UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________.

Commission file number: 001-37815

Global Medical REIT Inc.

(Exact name of registrant as specified in its charter)


Maryland		46-4757266
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2 Bethesda Metro Center, Suite 440 Bethesda, MD		20814
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (202) 524-6851

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol:	Name of each exchange on which registered:
Common Stock, par value $0.001 per share	GMRE	NYSE
Series A Preferred Stock, Par value $0.001 per share	GMRE PrA	NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes ◻ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	◻	Accelerated filer	þ
Non-accelerated filer	◻	Smaller reporting company	☑
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of shares of the registrant’s common stock outstanding at November 1, 2020 was 48,188,327.

Table of Contents

GLOBAL MEDICAL REIT INC.

Condensed Consolidated Balance Sheets

(unaudited and in thousands, except par values)


	As of
	September 30, 2020		December 31, 2019
Assets
Investment in real estate:
Land	$	116,123	$	95,381
Building		793,559		693,533
Site improvements		13,268		9,912
Tenant improvements		46,965		33,909
Acquired lease intangible assets		91,465		72,794
		1,061,380		905,529
Less: accumulated depreciation and amortization		(83,893)		(56,503)
Investment in real estate, net		977,487		849,026
Cash and cash equivalents		2,052		2,765
Restricted cash		5,210		4,420
Tenant receivables		6,702		4,957
Due from related parties		121		50
Escrow deposits		3,792		3,417
Deferred assets		18,928		14,512
Derivative asset		—		2,194
Goodwill		5,903		—
Other assets		5,356		3,593
Total assets	$	1,025,551	$	884,934

Liabilities and Equity
Liabilities:
Credit Facility, net of unamortized debt issuance costs of $3,875 and $3,832 at September 30, 2020 and December 31, 2019, respectively	$	454,325	$	347,518
Notes payable, net of unamortized debt issuance costs of $898 and $667 at September 30, 2020 and December 31, 2019, respectively		65,060		38,650
Accounts payable and accrued expenses		8,329		5,069
Dividends payable		11,843		11,091
Security deposits and other		5,571		6,351
Due to related party		—		1,648
Derivative liability		19,505		8,685
Other liability		3,090		2,405
Acquired lease intangible liability, net		8,621		3,164
Total liabilities		576,344		424,581
Commitments and Contingencies
Equity:
Preferred stock, $0.001 par value, 10,000 shares authorized; 3,105 issued and outstanding at September 30, 2020 and December 31, 2019, respectively (liquidation preference of $77,625 at September 30, 2020 and December 31, 2019, respectively)		74,959		74,959
Common stock, $0.001 par value, 500,000 shares authorized; 48,188 shares and 43,806 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		48		44
Additional paid-in capital		487,114		433,330
Accumulated deficit		(107,943)		(71,389)
Accumulated other comprehensive loss		(19,651)		(6,674)
Total Global Medical REIT Inc. stockholders' equity		434,527		430,270
Noncontrolling interest		14,680		30,083
Total equity		449,207		460,353
Total liabilities and equity	$	1,025,551	$	884,934

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GLOBAL MEDICAL REIT INC.

Condensed Consolidated Statements of Operations

(unaudited and in thousands, except per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019

Revenue
Rental revenue	$	25,055	$	18,117	$	68,623	$	50,093
Other income		42		78		178		182
Total revenue		25,097		18,195		68,801		50,275

Expenses
General and administrative		4,027		1,681		7,509		4,928
Operating expenses		3,619		1,362		8,256		3,826
Management fees – related party		—		1,621		4,024		4,539
Depreciation expense		6,954		5,006		19,383		13,481
Amortization expense		2,563		1,500		6,832		3,757
Interest expense		4,864		4,549		13,616		12,707
Management internalization expense		12,580		—		14,005		—
Preacquisition expense		70		168		267		224
Total expenses		34,677		15,887		73,892		43,462

Net (loss) income	$	(9,580)	$	2,308	$	(5,091)	$	6,813
Less: Preferred stock dividends		(1,455)		(1,455)		(4,366)		(4,366)
Less: Net loss (income) attributable to noncontrolling interest		767		(83)		647		(246)
Net (loss) income attributable to common stockholders	$	(10,268)	$	770	$	(8,810)	$	2,201

Net (loss) income attributable to common stockholders per share – basic and diluted	$	(0.22)	$	0.02	$	(0.19)	$	0.07

Weighted average shares outstanding – basic and diluted		46,908		35,512		45,503		32,514

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GLOBAL MEDICAL REIT INC.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(unaudited and in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019

Net (loss) income	$	(9,580)	$	2,308	$	(5,091)	$	6,813
Other comprehensive income (loss):
Increase (decrease) in fair value of interest rate swap agreements		2,003		(1,303)		(12,977)		(6,875)
Total other comprehensive income (loss)		2,003		(1,303)		(12,977)		(6,875)
Comprehensive (loss) income		(7,577)		1,005		(18,068)		(62)
Less: Preferred stock dividends		(1,455)		(1,455)		(4,366)		(4,366)
Less: Comprehensive loss attributable to noncontrolling interest		628		44		1,555		442
Comprehensive loss attributable to common stockholders	$	(8,404)	$	(406)	$	(20,879)	$	(3,986)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GLOBAL MEDICAL REIT INC.

Condensed Consolidated Statements of Equity

(unaudited and in thousands)

For the Nine Months Ended September 30, 2020:


													Global
											Accumulated		Medical
							Additional				Other		REIT Inc.		Non-
	Common Stock			Preferred Stock			Paid-in		Accumulated		Comprehensive		Stockholders’		controlling		Total
	Shares	Amount		Shares	Amount		Capital		Deficit		Loss		Equity		Interest		Equity
Balances, December 31, 2019	43,806	$	44	3,105	$	74,959	$	433,330	$	(71,389)	$	(6,674)	$	430,270	$	30,083	$	460,353
Net loss	—		—	—		—		—		(4,444)		—		(4,444)		(647)		(5,091)
Issuance of shares of common stock, net	3,169		3	—		—		38,234		—		—		38,237		—		38,237
LTIP Units and OP Units redeemed for common stock	1,213		1	—		—		15,550		—		—		15,551		(15,551)		—
Change in fair value of interest rate swap agreements	—		—	—		—		—		—		(12,977)		(12,977)		—		(12,977)
Stock-based compensation expense	—		—	—		—		—		—		—		—		3,391		3,391
Dividends to common stockholders ($0.60 per share)	—		—	—		—		—		(27,744)		—		(27,744)		—		(27,744)
Dividends to preferred stockholders ($1.40625 per share)	—		—	—		—		—		(4,366)		—		(4,366)		—		(4,366)
Dividends to noncontrolling interest	—		—	—		—		—		—		—		—		(2,596)		(2,596)
Balances, September 30, 2020	48,188	$	48	3,105	$	74,959	$	487,114	$	(107,943)	$	(19,651)	$	434,527	$	14,680	$	449,207

For the Three Months Ended September 30, 2020:


													Global
											Accumulated		Medical
							Additional				Other		REIT Inc.		Non-
	Common Stock			Preferred Stock			Paid-in		Accumulated		Comprehensive		Stockholders’		controlling		Total
	Shares	Amount		Shares	Amount		Capital		Deficit		Loss		Equity		Interest		Equity
Balances, June 30, 2020	46,252	$	46	3,105	$	74,959	$	462,607	$	(88,037)	$	(21,654)	$	427,921	$	14,788	$	442,709
Net loss	—		—	—		—		—		(8,813)		—		(8,813)		(767)		(9,580)
Issuance of shares of common stock, net	1,930		2	—		—		24,431		—		—		24,433		—		24,433
LTIP Units and OP Units redeemed for common stock	6		—	—		—		76		—		—		76		(76)		—
Change in fair value of interest rate swap agreements	—		—	—		—		—		—		2,003		2,003		—		2,003
Stock-based compensation expense	—		—	—		—		—		—		—		—		1,572		1,572
Dividends to common stockholders ($0.20 per share)	—		—	—		—		—		(9,638)		—		(9,638)		—		(9,638)
Dividends to preferred stockholders ($0.46875 per share)	—		—	—		—		—		(1,455)		—		(1,455)		—		(1,455)
Dividends to noncontrolling interest	—



Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets – September 30, 2020 and December 31, 2019	3
	Condensed Consolidated Statements of Operations – Three and Nine Months Ended September 30, 2020 and 2019	4
	Condensed Consolidated Statements of Comprehensive (Loss) Income – Three and Nine Months Ended September 30, 2020 and 2019	5
	Condensed Consolidated Statements of Equity – Three and Nine Months Ended September 30, 2020 and 2019	6
	Condensed Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2020 and 2019	8
	Notes to the Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52

Item 4.	Controls and Procedures	52

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	53

Item 1A.	Risk Factors	53

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55

Item 3.	Defaults Upon Senior Securities	55

Item 4.	Mine Safety Disclosures	55

Item 5.	Other Information	55

Item 6.	Exhibits	56

Signatures		58