Global Medical REIT Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Property Portfolio

Property Portfolio

12 Months Ended

Dec. 31, 2023

Property Portfolio

Property Portfolio

Note 3 – Property Portfolio

Summary of Properties Acquired and Sold During the Year Ended December 31, 2023

During the year ended December 31, 2023 the Company completed one acquisition. For this acquisition, substantially all of the fair value was concentrated in a single identifiable asset or group of similar identifiable assets and, therefore, the acquisition represents an asset acquisition. Accordingly, transaction costs for this acquisition were capitalized.

During the year ended December 31, 2023, the Company completed three dispositions. In March 2023, the Company sold a medical office building located in Jacksonville, Florida receiving gross proceeds of $4.4 million, resulting in a gain of $0.5 million. In June 2023 the Company 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. In August 2023, the Company 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.

A rollforward of the gross investment in land, building, improvements, and acquired lease intangible assets as of December 31, 2023 resulting from these acquisitions is as follows:


					Site		Tenant		Acquired Lease		Gross Investment in
	Land		Building		Improvements		Improvements		Intangible Assets		Real Estate
Balances as of December 31, 2022	$	168,308	$	1,079,781	$	22,024	$	65,987	$	148,077	$	1,484,177
Facility Acquired – Date Acquired:
Redding – 4/17/23		771		3,798		174		321		872		5,936
Capitalized costs⁽¹⁾		—		3,146		1,009		2,356		172		6,683
Total Additions:		771		6,944		1,183		2,677		1,044		12,619
Disposition of Jacksonville – 3/9/2023		(1,023)		(2,827)		—		—		—		(3,850)
Disposition of Oklahoma City – 6/30/2023		(2,814)		(43,553)		(1,127)		(1,505)		(9,406)		(58,405)
Disposition of North Charleston – 8/1/2023		(927)		(4,640)		(106)		(801)		(1,098)		(7,572)
Total Dispositions:		(4,764)		(51,020)		(1,233)		(2,306)		(10,504)		(69,827)
Balances as of December 31, 2023	$	164,315	$	1,035,705	$	21,974	$	66,358	$	138,617	$	1,426,969

(1)	Represents capital projects that were completed and placed in service during the year ended December 31, 2023 related to the Company’s existing facilities.

Depreciation expense was $41,266, $40,008, and $33,825 for the years ended December 31, 2023, 2022, and 2021, respectively.

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 $18,300. Many of these amounts are subject to contingencies that make it difficult to predict when they will be utilized, if at all. In accordance with the terms of the Company’s leases, capital improvement obligations in the next twelve months are expected to total approximately $13,900.

Summary of Properties Acquired and Sold During the Year Ended December 31, 2022

During the year ended December 31, 2022 the Company completed 14 acquisitions. For each acquisition, substantially all of the fair value was concentrated in a single identifiable asset or group of similar identifiable assets and, therefore, each acquisition represents an asset acquisition. Accordingly, transaction costs for these acquisitions were capitalized.

During the year ended December 31, 2022, the Company completed one disposition. In July 2022, the Company sold a medical office building located in Germantown, Tennessee receiving gross proceeds of $17.9 million, resulting in a gain of $6.8 million.

A rollforward of the gross investment in land, building, improvements, and acquired lease intangible assets as of December 31, 2022 resulting from these acquisitions is as follows:


					Site		Tenant		Acquired Lease		Gross Investment in
	Land		Building		Improvements		Improvements		Intangible Assets		Real Estate
Balances as of December 31, 2021	$	152,060	$	985,091	$	19,021	$	58,900	$	127,931	$	1,343,003
Facility Acquired – Date Acquired:
Gainesville – 2/4/22		555		3,899		76		199		575		5,304
Grand Rapids – 2/28/22		1,238		4,976		221		270		595		7,300
Sarasota – 3/29/22		747		3,703		84		331		1,263		6,128
Greenwood – 3/30/22		929		4,332		194		360		426		6,241
Fairbanks – 4/1/22		1,782		12,262		215		753		7,946		22,958
Rocky Point – 4/8/22		613		6,243		223		317		589		7,985
Fairfax – 5/11/22		4,012		13,238		399		310		3,304		21,263
Lee's Summit – 5/19/22		1,349		4,101		83		410		674		6,617
Lexington – 5/27/22		1,760		11,350		289		556		3,036		16,991
Toledo – 7/8/22		2,999		11,366		581		1,247		2,044		18,237
Lake Geneva – 7/26/22		444		4,612		141		230		725		6,152
Glenview – 9/1/22		1,448		6,258		241		279		912		9,138
Canandaigua – 9/16/22		578		11,118		370		489		1,493		14,048
Hermitage – 9/20/22		353		3,891		194		227		674		5,339
Capitalized costs⁽¹⁾		141		1,419		41		1,416		396		3,413
Total Additions:		18,948		102,768		3,352		7,394		24,652		157,114
Disposition of Germantown – 7/1/22		(2,700)		(8,078)		(349)		(307)		(4,506)		(15,940)
Balances as of December 31, 2022	$	168,308	$	1,079,781	$	22,024	$	65,987	$	148,077	$	1,484,177

(1)	Represents capital projects that were completed and placed in service during the year ended December 31, 2022 related to the Company’s existing facilities.

Lease Intangible Assets and Liabilities

The following is a summary of the carrying amount of lease intangible assets and liabilities as of December 31, 2023 and 2022:


	As of December 31, 2023
			Accumulated
	Cost		Amortization		Net
Assets
In-place leases	$	77,037	$	(44,249)	$	32,788
Above market leases		24,961		(10,318)		14,643
Leasing costs		36,619		(18,556)		18,063
	$	138,617	$	(73,123)	$	65,494
Liability
Below market leases	$	13,595	$	(8,314)	$	5,281


	As of December 31, 2022
			Accumulated
	Cost		Amortization		Net
Assets
In-place leases	$	82,374	$	(34,898)	$	47,476
Above market leases		26,054		(7,321)		18,733
Leasing costs		39,649		(14,683)		24,966
	$	148,077	$	(56,902)	$	91,175
Liability
Below market leases	$	13,595	$	(5,982)	$	7,613

The following is a summary of the acquired lease intangible amortization:



	Year Ended December 31,
	2023		2022		2021
Amortization expense related to in-place leases	$	11,612	$	11,685	$	9,046
Amortization expense related to leasing costs	$	5,079	$	4,942	$	3,917
Decrease in rental revenue related to above market leases	$	3,384	$	3,295	$	2,384
Increase in rental revenue related to below market leases	$	(2,332)	$	(2,268)	$	(1,864)

As of December 31, 2023, scheduled future aggregate net amortization of the acquired lease intangible assets and liabilities for each year ended December 31 is listed below:



	Net Decrease		Net Increase
	in Revenue		in Expenses
2024	$	(1,152)	$	14,208
2025		(1,697)		10,525
2026		(1,803)		8,700
2027		(1,375)		6,115
2028		(1,091)		4,805
Thereafter		(2,244)		6,498
Total	$	(9,362)	$	50,851

For the year ended December 31, 2023, the weighted average amortization period for asset lease intangibles and liability lease intangibles are 3.5 years and 2.3 years, respectively.