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Global Medical REIT Inc.  (NYSE:GMRE)
Q4 2019 Earnings Call
Mar 05, 2020, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Greetings. Welcome to Global Medical REIT fourth-quarter and year-end 2019 earnings call. [Operator instructions] Please note, this conference is being recorded. I will now turn the conference over to Evelyn Infurna with investor relations.

Thank you. You may begin.

Evelyn Infurna -- Investor Relations

Thank you, operator. Good morning, everyone, and welcome to the Global Medical REIT fourth-quarter and year-end earnings conference call. Please note the use of forward-looking statements by the company on this conference call. Statements made on this call may include statements which are not historical facts and are considered forward-looking.

The company intends these forward-looking statements to be covered by the safe harbor provision for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is making this statement for purpose of complying with those safe harbor provisions. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond the company's control, including without limitation, those contained in the company's 10-K for the year ended December 31, 2019, which we expect to file in the next few days and its other Securities and Exchange Commission filings. The company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, on this call, the company may refer to certain non-GAAP financial measures, such as funds from operations and adjusted funds from operations. You can find a tabular reconciliation of these non-GAAP financial measures to the most currently comparable GAAP numbers in the company's earnings release and in filings with the Securities and Exchange Commission.

Additional information may be found on the investor relations page of the company's website at www.globalmedicalreit.com. I would now like to turn the call over to Jeff Busch, chief executive officer of Global Medical REIT.

Jeff Busch -- Chief Executive Officer

Thank you, Evelyn, and welcome to our fourth-quarter 2019 conference call. Joining me today are Bob Kiernan, our chief financial officer; and Alfonzo Leon, our chief investment officer. 2019 was a remarkable year for GMRE. We invested over $250 million in 18 medical properties, supported our growth with two successful equity offerings and initiated the internalization review process.

Throughout 2019, we stuck to our core strategy of investing in primarily off-campus medical facilities, including medical office, specialty hospitals, inpatient rehabilitation facilities and ambulatory surgery centers. Importantly, the weighted average cap rate on our 2019 acquisition was 7.5%. GMRE's strategy is at the nexus of important changes in the way healthcare is delivered in the United States. Increasingly, health insurance providers are incentivizing patients and physicians to seek care in off-campus, specialized facilities by those owned by GMRE.

Our focus is on secondary markets, which helps to underpin our favorable rent coverage ratio. For example, while procedures in reimbursement have been priced nationally by insurance providers, rental rates are dictated by the local market. So comparable physician groups may generate similar top line nationally but realize very different bottom line, depending on the market they operated. To ensure that we are making smart decisions regarding operated, our acquisition team performs extensive due diligence to help mitigate risk of our tenants' credit.

We believe our portfolio of healthcare facilities is well diversified by asset type, geography and tenant. Our ability to combine healthcare knowledge and financial discipline with real estate expertise has helped create a portfolio with durable recurring cash flow and strong coverage ratios. We have a seasoned team, both in our management and on our board that brings both real estate expertise and healthcare expertise to the table. This helps GMRE navigate nuances, regulatory implication and structural factors that provide us with valuable insights in pursuing accretive transactions.

The healthcare properties we acquire are primarily leased to medical group with strong profitability and credit profile on a long-term triple or absolute net basis. Overall, we believe our portfolio can continue to provide a stable stream of income and drive strong results for investors. We are pleased with our accomplishments in 2019 and look forward to even more success in 2020. Before turning the call over to Bob, I would like to take a moment to discuss internalization.

On December 17, the company announced the board has formed a special committee of independent directors to evaluate a potential management internalization transaction. Given that internalization is an ongoing process, we are limited as to what we could share at this time. With that, I turn the call over to Bob Kiernan, our CFO, who will discuss our fourth-quarter financial results.

Bob Kiernan -- Chief Financial Officer

Thank you, Jeff. Last night, after the market closed, GMRE reported financial results for the fourth quarter and year ended December 31, 2019, via our press release and simultaneous posting of our supplemental earnings package through our website. Total revenue for the fourth quarter increased 42.3% year over year to $20.5 million due to the continued growth of our investment portfolio through our accretive acquisition strategy, as well as same-store portfolio contractual rental increases. For the 12 months ended December 31, 2019, total revenue grew 33% to $70.7 million.

Our same-store portfolio contractual rent increased $0.3 million during the fourth quarter of 2019 or 2.2% compared to the fourth quarter of 2018. Total expenses for the fourth quarter of 2019 increased 40.9% to $17.7 million year over year. For 2019, total expenses were $61.1 million, up 32% as compared to 2018. Depreciation and amortization expenses, as well as interest expense remain large components of our total expenses for each period as we continue to actively acquire properties.

G&A expense for the fourth quarter of 2019 was $1.6 million, up 17.5%, compared to $1.4 million in the year-ago period. This quarterly increase was primarily due to an increase in noncash LTIP compensation expense. LTIP compensation expense was $843,000 for the three months ended December 31, '19, compared to $693,000 for the same period in 2018. For the year ended December 31, 2019, G&A was $6.5 million, up 18%, compared to $5.5 million for the year ended December 31, 2018.

In this number, our noncash LTIP compensation expense increased to $3.3 million for 2019 from $2.7 million in 2018, and our cash G&A expenses increased to $3.2 million from $2.8 million in 2018. The increase in our cash G&A expenses is primarily a function of our increased size. And for 2020, we expect this increase to be approximately $3.4 million. Depreciation and interest expense continued to be our two largest expense line items in the fourth quarter driven by our acquisition activity.

Depreciation expense was $5.6 million in the fourth quarter of 2019, compared to $3.7 million in the prior-year quarter. Interest expense was approximately $4.8 million in the quarter, up 11% from the year-ago period. For the year ended December 31, 2019, depreciation expense was $19.1 million, compared to $13.6 million in the prior year, and interest expense was $17.5 million, up 17% from the same period last year. These increases are a direct result of our acquisition activity over the past year with respect to interest expense, higher average borrowings used to finance our acquisitions.

Our average borrowing cost for the fourth quarter of 2019 was 3.87%, compared to 4.21% in the prior quarter and 4.48% in the fourth quarter of 2018. The sequential quarterly decrease in our borrowing cost was largely driven by the impact of the $130 million of interest rate swaps that we entered into in October 2019. Net income attributable to common stockholders for the fourth quarter of 2019 was $1.2 million, compared to net income of $7 million in the fourth quarter of 2018. The reason for the decrease was due to a $7.7 million gain on the sale of an investment property in the fourth quarter of 2018, partially offset by the benefits of accretive acquisition activity in 2019.

For the year, our net income was $3.4 million versus $7.7 million in the prior year. Our FFO and AFFO for the fourth quarter of 2019 were both $0.21 per share and unit, up $0.01, compared to the prior-year quarter. For the full-year 2019, our FFO and AFFO per share and unit were each $0.75, down $0.01 respectively from the same period a year ago. The year-over-year decline in FFO and AFFO per share and unit are primarily due to an increase in our share count associated with our equity raises in March and December and related reductions in our average leverage.

Moving on to the balance sheet. As of December 31, 2019, our gross investment in real estate was just over $905 million, an increase of $258 million or 40% from year-end 2018. Turning to the liability side of our balance sheet. Our total debt was $386 million as of the end of the year, up from $315 million at the end of 2018 reflecting the growth of our portfolio.

We finished the year with total liquidity, including cash and availability on our revolver, of $151.4 million. In December, we issued 6.9 million shares of common stock at $13 per share, generating gross proceeds of $89.7 million. In addition, during the fourth quarter, we raised $7.6 million on our ATM at a weighted average price of $13.04 per share. Looking ahead to the first quarter, we expect a decrease in our FFO and AFFO on a per-share basis as a result of lower leverage as we pay down our revolver with proceeds from our December equity offering and incrementally higher management fees based on our increased equity base.

Beyond the first quarter and for the full-year 2020, our results will be impacted by various factors, including the timing of our acquisition closing, equity capital issuances and the potential internalization transaction. While there are uncertainties around the impact of these items in any quarter, we expect that we will cover our quarterly dividend on an AFFO basis in these periods and for the full year. With that, I will now turn the call over to Alfonzo who will review the investment landscape and our investment activity.

Alfonzo Leon -- Chief Investment Officer

Thank you, Bob. The fourth quarter capped off what was a very active year on the acquisition front for GMRE as we acquired five properties for $72.8 million at a weighted average cap rate of 7.4%. For the year, we acquired 18 properties for a company record $253.5 million at a weighted average cap rate of 7.5%. Portfolio metrics for the fourth quarter have changed on the margin.

Our properties are well diversified and now number 109 buildings in 27 states. The 2.8 million square foot portfolio is 99.8% leased at a weighted average rental rate of $25.33 per square foot and a weighted average lease term of 8.8 years and average rent escalation of 2.1% per year. Additionally, the properties have a portfoliowide rent coverage ratio of 4.9 times. Since our last earnings call on November 7, we completed five acquisitions.

These high-quality facilities leased to leading healthcare providers diversify our portfolio. These facilities include: on November 15, we acquired a 12,000 square foot MOB and an 8,000 square foot clinic in Jacksonville, Florida for $8.7 million. The MOB and clinic are 100% leased to Southeast Orthopedics, a group with 50-plus providers. We did a 15-year sale leaseback with strong rent coverage.

The 12,000 square foot MOB is located directly adjacent to St. Vincent's Medical Center, Riverside, which is part of Ascension. On December 17, we acquired a 17,000 square foot medical office building and surgery center in Greenwood, Indiana for $5.8 million. The MOB and ASC are 100% leased to Indiana Eye Clinic for 13-plus years with strong rent coverage.

Indiana Eye has been a leading group in Greenwood for 30 years. On February 13, we acquired a 98,000 square foot MOB in High Point, North Carolina for $24.75 million. The MOB contains a multispecialty clinic, neurology, urgent care and diagnostics. The MOB is 100% leased to Cornerstone Health Care, which is wholly owned by Wake Forest Baptist Health.

Wake Forest and Atrium Health announced in November 2019 that they are moving forward with a strategic partnership. Cornerstone is a leading ACO that was acquired by Wake Forest in May 2015. On February 27, we acquired a 115,000 square foot MOB in Clinton, Iowa for $11.35 million. The MOB contains a multispecialty clinic, surgery center, nephrology, gastro and diagnostics.

The MOB is 100% leased to Mercy Medical Center, the local subsidiary of Trinity Health, which is a large health system with annual operating revenues of $18.3 billion and assets of $26.2 billion. Mercy acquired Medical Associates, the largest multispecialty group with 40-plus providers in Clinton in June 2019. Yesterday, we acquired a 34,000 square foot MOB in West Allis, Wisconsin for $9 million. The multispecialty facility includes sifting exam rooms, procedure room, imaging services, a full-service lab, rehab services and two GI and pain surgical suites.

The facility is 100% leased to Columbia St. Mary's Hospital, which is a wholly owned subsidiary of Ascension Health Network. Ascension Health is the largest not-for-profit health system in the United States. In addition, as of yesterday, we had entered into contracts to acquire four properties for approximately $67.3 million.

We are currently in a due diligence process for the properties under contract. If we identify problems with one or more of these properties or the operator of the properties during our due diligence review, we may not close the transaction on a timely basis or at all. We had an exceptional year with respect to finding high-quality products and volume. As we look to 2020, it is important to remember that while we have a strong pipeline of high-quality assets, the amount of assets we ultimately close on will vary year to year.

Our top priority is to focus on acquiring assets that are accretive, of high quality and meet our strict underwriting standards. If we cannot find assets that meet our criteria, we will not pursue transactions just to grow our asset base. With that said, we target full-year acquisitions in the range of $180 million to $220 million, which is at the midpoint similar to the amount we acquired in 2018. We are confident in our strategy and believe that we have built and continue to build a portfolio that will provide durable cash flows for our shareholders. And with that, we will be happy to take your questions.

Questions & Answers:


Operator

[Operator instructions] Our first question is from Chad Vanacore with Stifel. Please proceed.

Chad Vanacore -- Stifel Financial Corp. -- Analyst

Hey, good morning, all.

Jeff Busch -- Chief Executive Officer

Good morning.

Chad Vanacore -- Stifel Financial Corp. -- Analyst

All right. Could you talk to us a little bit about the process and time line of internalization and what discussions are going on the board level? And more importantly, what are some of the procedural hurdles you might need to overcome?

Bob Kiernan -- Chief Financial Officer

Hi, Chad, this is Bob. So I can just address this really only at a high level at this point. So really, other than to say that the special committee has been formed and it's going through its evaluation, we can't really comment on the process because it is in process. And so there's really -- as news is disclosable from that process, we will do that.

But at this time, we can't really comment on the process.

Chad Vanacore -- Stifel Financial Corp. -- Analyst

All right. You can't give us any kind of landmarks or hurdles or benchmarks that you have to hit?

Bob Kiernan -- Chief Financial Officer

No. I mean, I think it's in the committee's hands from a process perspective versus the company or management's hand.

Chad Vanacore -- Stifel Financial Corp. -- Analyst

All right. How about something that's more formulaic? Can you remind us what the management termination fee might be?

Bob Kiernan -- Chief Financial Officer

Sure. In terms of the numbers, it's formulaic in the agreement that the average of the trailing eight quarters, annual fee at three times. And depending on the actual timing in 2020, it looks like it would be between $18.5 million and $20 million from an overall fee perspective. I think it's also noteworthy that we'll also have legal -- the company will and other professional fees associated with the internalization.

And we don't have full visibility into what those numbers will be at this point, but I'm estimating around $1 million, plus or minus, on the type of transaction costs that we may incur through this process.

Chad Vanacore -- Stifel Financial Corp. -- Analyst

OK. And then, Bob, I think last quarter, you had mentioned that you're potentially pursuing some debt financing options. Can you give any detail about where you are there?

Bob Kiernan -- Chief Financial Officer

Yes. So we're open to pursuing that. We haven't really -- there's nothing new to report, Chad, on changing our debt structure at this point. It's still a work in process on that.

So nothing new to report. We continue to evaluate opportunities to diversify away from the credit facility, and also one of the things we'll be looking at during the year is likely expansion on the credit facility.

Chad Vanacore -- Stifel Financial Corp. -- Analyst

OK. Then you just mentioned in the press release about increasingly competitive acquisition environment. Just wondered is that general statement about broader market? Or are you seeing more activity in your secondary market within the size range that you're looking at?

Bob Kiernan -- Chief Financial Officer

Yes. So that comment was general and specific. So it was both. But it changes a lot.

I mean, it goes up and down. Coming into the year, my sense was that it was getting more competitive, and there was -- I got the sense that within the niche that we're targeting, there was more competition deals that I thought we're getting priced beyond our numbers where we wanted to price them. But in the last couple of weeks, there's definitely been a change in that sentiment. And I'm actually thinking over the next quarter or two, I'm expecting actually softening.

So it moves around a bit coming into the year, my sense of it, and it's hard to peg a number and measure it. This is a very subjective metric. Coming in, it was getting competitive. But as I sit today, I'm thinking people are probably taking their foot off the gas.

Chad Vanacore -- Stifel Financial Corp. -- Analyst

All right. Thanks.

Operator

Our next question is from Drew Babin with Robert W. Baird & Company. Please proceed.

Drew Babin -- Robert W. Baird and Company -- Analyst

Hey, good morning, all.

Jeff Busch -- Chief Executive Officer

Good morning, Drew.

Drew Babin -- Robert W. Baird and Company -- Analyst

A question on the management fee. I think, Bob, you mentioned that just based on the increase in market cap will be higher management fees, assuming that no internalization occurs immediately in the first quarter. Can you quantify kind of what that jump is in the management fee just based on the current price of the stock and the increase in market cap?

Bob Kiernan -- Chief Financial Officer

Sure. It's right around $2 million from a quarterly perspective looking at Q1.

Drew Babin -- Robert W. Baird and Company -- Analyst

OK. And then secondly, in another balance sheet question while we're on it, I know that there's a matrix for the spread on your credit facility. With increases in leverage, the spread widens out a little bit. I guess, as you relever after the equity issuance, might we see the spread widen out a little bit as the result of that releveraging? And I guess, sort of how do you kind of quantify the trade-off between the two factors there?

Bob Kiernan -- Chief Financial Officer

So we ended the year in the 40% to 45% range on our pricing grid in the credit facility. And yes, I expect that as we end Q1, we'll move into the next level on the pricing grid, and the 45% to 50% will likely be in the low end of that pricing grid. And it does go into our decision-making in terms of managing where we are above and below that pricing grid to kind of be as efficient as we can from a balance sheet and debt management perspective.

Drew Babin -- Robert W. Baird and Company -- Analyst

And can you remind us what spread is in both of the two ranges on the grid that you mentioned and how much that widens out?

Bob Kiernan -- Chief Financial Officer

Yes. It's a 25-basis-point change between the two.

Drew Babin -- Robert W. Baird and Company -- Analyst

OK. And lastly for me. Alfonzo, I just wanted to touch on the White Rock Acute Care Hospital. The disclosed coverage ratio on that was, obviously, pretty low for a hospital, but I know you've talked in the past about the transitional elements of this property because it's managed by Pipeline.

Could you just kind of give an update on the status of operations and kind of the near- to intermediate-term expected trajectory there?

Alfonzo Leon -- Chief Investment Officer

Yes. No. You touched on it exactly. So if you recall, this was a property that -- the JV between Baylor, Tenet sold to -- and Pipeline in the first quarter of 2018.

When we did our underwriting, we've not just underwrote and got comfortable with Pipeline, but we also underwrote -- and this is more importantly, underwrote the hospital, the ER business, the local area, the fundamentals, which is why we felt very comfortable that this was a long-term good investment. We knew going in that first year was going to be a transition year, which is why we had them prepay rent for a year, which is also why it was impossible to calculate rent coverage because they prepaid all of it and it was a transition year. We decided to start reporting that number. They're still working on -- I would characterize it as they've transitioned, they stabilized, and now they're focused on revenue opportunities.

They've worked through on the expense side pretty well. And so there's -- right now, they're focusing more on revenue growth opportunities, growing their EBITDA. So I would expect that rent coverage to grow from this point forward.

Drew Babin -- Robert W. Baird and Company -- Analyst

Great. Appreciate the disclosure there. That's all for me. Thanks.

Operator

Our next question is from Barry Oxford with D.A. Davidson. Please proceed.

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

Great. Thanks, guys. I guess, this is for Alfonzo. Alfonzo, not that the cap rate ticked down a little bit in the fourth quarter.

Just a little bit, I mean, nothing alarming clearly. But was that a function of the assets? Or was that a function of the marketplace getting a little more competitive?

Alfonzo Leon -- Chief Investment Officer

So I would say both. And it's hard to control what opportunities are available in the market. I mean, we're always scanning and evaluating and discussing with everyone that we can talk to, to try to find deals. And we don't really control what kind of deals we're going to have a chance to pursue.

So I think if you look across the quarters, I mean, it bumps up and down. And it's hard to really forecast trends based on any one quarter is the way I'd put it. And as you point out, yes, I'll leave it there.

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

OK. And then on the off-campus, are you finding that a better risk-adjusted return? Or are you making more of a conscious decision that, look, this is just the way medical is going to be serviced in the future and we need to be there?

Alfonzo Leon -- Chief Investment Officer

So many things to answer that question. I mean, I would start by saying it depends on what campus. I mean, some campuses are fortresses, and it's safe bet that they're going to continue being a center of health for generations. And in every major city, there is one of those.

But when it's that obvious of a place that is going to be around for 100 years, or who knows how long, I mean, the pricing for that kind of asset is very, very expensive. And you're going to get everyone to bid, and you're going to squeeze every last basis point of enjoyment out of that investment. When you start getting into -- and on the other side of that, you've got some campuses that are, obviously, struggling in areas that are questionable, and pricing -- on whether or not that's a good investment, I mean, you're really betting on the hospital. Even though you're buying like an MOB on that campus, at the end of the day, what you really have to do is underwrite the hospital.

And some of that, I would say, the investment community has gotten pretty savvy. And more often than not, those actually get priced with 100, 200 basis points above where the core on-campus MOBs trade at. Off-campus, it requires a lot more thought about why the property is where it is, how convenient it is, what the tenancy is, what the use is, what else is built around. And you can't just make a blanket statement about whether or not off-campus is better or not.

I mean, it really truly is case-specific. You really have to contemplate why and you have to go through a list of questions, and you have to really kind of make an assessment whether it really makes sense from a healthcare delivery perspective. And within the off-campus inventory, I mean, there's a pretty wide spectrum of types of facilities, and each one of them has unique inherent pros and cons. So a long way of saying it depends.

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

Right. No. I appreciate all that color. And so lastly, on the four properties that you have under contract, if they were to close, would we see them closing like in March, April? Would it be more like an April, May type of time frame?

Alfonzo Leon -- Chief Investment Officer

March, April, roughly. Yes. Maybe --

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

OK, OK. It's just it's a little bit of a big number, so timing is going to matter on that, yes.

Alfonzo Leon -- Chief Investment Officer

Yes. So yes, I'd say March, April. And we might have one or two that sits into May. But I would say, March, April.

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

Right. Thanks so much.

Operator

Our next question is from Bryan Maher with B. Riley FBR. Please proceed.

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

Good morning, guys. So a question I have, and you may or may not have seen our note this morning on Community Healthcare. But how is it -- maybe this is best for Alfonzo. And I know, Jeff, you talked about this in your prepared comments kind of early on, the difference in assets and locations and what have you.

Maybe you can delve into that a little bit deeper. But how is it -- Tim is seeing and buying assets yielding kind of 9% to 11% cap rate, and you guys are kind of 7% or 8%, and I'm not really saying one is better than the other. It just seems when I look at both portfolios, the REITs other than one is internal, one is external, maybe that explains some of the disparity in the multiples, don't seem all that different, except for your assets seem to be a little bit bigger, a little bit more pricey. But I'm trying to wrap my head, hands around the disparity in the two portfolios and what people are acquiring.

And I know you might not want to talk too much about a competitor's portfolio and what they're doing, but can you maybe talk to the different types of assets? And Alfonzo, are you seeing 9% and 11% cap rate properties that you're just passing on?

Alfonzo Leon -- Chief Investment Officer

Yes. So a lot of the stuff that we see that are trading at 9% and 11% don't fit our portfolio. Having said that, I mean, we have one that we bought that is 11% cap, but there's a story behind that. And it starts with -- it took us 13 months to complete it, and it was a system that was buying the group.

And when we were negotiating with them -- when we got into the deal, they were still in the process of getting acquired. It wasn't sure they were going to get acquired, then they got acquired, and then it took us a long time to close and negotiate. But that was a situation where we came into this understanding that, in essence, we're getting pricing arbitrage because of stark laws and the hospital is limited in terms of what they can do, and the physicians are in a position where they're negotiating getting acquired. And so it was an opportunity for us to hang around the hoop and very strategic patients and very conscientious time management, understanding that this was going to take a long time resulted in a great yield and the low replacement cost investment, nice buildings, great-looking surgery center, but it's very, very selective.

So I'll pause there, and I'll let Jeff also chime in.

Jeff Busch -- Chief Executive Officer

Yes. I just want to distinguish between where Community Health is and where we are. We're both in the same buying medical real estate. They're buying the higher caps with higher risk.

We're buying less risk. That's essentially what the issue is. We tend to pass over those type of deals, but they can work out on a risk portfolio. We believe that we're trying to buy low risk but be in secondary markets.

And because our medical expertise or discipline in buying that we turn down many, many deals will give us that extra risk-adjusted return and we'll get a benefit on risk-adjusted return, and they have a strategy that's different than ours in higher return, and I don't know of their risk level. But essentially, we don't look at that level of risk that they do.

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

Yes. It just seems pretty stark when you hear that, and they're trading at north of 24 times this year's EBITDA, and you guys are trading at just under 17 times. It seems like a huge gap for one company that's running at 90% occupancy and one that's trading nearly 100% occupancy. So trying to wrap our heads around that here, but thank you for the insights.

Operator

Our next question is from Rob Stevenson with Janney Montgomery Scott. Please proceed.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Good morning, Bob. I mean, I know that there's limits to what you can say, but whatever date that the board makes a decision, assuming that they decide to internalize, what is the time frame from there for you guys in terms of completing the internalization? How long does it mechanically given all the legal and everything else? Is that a three-month? Is that a six-month? Is that a couple of weeks? Can you sort of help us understand what the sort of time it would take after the board would render a decision, how long that would take?

Bob Kiernan -- Chief Financial Officer

Rob, I really don't know, I mean, how long it would take. There's just not a lot of visibility into what the timing of our actual changeover would occur as that process evolves, but I think it'll be as efficient as it can. I know the committee is actively working through the process, and they're interested in getting this done as quickly and as efficiently as they can so that the process runs smoothly, and we end up with a good transaction for shareholders, that it's done in an efficient way. I mean, I think that's really the most I can say.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

OK. And then, so you've completed roughly $45 million of acquisitions thus far in 2020. You've got another close to $70 million under contract that Alfonzo said likely close in sort of March and April. Once you've done that, how much equity or how much dry powder do you have to complete acquisitions beyond that without raising money either under the ATM or in a marketed transaction?

Bob Kiernan -- Chief Financial Officer

Sure. So we ended the year with about, call it, $150 million of capacity on the revolver. And so as that winds down, that will limit, I mean -- or sets a finite available capital, so we just work backwards from the $150 million. And then, again, as I mentioned earlier, we are looking at alternative debt opportunities, as well as opportunities within the credit facility to add capacity as the year progresses.

And also, we have access to equity capital. So I think it'll be a combination of that as the year progresses.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

OK. And then last one for me, Alfonzo. Anything abnormal or different about the properties under contract in terms of cap rate or asset type versus what you guys have been doing over the last few quarters?

Alfonzo Leon -- Chief Investment Officer

Well, no. In terms of profile of property, quality of building, tenant profile, healthcare underwriting, no, very in line, with the one deal in Clinton, Iowa being a function of hanging around the hoop and being -- realizing an opportunity of working with the physicians and the health system to get above-standard yields, otherwise no.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

OK. I mean, anything on your sort of asset types that you guys don't currently own that you would own, right deal, right price?

Alfonzo Leon -- Chief Investment Officer

So got it. We're always in discussions with people with different appetite. Just something that comes top of mind is like, like, what do you call them, micro hospitals. We've been exploring thus far, have not found one that makes sense to me.

I think within the industry, there's like a first gen, second gen. And usually, first and second gens don't really make sense. You've got to wait for third gen before people kind of figure out the model. And I think we're probably getting there.

The other one is behavioral is one that I feel like, whether I like it or not, people talk to me about behavioral. And more often than not, I don't like what I'm hearing. I feel like the space is -- especially the addiction side of the space is one that I don't feel comfortable in and doesn't make sense to me, doesn't pass the -- I guess, it just doesn't pass the test from my opinion. But we are beginning to have discussions within the behavioral space.

I mean, it's a wide ecosystem and pretty, actually, very, very diverse, different types of niches within behavioral, which makes it hard to compare apples-to-apples, but there are some aspects of behavioral that do seem pretty interesting. Geriatric, pediatric seem like they make a lot more sense. But today, we really haven't found a deal that we like that we're comfortable with, that we feel are going to be good investments that are not going to give us headaches during our ownership. Urgent care centers.

I felt like all of a sudden, everybody wanted to talk to me about urgent care centers, and that in and of itself was a sign that I probably shouldn't invest in urgent care centers because the first thing that came to mind was that there was going to be oversupply and reminded me of freestanding ERs. A couple of years ago, I felt like everybody wanted to talk to me about freestanding ERs, and that again was a sign to me that there's probably oversupply, and people are trying to dump, and I stayed away from it. So there's a growing inventory in types of facilities that people can invest in, and we're always exploring, and we are opportunistic. We pride ourselves with being so.

So we're always exploring, and we have an open mind. But thus far, I wouldn't say that we're going to pursue anything in any magnitude at this point.

Jeff Busch -- Chief Executive Officer

This is Jeff. I just want to say one area we're going to stay out of is SNFs. We see some danger in that right now in the market. So we will be staying out of that.

We never went into it, and we're going to stay out of it.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

And I mean, how much of your assets, if any, are in essentially shopping centers and things like that? Because it seems like that that's where a lot of those urgent care and veterinary clinics and things of that nature, which don't have a lot of location premium to them where it could go into the strip mall down the street standpoint. How much of that stuff do you have, if any?

Alfonzo Leon -- Chief Investment Officer

Yes. The first thing that comes to mind when I think of some of those really retail locations, the parcels are complicated. Sometimes you're dealing with facilities that used to be Pizza Huts that are now converted into something else and -- or abandoned car -- the facility itself sometimes is pretty problematic. But once in a while, you do come across -- there's a lot of developers in the space that are actually very, very good at what they do, and they they find good lots adjacent to malls or within the mall that makes sense and it's newer facilities.

I have had some discussions with folks that develop relationships with health systems to build urgent care centers. I mean, that makes sense to me. And they're building very high-quality stuff. What makes even more sense to me, for example, is developers that have formed relationships with insurance companies, building urgent care centers, and that makes a ton of sense to me.

So it just really depends. But I think what you were alluding to is more of the -- especially when you said no location premium, it's kind of a random healthcare facility that's kind of wedged into a mall or a retail strip. And that kind of stuff, we don't like.

Rob Stevenson -- Janney Montgomery Scott -- Analyst

OK, all right. Thanks, guys.

Operator

[Operator instructions] Our next question is from Gaurav Mehta with National Securities. Please proceed.

Gaurav Mehta -- National Securities -- Analyst

Thanks. Good morning. Alfonzo, in your prepared remarks, I think you made a comment that you're expecting some softening in the transaction market for next one or two quarters. Can you expand upon that a little bit, what you're seeing in the transaction market in the light of economic uncertainty around the coronavirus?

Alfonzo Leon -- Chief Investment Officer

Yes. I mean, that's basically it. I mean, it's too soon to tell. And it really just depends on what measures are taken at the local and state level to control the spread.

I'm already hearing some discussions about conferences that might or might not get canceled. I mean, that's going to have an impact. I'm already hearing that on some deals, lenders are getting or hitting a pause on it. So that to me signals that if you're looking for third-party financing, it might be challenging.

Gaurav Mehta -- National Securities -- Analyst

I mean, and that creates more opportunity for you if you have access to capital, and others don't?

Alfonzo Leon -- Chief Investment Officer

That's the way I see it.

Gaurav Mehta -- National Securities -- Analyst

All right. That's all for me. Thank you.

Operator

We have reached the end of our question-and-answer session. I would like to turn the call back over to Jeff Busch for closing remarks.

Jeff Busch -- Chief Executive Officer

I'd like to thank everybody for joining us and appreciate your time. Thank you.

Operator

[Operator signoff]

Duration: 53 minutes

Call participants:

Evelyn Infurna -- Investor Relations

Jeff Busch -- Chief Executive Officer

Bob Kiernan -- Chief Financial Officer

Alfonzo Leon -- Chief Investment Officer

Chad Vanacore -- Stifel Financial Corp. -- Analyst

Drew Babin -- Robert W. Baird and Company -- Analyst

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

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

Rob Stevenson -- Janney Montgomery Scott -- Analyst

Gaurav Mehta -- National Securities -- Analyst

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