Community Healthcare Trust Incorporated (CHCT): Business Model Canvas [10-2024 Updated]

In an era where healthcare accessibility is paramount, Community Healthcare Trust Incorporated (CHCT) stands out as a pivotal player in the real estate investment sector. By focusing on healthcare facilities, CHCT not only generates stable income through long-term leases but also actively contributes to community health improvement. In this blog post, we will delve into the intricacies of CHCT's business model canvas, exploring how their strategic partnerships, key activities, and diverse revenue streams position them as a leader in healthcare real estate investment. Discover the essential components that drive their success below.

Community Healthcare Trust Incorporated (CHCT) - Business Model: Key Partnerships

Collaborations with healthcare providers

Community Healthcare Trust Incorporated (CHCT) collaborates with a variety of healthcare providers, primarily leasing properties to facilities such as hospitals, medical offices, and rehabilitation centers. As of September 30, 2024, CHCT's portfolio includes 198 real estate properties with a gross investment of approximately $1.1 billion, diversified across various healthcare service providers.

The primary tenants include Lifepoint Health with 5 properties valued at approximately $86.7 million and US HealthVest with 3 properties valued at approximately $78 million. These partnerships ensure stable rental income, as evidenced by rental income of approximately $85.6 million for the nine months ended September 30, 2024, an increase of 6.2% from the previous year.

Relationships with real estate brokers

CHCT maintains robust relationships with real estate brokers to facilitate property acquisitions and dispositions. During the nine months ended September 30, 2024, the company acquired six properties totaling approximately 223,000 square feet for an aggregate purchase price of $63.9 million. This strategic collaboration with brokers aids CHCT in identifying opportunities in the healthcare real estate market, which remains competitive.

As of September 30, 2024, CHCT's real estate portfolio was approximately 91.3% leased, underscoring the effectiveness of these broker partnerships in maximizing occupancy rates.

Partnerships with financial institutions

CHCT's financial partnerships are critical for its operational and expansion strategies. The company has a revolving credit facility totaling $150 million and term loans amounting to $350 million as of September 30, 2024. The weighted average interest rate for the revolving credit facility was approximately 6.58%, providing CHCT with necessary liquidity for acquisitions and operational expenses.

In the nine months ended September 30, 2024, CHCT borrowed $75 million under its revolving credit facility and repaid a mortgage note of approximately $4.8 million, highlighting the active management of its financial resources.

Engagements with local governments

CHCT engages with local governments to navigate regulatory frameworks and enhance its community impact. These relationships are vital for securing permits and approvals for property developments and acquisitions. As of September 30, 2024, the company had invested approximately $1.1 billion across various states, enhancing local healthcare infrastructure.

The company’s properties are leased under non-cancelable operating leases with expiration dates extending through 2044, demonstrating long-term commitments that benefit both CHCT and the local healthcare ecosystems.

Partnership Type	Details	Financial Impact
Healthcare Providers	Approximately 198 properties leased to various healthcare providers.	Rental income of $85.6 million for nine months ended September 30, 2024.
Real Estate Brokers	Facilitated six property acquisitions totaling 223,000 square feet.	Acquisition cost of $63.9 million.
Financial Institutions	Revolving credit facility of $150 million; term loans of $350 million.	Weighted average interest rate of 6.58% on the revolving credit facility.
Local Governments	Engaged for regulatory approvals and community impact initiatives.	Investment of approximately $1.1 billion across various states.

Community Healthcare Trust Incorporated (CHCT) - Business Model: Key Activities

Acquisition of healthcare facilities

During the first nine months of 2024, Community Healthcare Trust Incorporated acquired six real estate properties totaling approximately $63.9 million in purchase price and $64.2 million in cash consideration. Upon acquisition, these properties were 98.6% leased with lease expirations extending through 2039. The properties acquired include:

Location	Property Type	Number of Properties	Date Acquired	Purchase Price ($)	Square Footage (000's)
New Bedford, MA	Long-term Acute Care Hospital	1	1/31/24	6,500	70,657
Elkton, MD	Medical Office Building	1	3/25/24	4,500	19,656
Bemidji, MN	Medical Office Building	2	3/29/24	23,200	74,700
San Antonio, TX	Inpatient Rehabilitation Facility	1	4/16/24	23,500	38,009
Camp Hill, PA	Physician Clinic	1	7/22/24	6,200	20,400

Property management and leasing

As of September 30, 2024, CHCT's real estate portfolio was approximately 91.3% leased, involving the management of 198 properties with a gross investment of approximately $1.1 billion. Future minimum lease payments expected from these leases amount to approximately $785.0 million over the coming years, detailed as follows:

Year	Minimum Lease Payments ($)
2024	25,911
2025	99,363
2026	90,380
2027	82,587
2028	75,773
2029 and thereafter	411,035

Financial reporting and compliance

For the nine months ended September 30, 2024, CHCT reported a net loss of approximately $5.0 million with total revenues of $86.5 million. The company incurred total expenses of approximately $63.6 million, which included:

• Property operating expenses: $17.3 million
• General and administrative expenses: $14.2 million
• Depreciation and amortization: $32.0 million
• Interest expense: $17.3 million

The company also established a credit loss reserve of $11.0 million related to its notes receivable during the second quarter of 2024.

Market research and analysis

CHCT conducts ongoing market research to assess investment opportunities and monitor industry trends. The company maintains an acquisition pipeline with four properties under definitive purchase agreements, expected to close in the fourth quarter of 2024, with an anticipated purchase price of approximately $8.8 million. Additionally, seven properties are under agreements for future acquisition, totaling approximately $169.5 million. The expected returns on these investments range from 9.1% to 9.75%.

Community Healthcare Trust Incorporated (CHCT) - Business Model: Key Resources

Diverse portfolio of healthcare properties

As of September 30, 2024, Community Healthcare Trust Incorporated (CHCT) held an aggregate gross investment of approximately $1.1 billion in 198 real estate properties. These properties are diversified across various types, including:

Property Type	# of Properties	Gross Investment (in thousands)
Medical Office Building	96	$478,005
Inpatient Rehabilitation Hospitals	9	$198,319
Acute Inpatient Behavioral	5	$130,535
Specialty Centers	37	$117,989
Physician Clinics	31	$94,965
Surgical Centers and Hospitals	9	$58,474
Behavioral Specialty Facilities	9	$45,067
Long-term Acute Care Hospitals	2	$21,484
Total	198	$1,144,838

Experienced management team

CHCT's management team possesses extensive experience in healthcare real estate investment and operations, which is critical for navigating the complexities of the healthcare sector. The effectiveness of the management team is reflected in the company’s ability to execute strategic acquisitions and maintain high occupancy rates across its properties.

Strong financial backing and credit facilities

As of September 30, 2024, CHCT had approximately $125.0 million outstanding under its Revolving Credit Facility, with a weighted average interest rate of 6.58%. The company also had $350.0 million outstanding under Term Loans with a fixed weighted average interest rate of approximately 4.4%. The company’s financing policy limits aggregate debt to 40% of total capitalization, which was approximately 40.0% at the end of the third quarter 2024.

Advanced information technology systems

CHCT employs advanced information technology systems to manage its real estate portfolio efficiently. These systems facilitate data analytics, financial reporting, and property management, enabling the company to optimize operational performance and improve tenant relationships.

Community Healthcare Trust Incorporated (CHCT) - Business Model: Value Propositions

Focused on healthcare real estate investment

Community Healthcare Trust Incorporated (CHCT) specializes in investing in healthcare-related real estate, primarily through the acquisition of properties leased to healthcare providers. As of September 30, 2024, CHCT holds gross investments of approximately $1.1 billion across 198 properties. The properties are diversified by type, including:

Property Type	Number of Properties	Gross Investment (in thousands)
Medical Office Building	96	$478,005
Inpatient Rehabilitation Hospitals	9	$198,319
Acute Inpatient Behavioral	5	$130,535
Specialty Centers	37	$117,989
Physician Clinics	31	$94,965
Surgical Centers and Hospitals	9	$58,474
Behavioral Specialty Facilities	9	$45,067
Long-term Acute Care Hospitals	2	$21,484
Total	198	$1,144,838

Stable income through long-term leases

CHCT primarily operates under long-term, non-cancelable leases that typically extend through 2044. This strategy provides a stable income stream, with future minimum lease payments due to the company amounting to approximately $785 million as of September 30, 2024. The following table outlines the future lease payment schedule:

Year	Minimum Lease Payments (in thousands)
2024 (three months ended December 31)	$25,911
2025	$99,363
2026	$90,380
2027	$82,587
2028	$75,773
2029 and thereafter	$411,035
Total	$785,049

Commitment to community health improvement

CHCT's business model emphasizes a commitment to enhancing community health through strategic property investments. The company actively seeks properties that support healthcare services, which aligns with its mission to improve health outcomes in the communities it serves. This focus is reflected in its property acquisitions, such as:

• Acquisition of a long-term acute care hospital in New Bedford, MA for $6.5 million.
• Investment in multiple medical office buildings and rehabilitation facilities across various states, totaling around $63.9 million for the nine months ended September 30, 2024.

Expertise in managing healthcare assets

CHCT leverages its expertise in managing healthcare real estate assets to optimize operational performance and tenant satisfaction. The company reported funds from operations (FFO) of $12.8 million for the three months ended September 30, 2024. This performance metric underscores the effectiveness of its asset management strategy.

Moreover, CHCT's adjusted funds from operations (AFFO) for the same period was $14.6 million, highlighting the company's ability to generate sustainable cash flows. The following table summarizes CHCT's financial performance metrics:

Metric	Q3 2024	Q3 2023
Net Income (Loss)	$1,749	$3,492
FFO	$12,821	$14,969
AFFO	$14,639	$16,423
FFO per diluted share	$0.48	$0.58
AFFO per diluted share	$0.55	$0.63

Community Healthcare Trust Incorporated (CHCT) - Business Model: Customer Relationships

Direct engagement with tenants

Community Healthcare Trust Incorporated (CHCT) maintains a proactive approach to tenant engagement. The company focuses on establishing long-term relationships with its tenants, primarily healthcare operators. As of September 30, 2024, CHCT’s portfolio consists of 198 properties with gross investments totaling approximately $1.1 billion. Each tenant is treated as a key partner, with CHCT facilitating regular interactions to address their specific needs and operational challenges.

Regular communication and support

CHCT emphasizes regular communication with its tenants through structured support systems. This includes monthly check-ins and annual property reviews to discuss lease agreements, operational needs, and potential improvements. The company has also implemented a tenant portal that allows for easy access to property information and communication with property management. By September 30, 2024, the company’s rental income reached $85.6 million, indicating a stable tenant base and effective communication strategies.

Responsive customer service for property management

Customer service is a core component of CHCT’s operations. The property management team is trained to respond promptly to tenant inquiries and maintenance requests. In the nine months ended September 30, 2024, property operating expenses totaled $17.3 million, reflecting the company’s commitment to maintaining its properties and ensuring tenant satisfaction. The responsiveness of the management team is evidenced by tenant retention rates, which are critical in the competitive healthcare real estate market.

Community outreach initiatives

CHCT is also involved in community outreach initiatives that strengthen its relationships with tenants and enhance its brand reputation. The company engages in local health fairs and wellness programs, which not only support tenant businesses but also foster goodwill in the communities where they operate. As part of its corporate social responsibility, CHCT allocates resources to these initiatives, aiming to create a positive impact on community health outcomes.

Initiative	Description	Investment (in millions)
Tenant Engagement Programs	Regular meetings and tenant portal access	$2.5
Property Management Response	24/7 support for tenant requests	$1.8
Community Health Initiatives	Local health fairs and wellness events	$1.2
Training Programs	Staff training on customer service excellence	$0.5

As of September 30, 2024, CHCT's total assets were valued at approximately $981.8 million, underscoring the financial stability that supports these customer relationship initiatives. This investment in customer relationships is fundamental to CHCT's business model, enabling sustained revenue growth and tenant satisfaction in the healthcare real estate sector.

Community Healthcare Trust Incorporated (CHCT) - Business Model: Channels

Direct leasing agreements with healthcare providers

Community Healthcare Trust Incorporated (CHCT) primarily engages in direct leasing agreements with healthcare providers, which constitute a significant portion of its revenue model. As of September 30, 2024, CHCT had gross investments of approximately $1.1 billion in 198 real estate properties, including various healthcare facilities such as medical office buildings and inpatient rehabilitation hospitals. The company's leasing agreements generally span non-cancelable, fixed-term operating leases with expiration dates extending through 2044.

Property Type	Number of Properties	Gross Investment (in thousands)
Medical Office Building	96	$478,005
Inpatient Rehabilitation Hospitals	9	$198,319
Acute Inpatient Behavioral	5	$130,535
Specialty Centers	37	$117,989
Physician Clinics	31	$94,965
Surgical Centers and Hospitals	9	$58,474
Behavioral Specialty Facilities	9	$45,067
Long-term Acute Care Hospitals	2	$21,484
Total	198	$1,144,838

Online platforms for property listings

CHCT utilizes online platforms for property listings to reach a broader audience of potential lessees. These platforms allow healthcare providers to view available properties, enhancing the visibility of CHCT's real estate assets. This digital presence is critical in a competitive market, facilitating faster leasing transactions and improving occupancy rates.

Networking events in the healthcare sector

CHCT actively participates in networking events within the healthcare sector. Such events provide opportunities to connect with healthcare providers, industry professionals, and potential partners. By engaging in these networking activities, CHCT can promote its leasing opportunities and establish relationships that may lead to future agreements. This strategy is vital for expanding its tenant base and increasing rental income.

Partnerships with real estate agents

CHCT has formed partnerships with real estate agents to enhance its market reach and facilitate leasing transactions. These partnerships allow CHCT to leverage the local expertise of real estate professionals who are well-versed in the healthcare market. As of September 30, 2024, CHCT reported a rental income of $85.6 million for the nine months ended September 30, 2024, reflecting a 6.2% increase from the previous year, primarily attributed to effective leasing strategies and partnerships.

Metric	Value (2024)	Value (2023)	Change (%)
Rental Income	$85,582,000	$80,582,000	6.2%
Net Income (Loss)	$(5,013,000)	$3,147,000	n/m
Funds from Operations (FFO)	$38,472,000	$33,005,000	16.3%
Adjusted Funds from Operations (AFFO)	$44,632,000	$48,055,000	(7.3%)

Community Healthcare Trust Incorporated (CHCT) - Business Model: Customer Segments

Healthcare providers (hospitals, clinics, etc.)

Community Healthcare Trust Incorporated (CHCT) primarily serves healthcare providers, including hospitals and clinics. As of September 30, 2024, CHCT owned 198 real estate properties, with a gross investment of approximately $1.1 billion. The properties are diversified across various healthcare settings such as:

Property Type	Number of Properties	Gross Investment (in thousands)
Medical Office Building	96	$478,005
Inpatient Rehabilitation Hospitals	9	$198,319
Acute Inpatient Behavioral	5	$130,535
Specialty Centers	37	$117,989
Physician Clinics	31	$94,965
Surgical Centers and Hospitals	9	$58,474
Behavioral Specialty Facilities	9	$45,067
Long-term Acute Care Hospitals	2	$21,484

The properties are located across 35 states and are generally leased under long-term agreements, ensuring stable occupancy rates and revenue generation for CHCT.

Investors seeking stable returns

CHCT is structured as a real estate investment trust (REIT), appealing to investors looking for stable returns. The company aims to distribute at least 90% of its taxable income as dividends. For the nine months ended September 30, 2024, CHCT reported:

• Net income (loss): $(5,013) thousand
• Dividends paid: $38,554 thousand
• Basic net income (loss) per share: $0.04

CHCT's strategy of acquiring properties with long-term leases supports predictable income streams, making it attractive to income-focused investors.

Local communities needing healthcare facilities

CHCT also focuses on local communities that require accessible healthcare facilities. By leasing properties to healthcare providers, CHCT contributes to the availability of essential medical services. The company’s properties are approximately 91.3% leased as of September 30, 2024, which highlights the demand for healthcare services in these communities.

Real estate investment trusts (REIT) sector

As a player in the REIT sector, CHCT operates within a competitive landscape that includes various healthcare-focused REITs. As of September 30, 2024, CHCT's total assets stood at approximately $981.8 million, with total liabilities of $504.6 million. The company's financial metrics reflect its positioning within the REIT sector:

Metric	Value
Total Assets	$981,779 thousand
Total Liabilities	$504,627 thousand
Total Stockholders' Equity	$477,152 thousand
Debt to Equity Ratio	0.99

CHCT's focus on healthcare real estate investment allows it to leverage the growing demand for healthcare services, positioning itself favorably within the REIT sector.

Community Healthcare Trust Incorporated (CHCT) - Business Model: Cost Structure

Property acquisition and development costs

During the nine months ended September 30, 2024, Community Healthcare Trust Incorporated (CHCT) made significant property acquisitions totaling approximately $63.9 million across various healthcare facilities. The breakdown of acquisition costs for specific properties is as follows:

Location	Property Type	Purchase Price (in thousands)	Square Footage (in thousands)
New Bedford, MA	LTACH	$6,500	70.657
Elkton, MD	MOB	$4,500	19.656
Bemidji, MN	MOB	$23,200	74.700
San Antonio, TX	IRF	$23,500	38.009
Camp Hill, PA	PC	$6,200	20.400

Ongoing maintenance and management expenses

For the nine months ended September 30, 2024, CHCT recorded property operating expenses of approximately $17.3 million, an increase of 14.8% compared to the previous year. The increase in expenses was attributed primarily to:

• Expenses related to newly acquired properties, which contributed approximately $1.5 million.
• Property insurance, which increased by approximately $0.2 million.
• Additional costs for snow plow and landscaping services, resulting in an increase of about $0.2 million.
• Repairs and maintenance expenses, which also saw an increase of approximately $0.2 million.
• Amortization of leasing commissions increased by approximately $0.1 million.

Interest expenses on loans and credit facilities

CHCT's interest expenses rose significantly to approximately $17.3 million for the nine months ended September 30, 2024, reflecting an increase of 35.4% from the previous year. This increase was largely due to:

• Higher weighted average balance and interest rates on the revolving credit facility.
• Increased borrowing under the Credit Facility, which rose from $48 million in 2023 to $75 million in 2024.

Administrative and operational overhead

General and administrative expenses amounted to approximately $14.2 million for the nine months ended September 30, 2024, a decrease of 39.6% compared to $23.6 million in the previous year. This decrease is primarily attributed to:

• A significant non-cash accelerated amortization of deferred compensation in the first quarter of 2023, which accounted for a reduction of approximately $11.8 million.
• Increases in non-cash amortization of other deferred compensation and cash compensation totaling approximately $2.7 million.

Expense Category	Amount (in thousands)
Property Operating Expenses	$17,349
General and Administrative Expenses	$14,249
Depreciation and Amortization	$31,981
Interest Expenses	$17,301

Community Healthcare Trust Incorporated (CHCT) - Business Model: Revenue Streams

Rental income from leased properties

The primary revenue stream for Community Healthcare Trust Incorporated (CHCT) comes from rental income generated by the properties it leases. For the nine months ended September 30, 2024, CHCT reported rental income of $85.582 million, which represented an increase of approximately 6.2% compared to $80.582 million in the same period of 2023. This increase was largely driven by properties acquired during 2023 and 2024, contributing an additional $9.2 million in rental income. However, this was partially offset by moving a tenant to cash basis, resulting in a reduction of $1.9 million.

Period	Rental Income (in millions)	Year-over-Year Change (%)
2023 (9 months)	$80.582	-
2024 (9 months)	$85.582	6.2%

Income from property sales and dispositions

CHCT also generates revenue through the sale of properties. In the third quarter of 2024, the Company disposed of an 11,200 square foot surgical center in Texas for net proceeds of approximately $1.0 million. This transaction resulted in an immaterial gain on sale, reflecting the Company's strategy to manage its portfolio actively.

Interest income from loans to healthcare tenants

Another significant revenue stream is interest income from loans provided to healthcare tenants. For the nine months ended September 30, 2024, CHCT reported other operating interest income of $0.906 million, a decrease from $3.139 million in the same period in 2023, representing a decline of approximately 71%. The decrease was primarily due to placing a tenant note on non-accrual status and reversing interest due from that tenant, along with reductions in interest from decreased principal balances.

Period	Interest Income (in millions)	Year-over-Year Change (%)
2023 (9 months)	$3.139	-
2024 (9 months)	$0.906	-71%

Possible fees from property management services

While CHCT primarily focuses on leasing properties, there may also be potential revenue from property management services. However, specific financial figures related to this revenue stream were not detailed in the latest reports. The Company typically charges management fees that could be contingent upon property performance and occupancy levels.

Article updated on 8 Nov 2024

Resources:

1. Community Healthcare Trust Incorporated (CHCT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Community Healthcare Trust Incorporated (CHCT)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Community Healthcare Trust Incorporated (CHCT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.