IPO Report: Community Healthcare Trust (CHTC)

Francis Gaskins |

Community Healthcare Trust (CHTC) is a fully-integrated healthcare real estate company that was recently organized as a Maryland corporation to acquire and own properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers in Non-Urban markets. It is based in Franklin, TN.

Five other companies are scheduled for the week of May 18. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Sandler O'Neill, Evercore Partners, SunTrust Robinson Humphrey, Janney Montgomery Scott, Oppenheimer and BB&T Capital Markets
Co-managers:

CHTC scheduled a $125 million IPO with a market capitalization of $131 million at a price range midpoint of $20 for Thursday, May 21, 2015 on NYSE.

Community Healthcare Trust Summary

CHTC is a fully-integrated healthcare real estate company that was recently organized as a Maryland corporation to acquire and own properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers in Non-Urban markets.

Community Healthcare Trust Valuation

Glossary

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Community Healthcare Trust (CHCT)

$131

9.4

21.9

1.1

1.2

96%

             

Community Healthcare Trust Conclusion

Neutral

Roll-up of 35 properties

Selling 96% on the IPO

Expects to pay 7.5% at  price range mid-point

Price to book of 1.1

Price to tangible bk of 1.2

Community Healthcare Trust Business

CHTC is a fully-integrated healthcare real estate company that was recently organized as a Maryland corporation to acquire and own properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers in Non-Urban markets.

CHTC’s strategic focus is to invest in real estate that is diversified across healthcare provider, geography, facility type and industry segment. CHTC  believes that favorable demographic trends, continuing increases in healthcare spending and the continuing shift in the delivery of healthcare services to community-based outpatient facilities create attractive opportunities for us.

CHTC intends to focus on Non-Urban healthcare facilities because CHTC believes these properties are essential to healthcare providers in their local markets and can generate more attractive risk-adjusted returns than similar facilities in urban markets.

In addition, CHTC believes its management team's extensive relationships with healthcare providers and owners of healthcare facilities will provide CHTC with the opportunity to acquire attractive Non-Urban healthcare facilities outside of a competitive bidding process.

Furthermore, CHTC believes there is significantly less competition from existing REITs and institutional buyers for these Non-Urban assets.

Upon completion of this offering and the acquisition of its  Initial Properties, CHTC will own 35 properties comprised of an aggregate of approximately 623,000 leasable square feet located in 18 states.

CHTC’s Initial Properties are leased by healthcare providers across a diverse range of both facility types and healthcare industry segments, including ambulatory surgery centers, behavioral facilities, dialysis clinics, medical office buildings, oncology centers, and physician clinics.

As of March 31, 2015, the Initial Properties were approximately 94% leased to 69 separate tenants. CHTC believes its staggered lease maturity schedule and active asset management will optimize the value of its  portfolio by consistently achieving market rental rates in new leases when the existing leases expire.

Community Healthcare Trust Intellectual Property

None

Community Healthcare Trust Competition

CHTC competes for property acquisitions with other investors, healthcare providers, other healthcare related REITs, real estate partnerships and financial institutions.

The operation of all of CHTC’s properties, including the Initial Properties, will be subject to competition from similar properties.

Certain tenants of other properties may have greater capital resources than CHTC does.

In addition, the extent to which the Initial Properties are utilized depends upon several factors, including the number of physicians using, or referring patients to, the healthcare facilities leasing the Initial Properties, competitive systems of healthcare delivery, and the area population, size and composition. Private, federal and state payment programs and the effect of other laws and regulations may also have a significant effect on the utilization of the properties.

Virtually all of the Initial Properties operate in a competitive environment and patients and referral sources, including physicians, may change their preferences for a healthcare facility from time to time.

Community Healthcare Trust 5% shareholders Pre-IPO

Athena Funding Partners, LLC  60.00%

Timothy G. Wallace       60.00%

W. Page Barnes  12.50%                     

Community Healthcare Trust Dividends

To satisfy the requirements to qualify as a REIT, and to avoid paying tax on its income, CHTC intends to pay regular quarterly cash dividends of all or substantially all of its  REIT taxable income (excluding net capital gains) to holders of its  common stock.

CHTC intends to pay a pro rata dividend with respect to the period commencing on the completion of this offering and ending on June 30, 2015, based on $0.375 per share for a full quarter.

On an annualized basis, this would be $1.50 per share, or an annual dividend rate of approximately 7.5%, based on the mid-point of the price range indicated on the cover page of the prospectus.

Community Healthcare Trust Use of Proceeds

CHTC expects to receive $117 million from its IPO and use it for the following:

$114.5 million to acquire the Initial Properties. The balance, if any, for general corporate and working capital purposes, including payment of expenses associated with this offering, the acquisition of the Initial Properties and possible future acquisitions and development activities.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Comments

Emerging Growth

Immunovaccine Inc.

Immunovaccine Inc is clinical stage biopharmaceutical company. The Company develops products based on its proprietary vaccine enhancement platform in T cell activating therapies for cancer.

Private Markets

Initial State

Initial State is an Internet of Things (IoT) data analytics & data management platform company. We turn sensor and event data into information that matters by making it easy to…

Airbnb

Airbnb is a community marketplace for people to list, discover, and book unique accommodations around the world — online or from a mobile phone. Whether an apartment for a night,…