CHCT

CHCT screens optically cheap on P/FFO but the trend underneath is the story, and it is negative. Ignore the 228x P/E — for a REIT, GAAP EPS ($0.08) is buried under $43.5M of D&A. Add D&A back to net income ($5.10M) and FFO is only ~$48.6M (~$1.70/share); against $53.7M of dividends paid, the payout is already >110% of FFO, and after the $20.5M of capex the MD&A discloses, cash-covered (AFFO-style) distribution coverage is far worse. The only reason distributions still 'clear' is operating cash flow of $56.4M — but that figure has fallen three years running ($61.4M→$58.9M→$56.4M) while dividends have climbed every year ($48.1M→$51.7M→$53.7M). Those two lines are converging, and the gap is being plugged with balance-sheet capacity.

The balance sheet shows exactly that strain. Stockholders' equity fell 9.8% to $429M because the company is distributing more than it earns, while long-term debt rose 9.5% to $532M and total liabilities rose 8.7%, pushing liabilities/equity to 1.31x. Cash is a razor-thin $3.34M (down 23.8%), so there is no buffer — every acquisition and dividend leans on the Credit Facility and the new $500M shelf. The MD&A is candid that acquisitions are funded 'through our Credit Facility and equity offerings,' and Risk Factors flag that inability to access capital 'at favorable terms and rates' would be materially adverse — a live concern given the debt is growing into a higher-rate backdrop and net income has collapsed from $22.5M (FY2021) to a -$3.18M loss (FY2024) to a barely-positive $5.10M (FY2025).