In a report released today, Juan C. Sanabria from BMO Capital maintained a Hold rating on Global Medical REIT (GMRE – Research Report), with a price target of $10.00.
Juan C. Sanabria has given his Hold rating due to a combination of factors that suggest a balanced risk-reward profile for the stock of Global Medical REIT (GMRE). The company’s first-quarter results for the year 2024 aligned with expectations, which indicates a stable performance but not necessarily one that outperforms the market. Additionally, the company is engaging in new acquisitions, with a significant portfolio under contract set to close in the second half of the year. However, the details regarding the funding of these acquisitions are not clear, given that there was no ATM issuance reported for the first quarter. Moreover, the current leverage ratio remains high, which adds a degree of financial risk.
Another concern impacting the Hold rating is the bankruptcy of Steward, a tenant that accounts for a minor portion of GMRE’s Annual Base Rent (ABR) but is now behind on payments. This situation introduces an element of uncertainty regarding the company’s income stability. Furthermore, the report highlights an elevated Funds Available for Distribution (FAD) dividend payout ratio, which exceeds 100%, suggesting that the company’s dividend payments might not be sustainable in the long term without adjustments. This combination of ongoing investments, unclear funding strategies, elevated leverage, and potential income risks from tenants contributes to a cautious outlook, thus warranting a Hold recommendation on the GMRE stock.
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Global Medical REIT (GMRE) Company Description:
Global Medical REIT, Inc. engages in the acquisition of purpose-built healthcare facilities and leasing of those properties to strong healthcare systems and physician groups. The company was founded on March 18, 2011 and is headquartered in Bethesda, MD.
