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Global Medical REIT Inc.  (NYSE:GMRE)
Q4 2018 Earnings Conference Call
March 07, 2019, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to the Global Medical REIT's 2018 Fourth Quarter and Year End Earnings Conference Call. At this time, all lines have been placed in a listen-only mode. Please note that today's conference call is being recorded with a webcast replay available for the next 90 days.

The dial-in details for the replay can be found in yesterday's press release and can be obtained from the Investor Relations section of the Company's website at www.globalmedicalreit.com. After our speakers remarks, there will be a question-and-answer period.

(Operator Instructions). I will now turn the conference over to Global Medical REIT's Investor Relations Representative, Mary Jensen.

Mary Jensen -- Investor Relations

Thank you, operator. Good morning, everyone. Last night, after the market closed, Global Medical REIT announced its fourth quarter and year end operating and financial results for the period ended December 31st, 2018.

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 the 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 any references to assumptions and forecasts of future results.

Except for historical information, the matters set forth herein, including but not limited to any projections or forecasts of revenues, expenses, operating results, cash flows or other financial items, including our funds from operations or FFO and adjusted funds from operations or AFFO.

Any statements concerning our plans, strategies and objectives for future operations and our pipeline of acquisition opportunities and expected acquisition activity; including information about our current and prospective tenants; any statement regarding future dividend payments; any statement regarding future capital-raising activity; any statement regarding future regulatory changes and their impact on our industry or business; and any statements regarding future economic conditions or performance are forward-looking statements.

These forward-looking statements are based on our current expectations, estimates and assumptions and are subject to certain risks and uncertainties. Although we believe that the expectations, estimates and assumptions reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements.

Important factors that could cause our actual results to differ materially from estimates or projections contained in our forward-looking statements are set forth in the Risk Factor section of our Annual Report on Form 10-K and Quarterly Report on Form 10-Q and elsewhere in the reports we have filed with the United States Security and Exchange Commissions.

These risk factors include the risks that are financial projections, including projections for Funds From Operations or FFO and Adjusted Funds From Operations or AFFO, may not be realized due to, among other things, lower-than-anticipated revenues or higher-than-anticipated expenses, or we may not be successful in completing all of the acquisitions and dispositions in our investment pipeline or that we identify or pursue in the future.

We do not intend and undertake no obligation to update any forward-looking statements. Please note that the market commentary referenced in our prepared remarks today is based on data obtained from JLL healthcare real estate capital markets updates as well as Revista medical real estate reports.

With that, I'd like to turn the call over to Jeff Busch, Chief Executive Officer of Global Medical REIT. Please go ahead, Jeff.

Jeffrey Busch -- Chief Executive Officer, Chairman and President

Thank you, Mary and welcome everyone to our call. Joining me today are Bob Kiernan, our Chief Financial Officer and Alfonzo Leon, our Chief Investment Officer. I'll start off with a review of some of our excellent 2018 accomplishments and provide an update on our ongoing strategic and operational plans.

Bob will follow with his review of the Company's financial results for the fourth quarter and full year. Alfonzo will then provide a market update and a review of the Company's acquisition activity. We are very pleased with the track record we established as prudent investors of medical office and other healthcare real estate.

We are also happy with how we have evolved as a public REIT. In addition to our fourth quarter and full-year acquisition activity, GMRE continues to position itself well within the marketplace.

During the year, we utilized our network of underwriting expertise to complete 14 acquisitions totaling 812,000 square feet for approximately $196 million at a weighted average cap rate of 8.04%.

This reflects more than a 32% increase in square feet compared to the 613,000 square feet we had acquired in 2017.

The disposition of our Great Bend asset, which we sold in December is a testament to our disciplined underwriting and the value we are creating to our net lease medical portfolio. We sold it for $32.5 million generating a $7.7 million gain in achieving an internal rate of return of 43% on a leverage basis and 24% on an unleveraged basis. Investors continue to show interest in GMRE during 2018.

During the year, we raised approximately $57 million of equity at an average offering price of $9.23 per share. This includes $18 million through OP Unit transactions, which we believe is a testament to our seller's confidence in our business and strategy and another $39 million through various equity offerings. Though these strategic capital raises, we were able to manage our leverage and create a more flexible balance sheet.

We extended our credit facility maturities, while increasing our borrowing capacity and fixing a portion of our interest rates.

We are very pleased with the timing and execution of these various equity issuances and debt transactions during the year. We were able to raise capital through a tumultuous market volatility and from multiple sources of attractive prices to support our portfolio growth. Bob will provide you more color on these transactions in his remark.

Further, we continue to foster our relationships with international investors, as another source of potential capital. Our ongoing conversation with them as well as our domestic bank support our multifaceted approach to a diversified capital source. In addition, as we continue to evolve as a publicly traded REIT, we further diversified our Board of Directors with the addition of Ms. Paula Crowley and Lori Wittman, both of whom have served in C-level positions and have extensive healthcare, real estate and capital markets expertise.

Their contributions over the last few quarters have already strengthened the Board. We believe these milestones demonstrate our commitment to our shareholders and that our goals are aligned with them. As far as 2019 goes, it's shaping up to be another good growth year for us. So far this year, we've completed one transaction and have another under contract, representing a total of about 52,000 square feet for a purchase price of approximately $21 million and we have a very strong pipeline of potential investors.

With that, I'd like to turn the call over to Bob Kiernan, our CFO who'll provide details regarding the fourth quarter financial highlights.

Robert Kiernan -- Chief Financial Officer and Treasurer

Thank you, Jeff. Yesterday we reported our fourth quarter and year-end financial results for 2018 via a press release and simultaneous posting of our earnings package through our website. Regarding the fourth quarter results -- fourth quarter and year end results, our total revenue increased to $14.4 million in the fourth quarter of 2018, up from $9.9 million in the fourth quarter of 2017.

For the year ended December 31, 2018, our total revenue increased to $53.2 million, up over 75% from last year. These were driven by an increase in rental revenue from our net leased healthcare portfolio. Revenue growth continues to be positively impacted by our acquisition activity in the terms of our underlying leases.

On a same store basis, our Q4 2018 cash rental revenue increased $170,000 or 2.3% compared to the fourth quarter of 2017.

Total expenses for the fourth quarter of 2018 increased to $12.5 million, up from $8.6 million in the fourth quarter of 2017. For the year ended December 31, 2018, total expenses increased to $46.3 million compared to $30.4 million for the year ended December 31, 2017.

Depreciation and amortization expenses, as well as interest expense remain large components of our total expenses, as we continue actively acquiring properties. G&A expenses as a percent of our revenue continue to decline as a result of our cost reduction efforts and increased revenue from our larger portfolio size.

For the three months ended December 31, 2018, G&A as a percent of our total revenue was 10% compared to 11% in the comparative period. For the year ended December 31, 2018, G&A as a percent of total revenue was 10% compared to 18% in 2017.

For the year, these results were primarily impacted by an increase in non-cash LTIP expenses offset by a decrease of public company and other professional fees. Our non-cash LTIP expenses in the fourth quarter of just under $700,000 was up from $300,000 in Q4 of 2017 and down slightly from last quarter.

Looking forward to 2019, we estimated non-cash LTIP expenses should range between $2.7 million-$2.9 million for the year. We continue to look for ways to actively reduce cash G&A expenses and have a very scalable operating platform that's well positioned for continued portfolio growth without too much of an impact on our G&A. Therefore, we estimate that cash G&A for 2019 should range between $700,000 to $850,000 per quarter, representing an annual run rate of $2.8 million to $3.1 million.

Depreciation and interest expense were again our two largest expense line items in the fourth quarter and for the year, both are positively correlated with our robust acquisition activity in 2018. Depreciation expense was $3.7 million in the fourth quarter of 2018 versus $2.6 million in the prior year quarter. For the year ended December 31, 2018, depreciation expense totaled $13.6 million compared to $7.9 million in 2017.

Interest expense was $4.3 million in the fourth quarter compared to $2.2 million in the fourth quarter of 2017. For the year ended December 31, 2018, interest expense totaled $15 million compared to $7.4 million in 2017. These increases in interest expense were primarily driven by higher interest rates and higher average borrowings, the proceeds of which were used to finance our property acquisitions.

As Jeff mentioned, during the fourth quarter we sold our Great Bend assets that generates a gain of $7.7 million, reflecting the impact of increased rental revenue and this gain we reported net income attributable to common shareholders in the fourth quarter of $7 million or $0.31 per share. This compares to a loss of $200,000 or a loss of $0.01 per share in the comparative quarter.

For the year ended December 31, 2018, net income attributable to common shareholders increased to approximately $7.7 million or $0.35 per share compared to a net loss of approximately $1.8 million or a loss of $0.09 per share in 2017.

Higher rental revenue driven by our investment activities positively impacted funds from operations, FFO for the fourth quarter increased to $0.21 per share and AFFO improved to $0.20 per share versus $0.14 and $0.15 respectively in the fourth quarter of 2017.

On a sequential basis, FFO and AFFO remained flat at $0.21 and $0.20 per share, respectively. For the year ended December 31, 2018 FFO increased to $0.78 per share compared to $0.41 per share in 2017. AFFO, for the year ended December 31, 2018 increased to $0.76 per share compared to $0.54 per share in 2017.

Moving onto the balance sheet, as of December 31, 2018, our portfolio of real estate assets was carried at a gross value of $648 million, a sequential increase of $35 million and significantly up from $472 million at the end of 2017.

Looking at the liability side of our balance sheet, at year end 2018, we reduced our total debt to the tune of approximately $315 million from $332 million at September 30, 2018, net of unamortized debt discount. The current balance sheet includes $280 million drawn on our credit facility and $39 million of fixed rate notes payable.

During the fourth quarter, we fixed the LIBOR component of an additional $70 million of our credit facility borrowings, bringing the total amount of hedged borrowings to $170 million. At December 31, 2018, the weighted average term of the Company's debt was 4.24 years and our weighted average interest rate was 4.64%.

Lastly, as Jeff mentioned earlier in 2018, we demonstrated demand for our public equity and the various sources available to us by raising approximately $57 million of equity through a combination of OP Unit issuances, a direct public underwritten offering and activities through our ATM program.

Specifically, in connection with property acquisitions during the year, our operating partnership issued 1.9 million OP units, valued at $18 million at an average issuance price of $9.60 per OP Unit. In December, we sold 3.7 million shares of our common stock through a public underwritten offering at $9 per share, generating gross proceeds of $32.9 million.

In addition, through our ATM, we sold 662,000 shares of our common stock at an average price of $9.41 per share, generating gross proceeds of $6.2 million. In addition, on March 5th, our Board of Directors declared a $0.20 per share, cash dividend to common stockholders of record, as of March 26, 2019, the dividend represents an annualized rate of $0.80 per share.

With that, I will now turn things over to Alfonzo Leon, our Chief Investment Officer, who will provide an overview of the investment landscape and GMRE's portfolio.

Alfonzo Leon -- Chief Investment Officer

Thanks, Bob. In 2018, we achieved impressive results which validates our strategy. We completed 14 transactions totaling 112,000 square feet for approximately $196 million, and we did this at an average cap rate of 8% and $242 per square foot pricing.

These assets are in Texas, Georgia, Florida, Ohio, Kansas, Illinois and California and are leased to tenants providing primary care, oncology, ENT, Podiatry, OBGYN and Dermatology.

Our $648 million portfolio today now consist of 84 properties totaling 2.1 million square feet at an average 8% investment yield. By asset type, 58.4% of our portfolio is medical office, service center or outpatient. 21.9% is rehab hospital, 7.5% is surgical hospital, 4.4% is general acute care hospital and 7.8% is a mix of others (ph).

Our goal has been to buy a diversified portfolio of quality real estate leased to leading healthcare providers and secondary, tertiary markets at attractive risk-adjusted yields that are 100 basis points to 150 basis points above average. We focus on newer facilities, revenue generating facilities, good locations with attractive submarkets and good healthcare fundamentals.

Our pipeline today is looking strong. We are currently in various phases of underwriting activities on a number of deals. Like last year, and if market conditions remain status quo, we believe we can achieve another year of prudent growth. As we have stated before, we are the beneficiaries of several dynamics in this space.

First, healthcare providers are diversifying their real estate strategies to capture growing patient demand which is resulting in more settings for care.

Second, an aging population has created more outpatient procedures that are driving the need to meet patients demand within their geographic areas which oftentimes is away from a hospital campus.

Third, physicians have also assembled into larger groups that have real estate portfolios located strategically across the suburban communities they serve. We believe these groups are poised to thrive in a value-based, healthcare reimbursement environment, and fourth, we believe technology will continue pushing more healthcare into outpatient settings (ph).

I would like to reiterate our business strategy. We are not just buying real estate, we are underwriting our tenants and why they are strategically valuable to the healthcare delivery network. We strive to turn every stone looking for value, we go the extra mile of that each investment and we close on our deals with conviction in our underwriting.

We look for providers that offer high quality healthcare in lower cost settings. We look for critically needed providers in suburban communities that lease buildings with solid EBITDAR driven coverage ratios. There is an enormous investment opportunity of these deals and we are uniquely suited to pursue this niche.

With that, we will be happy to take your questions.

Questions and Answers:

Operator

(Operator Instructions). Our first question comes from the line of Barry Oxford with D.A. Davidson. Please proceed with your question.

Barry Oxford -- D.A. Davidson -- Analyst

Great, thanks guys. I guess this question is for Alfonzo. Alfonzo, how much is in your pipeline right now? And then of that what percentage you would say would be at least half way or more late stage negotiations?

Alfonzo Leon -- Chief Investment Officer

Sure. So we're always looking for opportunities and I view one of my roles here is to create as many options as possible and we're all -- we always have a dozen deals more or less active at different stages as needed to match our corporate goals.

So we're working on a bunch of stuff. We've got a lot of stuff in a pipeline and we're -- all of it -- which we will execute just as it fits our corporate needs.

Barry Oxford -- D.A. Davidson -- Analyst

Okay, great, great, thanks. And then just kind of following up along the same lines. You guys did a fair amount of equity offerings via the OP units of the ATM or (ph) an offering. Do you guys anticipate tapping the equity markets as heavily in '19 as you did in '18?

Robert Kiernan -- Chief Financial Officer and Treasurer

That's hard to say. Basically, we raised based upon how finding good quality purchases, we do plan to grow right now, we have approximately $70 million worth of purchasing power and we are optimistic -- opportunistic in the market. So therefore we do always look for capital, but we don't necessarily need capital. So if the opportunity arises we could raise capital when we needed for acquisitions.

Barry Oxford -- D.A. Davidson -- Analyst

Great. And just one more on the OP unit. Are there a fair amount of deals or that would take OP units or is that more just on a run-off basis?

Robert Kiernan -- Chief Financial Officer and Treasurer

You know, it's hard to predict. Last year we did over $18 million in OP units in three deals. We've had a lot of discussions with a lot of groups. We completed an OP unit deal just recently $0.5 million, in our pipeline, we have a few that are interested in it and it's hard to predict until you really get to the finish line. Just how many they're willing to take and the conversations are pretty fluid.

Sometimes we start with a small number and end up with a big one, case in point is the Corona deal that we closed last year started with a smaller number, but ended up with $10 million. So it's hard to predict, but we're always discussing it, there is a lot of interest in it and we're happy to take it.

Barry Oxford -- D.A. Davidson -- Analyst

Great. Thanks so much guys.

Operator

Our next question comes from the line of Rob Stevenson with Janney Montgomery Scott. Please proceed with your question.

Robert Stevenson -- Janney Montgomery Scott -- Analyst

Good morning, guys. Jeff or Alfonzo, are you guys planning on selling any assets in the '19 at this point?

Robert Kiernan -- Chief Financial Officer and Treasurer

There is no plans right now, but we do look at conditions changing. What happened with the sale last year is the asset was upgraded was purchased by a major system. So suddenly it became a rated asset and a lot of groups were contacting us about the sale. So we don't necessarily know if we're going to sell assets, but we do have to wait whether the asset on the sale, we could reinvest it well, and will return extra dividend to our investors. That's in the calculation.

Robert Stevenson -- Janney Montgomery Scott -- Analyst

Okay. And then Alfonzo, targeting any specific types of healthcare assets in '19 or is there anything in your pipeline that predominantly makes up the product mix at this point?

Alfonzo Leon -- Chief Investment Officer

Yeah. So we're -- our focus, what we look for hasn't changed. I mean it -- we're -- we like the niche that we're in, the inventory of properties that come to market fluctuates, varies, quarter-by-quarter even if you look at what we've done quarter-by-quarter, it's varied. So we're not necessarily quarter-by-quarter focusing on any one asset type, it's really just more about finding good opportunities, good real estate and really quarter-by-quarter trying to pick the best we can. So not necessarily asset focused, it's more quality focused.

Robert Stevenson -- Janney Montgomery Scott -- Analyst

And does the current pipeline comprise of anything in particular?

Alfonzo Leon -- Chief Investment Officer

It's a mix, as it always is and it's -- and everything is at different stages and that's why... (multiple speakers)

Robert Stevenson -- Janney Montgomery Scott -- Analyst

Okay. All right. And then Bob, have you guys issued anything under the ATM thus far in the first quarter?

Robert Kiernan -- Chief Financial Officer and Treasurer

We have -- We've done about $3 million in the ATM, so far in 2019.

Robert Stevenson -- Janney Montgomery Scott -- Analyst

Okay. And what was the -- because of the equity offering came sort of middle of the month and everything, I mean, what was the -- what's the shares and units outstanding that you guys had collectively at December 31st, that we should be using rolling forward for share count?

Robert Kiernan -- Chief Financial Officer and Treasurer

Sure. The year-end shares were right -- shares in OP right around $30 million, just under and then for Q1, the weighted average shares would be right around -- right at $30 million.

Robert Stevenson -- Janney Montgomery Scott -- Analyst

Okay. And then I guess now that you guys are a maturing public Company, how are you guys thinking about providing earnings guidance going forward, I mean you provided some guidance in terms of G&A and stuff like that, but how are you guys thinking about that as you guys continue to mature?

Robert Kiernan -- Chief Financial Officer and Treasurer

Yeah. I think Rob, I mean, based on the current size and the lumpiness of the acquisition activity, we're not really comfortable in providing near-term guidance. We feel very good about the portfolio, over the long term, and we continue to grow the portfolio, I think we'll be able to provide more near-term outlook, but just not comfortable with providing that full guidance at this point, but rather kind of focusing, hopefully providing some color on some of these individual lines to give better color around where we are on those that we can control.

Robert Stevenson -- Janney Montgomery Scott -- Analyst

Okay, thanks guys. Appreciate it.

Operator

Our next question comes from the line of Drew Babin with Robert W. Baird. Please proceed with your question.

Alex -- Robert W. Baird & Co -- Analyst

Good morning. This is Alex on for Drew. Given the late quarter timing of your recent capital -- recent activity. Do you anticipate any dilution leaking into the first quarter?

Robert Kiernan -- Chief Financial Officer and Treasurer

Yeah, I mean, I think the way I'd look at it was, you know, we ended the year at just under 50% leverage and so the Q1, based on the timing of acquisitions, there'd be a little bit of a lag in Q1 as we redeploy and/or deploy our dry powder.

Alex -- Robert W. Baird & Co -- Analyst

Got it, that is helpful. And you mentioned a robust opportunity pipeline that you guys constantly are working on. We're just curious if you could give us any color on the pricing trends you're seeing and you know, how the cap rates generally trended in the last, call it 6 months to 12 months?

Robert Kiernan -- Chief Financial Officer and Treasurer

Sure. So cap rates is what I think about every day and try to figure out kind of where the trends are. As we start the year, and I guess kind of high level, in 2018 I did sense that cap rates softened a little bit, but by the year end, I think it strengthened again and coming into 2019 and it's really hard to pinpoint exactly where the market is and comps, you're looking at stuff that was priced six months in the past which for our purposes it helps, but not necessarily perfect.

But as we start 2019, I get the sense the market is strengthening a little bit, but not materially different. So as we start the year -- I kind of think the market is kind of where it was last year with the REIT shares strengthening, I don't think we just yet felt the impact of that in the markets, I mean, I'm beginning to hear some sense of that coming back and some sense that they're going to start putting pricing pressure back in the market, but too soon to tell.

So, that's best I can give you is, I think we're sort of in the same market we were at the end of last year.

Alex -- Robert W. Baird & Co -- Analyst

Got it. Thanks for the...

Robert Kiernan -- Chief Financial Officer and Treasurer

Yeah. And how that relates to us, I mean our niche hasn't really changed too much, not dramatically, we're still seeing similar opportunities, so as it relates to us, we're still -- as I see it, in the same market.

Alex -- Robert W. Baird & Co -- Analyst

Got it. Thanks for the update there. Last question from me. Looks like physician group rent coverage ticked down about half a turn this quarter. Was that a majority driven by transactional activity or is there some softening at certain properties, obviously 6.5 times is still really healthy, but any color there would be really appreciated.

Robert Kiernan -- Chief Financial Officer and Treasurer

I don't think it really means much. Their business tends to be pretty lumpy as well. So we're not concerned given where we are with their rent coverage and not -- I don't know if I have more commentary than that, I mean, I think it is -- we would expect it to fluctuate up and down and the change hasn't been that relative.

Alex -- Robert W. Baird & Co -- Analyst

Got it. Thanks for taking my question guys.

Operator

(Operator Instructions). Our next question comes from the line of Bryan Maher with B. Riley FBR. Please proceed with your question.

Bryan Maher -- B. Riley, FBR -- Analyst

Good morning, guys. The AMG Specialty Hospital acquisition you did in the first quarter, almost a 9% cap rate kind of jumped out at us. Was there anything particularly special about that property, pluses or minuses that was responsible for that?

Robert Kiernan -- Chief Financial Officer and Treasurer

Sure. So, for starters, LTAC is an asset class that causes -- is not one that a lot of us (ph) are pursuing. It's a great facility, it's next to a lane regional medical center. I mean, when we -- we were very careful about making sure that the operator was solid, that the facility itself was profitable and understood exactly kind of the timeline of when it was built, why it was build, the whole context.

So that one also was a relationship deal, it's folks that I know and have known for many years. And they came to us off market with the opportunity. So it came together nicely. There were a few things that we had to fix in the lease which we did and resulted in what I view as a great acquisition of a very nice LTAC, very profitable next to a lane regional medical center in that area.

Bryan Maher -- B. Riley, FBR -- Analyst

Okay, great. And then you have danced around this question, a couple of times in some of the analyst questions. But your acquisition pays definitely was a little bit more brisk in 2018 than we were expecting and certainly what we're modeling for '19 and '20.

I mean, to just give -- you know, not looking for guidance but just kind of a broad swath, are you looking for something in 2019 maybe no less than the $100 million up to $200 million in that broad zip code?

Robert Kiernan -- Chief Financial Officer and Treasurer

Yeah, I mean as we alluded to -- if things stay status quo, we hope to continue growing as much as we did last year for sure. I mean, my goal is to look for as many opportunities as I can and we have a lot of options in front of us and great options. So we're excited, there's has been good momentum that built up last year and a lot of folks, reaching out to us, we're very busy running around looking at a lot of stuff.

So we're coming into the year with a lot of wind in our sales in terms of opportunities and really look forward to being able to grow.

Bryan Maher -- B. Riley, FBR -- Analyst

And just lastly, are you seeing anything in the competitive landscape for acquisitions, our people -- just as aggressive today as they were a year ago, have they pulled back, have they increased their appetite. What's the competitive environment looking like out there?

Robert Kiernan -- Chief Financial Officer and Treasurer

Yeah, you know, and it's -- that one is always hard to really pinpoint exactly and you have to take as much debt (ph) as you can and talk to as many people as you can. The volume is composed of and the way I see it sort of single assets and portfolios, I mean, last year there were a good number of portfolios, this year there have been a few smaller ones that have come out and the single asset volume seems pretty robust.

I mean, I don't have an exact stat for that, but there's just a lot of stuff that's become available, and it's, honestly -- it's getting to the point where I don't know how anyone can really keep up with it. I mean it's a lot. And I try as best I can to keep tabs (ph) on what everybody else is up to and talk to them at conferences and trying to get a sense of where things are headed.

It's a very general comment, but as we start 2019, it feels a lot like where we were at third and fourth quarter 2018. I don't see any material change. But what I'm waiting to see to have an impact on the market is the fact that REIT shares have come back up and I would predict that it's probably going to trigger some portfolios to come back to market, and I know that there is a few big portfolios that have been priced recently and pricing probably was a little stronger than some folks, we thought they were going to get.

I don't think we're in -- for the high kind of trophy asset quality stuff, I don't think we're sub-five, to be determined if something prices below that, I do know one comp that traded to five, in our niche. I mean, I don't see a dramatic change if anything from just pure supply demand perspective. I kind of feel like there's a lot -- supply is kind of outstripping demand and to my comment before, I mean, I don't know how anyone can really keep up with volatility (ph) there's a lot, and there's not that many players in the space.

So as we come into 2018, it looks to be as busy as it was last year, and for us, our niche, I think we're looking at a similar market.

Bryan Maher -- B. Riley, FBR -- Analyst

Okay, great. Thanks. That's all from me.

Operator

Ladies and gentlemen, we have reached the end of the question-and-answer session, and I would like to turn the call back to Jeffrey Busch for closing remarks.

Jeffrey Busch -- Chief Executive Officer, Chairman and President

We are very pleased with the direction of the Company and look forward to another productive year. Thank you for joining our conference call.

Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Duration: 36 minutes

Call participants:

Mary Jensen -- Investor Relations

Jeffrey Busch -- Chief Executive Officer, Chairman and President

Robert Kiernan -- Chief Financial Officer and Treasurer

Alfonzo Leon -- Chief Investment Officer

Barry Oxford -- D.A. Davidson -- Analyst

Robert Stevenson -- Janney Montgomery Scott -- Analyst

Alex -- Robert W. Baird & Co -- Analyst

Bryan Maher -- B. Riley, FBR -- Analyst

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