Global Medical REIT Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Property Portfolio

Property Portfolio

6 Months Ended

Jun. 30, 2023

Property Portfolio

Property Portfolio

Note 3 – Property Portfolio

Summary of Properties Acquired and Sold During the Six Months Ended June 30, 2023

During the six months ended June 30, 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 represented an asset acquisition. Accordingly, transaction costs for this acquisition were capitalized.

A rollforward of the gross investment in land, building, improvements, and acquired lease intangible assets as of June 30, 2023 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⁾		—		1,265		333		1,741		172		3,511
Total Additions:		771		5,063		507		2,062		1,044		9,447
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)
Total Dispositions:		(3,837)		(46,380)		(1,127)		(1,505)		(9,406)		(62,255)
Balances as of June 30, 2023	$	165,242	$	1,038,464	$	21,404	$	66,544	$	139,715	$	1,431,369

(1)

Represents capital projects that were completed and placed in service during the six months ended June 30, 2023 related to the Company’s existing facilities.

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.

Depreciation expense was $10,468 and $20,962 for the three and six months ended June 30, 2023, respectively, and $9,898 and $19,300 for the three and six months ended June 30, 2022, respectively.

As of June 30, 2023, the Company had aggregate capital improvement commitments and obligations to improve, expand, and maintain the Company’s existing facilities of approximately $29,600. 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 $10,400.

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.

A rollforward of the gross investment in land, building, improvements, and acquired lease intangible assets as of December 31, 2022 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 the dates presented:


	As of June 30, 2023
			Accumulated
	Cost		Amortization		Net
Assets
In-place leases	$	77,571	$	(38,749)	$	38,822
Above market leases		24,961		(8,681)		16,280
Leasing costs		37,183		(16,190)		20,993
	$	139,715	$	(63,620)	$	76,095
Liability
Below market leases	$	13,595	$	(7,151)	$	6,444


	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:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Amortization expense related to in-place leases	$	2,993	$	2,895	$	6,041	$	5,534
Amortization expense related to leasing costs	$	1,313	$	1,221	$	2,638	$	2,337
Decrease in rental revenue related to above market leases	$	871	$	866	$	1,747	$	1,591
Increase in rental revenue related to below market leases	$	(584)	$	(551)	$	(1,169)	$	(1,077)

As of June 30, 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
2023 (six months remaining)	$	(472)	$	8,027
2024		(1,151)		14,287
2025		(1,697)		10,596
2026		(1,803)		8,775
2027		(1,376)		6,190
Thereafter		(3,337)		11,940
Total	$	(9,836)	$	59,815

As of June 30, 2023, the weighted average amortization periods for asset lease intangibles and liability lease intangibles were 3.9 years and 2.8 years, respectively.