our stockholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock.
If we make a taxable dividend payable in cash and our common stock and a significant number of our stockholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock. 32 Table of Contents The ability of the Board to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.
Any material changes in the current payment programs or regulatory, economic, environmental or competitive conditions in these states could have an amplified effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock than if our properties were more geographically diverse.
Any material changes in the current payment programs or regulatory, economic, environmental or competitive conditions in these states could have an amplified effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock than if our properties were more geographically diverse. 16 Table of Contents We may be unable to successfully enter into definitive purchase or sale agreements for, or close the acquisition or sale of, the properties in our investment pipeline or our portfolio.
We have obtained title insurance policies for each of our properties, typically in an amount equal to its original price. However, these policies may be for amounts less than the current or future values of our properties.
In such an event, we cannot be certain that we would be able to replace the coverage at similar or otherwise favorable terms. We have obtained title insurance policies for each of our properties, typically in an amount equal to its original price. However, these policies may be for amounts less than the current or future values of our properties.
If we determine that an impairment has occurred, we would be required to make an adjustment to the net carrying value of the asset which could have a material adverse effect on our business, financial condition, results of operations and the trading price of our common and preferred stock. 23 Table of Contents Risks Related to Our Structure We have no direct operations and rely on funds received from our Operating Partnership and its subsidiaries to meet our obligations.
If we determine that an impairment has occurred, we would be required to make an adjustment to the net carrying value of the asset which could have a material adverse effect on our business, financial condition, results of operations and the trading price of our common and preferred stock.
Any attempt to own or transfer shares of our beneficial interest in violation of these restrictions may result in the shares being automatically transferred to a charitable trust or may be void. 25 Table of Contents Certain provisions of Maryland law could inhibit changes of control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for shares of our common stock or that our stockholders otherwise believe to be in their best interests.
Certain provisions of Maryland law could inhibit changes of control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for shares of our common stock or that our stockholders otherwise believe to be in their best interests.
Further, if any of our insurance carriers were to become insolvent, we would be forced to replace the existing coverage with another suitable carrier, and any outstanding claims would be at risk for collection. In such an event, we cannot be certain that we would be able to replace the coverage at similar or otherwise favorable terms.
In such an event, we might remain obligated for any mortgage debt or other financial obligation related to the property. Further, if any of our insurance carriers were to become insolvent, we would be forced to replace the existing coverage with another suitable carrier, and any outstanding claims would be at risk for collection.
For us to qualify as a REIT, no more than 50% of the value of our outstanding shares of stock may be owned, beneficially or constructively, by five or fewer individuals at any time during the last half of each taxable year other than our initial REIT taxable year.
For us to qualify as a REIT, no more than 50% of the value of our outstanding shares of stock may be owned, beneficially or constructively, by five or fewer individuals at any time during the last half of each taxable year other than our initial REIT taxable year. 27 Table of Contents Subject to certain exceptions, our charter prohibits any stockholder from owning actually or constructively more than 9.8% in value or number of shares, whichever is more restrictive, of any class or series of our outstanding shares.
Risks Related to the Real Estate Industry Changes in the general real estate market conditions may adversely affect us. Real estate investments are subject to various risks and fluctuations and cycles in value and demand, many of which are beyond our control.
Real estate investments are subject to various risks and fluctuations and cycles in value and demand, many of which are beyond our control.
If a TRS lessee failed to qualify as a TRS or the facility operators engaged by a TRS lessee did not qualify as “eligible independent contractors,” we would fail to qualify as a REIT and would be subject to higher taxes and have less cash available for distribution to our stockholders.
If a TRS lessee failed to qualify as a TRS or the facility operators engaged by a TRS lessee did not qualify as “eligible independent contractors,” we would fail to qualify as a REIT and would be subject to higher taxes and have less cash available for distribution to our stockholders. 33 Table of Contents Rent paid by a lessee that is a “related party tenant” of ours will not be qualifying income for purposes of the two gross income tests applicable to REITs.
The healthcare industry is currently experiencing, among other things: ● Changes in the demand for and methods of delivering healthcare services; ● Competition among healthcare providers; ● Consolidation of large health insurers; ● Regulatory and government reimbursement uncertainty resulting from the Affordable Care Act and other healthcare reform laws; ● Federal court decisions on cases challenging the legality of the Affordable Care Act; ● Federal and state government plans to reduce budget deficits and address debt ceiling limits by lowering healthcare provider Medicare and Medicaid payment rates; ● Changes in third-party reimbursement methods and policies; and ● Increased scrutiny of billing, referral and other practices by U.S. federal and state authorities.
The healthcare industry is currently experiencing, among other things: ● Changes in the demand for and methods of delivering healthcare services, particularly as telemedicine and telehealth continue to gain popularity, as well as continued innovation and integration of technological advancements and artificial intelligence; ● Increased attention to compliance with regulations designed to safeguard protected health information and cyber-attacks on entities; ● Consolidation and pressure to integrate within the healthcare industry through acquisitions and joint ventures; ● Competition among healthcare providers; ● Consolidation of large health insurers; ● Regulatory and government reimbursement uncertainty resulting from the Affordable Care Act and other healthcare reform laws; ● Federal court decisions on cases challenging the legality of the Affordable Care Act; ● Federal and state government plans to reduce budget deficits and address debt ceiling limits by lowering healthcare provider Medicare and Medicaid payment rates; ● Changes in third-party reimbursement methods and policies; ● Staffing shortages (particularly nursing staff) and increases in wages as well as inflation in the cost of supplies; and ● Increased scrutiny of billing, referral and other practices by U.S. federal and state authorities.
These restrictions could limit our ability to sell healthcare facilities at a time, or on terms, that would be favorable absent such restrictions which, in turn, could materially, adversely affect our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock.
These restrictions could limit our ability to sell healthcare facilities at a time, or on terms, that would be favorable absent such restrictions which, in turn, could materially, adversely affect our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock. 26 Table of Contents Our Operating Partnership may issue additional OP Units to third parties without the consent of our stockholders, which would reduce our ownership percentage in our Operating Partnership and could have a dilutive effect on the amount of distributions made to us by our Operating Partnership and, therefore, the amount of distributions we can make to our stockholders.
Failure to close acquisitions or dispositions under contract could make it more difficult to grow or manage our portfolio, which could materially adversely affect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock. 16 Table of Contents We may obtain only limited warranties when we purchase a property, which, in turn, would only provide us with limited recourse against the seller if issues arise after our purchase of a property.
Failure to close acquisitions or dispositions under contract could make it more difficult to grow or manage our portfolio, which could materially adversely affect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock.
Therefore, any such default could have a material adverse impact on our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock. 19 Table of Contents Our interest rate hedges may not be successful in mitigating our interest rate risks.
Therefore, any such default could have a material adverse impact on our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common and preferred stock. Interest rate swaps related to our $350 million term loan (“Term Loan A”) are set to expire in April 2026.
If we lose our REIT status, our business, financial condition, results of operations, ability to make distributions to our stockholders and the trading price of our common and preferred stock could be materially adversely affected. Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.
If we lose our REIT status, our business, financial condition, results of operations, ability to make distributions to our stockholders and the trading price of our common and preferred stock could be materially adversely affected. Our qualification as a REIT could be jeopardized as a result of our interests in joint ventures.
We conduct substantially all of our operations through our Operating Partnership. As of December 31, 2023, we owned 92.91% of the outstanding OP Units. Apart from this ownership interest in our Operating Partnership, we do not have any independent operations.
As of December 31, 2024, we owned 92.6% of the outstanding OP Units. Apart from this ownership interest in our Operating Partnership, we do not have any independent operations. As a result, we rely on distributions from our Operating Partnership to pay any dividends that we might declare on our common and preferred stock.
Rent paid by a lessee that is a “related party tenant” of ours will not be qualifying income for purposes of the two gross income tests applicable to REITs. We may, in the future, lease certain of our healthcare facilities that qualify as “qualified health care properties” to a TRS lessee.
We may, in the future, lease certain of our healthcare facilities that qualify as “qualified health care properties” to a TRS lessee.
As of December 31, 2023, we had $611.2 million of indebtedness outstanding (net of unamortized debt issuance costs). We may also place indebtedness on our healthcare facilities in the future. We run the risk of being unable to refinance such debt (including our Credit Facility debt) when the loans come due or of being unable to refinance on favorable terms.
As of December 31, 2024, we had $646.1 million of indebtedness outstanding (net of unamortized debt issuance costs). We may also place indebtedness on our healthcare facilities in the future.
The rapid increase in inflation during 2022, which remained elevated during 2023, led to a rapid increase in market interest rates, which materially increased the interest rate on our floating rate debt.
Since 2022, market interest rates have increased, which materially increased the interest rate on our floating rate debt.
If these labor shortages are not rectified at reasonable cost, healthcare practices, including our tenants, may continue to experience staffing shortages or increased labor and recruitment costs, which could negatively impact their businesses and their ability to pay rents to us.
If these labor costs remain elevated, healthcare practices, including our tenants, may continue to experience increased labor costs, which could negatively impact their businesses and their ability to pay rents to us. Additionally, the volatility of COVID-19, its variants and its subvariants are unpredictable and there are no assurances that new variants and subvariants will not emerge in the future.
Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of our investment in a property, as well as the anticipated future revenue from the property. In such an event, we might remain obligated for any mortgage debt or other financial obligation related to the property.
Accordingly, we may not have enough insurance coverage against certain types of losses and may experience decreases in the insurance coverage available. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of our investment in a property, as well as the anticipated future revenue from the property.
As of December 31, 2023, approximately 19%, 11%, 9%, 7%, 6%, and 6% of our total annualized base rent was derived from properties located in Texas, Florida, Ohio, Pennsylvania, Arizona, and Illinois , respectively. As a result of this geographic concentration, we are particularly exposed to downturns in these states’ economies or other changes in local real estate market conditions.
As a result of this geographic concentration, we are particularly exposed to downturns in these states’ economies or other changes in local real estate market conditions.
Any or all the foregoing could have a material adverse effect on our business, financial condition and results of operations, our ability to pay distributions to our stockholders and the trading price of our common and preferred stock. Risks Related to our Financings We finance a portion of our portfolio with unhedged floating-rate debt from our Credit Facility.
Any of the foregoing risks could materially adversely affect our business, financial condition, results of operations, our ability to pay distributions to our stockholders and the trading price of our common and preferred stock.
As of December 31, 2023, the balance of the revolver component of our Credit Facility (the “Revolver”) was $92.4 million, which represented approximately 15% of our total outstanding indebtedness at December 31, 2023.
As of December 31, 2024, the balance of the revolver component of our Credit Facility (the “Revolver”) was $136.6 million, which represented approximately 21% of our total outstanding indebtedness at December 31, 2024. Since 2022, market interest rates have increased in response to increased rates of inflation during that time period.
Furthermore, dealing with a tenant bankruptcy or other default may divert management’s attention and cause us to incur substantial legal and other costs. The physical effects of climate change could have a material adverse effect on our properties. ​ The physical effects of climate change could have a material adverse effect on our facilities, operations, and business.
Furthermore, dealing with a tenant bankruptcy or other default may divert management’s attention and cause us to incur substantial legal and other costs. On May 6, 2024, our tenant, Steward Health Care (“Steward”), filed for Chapter 11 bankruptcy reorganization.
However, some types of losses may be uninsurable or too expensive to insure against, such as losses due to windstorms, terrorist acts, earthquakes, and toxic mold, among others. Accordingly, we may not have enough insurance coverage against certain types of losses and may experience decreases in the insurance coverage available.
Our tenants are generally required (either directly or through a reimbursement arrangement with us) to maintain comprehensive property and casualty insurance covering our properties. However, some types of losses may be uninsurable or too expensive to insure against, such as losses due to windstorms, terrorist acts, earthquakes, and toxic mold, among others.
COVID-19 has affected the healthcare industry in many ways. Many stories exist about U.S. healthcare workers, especially nurses, experiencing burnout due to the length and severity of the pandemic, and this has caused many nurses and other medical professionals to switch jobs within the medical profession or quit the profession altogether.
The COVID-19 epidemic caused a dramatic increase in healthcare wage inflation, as the supply of U.S. healthcare workers, especially nurses, decreased due to, among other reasons, nurses experiencing burnout due to the length and severity of the pandemic.
Additionally, the volatility of COVID-19, its variants and its subvariants are unpredictable and there are no assurances that new variants and subvariants will not emerge in the future. Other viruses or pandemics could also cause similar effects in the future.
Other viruses or pandemics could also cause similar effects in the future.
Our tenants’ businesses have in the past and could again in the future be materially and adversely affected by the effects of the COVID-19 virus, including labor shortages that have resulted from nurses and other medical personnel switching jobs within the medical profession or quitting the medical profession altogether, and other viruses or pandemics could cause similar effects in the future.
Healthcare wage inflation increased dramatically due to the COVID-19 virus and remained elevated throughout 2024, which has in the past and could continue to materially and adversely affect certain of our tenants’ businesses. Other viruses or pandemics could cause similar effects to healthcare wage inflation in the future.
Removed
This phenomenon has led to material increases in labor costs for healthcare systems, especially hospital systems, as employers have had to rely on contract nursing labor to sustain their businesses.
Added
Other viruses or pandemics could cause similar effects to healthcare wage inflation in the future. ● We have significant geographic concentration in a small number of states, including Texas, Florida, Ohio, Pennsylvania, Illinois, Arizona, and Michigan.
Removed
We may be unable to successfully enter into definitive purchase or sale agreements for, or close the acquisition or sale of, the properties in our investment pipeline or our portfolio.
Added
Healthcare wage inflation has yet to return to pre-pandemic levels and these wage increases have materially and adversely affected the businesses of many healthcare operators, especially hospital systems, which rely heavily on nurses.
Removed
We may incur uninsured losses or losses in excess of our insurance coverage, which may result in us having to absorb all or a portion of such loss. Our tenants are generally required (either directly or through a reimbursement arrangement with us) to maintain comprehensive property and casualty insurance covering our properties.
Added
In connection with the Steward bankruptcy, Steward rejected its largest lease with us at our healthcare facility in Beaumont, Texas (the “Beaumont Facility”).
Removed
The rapid increase in inflation during 2022, which remained elevated during 2023, has led to a dramatic increase in market interest rates as the Fed has implemented a series of interest rate increases to curb the inflation rate.
Added
As of December 31, 2024, the Steward bankruptcy was still ongoing and Steward owed us $0.8 million in rent and $1.6 million in other amounts due in connection with the lease at the Beaumont Facility, which lease was rejected by Steward in connection with the bankruptcy.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeSenior Management will then report such threats and incidents to the Audit Committee, when appropriate. ​ Risk Management and Strategy ​ The Company’s cybersecurity program is focused on the following key areas: ​ ● Governance : As discussed in more detail under “Item 1C.
Biggest changeSenior Management will then report such threats and incidents to the Audit Committee, when appropriate. ​ The members of Senior Management each hold degrees in their respective fields and combined have approximately 30 years or more of experience managing risks at the Company and at similar companies, including risks arising from cybersecurity threats. ​ Risk Management and Strategy ​ The Company’s cybersecurity program is focused on the following key areas: ​ ● Governance : As discussed in more detail under “Item 1C.
Cybersecurity—Governance,” the Board’s oversight of cybersecurity risk management is supported by the Audit Committee of the Board (the “Audit Committee”), which regularly interacts with the Company’s management team. ​ ● Collaborative Approach : The Company has implemented a comprehensive, cross-functional approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner. ​ ● Technical Safeguards : The Company deploys technical safeguards that are designed to protect information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence. ​ ● Incident Response and Recovery Planning : The Company has established and maintains comprehensive incident response and recovery plans that fully address the response to a cybersecurity incident, and such plans are tested and evaluated on a regular basis. ​ ● Third-Party Risk Management : The Company maintains a comprehensive, risk-based approach to identifying and overseeing cybersecurity risks presented by third parties, including vendors, service providers and other external users of the Company’s systems, as well as the systems of third parties that could adversely impact the Company’s business in the event of a cybersecurity incident affecting those third-party systems. ​ ● Education and Awareness : The Company provides regular, mandatory training for personnel regarding cybersecurity threats as a means to equip personnel with effective tools to address cybersecurity threats, and to communicate evolving information security policies, standards, processes and practices.
Cybersecurity—Governance,” the Board’s oversight of cybersecurity risk management is supported by the Audit Committee of the Board (the “Audit Committee”), which regularly interacts with the Company’s management team. ​ ● Collaborative Approach : The Company has implemented a comprehensive, cross-functional approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner. ​ ● Technical Safeguards : The Company deploys technical safeguards that are designed to protect information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence. ​ ● Incident Response and Recovery Planning : The Company has established and maintains comprehensive incident response and recovery plans that address the response to a cybersecurity incident, and such plans are tested and evaluated on a regular basis. ​ ● Third-Party Risk Management : The Company maintains a comprehensive, risk-based approach to identifying and overseeing cybersecurity risks presented by third parties, including vendors, service providers and other external users of the Company’s systems, as well as the systems of third parties that could adversely impact the Company’s business in the event of a cybersecurity incident affecting those third-party systems. ​ ● Education and Awareness : The Company provides regular, mandatory training for personnel regarding cybersecurity threats as a means to equip personnel with effective tools to address cybersecurity threats, and to communicate evolving information security policies, standards, processes and practices.
The Cybersecurity Policies set forth the Company’s policies and procedures for cybersecurity event prevention, including the Company’s (i) network and computer systems acceptable use policy, (ii) data backup procedures, (iii) business continuity plan, (iii) data retention policy, (iv) disaster recovery plan, (v) email use and security policy, (vi) network change management procedures, and (vii) password and authentication requirements policy.
The Cybersecurity Policies set forth the Company’s policies and procedures for cybersecurity event prevention, including the Company’s (i) network and computer systems acceptable use policy, (ii) data backup procedures, (iii) business continuity plan, (iv) data retention policy, (v) disaster recovery plan, (vi) email use and security policy, (vii) network change management procedures, and (viii) password and authentication requirements policy.
We face certain ongoing risks from cybersecurity risks that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
We face certain ongoing cybersecurity risks that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
The Cybersecurity Policies also (i) provide indicators that Company employees should be aware of to recognize a cybersecurity event, (ii) outline the roles and responsibilities for Company employees and other third parties with respect to the Company’s cybersecurity incident response team (“CSIR Team”), (iii) set forth the steps to take in response to a cybersecurity incident, including reporting the incident, investigating the incident, preserving non-affected systems and data, informing, as appropriate, Senior Management (as defined below), insurance carriers, law enforcement and other parties that may be affected by the incident and (iv) maintaining business continuity. ​ The Company’s President and Chief Executive Officer, Chief Financial Officer and Treasurer, Chief Operating Officer and General Counsel and Secretary (“Senior Management”) are responsible for assessing and managing cybersecurity risks with the support of the entire CSIR Team, led by the Director of Operations/Risk Management.
The Cybersecurity Policies also (i) provide indicators that Company employees should be aware of to recognize a cybersecurity event, (ii) outline the roles and responsibilities for Company employees and other third parties with respect to the Company’s cybersecurity incident response team (“CSIR Team”), (iii) set forth the steps to take in response to a cybersecurity incident, including 36 Table of Contents reporting the incident, investigating the incident, preserving non-affected systems and data, informing, as appropriate, Senior Management (as defined below), insurance carriers, law enforcement and other parties that may be affected by the incident and (iv) include the processes for maintaining business continuity. ​ The Company’s President and Chief Executive Officer, Chief Financial Officer and Treasurer, Chief Operating Officer and General Counsel and Secretary (“Senior Management”) are responsible for assessing and managing cybersecurity risks with the support of the entire CSIR Team, led by the Director of Operations/Risk Management.
The results of such assessments and reviews are reported to the Audit Committee and the Board, and the Company adjusts its cybersecurity policies, standards, processes and practices as necessary based on the information provided by these assessments and reviews. ​ 34 Table of Contents Governance ​ The Board, in coordination with the Audit Committee, oversees the Company’s cybersecurity risk management process.
The results of such assessments and reviews are reported to the Audit Committee and the Board, and the Company adjusts its cybersecurity policies, standards, processes and practices as necessary based on the information provided by these assessments and reviews. ​ Governance ​ The Board, in coordination with the Audit Committee, oversees the Company’s cybersecurity risk management process.
The Company regularly engages third parties to perform assessments on its cybersecurity measures, including information security maturity assessments and independent reviews of the Company’s information security control environment and operating effectiveness.
The Company regularly engages third parties to perform assessments on its cybersecurity measures, including information security materiality assessments and independent reviews of the Company’s information security control environment and operating effectiveness.
The Director of Operations/Risk Management is the 33 Table of Contents primary lead for monitoring the prevention, detection, mitigation and remediation of cybersecurity threats and incidents and ensuring that the Cybersecurity Policies are followed.
The Director of Operations/Risk Management is the primary lead for monitoring the prevention, detection, mitigation and remediation of cybersecurity threats and incidents and ensuring that the Cybersecurity Policies are followed.
The Company engages in the periodic assessment and testing of its policies, standards, processes and practices that are designed to address cybersecurity threats and incidents. These efforts include a wide range of activities, including audits, assessments, tabletop exercises, threat modeling, vulnerability testing and other exercises focused on evaluating the effectiveness of the Company’s cybersecurity measures and planning.
These efforts include a wide range of activities, including audits, assessments, tabletop exercises, threat modeling, vulnerability testing and other exercises focused on evaluating the effectiveness of the Company’s 37 Table of Contents cybersecurity measures and planning.
Added
The Company engages in the periodic assessment and testing of its policies, standards, processes and practices that are designed to address cybersecurity threats and incidents.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe declaration and payment of quarterly dividends remains subject to the review and approval of the Board, see “Risk Factors — Subject to certain requirements under Maryland law and REIT requirements, the Board has sole discretion to determine if we will pay distributions and the amount and frequency of such distributions, and past distribution amounts may not be indicative of future distribution amounts . ” Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under Section 18, and shall not be deemed to be incorporated by reference into any filing of Global Medical REIT Inc. under the Securities Act or the Exchange Act. 35 Table of Contents The graph below compares the cumulative total return of our common stock, the S&P 500 Index, and the MSCI U.S.
Biggest changeThe declaration and payment of quarterly dividends remains subject to the review and approval of the Board, see “Risk Factors — Subject to certain requirements under Maryland law and REIT requirements, the Board has sole discretion to determine if we will pay distributions and the amount and frequency of such distributions, and past distribution amounts may not be indicative of future distribution amounts . ” 38 Table of Contents Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under Section 18, and shall not be deemed to be incorporated by reference into any filing of Global Medical REIT Inc. under the Securities Act or the Exchange Act.
REIT Index consists of equity REITs that are included in the MSCI US Investable Market 2500 Index, except for specialty equity REITS that do not generate a majority of their revenue and income from real estate rental and leasing operations. We have included the MSCI U.S.
The MSCI U.S. REIT Index consists of equity REITs that are included in the MSCI US Investable Market 2500 Index, except for specialty equity REITS that do not generate a majority of their revenue and income from real estate rental and leasing operations. We have included the MSCI U.S.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is quoted on the New York Stock Exchange under the ticker symbol “GMRE.” The Company declared and paid a dividend of $0.21 per share of common stock with respect to each quarter within the fiscal years ended December 31, 2023 and 2022.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is quoted on the New York Stock Exchange under the ticker symbol “GMRE.” The Company declared and paid a dividend of $0.21 per share of common stock with respect to each quarter within the fiscal years ended December 31, 2024 and 2023.
Unregistered Sales of Equity Securities None. ​ Issuer Purchases of Equity Securities None. ​ 36 Table of Contents ITEM 6. [Reserved] ​
Unregistered Sales of Equity Securities None. ​ 39 Table of Contents Issuer Purchases of Equity Securities None. ​ ITEM 6. [Reserved] ​
A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions. As of December 31, 2023 and 2022, there were 65,564,943 and 65,518,306 outstanding shares of common stock, respectively.
A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions. As of December 31, 2024 and 2023, there were 66,871,228 and 65,564,943 outstanding shares of common stock, respectively.
REIT Index from December 31, 2018 through December 31, 2023. The comparison assumes $100 was invested on December 31, 2018 in our common stock and in each of the foregoing indices and assumes reinvestment of dividends, as applicable. The MSCI U.S.
The graph below compares the cumulative total return of our common stock, the S&P 500 Index, and the MSCI U.S. REIT Index from December 31, 2019 through December 31, 2024. The comparison assumes $100 was invested on December 31, 2019 in our common stock and in each of the foregoing indices and assumes reinvestment of dividends, as applicable.
REIT Index because we believe that it is representative of the industry in which we compete and is relevant to an assessment of our performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Global Medical REIT Inc. ​ $ 100.00 ​ $ 159.98 ​ $ 169.20 ​ $ 242.82 ​ $ 139.91 ​ $ 178.95 S&P 500 Index ​ $ 100.00 ​ $ 131.49 ​ $ 155.68 ​ $ 200.37 ​ $ 164.08 ​ $ 207.21 MSCI U.S.
REIT Index because we believe that it is representative of the industry in which we compete and is relevant to an assessment of our performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Global Medical REIT Inc. ​ $ 100.00 ​ $ 105.76 ​ $ 151.78 ​ $ 87.45 ​ $ 111.86 ​ $ 85.50 S&P 500 Index ​ $ 100.00 ​ $ 118.40 ​ $ 152.39 ​ $ 124.79 ​ $ 157.59 ​ $ 197.02 MSCI U.S.
REIT Index ​ $ 100.00 ​ $ 125.84 ​ $ 116.31 ​ $ 166.39 ​ $ 125.61 ​ $ 142.87 ​ As of February 26, 2024, there were 32 record holders, and 65,574,549 shares of common stock issued and outstanding.
REIT Index ​ $ 100.00 ​ $ 92.43 ​ $ 132.23 ​ $ 99.82 ​ $ 113.54 ​ $ 123.47 ​ As of February 26, 2025, there were 32 record holders, and 66,871,228 shares of common stock issued and outstanding.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

51 edited+36 added−22 removed41 unchanged
Biggest changeThe decrease in our cash and cash equivalents and restricted cash balances to $6.7 million as of December 31, 2023, compared to $14.5 million as of December 31, 2022, was primarily due to net repayments on our Credit Facility primarily using funds from our property dispositions, funds used to pay dividends to our common and preferred stockholders and holders of OP Units and LTIP Units, a payment for the defeasance of a CMBS loan, and funds used for capital expenditures on existing real estate investments, partially offset by net proceeds received from the sale of investment properties and net cash provided by operating activities. ​ The decrease in our total liabilities to $662.0 million as of December 31, 2023 compared to $744.2 million as of December 31, 2022, was primarily the result of lower net borrowings outstanding.
Biggest changeThe increase in our cash and cash equivalents and restricted cash balances to $8.9 million as of December 31, 2024, compared to $6.7 million as of December 31, 2023, was primarily due to net cash provided by operating activities, net proceeds received from the sale of investment properties, net borrowings on our Credit Facility, and net proceeds received from ATM equity issuances, partially offset by funds used to acquire investment properties, the payment of dividends to our common and preferred stockholders and holders of OP Units and LTIP Units, funds used for capital expenditures on existing real estate investments and leasing commissions, the repayment of notes payable, and funds we invested in an unconsolidated joint venture. ​ The increase in our total liabilities to $700.6 million as of December 31, 2024 compared to $662.0 million as of December 31, 2023, was primarily the result of higher net borrowings outstanding on our Credit Facility, partially offset by a lower notes payable balance outstanding. 48 Table of Contents Liquidity and Capital Resources General Our short-term (up to 12 months) liquidity requirements include: ● Interest expense and scheduled principal payments on outstanding indebtedness; ● General and administrative expenses; ● Property operating expenses; ● Property acquisitions; ● Distributions on our common and preferred stock and OP Units and LTIP Units; and ● Capital and tenant improvements and leasing costs.
In accordance with the National Association of Real Estate Investment Trusts’ (“NAREIT”) definition, FFO means net income or loss computed in accordance with GAAP before noncontrolling interests of holders of OP Units and LTIP Units, excluding gains (or losses) from sales of property and extraordinary items, less preferred stock dividends, plus real estate-related depreciation and amortization (excluding amortization of debt issuance costs and the amortization of above and below market leases), and after adjustments for unconsolidated partnerships and joint ventures.
In accordance with the National Association of Real Estate Investment Trusts’ (“NAREIT”) definition, FFO means net income or loss computed in accordance with GAAP before noncontrolling interests of holders of OP Units and LTIP Units, excluding gains (or losses) from sales of property and extraordinary items, property impairment losses, less preferred stock dividends, plus real estate-related depreciation and amortization (excluding amortization of debt issuance costs and the amortization of above and below market leases), and after adjustments for unconsolidated partnerships and joint ventures.
(the “Company,” “us,” “we,” or “our”) is a Maryland corporation and internally managed REIT that owns and acquires healthcare facilities and leases those facilities to physician groups and regional and national healthcare systems. We hold our facilities and conduct our operations through a Delaware limited partnership subsidiary, Global Medical REIT L.P. (the “Operating Partnership”).
(the “Company,” “us,” “we,” or “our”) is a Maryland corporation and internally managed REIT that acquires healthcare facilities and leases those facilities to physician groups and regional and national healthcare systems. We hold our facilities and conduct our operations through a Delaware limited partnership subsidiary, Global Medical REIT L.P. (the “Operating Partnership”).
We use considerable judgement in our estimates of cash flow projections, discount, capitalization and interest rates, fair market lease rates, carrying costs during hypothetical expected lease-up periods, and costs to execute similar leases. ​ While our methodology for purchase price allocations did not change during the year ended December 31, 2023, the real estate market is fluid and our assumptions are based on information currently available in the market at the time of acquisition.
We use considerable judgement in our estimates of cash flow projections, discount, capitalization and interest rates, fair market lease rates, carrying costs during hypothetical expected lease-up periods, and costs to execute similar leases. ​ While our methodology for purchase price allocations did not change during the year ended December 31, 2024, the real estate market is fluid and our assumptions are based on information currently available in the market at the time of acquisition.
Additionally, changes in economic and operating conditions, including changes in the financial condition of our tenants, and changes to our intent and ability to hold the related asset, that occur subsequent to our impairment assessment could impact the assumptions used in that assessment and could result in future charges to earnings if assumptions regarding those investments differ from actual results. ​ Revenue Recognition Our operations primarily consist of rental revenue earned from tenants under leasing arrangements which provide for minimum rent and escalations.
Additionally, changes in economic and operating conditions, including changes in the financial condition of our tenants, and changes to our intent and ability 45 Table of Contents to hold the related asset, that occur subsequent to our impairment assessment could impact the assumptions used in that assessment and could result in future charges to earnings if assumptions regarding those investments differ from actual results. ​ Revenue Recognition Our operations primarily consist of rental revenue earned from tenants under leasing arrangements which provide for minimum rent and escalations.
Management believes that in order to facilitate a clear understanding of the Company's historical consolidated operating results, 46 Table of Contents these measures should be examined in conjunction with net income and cash flows from operations as presented in the Consolidated Financial Statements and other financial data included elsewhere in this Annual Report on Form 10-K.
Management believes that in order to facilitate a clear understanding of the Company's historical consolidated operating results, these measures should be examined in conjunction with net income and cash flows from operations as presented in the Consolidated Financial Statements and other financial data included elsewhere in this Annual Report on Form 10-K.
A continued low stock price and elevated interest rates have caused the Company’s cost of capital to remain elevated, which, in turn, has significantly reduced the ability to acquire assets that meet the Company’s investment requirements. ​ ● Continuation of the COVID-19 epidemic . The COVID-19 epidemic has affected the healthcare industry in many ways.
A continued low stock price and elevated interest rates have caused the Company’s cost of capital to remain elevated, which, in turn, has significantly reduced the ability to acquire assets that meet the Company’s investment requirements. ​ ● Healthcare Wage Inflation . The COVID-19 epidemic affected the healthcare industry in many ways.
In accordance with the terms of the Company’s existing and proposed leases, capital improvement obligations in the next 12 months are expected to total approximately $14 million.
In accordance with the terms of the Company’s existing and proposed leases, capital improvement obligations in the next 12 months are expected to total approximately $12.9 million.
For the Company these items include recurring acquisition and disposition costs, loss on the extinguishment of debt, recurring straight line deferred rental revenue, recurring stock-based compensation expense, recurring amortization of above and below market leases, recurring amortization of debt issuance costs, and other items.
For the Company these items include recurring acquisition and disposition costs, loss on the extinguishment of debt, recurring straight line deferred rental revenue, recurring stock-based compensation expense, recurring amortization of above and below market leases, recurring amortization of debt issuance costs, severance and transition related expense, and other items.
Our wholly owned subsidiary, Global Medical REIT GP LLC, is the sole general partner of our Operating Partnership and, as of December 31, 2023, we owned 92.91% of the outstanding common operating partnership units (“OP Units”) of our Operating Partnership, with an aggregate of 7.09% of the Operating Partnership owned by holders of long-term incentive plan units (“LTIP Units”) and third-party limited partners who contributed properties or services to the Operating Partnership in exchange for OP Units.
Our wholly owned subsidiary, Global Medical REIT GP LLC, is the sole general partner of our Operating Partnership and, as of December 31, 2024, we owned 92.6% of the outstanding common operating partnership units (“OP Units”) of our Operating Partnership, with an aggregate of 7.4% of the Operating Partnership owned by holders of long-term incentive plan units (“LTIP Units”) and third-party limited partners who contributed properties or services to the Operating Partnership in exchange for OP Units.
As of December 31, 2023, the Company had aggregate capital improvement commitments and obligations to improve, expand, and maintain the Company’s existing facilities of approximately $18 million. Many of these amounts are subject to contingencies that make it difficult to predict when they will be utilized, if at all.
As of December 31, 2024, the Company had aggregate capital improvement commitments and obligations to improve, expand, and maintain the Company’s existing facilities of approximately $24.5 million. Many of these amounts are subject to contingencies that make it difficult to predict when they will be utilized, if at all.
The Company defines Adjusted EBITDA re as EBITDA re plus loss on extinguishment of debt, non-cash stock compensation expense, non-cash intangible amortization related to above and below market leases, preacquisition expense and other normalizing items.
The Company defines Adjusted EBITDA re as EBITDA re plus loss on extinguishment of debt, non-cash stock compensation expense, non-cash intangible amortization related to above and below market leases, severance and transition related expense, transaction expense, and other normalizing items.
Our Credit Facility consists of (i) the $350 million Term Loan A, (ii) the $150 million Term Loan B, and (iii) the $400 million Revolver. The Credit Facility also contains a $500 million accordion feature. As of February 26, 2024, we had unutilized borrowing capacity under the Credit Facility of $293.6 million.
Our Credit Facility consists of (i) the $350 million Term Loan A, (ii) the $150 million Term Loan B, and (iii) the $400 million Revolver. The Credit Facility also contains a $500 million accordion feature. As of February 26, 2025, we had unutilized borrowing capacity under the Credit Facility of $219.4 million.
Beyond 2024, we are contractually obligated to pay, or have capital commitments for, approximately (i) $655.5 million of principal and interest payments on our outstanding debt, and (ii) $12.7 million in ground and operating lease expenses.
Beyond 2025, we are contractually obligated to pay, or have capital commitments for, approximately (i) $666.5 million of principal and interest payments on our outstanding debt, and (ii) $12.0 million in ground and operating lease expenses.
In 2024, we are contractually obligated to pay, or have capital commitments for, approximately (i) $34.8 million of principal and interest payments on our outstanding debt, and (ii) $0.7 million in ground and operating lease expenses.
In 2025, we are contractually obligated to pay, or have capital commitments for, approximately (i) $37.5 million of principal and interest payments on our outstanding debt, and (ii) $0.7 million in ground and operating lease expenses.
In addition, our operating expenses included $5.9 million of non-recoverable property operating expenses from gross leases for the year ended December 31, 2023, compared to $4.7 million for the same period in 2022. ​ Depreciation Expense Depreciation expense for the year ended December 31, 2023 was $41.3 million, compared to $40.0 million for the same period in 2022, an increase of $1.3 million.
In addition, our operating expenses included $5.7 million of non-recoverable property operating expenses from gross leases for the year ended December 31, 2024, compared to $5.9 million for the same period in 2023. ​ Depreciation Expense Depreciation expense for the year ended December 31, 2024 was $40.4 million, compared to $41.3 million for the same period in 2023, a decrease of $0.9 million.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 1, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 28, 2024.
As of December 31, 2023, management believed it complied with all of the financial and non-financial covenants contained in the Credit Facility. Other Fixed Debt. We have $26.0 million in gross notes payable as of December 31, 2023, which is comprised of three instruments. 45 Table of Contents Hedging Instruments.
As of December 31, 2024, management believed it complied with all of the financial and non-financial covenants contained in the Credit Facility. Other Fixed Debt. We have $14.4 million in gross notes payable as of December 31, 2024, which is comprised of two instruments. Hedging Instruments.
Additionally, many employer-based insurance plans continue to increase the percentage of insurance premiums for which covered individuals are responsible, which makes healthcare services more expensive for individuals. We expect these trends will only be exacerbated by the COVID-19 epidemic, as medical expenditures increased significantly during the epidemic.
Additionally, many employer-based insurance plans continue to increase the percentage of insurance premiums for which covered individuals are responsible, which makes healthcare services more expensive for individuals. These trends were exacerbated by the COVID-19 epidemic, as medical expenditures increased significantly during the epidemic and have not yet returned to pre-COVID-19 levels.
We consider our critical accounting estimates to be those used in the determination of the reported amounts and disclosure related to the following: ● Investment in Real Estate ● Impairment of Long-Lived Assets ● Revenue Recognition Investment in Real Estate All of our facility acquisitions for the years ended December 31, 2023 and 2022 were accounted for as asset acquisitions because substantially all of the fair value of the gross assets that we acquired were concentrated in a single asset or group of similar identifiable assets.
Below is a discussion of accounting policies that we consider critical in that it may require complex judgment in its application or require estimates about matters that are inherently uncertain. 44 Table of Contents We consider our critical accounting estimates to be those used in the determination of the reported amounts and disclosure related to the following: ● Investment in Real Estate ● Impairment of Long-Lived Assets ● Revenue Recognition Investment in Real Estate All of our facility acquisitions for the years ended December 31, 2024 and 2023 were accounted for as asset acquisitions because substantially all of the fair value of the gross assets that we acquired were concentrated in a single asset or group of similar identifiable assets.
In the case of the fair value of above-market or below-market lease intangibles, our estimates of the values of these components will affect the amount of rental revenue we record as these values are amortized as a reduction of or an addition to rental income over the estimated remaining term of the respective leases. 40 Table of Contents Impairment of Long-Lived Assets We review our real estate assets on an asset group basis for impairment.
In the case of the fair value of above-market or below-market lease intangibles, our estimates of the values of these components will affect the amount of rental revenue we record as these values are amortized as a reduction of or an addition to rental income over the estimated remaining term of the respective leases.
Management believes that reporting AFFO in addition to FFO is a useful supplemental measure for the investment community to use when evaluating the operating performance of the Company on a comparative basis. 47 Table of Contents A reconciliation of FFO and AFFO for the years ended December 31, 2023, 2022, and 2021 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 ​ ​ (unaudited, in thousands except per share and unit amounts) Net income ​ $ 21,734 ​ $ 19,996 ​ $ 18,342 Less: Preferred stock dividends ​ (5,822) ​ (5,822) ​ (5,822) Depreciation and amortization expense ​ ​ 58,007 ​ ​ 56,611 ​ ​ 46,764 Gain on sale of investment properties ​ ​ (15,560) ​ ​ (6,753) ​ ​ (1,069) FFO ​ $ 58,359 ​ $ 64,032 ​ $ 58,215 Loss on extinguishment of debt ​ ​ 868 ​ ​ — ​ ​ — Amortization of above market leases, net ​ 1,052 ​ 1,027 ​ 520 Straight line deferred rental revenue ​ (2,636) ​ (4,251) ​ (5,317) Stock-based compensation expense ​ 4,242 ​ 4,681 ​ 5,810 Amortization of debt issuance costs and other ​ 2,376 ​ 2,201 ​ 1,982 Preacquisition expense ​ 44 ​ 354 ​ 151 AFFO ​ $ 64,305 ​ $ 68,044 ​ $ 61,361 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income attributable to common stockholders per share – basic and diluted ​ $ 0.24 ​ $ 0.20 ​ $ 0.19 FFO per share and unit ​ $ 0.83 ​ $ 0.92 ​ $ 0.90 AFFO per share and unit ​ $ 0.91 ​ $ 0.98 ​ $ 0.95 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average Shares and Units Outstanding – basic and diluted ​ 70,378 ​ 69,662 ​ 64,548 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average Shares and Units Outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average Common Shares ​ 65,550 ​ 65,462 ​ 60,640 Weighted Average OP Units ​ 2,077 ​ 1,669 ​ 1,732 Weighted Average LTIP Units ​ 2,751 ​ 2,531 ​ 2,176 Weighted Average Shares and Units Outstanding – basic and diluted ​ 70,378 ​ 69,662 ​ 64,548 ​ Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) and Adjusted EBITDAre The Company calculates EBITDA re in accordance with standards established by NAREIT and defines EBITDA re as net income or loss computed in accordance with GAAP plus depreciation and amortization, interest expense, gain or loss on the sale of investment properties, and impairment loss, as applicable.
Management believes that reporting AFFO in addition to FFO is a useful supplemental measure for the investment community to use when evaluating the operating performance of the Company on a comparative basis. 51 Table of Contents A reconciliation of FFO and AFFO for the years ended December 31, 2024, 2023, and 2022 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 2022 ​ ​ (unaudited, in thousands except per share and unit amounts) Net income ​ $ 6,692 ​ $ 21,734 ​ $ 19,996 Less: Preferred stock dividends ​ (5,822) ​ (5,822) ​ (5,822) Depreciation and amortization expense ​ ​ 55,226 ​ ​ 58,007 ​ ​ 56,611 Gain on sale of investment properties ​ ​ (4,205) ​ ​ (15,560) ​ ​ (6,753) Impairment of investment property ​ ​ 1,696 ​ ​ — ​ ​ — Equity loss from unconsolidated joint venture ​ ​ 20 ​ ​ — ​ ​ — FFO attributable to common stockholders and noncontrolling interest ​ $ 53,607 ​ $ 58,359 ​ $ 64,032 Loss on extinguishment of debt ​ ​ — ​ ​ 868 ​ ​ — Amortization of above market leases, net ​ 1,171 ​ 1,052 ​ 1,027 Straight line deferred rental revenue ​ (2,091) ​ (2,636) ​ (4,251) Stock-based compensation expense ​ 5,102 ​ 4,242 ​ 4,681 Amortization of debt issuance costs and other ​ 2,243 ​ 2,376 ​ 2,201 Severance and transition related expense ​ ​ 3,176 ​ ​ — ​ ​ — Transaction expense ​ 155 ​ 44 ​ 354 AFFO attributable to common stockholders and noncontrolling interest ​ $ 63,363 ​ $ 64,305 ​ $ 68,044 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income attributable to common stockholders per share – basic and diluted ​ $ 0.01 ​ $ 0.23 ​ $ 0.20 FFO attributable to common stockholders and noncontrolling interest per share and unit ​ $ 0.75 ​ $ 0.83 ​ $ 0.92 AFFO attributable to common stockholders and noncontrolling interest per share and unit ​ $ 0.89 ​ $ 0.91 ​ $ 0.98 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average Shares and Units Outstanding – basic and diluted ​ 71,320 ​ 70,378 ​ 69,662 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average Shares and Units Outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average Common Shares ​ 65,936 ​ 65,550 ​ 65,462 Weighted Average OP Units ​ 2,244 ​ 2,077 ​ 1,669 Weighted Average LTIP Units ​ 3,140 ​ 2,751 ​ 2,531 Weighted Average Shares and Units Outstanding – basic and diluted ​ 71,320 ​ 70,378 ​ 69,662 ​ Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) and Adjusted EBITDAre The Company calculates EBITDA re in accordance with standards established by NAREIT and defines EBITDA re as net income or loss computed in accordance with GAAP plus depreciation and amortization, interest expense, gain or loss on the sale of investment properties, property impairment losses, and adjustments for unconsolidated partnerships and joint ventures , as applicable.
We identify an asset group based on the lowest level of identifiable cash flows. In the impairment analysis we must determine whether there are indicators of impairment.
Impairment of Long-Lived Assets We review our real estate assets on an asset group basis for impairment. We identify an asset group based on the lowest level of identifiable cash flows. In the impairment analysis we must determine whether there are indicators of impairment.
From August 2024 to April 2026 the SOFR component of Term Loan A will be fixed at 1.36%. ​ Term Loan B Swaps ​ As of December 31, 2023, four of our interest rate swaps related to Term Loan B with a combined notional value of $150 million that fix the SOFR component on Term Loan B through January 2028 at 2.54%. ​ Total Fixed Debt .
Four of our interest rate swaps related to Term Loan B with a combined notional value of $150 million that fix the SOFR component on Term Loan B through January 2028 at 2.54%. ​ Total Fixed Debt .
Internal Sources of Liquidity ​ Our primary internal sources of liquidity include cash flow from operations and proceeds from select property dispositions and recapitalization transactions. ​ External Sources of Liquidity ​ Our primary external sources of liquidity include net proceeds received from equity issuances, including the issuance of OP Units in connection with acquisitions of additional properties, and debt financing, including borrowings under our Credit Facility and secured term loans. ​ Equity Issuances ​ In January 2024, the Company and the Operating Partnership implemented the 2024 ATM Program, pursuant to which we may offer and sell, from time to time, shares of our common stock.
Internal Sources of Liquidity ​ Our primary internal sources of liquidity include cash flow from operations and proceeds from select property dispositions and recapitalization transactions. ​ External Sources of Liquidity ​ Our primary external sources of liquidity include net proceeds received from equity issuances, including the issuance of OP Units in connection with acquisitions of additional properties, and debt financing, including borrowings under our Credit Facility and secured term loans. ​ Equity Issuances ​ In January 2024, the Company and the Operating Partnership implemented the 2024 ATM Program, pursuant to which we may offer and sell (including through forward sales), from time to time, shares of our common stock. ​ During the year ended December 31, 2024, we generated gross proceeds of $12.0 million through ATM equity issuances of 1.2 million shares of our common stock at an average offering price of $9.95 per share. 49 Table of Contents Debt Financing . ​ Credit Facility.
Management considers EBITDA re and Adjusted EBITDA re important measures because they provide additional information to allow management, investors, and our current and potential creditors to evaluate and compare our core operating results and our ability to service debt. 48 Table of Contents A reconciliation of net income to EBITDA re and Adjusted EBITDA re for the years ended December 31, 2023, 2022, and 2021 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 ​ (unaudited and in thousands) Net income $ 21,734 ​ $ 19,996 ​ $ 18,342 Interest expense 30,893 ​ 25,230 ​ 19,696 Depreciation and amortization expense ​ 58,135 ​ ​ 56,723 ​ ​ 46,875 Gain on sale of investment properties ​ (15,560) ​ ​ (6,753) ​ ​ (1,069) EBITDA re $ 95,202 ​ $ 95,196 ​ $ 83,844 Loss on extinguishment of debt ​ 868 ​ ​ — ​ ​ — Stock-based compensation expense 4,242 ​ 4,681 ​ 5,810 Amortization of above market leases, net 1,052 ​ 1,027 ​ 520 Preacquisition expense 44 ​ 354 ​ 151 Adjusted EBITDA re $ 101,408 ​ $ 101,258 ​ $ 90,325 ​
Management considers EBITDA re and Adjusted EBITDA re important measures because they provide additional information to allow management, investors, and our current and potential creditors to evaluate and compare our core operating results and our ability to service debt. 52 Table of Contents A reconciliation of net income to EBITDA re and Adjusted EBITDA re for the years ended December 31, 2024, 2023, and 2022 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 2022 ​ (unaudited and in thousands) Net income $ 6,692 ​ $ 21,734 ​ $ 19,996 Interest expense 28,689 ​ 30,893 ​ 25,230 Depreciation and amortization expense ​ 55,359 ​ ​ 58,135 ​ ​ 56,723 Gain on sale of investment properties ​ (4,205) ​ ​ (15,560) ​ ​ (6,753) Impairment of investment property ​ 1,696 ​ ​ — ​ ​ — Equity loss from unconsolidated joint venture ​ 20 ​ ​ — ​ ​ — EBITDA re $ 88,251 ​ $ 95,202 ​ $ 95,196 Loss on extinguishment of debt ​ — ​ ​ 868 ​ ​ — Stock-based compensation expense 5,102 ​ 4,242 ​ 4,681 Amortization of above market leases, net 1,171 ​ 1,052 ​ 1,027 Severance and transition related expense ​ 3,176 ​ ​ — ​ ​ — Transaction expense 155 ​ 44 ​ 354 Adjusted EBITDA re $ 97,855 ​ $ 101,408 ​ $ 101,258 ​
Net Income Net income for the year ended December 31, 2023 was $22.8 million compared to $20.0 million for the same period in 2022, an increase of $2.8 million. Assets and Liabilities As of December 31, 2023 and 2022, our principal assets consisted of investments in real estate, net, of $1.2 billion and $1.3 billion, respectively.
Net Income Net income for the year ended December 31, 2024 was $6.7 million compared to $21.7 million for the same period in 2023, a decrease of $15.0 million. Assets and Liabilities As of December 31, 2024 and 2023, our principal assets consisted of investments in real estate, net, of $1.2 billion.
We finance our acquisitions with a mixture of debt and equity primarily from our cash from operations, borrowings under our Second Amended and Restated Credit Facility (the “Credit Facility”), and stock issuances. 37 Table of Contents 2023 Executive Summary The following tables summarize the primary changes in our business and operations during the years presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 ​ ​ (in thousands, except per share and unit amounts) Rental revenue ​ $ 140,934 ​ $ 137,167 Depreciation and amortization expense ​ $ 58,135 ​ $ 56,723 Interest expense ​ $ 30,893 ​ $ 25,230 General and administrative expense ​ $ 16,853 ​ $ 16,545 Gain on sale of investment properties ​ $ 15,560 ​ $ 6,753 ​ ​ ​ ​ ​ ​ ​ Net income attributable to common stockholders per share ​ $ 0.23 ​ $ 0.20 FFO per share and unit (1) ​ $ 0.83 ​ $ 0.92 AFFO per share and unit (1) ​ $ 0.91 ​ $ 0.98 Dividends per share of common stock ​ $ 0.84 ​ $ 0.84 ​ ​ ​ ​ ​ ​ ​ Weighted average common stock outstanding ​ 65,550 ​ 65,462 Weighted average OP Units outstanding ​ 2,077 ​ 1,669 Weighted average LTIP Units outstanding ​ 2,751 ​ 2,531 Total weighted average shares and units outstanding ​ 70,378 ​ 69,662 (1) See “—Non-GAAP Financial Measures,” for a description of our non-GAAP financial measures and a reconciliation of our non-GAAP financial measures. ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ ​ December 31, ​ December 31, ​ 2023 2022 ​ ​ (dollars in thousands) Investment in real estate, gross ​ $ 1,426,969 ​ $ 1,484,177 ​ Total debt, net ​ $ 611,232 ​ $ 694,119 ​ Weighted average interest rate ​ 3.83 % 4.20 % Total equity (including noncontrolling interest) ​ $ 605,814 ​ $ 649,065 ​ Net leasable square feet ​ 4,748,626 ​ 4,895,635 ​ Our Properties Completed Acquisitions During the year ended December 31, 2023 we completed one acquisition encompassing 18,698 leasable square feet for a contractual purchase price of $6.7 million with annualized base rent of $0.5 million.
We finance our acquisitions with a mixture of debt and equity primarily from our cash from operations, borrowings under our Second Amended and Restated Credit Facility (the “Credit Facility”), and stock issuances. 40 Table of Contents 2024 Executive Summary The following tables summarize the primary changes in our business and operations during the years presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 ​ ​ (in thousands, except per share and unit amounts) Rental revenue ​ $ 138,410 ​ $ 140,934 Depreciation and amortization expense ​ $ 55,359 ​ $ 58,135 Interest expense ​ $ 28,689 ​ $ 30,893 General and administrative expense ​ $ 21,123 ​ $ 16,853 Gain on sale of investment properties ​ $ 4,205 ​ $ 15,560 ​ ​ ​ ​ ​ ​ ​ Net income attributable to common stockholders per share ​ $ 0.01 ​ $ 0.23 FFO attributable to common stockholders and noncontrolling interest per share and unit (1) ​ $ 0.75 ​ $ 0.83 AFFO attributable to common stockholders and noncontrolling interest per share and unit (1) ​ $ 0.89 ​ $ 0.91 Dividends per share of common stock ​ $ 0.84 ​ $ 0.84 ​ ​ ​ ​ ​ ​ ​ Weighted average common stock outstanding ​ 65,936 ​ 65,550 Weighted average OP Units outstanding ​ 2,244 ​ 2,077 Weighted average LTIP Units outstanding ​ 3,140 ​ 2,751 Total weighted average shares and units outstanding ​ 71,320 ​ 70,378 (1) See “—Non-GAAP Financial Measures,” for a description of our non-GAAP financial measures and a reconciliation of our non-GAAP financial measures. ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ ​ December 31, ​ December 31, ​ 2024 2023 ​ ​ (dollars in thousands) Investment in real estate, gross ​ $ 1,450,916 ​ $ 1,426,969 ​ Total debt, net ​ $ 646,131 ​ $ 611,232 ​ Weighted average interest rate ​ 3.75 % 3.83 % Total equity (including noncontrolling interest) ​ $ 555,916 ​ $ 605,814 ​ Net leasable square feet ​ 4,756,108 ​ 4,748,626 ​ Our Properties As of December 31, 2024, our portfolio consisted of gross investment in real estate of $1.5 billion, with an aggregate of 4.8 million leasable square feet and an aggregate $110 million of annualized base rent.
Interest Expense Interest expense for the year ended December 31, 2023 was $30.9 million, compared to $25.2 million for the same period in 2022, an increase of $ 5.7 million. This increase was due to increased interest rates, partially offset by lower average borrowings during the year ended December 31, 2023, compared to the same period in 2022.
Interest Expense Interest expense for the year ended December 31, 2024 was $28.7 million, compared to $30.9 million for the same period in 2023, a decrease of $2.2 million. This decrease was due to lower interest rates and lower average borrowings during the year ended December 31, 2024, compared to the same period in 2023.
We believe the trend towards physician group consolidation will serve to strengthen the credit quality of our tenants if our tenants merge or are consolidated with larger health systems. We believe the following trends may negatively impact our results of operations: ● Fed’s “wait-and-see” approach could cause interest rates to remain elevated for longer than previously expected.
We believe the trend towards physician group consolidation will serve to strengthen the credit quality of our tenants if our tenants merge or are consolidated with larger health systems. 43 Table of Contents We believe the following trends may negatively impact our results of operations: ● Longer-Term Interest rates remain at elevated levels. During 2024 the U.S.
Our fixed debt totaled $526.0 million on a gross basis at December 31, 2023, with a weighted average interest rate of 3.31% based on our interest rate swaps and at current leverage. The weighted average maturity of our fixed debt was 2.8 years at December 31, 2023.
Our fixed debt totaled $514.4 million on a gross basis at December 31, 2024, with a weighted average interest rate of 3.18% based on our interest rate swaps at current leverage.
The weighted average interest rate of our debt for the year ended December 31, 2023 was 4.12% compared to 3.43% in 2022. Additionally, the weighted average interest rate and term of our debt was 3.83% and 2.9 years, respectively, at December 31, 2023.
The weighted average interest rate of our debt for the year ended December 31, 2024 was 3.94% compared to 4.12% in 2023.
Debt Activity During the year ended December 31, 2023, we borrowed $83.1 million under our Credit Facility and repaid $136.4 million, for a net amount repaid of $53.3 million.
Debt Activity During the year ended December 31, 2024, we borrowed $143.8 million under our Credit Facility and repaid $99.6 million, for a net amount borrowed of $44.2 million.
This phenomenon has led to material increases in labor costs for healthcare systems, especially hospital systems, as some employers have had to rely on higher costing contract nursing labor to sustain their businesses. The increase in labor costs, among various other factors, contributed to the rapid increase in inflation during 2022, which remained elevated during 2023.
This phenomenon has led to material increases in labor costs for healthcare systems, especially hospital systems, as some employers have had to rely on higher cost contract nursing labor to sustain their businesses. Although reliance on contract nursing and overall healthcare wage inflation moderated during 2024, the overall increase in healthcare labor costs remains.
Within that increase, $19.5 million in revenue was recognized from net lease expense recoveries during the year ended December 31, 2023, compared to $18.7 million for the same period in 2022. 42 Table of Contents Expenses General and Administrative General and administrative expenses for the year ended December 31, 2023 were $16.9 million, compared to $16.5 million for the same period in 2022, an increase of $0.4 million.
Within that decrease, $19.4 million in revenue was recognized from net lease expense recoveries during the year ended December 31, 2024, compared to $19.5 million for the same period in 2023.
We completed one acquisition during the year ended December 31, 2023 and sold six medical office buildings through three disposition transactions. Our liquid assets consisted primarily of cash and cash equivalents and restricted cash of $6.7 million and $14.5 million, as of December 31, 2023 and 2022, respectively.
We completed the acquisition of a 15-property portfolio and completed seven disposition transactions during the year ended December 31, 2024. Our liquid assets consisted primarily of cash and cash equivalents and restricted cash of $8.9 million and $6.7 million, as of December 31, 2024 and 2023, respectively.
In addition, if we decide to redeem our preferred stock, we would have to pay the liquidation preference of $77.6 million plus accrued dividends, fees and expenses. 44 Table of Contents Our long-term (beyond 12 months) liquidity requirements consist primarily of funds necessary to pay for acquisitions, capital and tenant improvements at our properties, scheduled debt maturities, general and administrative expenses, operating expenses, and distributions.
Our long-term (beyond 12 months) liquidity requirements consist primarily of funds necessary to pay for acquisitions, capital and tenant improvements at our properties, scheduled debt maturities, general and administrative expenses, operating expenses, and distributions.
During the 2023 year less funds were used to complete property acquisitions and we received more net proceeds from the sale of investment properties. ​ Net cash used in financing activities for the year ended December 31, 2023 was $143.8 million, compared to net cash provided by financing activities with $62.4 million for the same period in 2022.
During the 2024 year we used more funds to acquire investment properties, we received less net proceeds from the sale of investment properties, more funds were used for capital expenditures on existing real estate investments and leasing commissions, and we invested funds in an unconsolidated joint venture. ​ Net cash used in financing activities for the year ended December 31, 2024 was $21.9 million, compared to $143.8 million for the same period in 2023.
If management’s assumptions regarding the collectability of lease-related receivables prove incorrect, we could experience decreases in rental revenue, including decreases in excess of any amounts initially recognized. ​ 41 Table of Contents Consolidated Results of Operations The major factors that resulted in variances in our results of operations for each revenue and expense category for the year ended December 31, 2023 compared to the year ended December 31, 2022, were higher interest rates, significantly lower acquisition activity, increased disposition activity, and the recognition of a reserve related to one tenant.
If management’s assumptions regarding the collectability of lease-related receivables prove incorrect, we could experience decreases in rental revenue, including decreases in excess of any amounts initially recognized. ​ Consolidated Results of Operations For a discussion related to our results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022, refer to Part II, Item 7.
Operating Expenses Operating expenses for the year ended December 31, 2023 were $28.1 million, compared with $25.2 million for the same period in 2022, an increase of $2.9 million. The increase results primarily from $19.5 million of recoverable property operating expenses incurred during the year ended December 31, 2023, compared to $18.7 million for the same period in 2022.
Included in these amounts were $19.4 million of recoverable property operating expenses incurred during the year ended December 31, 2024, compared to $19.5 million for the same period in 2023.
The increase resulted from an increase in cash compensation costs and general corporate expenses, partially offset by a reduction in non-cash LTIP compensation expense, which was $4.2 million for the year ended December 31, 2023, compared to $4.7 million for the same period in 2022.
Busch, and an increase in non-cash LTIP compensation expense, which was $5.1 million for the year ended December 31, 2024, compared to $4.2 million for the same period in 2023. Operating Expenses Operating expenses for the year ended December 31, 2024 were $29.3 million, compared with $28.1 million for the same period in 2023, an increase of $1.2 million.
Completed Property Dispositions ​ During the year ended December 31, 2023, the Company completed three dispositions that generated aggregate gross proceeds of $80.5 million, resulting in an aggregate gain of $15.6 million.
Gain on Sale of Investment Properties During the year ended December 31, 2024, we completed seven dispositions resulting in an aggregate gain of $4.2 million. During the year ended December 31, 2023, we completed three dispositions resulting in an aggregate gain of $15.6 million.
The increase resulted primarily from the recognition of a full year of amortization expense in 2023 from acquisitions that were completed during 2022, partially offset by the impact of property dispositions.
The decrease primarily resulted from the full year impact of three property dispositions that were completed during the year ended December 31, 2023 and the impact from seven property dispositions that were completed during the year ended December 31, 2024, partially offset by the impact of 15 properties that were acquired in 2024.
The increase resulted primarily from the recognition of a full year of depreciation expense in 2023 from acquisitions that were completed during 2022, partially offset by the impact of property dispositions. Amortization Expense Amortization expense for the year ended December 31, 2023 was $16.9 million, compared to $16.7 million for the same period in 2022, an increase of $0.2 million.
Amortization Expense Amortization expense for the year ended December 31, 2024 was $14.9 million, compared to $16.9 million for the same period in 2023, a decrease of $2.0 million.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2023 2022 $ Change ​ ​ (in thousands) ​ ​ ​ Revenue ​ ​ ​ ​ Rental revenue ​ $ 140,934 ​ $ 137,167 ​ $ 3,767 Other income ​ 115 ​ 116 ​ (1) Total revenue ​ 141,049 ​ 137,283 ​ 3,766 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expenses ​ ​ ​ ​ ​ ​ ​ ​ General and administrative ​ 16,853 ​ 16,545 ​ 308 Operating expenses ​ 28,082 ​ 25,188 ​ 2,894 Depreciation expense ​ 41,266 ​ 40,008 ​ 1,258 Amortization expense ​ 16,869 ​ 16,715 ​ 154 Interest expense ​ 30,893 ​ 25,230 ​ 5,663 Preacquisition expense ​ 44 ​ 354 ​ (310) Total expenses ​ 134,007 ​ 124,040 ​ 9,967 Income before gain from sale of investment properties and loss on extinguishment of debt ​ ​ 7,042 ​ ​ 13,243 ​ ​ (6,201) Gain on sale of investment properties ​ ​ 15,560 ​ ​ 6,753 ​ ​ 8,807 Loss on extinguishment of debt ​ ​ (868) ​ ​ — ​ ​ (868) Net income ​ $ 21,734 ​ $ 19,996 ​ $ 1,738 ​ Revenue Total Revenue Total revenue for the year ended December 31, 2023 was $141.0 million, compared to $137.3 million for the same period in 2022, an increase of $3.7 million.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2024 2023 $ Change ​ ​ (in thousands) ​ ​ ​ Revenue ​ ​ ​ ​ Rental revenue ​ $ 138,410 ​ $ 140,934 ​ $ (2,524) Other income ​ 370 ​ 115 ​ 255 Total revenue ​ 138,780 ​ 141,049 ​ (2,269) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expenses ​ ​ ​ ​ ​ ​ ​ ​ General and administrative ​ 21,123 ​ 16,853 ​ 4,270 Operating expenses ​ 29,251 ​ 28,082 ​ 1,169 Depreciation expense ​ 40,427 ​ 41,266 ​ (839) Amortization expense ​ 14,932 ​ 16,869 ​ (1,937) Interest expense ​ 28,689 ​ 30,893 ​ (2,204) Transaction expense ​ 155 ​ 44 ​ 111 Total expenses ​ 134,577 ​ 134,007 ​ 570 Income before other income (expense) ​ ​ 4,203 ​ ​ 7,042 ​ ​ (2,839) Gain on sale of investment properties ​ ​ 4,205 ​ ​ 15,560 ​ ​ (11,355) Impairment of investment property ​ ​ (1,696) ​ ​ — ​ ​ (1,696) Equity loss from unconsolidated joint venture ​ ​ (20) ​ ​ — ​ ​ (20) Loss on extinguishment of debt ​ ​ — ​ ​ (868) ​ ​ 868 Net income ​ $ 6,692 ​ $ 21,734 ​ $ (15,042) ​ 46 Table of Contents Revenue Total Revenue Total revenue for the year ended December 31, 2024 was $138.8 million, compared to $141.0 million for the same period in 2023, a decrease of $2.2 million.
Due to our forward starting interest rate swaps related to Team Loan A, the weighted average interest rate on fixed debt outstanding as of December 31, 2023 is expected to improve over the next two years. ​ Cash Flow Information Net cash provided by operating activities for the year ended December 31, 2023 was $67.6 million, compared to $76.5 million for the same period in 2022.
The weighted average maturity of our fixed debt was 1.9 years at December 31, 2024. ​ Cash Flow Information Net cash provided by operating activities for the year ended December 31, 2024 was $70.0 million, compared to $68.4 million for the same period in 2023.
The decrease during the 2023 year was primarily due to lower income before gain on sale of investment properties. ​ Net cash provided by investing activities for the year ended December 31, 2023 was $67.6 million, compared to net cash used in investing activities of $137.3 million for the same period in 2022.
During the 2024 year there was a lower aggregate gain on the sale of investment properties, an impairment loss on an investment property, increases in accounts payable and accrued expenses and other assets and liabilities, and an increase in non-cash LTIP compensation expense, partially offset by lower net income, lower non-cash depreciation and amortization expenses, and a higher tenant receivables balance. ​ Net cash used in investing activities for the year ended December 31, 2024 was $45.9 million, compared to net cash provided by investing activities of $67.6 million for the same period in 2023.
No shares were sold under the 2024 ATM Program from January 2024 through February 26, 2024. Trends Which May Influence Our Results of Operations We believe the following trends may positively impact our results of operations: ● An aging population . According to the 2020 U.S.
If Prospect rejects any of its leases with us, we would have a general unsecured claim with respect to amounts owed under any rejected lease. Trends Which May Influence Our Results of Operations We believe the following trends may positively impact our results of operations: ● An aging population . According to the 2020 U.S.
The increase primarily resulted from the recognition of a full year of rental revenue in 2023 from acquisitions that were completed during 2022, partially offset by the impact of property dispositions and the recognition of reserves for $0.9 of rent and the write-off of $0.2 million of deferred rent.
The decrease primarily resulted from the full year impact of three property dispositions that were completed during the year ended December 31, 2023 and the impact from seven property dispositions that were completed during the year ended December 31, 2024, partially offset by the impact of 15 properties that were acquired in 2024.
Income Before Gain on Sale of Investment Properties and Loss on Extinguishment of Debt Income before gain on sale of investment properties and loss on extinguishment of debt for the year ended December 31, 2023 was $8.1 million, compared to $13.2 million for the same period in 2022, a decrease of $5.1 million.
Additionally, the weighted average interest rate and term of our debt was 3.75% and 2.0 years, respectively, at December 31, 2024. 47 Table of Contents Income Before Other Income (Expense) Income before other income (expense) for the year ended December 31, 2024 was $4.2 million, compared to $7.0 million for the same period in 2023, a decrease of $2.8 million.
Although term SOFR, which is the reference rate for our floating rate debt, is expected to decrease during 2024 and 2025, any action or inaction by the Fed in the coming months could affect the timing and amounts of such decreases. ​ Continued elevated interest rates have contributed to a continued lull in the common stock prices of many REITs, including the price of the Company’s common stock.
Consequently, the Fed may maintain an elevated Federal Funds Rate, or determine to raise the Federal Funds Rate again, during 2025 and beyond if inflation begins to rise. ​ Continued elevated interest rates have contributed to a continued lull in the common stock prices of many REITs, including the price of the Company’s common stock.
Removed
We funded this acquisition primarily through the issuance of OP Units to the seller. As of December 31, 2023, our portfolio consisted of gross investment in real estate of $1.4 billion, with an aggregate of 4.7 million leasable square feet and an aggregate $110.2 million of annualized base rent.
Added
Completed Acquisitions During the year ended December 31, 2024 we completed the acquisition of a 15-property portfolio of outpatient medical real estate. In aggregate the portfolio had a purchase price of $80.3 million with 254,220 leasable square feet and annualized base rent of $6.4 million.
Removed
As of December 31, 2023, the net outstanding Credit Facility balance was $307.6 million and as of February 26, 2024, we had unutilized borrowing capacity under the Credit Facility of $293.6 million. ​ 38 Table of Contents In December 2023, we completed the defeasance of a CMBS loan by making a total payment of $31.5 million, including transaction costs, that was funded by borrowings on our Revolver.
Added
Properties Under Contract to Acquire and Acquisitions Completed Subsequent to December 31, 2024 In October 2024, we entered into a purchase agreement to acquire a five-property portfolio (the “five-property portfolio”) of medical real estate for an aggregate purchase price of $69.6 million.
Removed
The carrying value of the loan, net of unamortized debt issuance costs, was $30.6 million on the date of the defeasance, resulting in a loss on extinguishment of debt of $0.9 million.
Added
In February 2025, we completed the acquisition of three properties in the five-property portfolio encompassing an aggregate of 188,874 leasable square feet for an aggregate purchase price of $31.5 million with aggregate annualized base rent of $2.8 million.
Removed
In connection with the loan defeasance, we subsequently received $8.4 million in escrowed funds held by the CMBS servicer and used those funds to reduce our total debt. ​ Capital Raising Activity In January 2024, the Company and the Operating Partnership implemented a $300 million “at-the-market” equity offering program, pursuant to which we may offer and sell, from time to time, shares of our common stock (the “2024 ATM Program”).
Added
We expect to complete the acquisition of the remaining two properties in the five- 41 Table of Contents property portfolio, with an aggregate purchase price of $38.1 million, during the second quarter of 2025.
Removed
Market reaction to the Fed’s commentary after its January 2024 meeting, where it maintained the target range for the Federal Funds Rate at 5.25% to 5.50%, indicated that the Fed does not plan to cut interest rates until mid-2024 at the earliest, which could result in continued elevated interest rates for the first half of 2024, if not longer.
Added
The Company’s obligation to close the acquisition of the remaining two properties in the five-property portfolio is subject to certain customary terms and conditions, including due diligence reviews.
Removed
Furthermore, the continued spread of variants and subvariants of COVID-19 in the U.S. has prolonged the COVID-19 epidemic. ​ 39 Table of Contents ● Changes in third party reimbursement methods and policies .
Added
Accordingly, there is no assurance that we will close this acquisition on the terms described above, or at all. ​ Completed Property Dispositions ​ During the year ended December 31, 2024, we completed seven dispositions that generated aggregate gross proceeds of $60.7 million, resulting in an aggregate gain of $4.2 million.
Removed
Below is a discussion of accounting policies that we consider critical in that it may require complex judgment in its application or require estimates about matters that are inherently uncertain.
Added
Of the $60.7 million of gross disposition proceeds in 2024, $35.2 million were related to the sale of two properties to a joint venture between us and Heitman (the “Joint Venture”), whereby Heitman maintains an 87.5% equity investment and we maintain a 12.5% equity investment in the Joint Venture. ​ Impairment of Investment Property ​ During the year ended December 31, 2024, we recognized an impairment loss of $1.7 million related to our Derby, Kansas facility. ​ Capital Raising Activity ​ In January 2024, the Company and the Operating Partnership implemented a $300 million “at-the-market” equity offering program, pursuant to which we may offer and sell (including through forward sales), from time to time, shares of our common stock (the “2024 ATM Program”). ​ During the year ended December 31, 2024, we generated gross proceeds of $12.0 million through ATM equity issuances of 1.2 million shares of our common stock at an average offering price of $9.95 per share.
Removed
Regarding acquisitions, we completed one acquisition for a contractual purchase price of $6.7 million during the year ended December 31, 2023 compared to 14 completed acquisitions for an aggregate contractual purchase price of $148.9 million during the year ended December 31 2022.
Added
As of December 31, 2024, the net outstanding Credit Facility balance was $631.7 million and as of February 26, 2025, we had unutilized borrowing capacity under the Credit Facility of $219.4 million. ​ Joint Venture In December 2024, we entered into the Joint Venture with Heitman, a real estate investment firm with over $48 billion of assets under management.
Removed
Regarding dispositions, we had three property dispositions during the year ended December 31, 2023 that generated aggregate gross proceeds of $80.5 million compared to one property disposition during the year ended December 31, 2022 that generated gross proceeds of $17.9 million.
Added
Pursuant to the Joint Venture operating agreement, we maintain a 12.5% investment in the Joint Venture and also serve as its managing member and Heitman maintains an 87.5% investment. Most economic decisions related to the Joint Venture are determined by the majority vote of an executive committee that consists of three members representing Heitman and two members representing our Company.
Removed
Our total investments in real estate, net of accumulated depreciation and amortization, was $1.2 billion and $1.3 billion as of December 31, 2023 and 2022, respectively. For a discussion related to our results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to Part II, Item 7.
Added
As the managing member, we source new investments for the Joint Venture, manage the day-to-day activities of the Joint Venture and its assets, earn fees as compensation for such services, and are entitled to reimbursement of certain expenses we incur in the performance of such services.
Removed
Gain on Sale of Investment Properties During the year ended December 31, 2023, we completed three dispositions. In August 2023, we sold a medical office building located in North Charleston, South Carolina receiving gross proceeds of $10.1 million, resulting in a gain of $2.3 million.
Added
Pursuant to the terms of the Joint Venture operating agreement, we have the right to purchase investment opportunities for the Company before offering such opportunities to the Joint Venture. ​ In connection with the formation of the Joint Venture, we sold two of our assets to the Joint Venture (the “Seed Portfolio”) receiving gross proceeds of $35.2 million.
Removed
In June 2023, we sold a portfolio of four medical office buildings located in Oklahoma City, Oklahoma receiving gross proceeds of $66.0 million, resulting in a gain of $12.8 million.
Added
We used $2.1 million of the sale proceeds from the Seed Portfolio to finance our initial 12.5% 42 Table of Contents capital investment in the Joint Venture.
Removed
In March 2023, we sold a medical office building located in Jacksonville, Florida receiving gross proceeds of $4.4 million, resulting in a gain of $0.5 million. 43 Table of Contents During the year ended December 31, 2022, we sold a medical office building located in Germantown, Tennessee receiving gross proceeds of $17.9 million, resulting in a gain of $6.8 million. ​ Loss on Extinguishment of Debt ​ In December 2023, we completed the defeasance of a CMBS loan by making a total payment of $31.5 million, including transaction costs, that was funded by borrowings on our Revolver.
Added
In connection with the acquisition of the Seed Portfolio, the Joint Venture entered into a mortgage loan with a principal amount of $17.6 million. ​ Recent Developments CEO Succession Plan On January 8 , 2025, the Company and Jeffrey Busch, Chairman of the Board and Chief Executive Officer, reached an agreement regarding Mr.
Removed
The carrying value of the loan, net of unamortized debt issuance costs, was $30.6 million on the date of the defeasance, resulting in a loss on extinguishment of debt of $0.9 million. In connection with the loan defeasance, we subsequently received $8.4 million in escrowed funds held by the CMBS servicer and used those funds to reduce our total debt.
Added
Busch’s transition from service as the Company’s Chief Executive Officer and anticipated continuation as a member of the Company’s Board. Pursuant to a Transition and Separation Agreement and General Release of Claims dated as of January 8, 2025 (the “Separation Agreement”) , Mr. Busch, the Company and Inter-American Management LLC (“Inter-American”) agreed that Mr.
Removed
Liquidity and Capital Resources General Our short-term (up to 12 months) liquidity requirements include: ● Interest expense and scheduled principal payments on outstanding indebtedness; ● General and administrative expenses; ● Property operating expenses; ● Property acquisitions; ● Distributions on our common and preferred stock and OP Units and LTIP Units; and ● Capital and tenant improvements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed5 unchanged
Biggest changeAssuming no increase in the amount of our variable rate debt, if SOFR were reduced 100 basis points, our cash flow would increase by approximately $0.9 million annually. As of December 31, 2022, our exposure to interest rate risk was not materially different from our exposure as of December 31, 2023.
Biggest changeAssuming no increase in the amount of our variable rate debt, if SOFR were reduced 100 basis points, our cash flow would increase by approximately $1.4 million annually. As of December 31, 2023, our exposure to interest rate risk was not materially different from our exposure as of December 31, 2024.
We will not enter into derivative transactions for speculative purposes. In addition to changes in interest rates, the value of our investments is subject to fluctuations based on changes in local and regional economic conditions and changes in the creditworthiness of tenants/operators and borrowers, which may affect our ability to refinance our debt if necessary. ​ 49 Table of Contents
We will not enter into derivative transactions for speculative purposes. In addition to changes in interest rates, the value of our investments is subject to fluctuations based on changes in local and regional economic conditions and changes in the creditworthiness of tenants/operators and borrowers, which may affect our ability to refinance our debt if necessary. ​ 53 Table of Contents
As of December 31, 2023, we had $92.4 million of unhedged borrowings outstanding under the Revolver (before the netting of unamortized debt issuance costs) that bears interest at a variable rate. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Liquidity and Capital Resources” for a detailed discussion of our Credit Facility.
As of December 31, 2024, we had $136.6 million of unhedged borrowings outstanding under the Revolver (before the netting of unamortized debt issuance costs) that bears interest at a variable rate. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Liquidity and Capital Resources” for a detailed discussion of our Credit Facility.
At December 31, 2023, SOFR on our outstanding floating-rate borrowings was 5.36%. Assuming no increase in the amount of our variable interest rate debt, if SOFR increased 100 basis points, our cash flow would decrease by approximately $0.9 million annually.
At December 31, 2024, SOFR on our outstanding floating-rate borrowings was 4.34%. Assuming no increase in the amount of our variable interest rate debt, if SOFR increased 100 basis points, our cash flow would decrease by approximately $1.4 million annually.

Other GMRE 10-K year-over-year comparisons