Community Healthcare Trust Q3 2026 Earnings: Lower G&A Supports Higher FFO

Community Healthcare Trust (NYSE: CHCT) reported Q3 2026 revenue of $32.4 million, up 4.4% from $31.1 million a year earlier, while diluted EPS increased to $0.09 from $0.03. Net income rose to $3.1 million, with lower general and administrative expense supporting FFO growth even as interest expense and real estate sale losses increased.

Core Financial Results

Revenue growth was moderate, but total operating expenses declined 3.1% to $20.8 million. This combination lifted GAAP net income by 87.1%, although the comparison also benefited from lower stock-based compensation expense.

FFO and AFFO both increased, but at different rates. FFO excludes real estate depreciation and sale losses, while CHCT’s AFFO calculation also adjusts for straight-line rent and stock-based compensation.

Interest expense increased to $7.5 million from $7.1 million, and the net loss on real estate sales and impairment rose to $1.0 million from $0.9 million. These items partially offset the benefit of higher revenue and lower operating expenses.

Portfolio Operations and Capital Recycling

Leased occupancy improved sequentially from 89.8% in Q2 to 90.1% in Q3. At September 30, CHCT had approximately $1.2 billion invested across 196 properties in 36 states, covering about 4.5 million square feet.

A geriatric behavioral hospital operator occupying six CHCT properties paid approximately $0.5 million of rent during the quarter, up about $0.2 million from Q2. A prospective buyer of the tenant’s business was completing due diligence and preparing definitive agreements that would include new leases for the six properties, but CHCT did not provide assurance that the transaction would close or specify its timing.

Capital recycling remained central to the company’s strategy. CHCT completed $32.3 million of property dispositions after the end of Q2. During Q3, it sold one property for approximately $0.1 million of net proceeds and recorded a $0.7 million loss. After September 30, it sold another two properties for combined net proceeds of approximately $31.5 million, which are expected to support acquisitions through a Section 1031 exchange and fund general corporate purposes.

CHCT also had four properties under definitive purchase agreements with an aggregate expected price of approximately $99.0 million. Expected returns range from 9.1% to 9.75%. The company anticipates one closing in Q4 2026, another in Q1 2027, and the remaining two between mid-2027 and early 2028, subject to completion, occupancy and closing conditions.

Profitability and Balance Sheet

Net debt increased to $558.4 million at September 30 from $532.2 million at the end of 2025, while cash and cash equivalents declined to $1.4 million from $3.3 million. Assets held for sale increased to $22.6 million from $5.3 million, consistent with the capital-recycling activity completed shortly after quarter-end.

CHCT did not issue shares through its at-the-market program during Q3. The board maintained the quarterly common dividend at $0.33 per share, payable on November 25, 2026, to shareholders of record on November 13.

Lower G&A Amplified Modest Revenue Growth

The most important earnings driver was the reduction in G&A expense rather than a sharp acceleration in revenue. G&A declined 10.0% year over year and fell $0.7 million, or 14.3%, from Q2.

The sequential decrease included an approximately $0.9 million reduction in deferred compensation expense. Fully amortized restricted stock awards and forfeited performance-based restricted stock units reduced expense by about $1.25 million, partly offset by approximately $0.4 million of amortization from new Q3 awards. Total stock-based compensation declined to $1.9 million from $2.5 million a year earlier.

Because CHCT’s AFFO calculation removes stock-based compensation, the difference between 8.0% FFO-per-share growth and 3.6% AFFO-per-share growth is consistent with compensation-related expense changes having a larger effect on GAAP earnings and FFO than on the adjusted operating measure.

Recent Insider Transactions

The dated transaction records supplied include two August 2026 purchases and eight stock awards among the ten latest disclosures. No sales appear in those ten records, but individual awards or purchases should not be interpreted as statements about CHCT’s valuation or outlook.

Risks Investors Should Monitor

• Tenant transaction uncertainty: The proposed sale of the geriatric behavioral hospital operator remains subject to due diligence and definitive agreements. The timing and ultimate completion are uncertain, directly affecting a tenant in six CHCT properties.
• Higher debt and interest expense: Net debt increased from year-end, while quarterly interest expense rose 6.2% year over year. Continued increases could offset operating income growth.
• Acquisition execution: The four-property, $99.0 million pipeline depends on construction completion, occupancy and closing conditions. CHCT has explicitly cautioned that the announced timing and closings are not assured.
• Capital-recycling effects: The Q3 property sale produced only $0.1 million of net proceeds and a $0.7 million loss, illustrating how dispositions can weigh on GAAP earnings even when they support broader portfolio objectives.
• Remaining vacancy: Leased occupancy improved, but at 90.1% the portfolio still has meaningful unleased capacity that could limit rental-income growth.

Summary

CHCT’s Q3 2026 results combined moderate revenue growth with a larger increase in net income and FFO, primarily because G&A and compensation-related expenses declined. AFFO grew more slowly, providing a steadier view of adjusted operations. The next areas to monitor are the six-property tenant situation, execution and financing of the $99.0 million acquisition pipeline, and whether capital recycling can improve portfolio performance without adding further earnings pressure.