Global Medical REIT Inc.

Greetings and welcome to Global Medical REIT 4th Quarter 2024 Earnings Call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Sweat, Investor Relations. Thank you. Please go ahead.

Thank you. Good morning, everyone, and welcome to Global Medical REIT's fourth quarter and full year 2024 earnings conference call. On the call today are Jeff Bush, Chief Executive Officer, Alfonso Leon, Chief Investment Officer, and Bob Kiernan, Chief Financial Officer. Please note the use of forward-looking statements by the company on this conference call. Statements made on this call may include statements which are not historical facts and are considered forward-looking. The company intends these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is making this statement for purpose of complying with those safe harbor provisions. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond the company's control, including, without limitation, Those contained in the company's 10-K for the year ended December 31st, 2023, and its other SEC filings. The company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. Additionally, on this call, the company may refer to certain non-GAAP financial measures such as funds from operations, adjusted funds from operations, EBITRE, and adjusted EBITRE. You can find a tabular reconciliation of these non-GAAP financial measures to the most currently comparable GAAP numbers in the company's earnings release and in its filings with the SEC. Additional information may be found on the investor relations page of the company's website at www.globalmedicalreit.com. I would now like to turn the call over to Jeff Bush, Chief Executive Officer of Global Medical REIT. Jeff. Thank you, Steve.

Good morning and thank you for joining our fourth quarter and full year 2024 earnings call. Our high quality diversified portfolio continues to produce steady results. At the end of the fourth quarter, portfolio occupancy was 96.4% with a weighted average lease term of 5.6 years and a portfolio average rent coverage ratio of 4.5 times. For the fourth quarter, net income attributable to common shareholders was $1.4 million, or two cents per share, compared to a net loss attributable to common stockholders of $800,000. or one cent per share in the fourth quarter of 2023. FFO attributable to common stockholders and non-controlling interest in the fourth quarter was 15 cents per share and unit, down four cents from prior year quarter due primarily to $3.2 million of severance-related costs. FFO attributable to common stockholders and non-controlling interest was 22 cents per share and unit, down one cent from the prior year quarter. Regarding our acquisition activity during the year, in the spring, we entered into a purchase agreement to acquire a 15 property portfolio of outpatient medical real estate properties for an aggregate purchase price of $80.3 million. During the third quarter, we closed on the first tranche of this acquisition, consisting of five properties for $30.8 million. And during the fourth quarter, we completed the acquisition of the remaining 10 properties for $49.5 million. These properties are fully leased under triple net or absolute triple net leases and the acquisition was completed at a cap rate of 8%. Additionally, in the fourth quarter, we entered into a purchase agreement to acquire five property portfolios of medical outpatient facilities for an aggregate purchase price of $69.6 million at a 9% cap rate. Subsequent to the year end, we closed on the first tranche of this acquisition, completing the acquisition of three properties for $31.5 million. We expect to complete the acquisition of the remaining two properties during the second quarter of 2025. The transaction market continues to present promising opportunities in our asset class, and we are pleased with the recent addition to strengthen our high-quality portfolio. As we focus on growing our business, we remain committed to maintaining a strong balance sheet through our strategic asset recycling program. During the fourth quarter, we completed the sale of four medical facilities, generating aggregate gross proceeds of $40.5 million, resulting in an aggregate gain of $5.8 million. Of these $40.5 million of gross proceeds, $35.2 million were related to the sale of two properties to a joint venture with Heitman, a premier real estate investment firm managing over $48 billion in assets. In this joint venture, we maintain a 12.5% ownership stake and serve as its managing member, while Heitman holds the remaining 87.5% interest and through its voting interest controls the joint venture. We are excited to partner with Heitman and feel the joint venture allows us to capitalize on our acquisition and asset management platforms to continue to acquire assets, earn ancillary fees income, and gain a new capital partner. Lastly, in early 2025, we announced my succession plan as CEO. Over the past eight years, I have had the privilege of leading GMRE through both successes and challenges, working alongside many wonderful partners, associates, industry professionals, and are friends in the investment community. This transition creates an opportunity to bring fresh perspective to our growing strategy. I have the utmost confidence in our board's ability to select a successor who will lead our experienced team and leverage our robust infrastructure to create value for our stockholders. I am confident this transition will be seamless, and I'm deeply grateful to everybody who has been part of this journey. With that, I turn the call over to Alfonso to discuss our investment activity and the current market conditions in more detail.

Thank you, Jeff. The transaction market for our target medical facilities that align with our investment criteria continues to show promising momentum. We remain actively engaged with a broad range of physician groups brokers, and corporate sellers to identify compelling acquisition opportunities that will help us continue growing our portfolio. As Jeff mentioned, in the fourth quarter, we closed on a second tranche of our 15-property portfolio announced earlier in the year, acquiring the remaining 10 properties encompassing 160,000 leaseable square feet. In total, the 15-property portfolio had an aggregate purchase price of $80.3 million, with an aggregate of approximately 254,000 leaseable square feet, an aggregate annualized base rent of $6.4 million, equating to an 8% cap rate. Also during the first quarter, we announced a $69.6 million portfolio of five medical outpatient properties, which are under contract to purchase at a 9% cap rate. After year end, we closed the first tranche of this acquisition, acquiring three properties encompassing roughly 189,000 a leaseable square feet for an aggregate purchase price of $31.5 million with an aggregate annualized base rent of $2.8 million with the second tranche expected to close during the second quarter of 2025. As noted last quarter, these buildings feature tenants who have invested significant capital in their own suites with triple net rents averaging $14 to $15 per square feet. These well-maintained mission-critical facilities serve their respective health systems with a comprehensive mix of medical services from primary and urgent care to specialized practices including neuro, cardio, ortho, and cancer, as well as diagnostics, radiology, and laboratory services. All of the properties operate underground leases with an average of 60 years and remaining term. Approximately two-thirds of the property square footage is located on campus. Approximately 60% and 82% of the on and off campus properties, respectively, or at least investment-grade tenants. The ability to complete these deals in a two-trunch transaction provides us flexibility to fund these transactions prudently. The second tranche remains under contract and is under customary closing conditions. As such, we cannot guarantee that the remainder of this acquisition will close on time or at all. On the disposition front, during the quarter we closed on the sale of four medical facilities receiving aggregate proceeds of $40.5 million, resulting in an aggregate gain of $5.8 million. Of the $40.5 million of gross proceeds, $35.2 million came from the sale of two medical properties to our joint venture with Heitman. We maintain a 12.5% investment in the joint venture and serve as its managing member, while Heitman maintains an 87.5% investment. We are excited about this partnership and the opportunity that it may provide in the future as Heitman allocates capital to this strategy. For the full year, we completed seven dispositions, including two to the joint venture, as just mentioned, that generated aggregate gross proceeds of $60.7 million, resulting in aggregate gain of $4.2 million at a weighted average cap rate of 9%. Looking forward, we remain committed to our prudent investment approach that aligns with our strategy and underwriting standards. By leveraging our competitive advantage of scale, capital access, and OP unit structuring capabilities, we continue to pursue value-creating opportunities. I'd now like to turn the call over to Bob to discuss our financial results. Bob?

Thank you, Alfonso. At the end of the fourth quarter, 2024, Our portfolio consisted of gross investments in real estate of $1.5 billion and included 4.8 million of total leasable square feet, 96.4% occupancy, 5.6 years of weighted average lease term, 4.5 times rent coverage, with 2.2% weighted average contractual rent escalations. In the fourth quarter of 2024, our total revenues increased by approximately 6.7% compared to the prior year to $35.2 million, primarily due to the impact of acquisitions that closed during 2024. Total expenses for the fourth quarter of 2024 were $36.3 million compared to $31.5 million in the prior year quarter. These increases due primarily to the impact of one-time costs related to our CEO succession plan included in our G&A expenses. Our operating expenses for the fourth quarter of 2024 were $7.2 million compared to $6.1 million in the prior year quarter. Regarding the fourth quarter 2024 expenses, $4.7 million related to net leases, where the company recognized a comparable amount of expense recovery revenue, and $1.2 million related to gross leases. Relative to the increase in expense in 2024, this reflects increased costs from properties acquired in 2024 as well as the impact of tenants placed on cash basis accounting in the fourth quarter of 2023 and second quarter of 2024. G&A expenses for the fourth quarter of 2024 were $7.7 million compared to $4.2 million in the prior year quarter. The increase primarily resulted from $3.2 million that was expensed in 2024 related to the CEO succession plan. Looking ahead, we expect our total quarterly G&A expenses in 2025, excluding CEO transition-related costs, to be in the range of $4.5 million to $4.7 million. During the fourth quarter, we completed four property dispositions that generated aggregate gross proceeds of $40.5 million, resulting in an aggregate gain of $5.8 million. In addition to these sales, we recognized an impairment loss of $1.7 million in the fourth quarter related to our Gerby, Kansas facility. Net income attributable to common stockholders for the fourth quarter of 2024 was $1.4 million, or two cents per share, compared to net loss attributable to common stockholders of $800,000, or one cent per share, in the fourth quarter of 2023. FFO attributable to common stockholders in non-controlling interest in the fourth quarter of 2024 was $11.1 million, or 15 cents per share and unit, compared to $13.3 million, or 19 cents per share and unit, in the fourth quarter of 2023. AFFO, attributable to common stockholders and non-controlling interest in the fourth quarter of 2024, was $15.8 million, or 22 cents per share and unit, compared to $15.9 million, or 23 cents per share and unit, in the fourth quarter of 2023. The primary reason for the reduction in FFO was the recognition of $3.2 million in severance and transition related expenses related to our CEO succession plan. These expenses are included in FFO, but excluded from AFFO. Regarding capital expenditures on the portfolio, in 2024, our cash spend was approximately $13 million with approximately 45% related to tenant improvements. Currently, we're projecting 2025 capital expenditures of approximately $12 million to $14 million. In terms of tenant-related items, on January 11th, 2025, Prospect Medical Group filed for Chapter 11 bankruptcy reorganization. At that time, Prospect had approximately $2.4 million of outstanding lease payments related to three of our healthcare facilities, including $2.2 million related to our facility in East Orange, New Jersey, which has been accounted for in a cash basis since the fourth quarter of 2023. As of year end 2024, Prospect represented 0.8% of our total ABR. As of today, there has been no announced tenant or court decision on the leases we have with Prospect. If Prospect rejects any of its leases with the company, we will have a general unsecured claim with respect to pre-petition amounts owed under any projected lease. With respect to our 2025 lease expirations, We are pleased with our progress on renewals, and based on activity to date, we are currently estimating a 70% to 80% retention rate on the 508,000 square feet that were scheduled to expire as of the end of 2024. Additionally, as a result of the prospect bankruptcy, we expect to have approximately 30,000 square feet of increased vacancy once the prospect bankruptcy proceedings are complete. Moving on to the balance sheet, as of December 31st, 2024, our gross investment in real estate was $1.5 billion. Additionally, we had $651 million of total gross debt with a weighted average remaining term of 2.0 years. 79% of our total debt was fixed rate debt. Our leverage ratio was 44.8% and our weighted average interest rate was 3.75%. As of today, Pro forma for the acquisitions completed earlier this year, the current unutilized borrowing capacity under the credit facility is $219 million. Relative to equity, we did not issue any shares of common stock under our ATM program during the fourth quarter or to date in the first quarter of this year. Turning to our full year 2025 guidance, we expect AFFO per share in the unit in the range of 89 cents to 93 cents. Our 2025 guidance assumes no additional acquisition or disposition activity other than what has been completed or announced, and no additional equity or debt issuances other than normal course revolver activity. ASFL guidance excludes one-time expenses related to the CEO succession plan. As we start the year, our stable portfolio positions us well to navigate the current environment, while our liquidity allows us to selectively continue to acquire properties that fit our strategic objectives. We remain confident in our ability to execute our business strategy and look forward to sharing progress with you throughout the year. This concludes our prepared remarks. Operator, please open the call for questions.

Thank you. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Again, that's star 1 to register a question at this time. Today's first question is coming from Juan Zanabria of BMO Capital Markets. Please go ahead.

Hi, good morning. I was just hoping you could talk a little bit about the new Heitman Joint Venture program. with regards to target size, leverage, the types of assets the venture will be targeting relative to your own unbalanced sheet opportunities, and whether any incremental growth would be externally sought after, new acquisitions, or if we should expect further GMRE assets to be contributed into the JV?

Sure. The JV was set up with Heitman and it's part of a fund that they have dedicated for medical office. I mean, this fund is basically like a core plus fund. It's looking for strong cash on cash returns. You know, their cost of capital is more competitive than ours. I mean, we're targeting deals and call it low to seven to low seven cap rates range, looking primarily for strong properties with decent lease terms, a bias towards single tenant assets. The fund that we're joint ventured with has available for this strategy. At the time we formed the joint venture, about 50 million of equity that they could contribute So the goal is to grow this, and it's a fund that continues raising money. So presumably in the next few years, that fund will have more capital to allocate to this strategy. And so we contributed a couple assets, and this was after long conversations with Heitman in terms of understanding what kind of assets they like, what kind of markets they like. And so we started this joint venture with this seed, with the hopes of growing it. There aren't any discussions currently right now about selling more of our assets into that fund, but that's obviously an option that we have and was part of our consideration in forming this joint venture. But primarily the goal is to grow this fund together with Heitman.

This is Jeff. I just want to add a little bit why we did this. We do have an option to buy it at the end, so we could, you know, we could build up a nice core portfolio, and as we grow, this could be added at some point back in a purchase, and we're already managing this asset. And I generally am not that interested in selling our own assets into the fund. I'm looking for outside assets, really. You know, we needed to start it off, so we did this. But I'm more interested in outside assets, building a nice portfolio of that, earning the fees on it. So when you come down and, let's say, you buy a seven cap, we're now earning what we need is sort of an eight cap or so because we get fees on this.

Great. And then just curious on the CEO space, transition and sorry to hear you're stepping back from your current role, Jeff. But just curious on kind of the background of why stepping down and as part of the search process, is the board contemplating a broader strategic review and kind of what criteria is the board looking for for a new CEO?

Okay.

Okay. A couple of reasons. I'm 67 years old and want to do less. I started the company and it's been a great adventure and I think we did well in acquiring the assets and doing that. Capital markets is, you know, we can't help the interest rates. The macro economy is, you know, not as good now, but will improve. My plan is to stay active as chairman of the company. The idea in the new CEO is to bring in somebody who, you know, we're always interested as a board if there's a fresh perspective that, you know, something that I'm missing, but we also need the skills in that of having capital markets experience, having a good track record, and, you know, basically understanding, you know, the real estate assets type of thing. So it's not to throw out, we feel we've been successful, what we bought, You can see that we're projecting out that, you know, we'll still have strong, you know, AFFO going forward. Our portfolio is very strong. We improved it last year. But as a, you know, as a new CEO that we're looking for, we're looking at somebody, you know, with the experience in, you know, running a company, experience in, you know, capital markets, experience in, you know, the medical and the real estate. So that's really where we're coming at.

Was there ever a discussion on a broader strategic review as part of the change in the guard?

Definitely doing broader strategic reviews, and we do this all the time. So I'm looking forward to a new CEO coming in. I will be chairman, and, you know, we will look at this from, you know, is there anything we're missing? And hopefully, you know, the talent we bring to the table could help us move forward.

Hi, Shep. And then one just last question for me for the two tenants in question, kind of steward and prospect. I guess how much rents were in the fourth quarter? And could you just remind us again, and you talked to a little bit on the prepared remarks, what's assumed kind of going forward in guidance? Trying to get a sense of the cadence and what might be a temporary dip as a result of some rent payment ceasing or vacancy or

what have you okay yeah so on prospect um you know we talked i mean the largest you know single piece is the east orange piece that that we mentioned and that that's been on the cash basis since uh the the end of 2023 so the other two properties for prospect are are in vernon connecticut and those properties you know the exposure there kind of in i'll call it the stub you know relative to bankruptcy is is around 150 000 it runs in that uh you know around 75 to 100 you know per month uh and and again at this point we don't have any visibility into accepting or rejecting the lease per se but i think in general our there's a sense that they would accept the vernon connecticut leases these were assets they were looking to uh to sell the operations from but that transaction did not did not get done but um again it's it's not that significant of an exposure.

Like we said, it's less than 1% of our total ABR at December.

On Stewart, again, apart from the Beaumont exposure, the Stewart exposure is, again, is at a couple smaller facilities. And again, those are being, you know, again, being worked through similar to what they were last year.

Great. Thank you.

Thank you. The next question is coming from Austin Werschmitt of KeyBank Capital Markets.

Please go ahead.

Hi, and good morning, everybody. I was wondering if you could share some additional details about the nature of the assets that you seeded the joint venture with Heitman. And I'm sorry if I missed this, but what was the cap rate on that sale into the joint venture?

Sure. So it was a low seven cap and it was single tenant assets. We sold the property we had in High Point, North Carolina, which was the bulk of it. And then we had a gastro property that we had in Texas. Those two properties that we used to seed the transaction.

That's helpful. And then just what are sort of the latest thoughts then since, you know, Jeff, you alluded to not wanting to sell additional assets into the joint venture. I guess, what are the latest thoughts on funding the remaining portion of the acquisitions you've made or have under contract?

Well, right now, we're basically looking at either adjustments. Our stock price seems to be going up, so we could use ATM. It goes back and forth. So, ATM is a possibility. We could sell assets if we like. You know, we do look at our portfolio. We used about $150 million. This is what I look at. We did $150 million. The first tranches we did at $8 something, and the other is $9 something. So we're about $8.5. And we've been selling off assets, less assets that we're less interested in or we don't think is good for the future in our portfolio. philosophy doesn't fit as well into our portfolio. So we're trying to improve and we tremendously did that last year by selling off the Mishawaka one and getting the Beaumont released. We actually improved our portfolio tremendously. So one of the goals is these assets, I would put that in the top 10% in quality in our portfolio. So we're looking to possibly sell some things that are not in the higher percentage in the quality just to improve the overall quality of our portfolio.

And I guess are you kind of as you look out at the investment pipeline, are you looking kind of dual track on assets that would both go into the JV, you know, as well as, you know, opportunities that may not fit the core plus portfolio? you know, quality that the joint venture is looking for. But, you know, these nine cap type opportunities that you've sourced, are those still, you know, on the table and something you consider doing, you know, on balance sheet?

Absolutely. We also have a little bit of interesting thing in the market that's happening is a bunch of our small ones in communities are being able to be sell because they're strong, they're strong markets. And there's local buyers that's not nationally, you know, out there and paying pretty good cap rates. So we have been selling some of our properties and we could move it into, if we could find qualities around the eight and a half, nine, that's definitely trading one for the other and making a profit in the process as we did last year.

Yeah. There's a lot of owner-user interest in our properties, and we've been receiving inbounds inquiries on properties and offers as well.

The main strategy in this sort of down period or slow period where your stock's not really there and the cost of capital is not there is how we can improve the quality of our portfolio. and take a look at assets that we just may not want or not strategic to us in the future, but put in strong assets. Because this $100 million portfolio, the two portfolios that we got were very strong assets, high quality.

That's all very helpful. And that's all for me. And Jeff, just wanted to wish you all the best. Thank you.

I'm still here with the company. I plan to be the chairman for quite a while.

Thank you. The next question is coming from Gaurav Mehta of Alliance Global Partners. Please go ahead.

Thank you. Good morning.

Good morning.

I just wanted to clarify on your comments around prospects. So for 2025, prospect revenues are around $150,000 a month.

Is that right?

Yeah, about 800,000 of annual or 0.8% ABR.

And so that's still included in your guidance, right? You're not assuming that those reds go away?

Correct. Okay.

I also wanted to ask you overall for your tenant mix, do you guys maintain a tenant watch list and are there any other tenants you're concerned about within your portfolio?

Of course. We have active management and oversight of all the assets you know, in the portfolio, but there's nothing material that we would identify or flag, you know, as an item of that nature at this point.

Okay.

I think earlier in the call you mentioned $12 to $14 million of CapEx expected in 2025. So that's the record in CapEx, and it does not include any leasing commissions, right?

That's right, and I think with respect to leasing commission, just to comment on that, if you look back at last year's leasing commission number at $5.7 million, I think it's important to keep in mind that there were two individual leasing commissions, one on the new lease in the Beaumont facility, as well as a renewal that we did for very long-term leases for Encompass Properties. that represented over 60% of that total. And those were, again, one-off type items in last year's numbers. And as we look at this year, I'd expect that leasing commission number to be a lot lower than that and trend more toward the one to two million type range.

Okay, thank you.

Thank you. The next question is coming from Wes Galladay of Baird. Please go ahead.

Hey, good morning, everyone. Just have a few questions for you. When we look at the $110 million of ABR that you disclosed in your supplement, does that include the rent of prospect, which was on cash basis, and then the replacement tenant for Stewart?

So it doesn't include the cash basis. So East Orange, which was on cash basis, that is zero from an ABR perspective. The two Vernon properties are in that ABR number. And then with respect to the Beaumont facility, since that rent wasn't applicable at December, it's not in that 1231 ABR number.

Okay. Do you still have a mid-year commencement for that Beaumont tenant? Is that still the game plan of the guidance?

yes in sec it's uh you know at some point in the second quarter okay and then you talked about the retention of the uh the leases that are expiring this year is any of that front half loaded back half loaded how should we think about that i think it's it's i i think uh from a from the perspective of expirations it's it's you know i think largely ratable i don't think of any any either The most, from a retention perspective, the one thing I would flag, there's one lease that expires in May that's about 50,000 square feet that we're, again, would look to that as likely potentially moving into vacancy. But apart from that, that one individual item, I think from an occupancy perspective, again, very consistent with past years relative to uh you know to the trends we're seeing on uh on our leasing activity and i did mention with the again with the prospect facility and the uh if if the east orange facility excuse me you know is uh lease is rejected we'll see new vacancy as it relates to to that that's currently covered under an overall master lease okay okay those are guidance that we've provided.

Okay. And then I guess one last one on the acquisitions. When you buy these portfolios, I'm looking at the cap rates. So you have some sevens, some nines, and you had 111 at Slippery Rock. Would that be something that you may look to dispose of, buy the whole portfolio, but maybe get rid of one or two assets? Is that how we should think about that?

When we priced the portfolio, we looked at it as a portfolio cap rate, and there was a lot of back and forth with the seller in terms of pricing. There was a lot of context on the seller's side that was very specific to that seller that we had to contend with. The short answer is no. The allocations are... do not completely reflect, you know, the value of each building. And so, like, for example, that Slippery Rock one is a single tenant. It's a very nice facility. It's functioning very well. The hospital system is doing very well in that site. And so, you know, would we consider, I mean, it's a small asset relative to the portfolio. And so when we're thinking about dispositions, I mean, we kind of go through a long list of questions like pros and cons as to like, does it make sense? And so this one, you know, just based on the characteristics of the property, not one that we would consider selling quickly. And the other thing we have to take into consideration also is just all the rules and hold periods. So the short answer is not necessarily, no.

Okay, thank you, everyone.

Thank you.

The next question is coming from Rob Stevenson of Janie Montgomery Scott. Please go ahead.

Good morning, guys. One quick one on the Heitman JV. Do they have right of first refusal? In other words, you find a great asset and it's at an 8.5 cap. Does the JV get first right of refusal as to whether or not to acquire that before the REIT, or how does that work?

No. No, so whatever we find, I mean, we have the right to pursue on our own, and it's our option whether we want to pursue with Hygiene.

Okay, that's helpful.

And then... Rob, just to add in a little bit, we were really debating doing a JV, but it had to be really separate types of properties. And basically, we have a group out there seeing all the properties, but they're buying properties that we would not buy, just with our cost of capital.

Okay. And I guess the other question with that would wind up being is that, is there an opportunity for you guys to manage other assets, or will it only be management of assets that you put in, that you are a 12.5% owner of?

I mean, so the question is, would we provide management services to third parties?

Well, to tighten in for other assets that they may wind up having in their other health care funds.

Not been considered. So no, for now, it would just be on the assets that we own in the joint venture.

Okay. And then, Bob, the Christmas rent ramp that starts in the second quarter, I think you said, is that a full quarter of rent? And when do you get to a full quarter of rent on that lease? And how much ABR is that going to be once it's fully implemented?

Okay, so working backwards, it's about $2.9 million from an overall ABR perspective. And it's a little bit of a moving target as it relates to when it fully kicks in. And so it could be April, it could be May. It's somewhere in that zone where it will fully kick in. But there's a chance that we could start to do some partial as it evolves over the next few months. But the full $2.9 million from an annual perspective should be in that April, May type of timeframe.

Okay. And then with the FFO guidance range, what drives you to the higher and lower ends of that range other than acquisition volumes and investment spreads?

You know, we look at that from an overall perspective that the lower end would allow for maybe reduced leverage, you know, maybe a potential, you know, if there's an unforeseen type event or change in rates from a forward curve perspective. Things like that and from an upper end perspective, probably a little bit leverage staying on the higher side, things of that nature. And again, maybe just things of that nature that would be on the higher side.

Okay. That's helpful, guys. Thanks. Appreciate the time this morning.

Thank you. Ladies and gentlemen, this concludes today's event. We would like to thank you for your interest and participation in today's Global Medical REIT Teleconference. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.