Global Medical REIT Inc. (NYSE: GMRE) (the “Company” or “GMRE”), a net-lease medical office real estate investment trust (REIT) that owns and acquires purpose-built healthcare facilities and leases those facilities to strong healthcare systems and groups with leading market share, today announced that the Company’s leases with Pipeline Health (“Pipeline”), the tenant at GMRE’s White Rock Medical Center in Dallas, Texas (“White Rock”), will be assumed by Pipeline as part of its approved bankruptcy reorganization plan. Under its approved plan, Pipeline will assume its leases at White Rock subject to amendments to help facilitate Pipeline’s exit from bankruptcy and its new business plan that reiterates Pipeline’s commitment to the Dallas, Texas market.
Jeffrey M. Busch, Chairman, Chief Executive Officer and President stated, “We are pleased with the outcome of the bankruptcy process and Pipeline’s planned assumption of our leases at White Rock which reaffirms our investment thesis for that property. We believe that Pipeline has restructured itself with a narrower focus that includes the Dallas, Texas market, which should provide them a firmer footing to weather what has been a challenging market for acute-care hospitals. Because we structured the original transaction with significant credit protection, we are able to provide Pipeline some post-bankruptcy operating flexibility without any rent deferrals, which we believe is in the best interest of our stockholders.”
Pursuant to the proposed amendments there will be no changes to (i) the Company’s prospective cash rents, (ii) the rental rate per square foot, (iii) prospective rent escalations, or (iv) the term of the Company’s lease. The proposed amendments primarily relate to (i) GMRE contingently providing up to $3.8 million of proposed new capital expenditures ($3.1 million of which is intended to result in additional rents to the Company) and (ii) GMRE’s application of a portion of Pipeline’s security deposit to a portion of the rental payments due during the first year after the bankruptcy (with such security deposit amounts repaid during the second year after bankruptcy). The proposed lease amendments have not been finalized and Pipeline’s reorganization plan will not be effective until the lease amendments have been fully executed.
Additionally, in assuming its leases at White Rock, at the effective date of its plan Pipeline is required to pay any pre-petition rents owed to us (which consists of October 2022 rent). To-date Pipeline has paid to GMRE all rents that were due during the bankruptcy proceedings.
Certain statements contained herein may be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and it is the Company’s intent that any such statements be protected by the safe harbor created thereby. These forward-looking statements are identified by their use of terms and phrases such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "plan," "predict," "project," "will," "continue" and other similar terms and phrases, including references to assumptions and forecasts of future results. Except for historical information, the statements set forth herein including, but not limited to, any statements regarding Pipeline’s post-bankruptcy strategy and operations or the success of such strategy and operations, the terms of any lease amendments with Pipeline or whether we are able to successfully enter into the lease amendments with Pipeline and the amounts of any proposed capital expenditures and our return on such expenditures. These forward-looking statements are based on our current expectations, estimates and assumptions and are subject to certain risks and uncertainties. Although the Company believes that the expectations, estimates and assumptions reflected in its forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of the Company’s forward-looking statements. Additional information concerning us and our business, including additional factors that could materially and adversely affect our financial results, include, without limitation, the risks described under Part I, Item 1A - Risk Factors, in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, and in our other filings with the SEC. You are cautioned not to place undue reliance on forward-looking statements. The Company does not intend, and undertakes no obligation, to update any forward-looking statement.
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