UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER 30, 2022~~MARCH 31, 2023
OR
☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

Commission file number: 001-37401

Community Healthcare Trust Incorporated

(Exact Name of Registrant as Specified in Its Charter)


Maryland						46-5212033
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

3326 Aspen Grove Drive

Suite 150

Franklin, Tennessee 37067

(Address of Principal Executive Offices) (Zip Code)

(615) 771-3052

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class

Trading Symbol

Name of each exchange on which registered

Common stock, $0.01 par value per share

CHCT

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Emerging-growth company

☐

Non-accelerated filer

☐

Smaller reporting

company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The Registrant had ~~25,299,158~~26,304,425 shares of Common Stock, $0.01 par value per share, outstanding as of ~~October~~April 26, ~~2022.~~2023.

COMMUNITY HEALTHCARE TRUST INCORPORATED

FORM 10-Q

~~September 30, 2022~~March 31, 2023

TABLE OF CONTENTS


		Page
PART I.—FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of ~~Income~~Operations	4
	Condensed Consolidated Statements of Comprehensive (Loss) Income	45
	Condensed Consolidated Statements of Stockholders' Equity	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3231
Item 4.	Controls and Procedures	3231

PART II.—OTHER INFORMATION		33
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	33

SIGNATURES		35

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

COMMUNITY HEALTHCARE TRUST INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars and shares in thousands, except per share amounts)


		(Unaudited)					(Unaudited)
		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Real estate properties	Real estate properties					Real estate properties
Land and land improvements	Land and land improvements	$	103,413	$	97,397	Land and land improvements	$	122,702	$	117,657
Buildings, improvements, and lease intangibles	Buildings, improvements, and lease intangibles	783,308		736,465		Buildings, improvements, and lease intangibles	848,060		825,257
Personal property	Personal property	237		223		Personal property	264		253
Total real estate properties	Total real estate properties	886,958		834,085		Total real estate properties	971,026		943,167
Less accumulated depreciation	Less accumulated depreciation	(157,040)		(133,056)		Less accumulated depreciation	(174,346)		(165,341)
Total real estate properties, net	Total real estate properties, net	729,918		701,029		Total real estate properties, net	796,680		777,826
Cash and cash equivalents	Cash and cash equivalents	2,656		2,351		Cash and cash equivalents	3,666		11,233
Restricted cash	Restricted cash	682		516		Restricted cash	959		835

Other assets, net	Other assets, net	78,673		50,337		Other assets, net	84,989		86,531
Total assets	Total assets	$	811,929	$	754,233	Total assets	$	886,294	$	876,425

LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities	Liabilities					Liabilities
Debt, net	Debt, net	$	310,781	$	265,625	Debt, net	$	365,061	$	352,997
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	8,143		7,845		Accounts payable and accrued liabilities	10,478		11,377
Other liabilities, net	Other liabilities, net	14,519		18,651		Other liabilities, net	16,240		15,237
Total liabilities	Total liabilities	333,443		292,121		Total liabilities	391,779		379,611

Commitments and contingencies	Commitments and contingencies					Commitments and contingencies

Stockholders' Equity	Stockholders' Equity					Stockholders' Equity
Preferred stock, $0.01 par value; 50,000 shares authorized; none issued and outstanding	Preferred stock, $0.01 par value; 50,000 shares authorized; none issued and outstanding	—		—		Preferred stock, $0.01 par value; 50,000 shares authorized; none issued and outstanding	—		—
Common stock, $0.01 par value; 450,000 shares authorized; 25,299 and 24,983 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		253		250
Common stock, $0.01 par value; 450,000 shares authorized; 26,274 and 25,897 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively						Common stock, $0.01 par value; 450,000 shares authorized; 26,274 and 25,897 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	263		259
Additional paid-in capital	Additional paid-in capital	601,968		595,624		Additional paid-in capital	648,384		625,136
Cumulative net income	Cumulative net income	75,904		59,123		Cumulative net income	74,220		81,142
Accumulated other comprehensive income (loss)		21,468		(4,980)
Accumulated other comprehensive income						Accumulated other comprehensive income	15,684		22,667
Cumulative dividends	Cumulative dividends	(221,107)		(187,905)		Cumulative dividends	(244,036)		(232,390)
Total stockholders’ equity	Total stockholders’ equity	478,486		462,112		Total stockholders’ equity	494,515		496,814
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	811,929	$	754,233	Total liabilities and stockholders' equity	$	886,294	$	876,425

See accompanying notes to the condensed consolidated financial statements.

COMMUNITY HEALTHCARE TRUST INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2023 AND 2022 ~~AND 2021~~

(Unaudited; Dollars and shares in thousands, except per share amounts)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
REVENUES	REVENUES									REVENUES
Rental income	Rental income	$	23,919	$	22,447	$	69,720	$	65,233	Rental income	$	26,128	$	22,604

Other operating interest	Other operating interest	888		807		2,617		2,104		Other operating interest	1,048		877
		24,807		23,254		72,337		67,337			27,176		23,481

EXPENSES	EXPENSES									EXPENSES
Property operating	Property operating	4,327		4,051		12,480		11,623		Property operating	4,873		4,091
General and administrative(1)	General and administrative(1)	3,762		3,206		10,688		8,958		General and administrative(1)	16,205		3,316
Depreciation and amortization	Depreciation and amortization	8,003		7,812		24,022		22,576		Depreciation and amortization	9,018		7,942

		16,092		15,069		47,190		43,157			30,096		15,349

INCOME BEFORE INCOME TAXES AND OTHER ITEMS		8,715		8,185		25,147		24,180
(LOSS) INCOME BEFORE INCOME TAXES AND OTHER ITEMS										(LOSS) INCOME BEFORE INCOME TAXES AND OTHER ITEMS	(2,920)		8,132

Interest expense	Interest expense	(3,028)		(2,788)		(8,409)		(7,753)		Interest expense	(3,992)		(2,626)

Deferred income tax expense	Deferred income tax expense	(21)		(45)		(20)		(104)		Deferred income tax expense	(35)		17
Interest and other income	Interest and other income	7		2		63		56		Interest and other income	25		1

NET INCOME		$	5,673	$	5,354	$	16,781	$	16,379
NET (LOSS) INCOME										NET (LOSS) INCOME	$	(6,922)	$	5,524

NET INCOME PER COMMON SHARE:
Net income per common share – Basic		$	0.21	$	0.20	$	0.62	$	0.63
Net income per common share – Diluted		$	0.21	$	0.20	$	0.62	$	0.63
NET (LOSS) INCOME PER COMMON SHARE:										NET (LOSS) INCOME PER COMMON SHARE:
Net (loss) income per common share – Basic										Net (loss) income per common share – Basic	$	(0.32)	$	0.21
Net (loss) income per common share – Diluted										Net (loss) income per common share – Diluted	$	(0.32)	$	0.21
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-BASIC	WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-BASIC	23,587		23,472		23,578		23,161		WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-BASIC	24,227		23,570
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-DILUTED	WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-DILUTED	23,587		23,472		23,578		23,161		WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-DILUTED	24,227		23,570
___________										___________
(1) General and administrative expenses for the three months ended March 31, 2023 included stock-based compensation expense totaling approximately $14.3 million, including the accelerated amortization of stock-based compensation totaling approximately $11.8 million recognized upon the passing of our former CEO and President. General and administrative expenses for the three months ended March 31, 2022 included stock-based compensation expense totaling approximately $2.1 million.										(1) General and administrative expenses for the three months ended March 31, 2023 included stock-based compensation expense totaling approximately $14.3 million, including the accelerated amortization of stock-based compensation totaling approximately $11.8 million recognized upon the passing of our former CEO and President. General and administrative expenses for the three months ended March 31, 2022 included stock-based compensation expense totaling approximately $2.1 million.

See accompanying notes to the condensed consolidated financial statements.

COMMUNITY HEALTHCARE TRUST INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2023 AND 2022 ~~AND 2021~~

(Unaudited; Dollars in thousands)

Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
NET INCOME $ 5,673 $ 5,354 $ 16,781 $ 16,379
Other comprehensive income:
Increase in fair value of cash flow hedges 8,983 289 24,974 304
Reclassification for amounts recognized as interest expense (276) 1,181 1,474 3,273
Total other comprehensive income 8,707 1,470 26,448 3,577
COMPREHENSIVE INCOME $ 14,380 $ 6,824 $ 43,229 $ 19,956


			Three Months Ended March 31,
			2023		2022

NET (LOSS) INCOME			$	(6,922)	$	5,524
	Other comprehensive (loss) income:
		(Decrease) increase in fair value of cash flow hedges	(4,973)		11,407
		Reclassification for amounts recognized as interest expense	(2,010)		1,115
	Total other comprehensive (loss) income		(6,983)		12,522
COMPREHENSIVE (LOSS) INCOME			$	(13,905)	$	18,046

See accompanying notes to the condensed consolidated financial statements.

COMMUNITY HEALTHCARE TRUST INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30, 2022~~MARCH 31, 2023

(Unaudited; Dollars and shares in thousands, except per share amounts)

Preferred Stock Common Stock Additional Paid in Capital Cumulative Net Income Accumulated Other Comprehensive Income (Loss) Cumulative Dividends Total Stockholders' Equity
Shares Amount Shares Amount
Balance at June 30, 2022 — $ — 25,099 $ 251 $ 599,631 $ 70,231 $ 12,761 $ (209,912) $ 472,962
Issuance of common stock, net of issuance costs — — — — (125) — — — (125)
Stock-based compensation — — 200 2 2,462 — — — 2,464
Increase in fair value of cash flow hedges — — — — — — 8,983 — 8,983
Reclassification for amounts recognized as interest expense — — — — — — (276) — (276)
Net income — — — — — 5,673 — — 5,673
Dividends to common stockholders ($0.4425 per share) — — — — — — — (11,195) (11,195)
Balance at September 30, 2022 — $ — 25,299 $ 253 $ 601,968 $ 75,904 $ 21,468 $ (221,107) $ 478,486
Balance at December 31, 2021 — $ — 24,983 $ 250 $ 595,624 $ 59,123 $ (4,980) $ (187,905) $ 462,112
Issuance of common stock, net of issuance costs — — — — (423) — — — (423)
Stock-based compensation, net of shares withheld and forfeited — — 316 3 6,767 — — — 6,770
Increase in fair value of cash flow hedges — — — — — — 24,974 — 24,974
Reclassification for amounts recognized as interest expense — — — — — — 1,474 — 1,474
Net income — — — — — 16,781 — — 16,781
Dividends to common stockholders ($1.3200 per share) — — — — — — — (33,202) (33,202)
Balance at September 30, 2022 — $ — 25,299 $ 253 $ 601,968 $ 75,904 $ 21,468 $ (221,107) $ 478,486


	Preferred Stock			Common Stock			Additional Paid in Capital		Cumulative Net Income		Accumulated Other Comprehensive Income		Cumulative Dividends		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2022	—	$	—	25,897	$	259	$	625,136	$	81,142	$	22,667	$	(232,390)	$	496,814
Issuance of common stock, net of issuance costs	—	—		249	3		8,903		—		—		—		8,906
Stock-based compensation, net of forfeitures	—	—		128	1		14,345		—		—		—		14,346
Decrease in fair value of cash flow hedges	—	—		—	—		—		—		(4,973)		—		(4,973)
Reclassification for amounts recognized as interest expense	—	—		—	—		—		—		(2,010)		—		(2,010)
Net loss	—	—		—	—		—		(6,922)		—		—		(6,922)
Dividends to common stockholders ($0.4475 per share)	—	—		—	—		—		—		—		(11,646)		(11,646)
Balance at March 31, 2023	—	$	—	26,274	$	263	$	648,384	$	74,220	$	15,684	$	(244,036)	$	494,515

See accompanying notes to the condensed consolidated financial statements.

COMMUNITY HEALTHCARE TRUST INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30, 2021~~MARCH 31, 2022

(Unaudited; Dollars and shares in thousands, except per share amounts)

Preferred Stock Common Stock Additional Paid in Capital Cumulative Net Income Accumulated Other Comprehensive (Loss) Income Cumulative Dividends Total Stockholders' Equity
Shares Amount Shares Amount
Balance at June 30, 2021 — $ — 24,687 $ 247 $ 585,177 $ 47,656 $ (9,739) $ (166,285) $ 457,056
Issuance of common stock, net of issuance costs — — 139 1 6,529 — — — 6,530
Stock-based compensation — — 156 2 2,011 — — — 2,013
Increase in fair value of cash flow hedges — — — — — — 289 — 289
Reclassification for amounts recognized as interest expense — — — — — — 1,181 — 1,181
Net income — — — — — 5,354 — — 5,354
Dividends to common stockholders ($0.4325 per share) — — — — — — — (10,752) (10,752)
Balance at September 30, 2021 — $ — 24,982 $ 250 $ 593,717 $ 53,010 $ (8,269) $ (177,037) $ 461,671
Balance at December 31, 2020 — $ — 23,888 $ 239 $ 550,391 $ 36,631 $ (11,846) $ (145,499) $ 429,916
Issuance of common stock, net of issuance costs — — 822 8 38,161 — — — 38,169
Stock-based compensation — — 272 3 5,165 — — — 5,168
Increase in fair value of cash flow hedges — — — — — — 304 — 304
Reclassification for amounts recognized as interest expense — — — — — — 3,273 — 3,273
Net income — — — — — 16,379 — — 16,379
Dividends to common stockholders ($1.2900 per share) — — — — — — — (31,538) (31,538)
Balance at September 30, 2021 — $ — 24,982 $ 250 $ 593,717 $ 53,010 $ (8,269) $ (177,037) $ 461,671


	Preferred Stock			Common Stock			Additional Paid in Capital		Cumulative Net Income		Accumulated Other Comprehensive (Loss) Income		Cumulative Dividends		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2021	—	$	—	24,983	$	250	$	595,624	$	59,123	$	(4,980)	$	(187,905)	$	462,112
Stock issuance costs	—	—		—	—		(197)		—		—		—		(197)
Stock-based compensation, net of forfeitures	—	—		89	1		2,121		—		—		—		2,122
Increase in fair value of cash flow hedges	—	—		—	—		—		—		11,407		—		11,407
Reclassification for amounts recognized as interest expense	—	—		—	—		—		—		1,115		—		1,115
Net income	—	—		—	—		—		5,524		—		—		5,524
Dividends to common stockholders ($0.4375 per share)	—	—		—	—		—		—		—		(10,969)		(10,969)
Balance at March 31, 2022	—	$	—	25,072	$	251	$	597,548	$	64,647	$	7,542	$	(198,874)	$	471,114

See accompanying notes to the condensed consolidated financial statements.

COMMUNITY HEALTHCARE TRUST INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; Dollars in thousands)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income		$	16,781	$	16,379
Adjustments to reconcile net income to net cash provided by operating activities:
Net (loss) income						Net (loss) income	$	(6,922)	$	5,524
Adjustments to reconcile net (loss) income to net cash provided by operating activities:						Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	24,022		22,576		Depreciation and amortization	9,018		7,942
Other amortization	Other amortization	627		616		Other amortization	265		216
Stock-based compensation	Stock-based compensation	6,770		5,168		Stock-based compensation	2,547		2,122
Accelerated amortization of stock-based compensation						Accelerated amortization of stock-based compensation	11,799		—
Straight-line rent receivable	Straight-line rent receivable	(2,590)		(2,713)		Straight-line rent receivable	(917)		(820)

Deferred income tax expense		20		104
Deferred income tax expense (benefit)						Deferred income tax expense (benefit)	35		(17)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Other assets	Other assets	(1,367)		(1,455)		Other assets	(2,390)		(844)
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	994		(32)		Accounts payable and accrued liabilities	133		352
Other liabilities	Other liabilities	(387)		710		Other liabilities	(870)		(73)
Net cash provided by operating activities	Net cash provided by operating activities	44,870		41,353		Net cash provided by operating activities	12,698		14,402

INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Acquisitions of real estate	Acquisitions of real estate	(45,970)		(78,221)		Acquisitions of real estate	(23,895)		(5,845)

Funding of notes receivable	Funding of notes receivable	(5,500)		(13,350)		Funding of notes receivable	(1,295)		(1,500)

Proceeds from the repayment of notes receivable	Proceeds from the repayment of notes receivable	2,250		2,978		Proceeds from the repayment of notes receivable	750		750
Capital expenditures on existing real estate properties	Capital expenditures on existing real estate properties	(6,698)		(4,538)		Capital expenditures on existing real estate properties	(4,138)		(1,892)
Net cash used in investing activities	Net cash used in investing activities	(55,918)		(93,131)		Net cash used in investing activities	(28,578)		(8,487)

FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Net borrowings (repayments) on revolving credit facility		45,000		(29,000)
Term loan borrowings		—		125,000
Term loan repayments		—		(50,000)
Net borrowings on revolving credit facility						Net borrowings on revolving credit facility	12,000		4,000

Mortgage note repayments	Mortgage note repayments	(98)		(85)		Mortgage note repayments	(32)		(40)
Dividends paid	Dividends paid	(33,202)		(31,538)		Dividends paid	(11,646)		(10,969)
Proceeds from issuance of common stock	Proceeds from issuance of common stock	—		38,425		Proceeds from issuance of common stock	8,215		—
Equity issuance costs	Equity issuance costs	(181)		(173)		Equity issuance costs	(100)		(74)
Debt issuance costs		—		(1,646)

Net cash provided by financing activities		11,519		50,983
Increase (decrease) in cash and cash equivalents and restricted cash		471		(795)

Net cash provided by (used for) financing activities						Net cash provided by (used for) financing activities	8,437		(7,083)
Decrease in cash and cash equivalents and restricted cash						Decrease in cash and cash equivalents and restricted cash	(7,443)		(1,168)
Cash and cash equivalents and restricted cash, beginning of period	Cash and cash equivalents and restricted cash, beginning of period	2,867		2,892		Cash and cash equivalents and restricted cash, beginning of period	12,068		2,867
Cash and cash equivalents and restricted cash, end of period	Cash and cash equivalents and restricted cash, end of period	$	3,338	$	2,097	Cash and cash equivalents and restricted cash, end of period	$	4,625	$	1,699

Supplemental Cash Flow Information:	Supplemental Cash Flow Information:					Supplemental Cash Flow Information:
Interest paid (net of capitalized interest)	Interest paid (net of capitalized interest)	$	7,525	$	7,339	Interest paid (net of capitalized interest)	$	3,866	$	2,476
Invoices accrued for construction, tenant improvement and other capitalized costs	Invoices accrued for construction, tenant improvement and other capitalized costs	$	1,588	$	1,071	Invoices accrued for construction, tenant improvement and other capitalized costs	$	3,274	$	982

Reclassification of registration statement costs incurred in prior year to equity issuance costs	Reclassification of registration statement costs incurred in prior year to equity issuance costs	$	344	$	256	Reclassification of registration statement costs incurred in prior year to equity issuance costs	$	52	$	119

Increase in fair value of cash flow hedges		$	24,974	$	304
(Decrease) increase in fair value of cash flow hedges						(Decrease) increase in fair value of cash flow hedges	$	(4,973)	$	11,407
Income taxes paid	Income taxes paid	$	65	$	25	Income taxes paid	$	60	$	12
Capitalized interest	Capitalized interest	$	504	$	171	Capitalized interest	$	192	$	228
Net proceeds accrued for common stock issued in March with cash settlement in April						Net proceeds accrued for common stock issued in March with cash settlement in April	$	732	$	—

See accompanying notes to the condensed consolidated financial statements.

COMMUNITY HEALTHCARE TRUST INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2022~~March 31, 2023

(Unaudited)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Overview

Community Healthcare Trust Incorporated (the ‘‘Company’’, ‘‘we’’, ‘‘our’’) was organized in the State of Maryland on March 28, 2014. The Company is a fully-integrated healthcare real estate company that owns and acquires real estate properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers. As of ~~September 30, 2022,~~March 31, 2023, the Company had investments of approximately ~~$890.0~~$974.0 million in ~~161~~181 real estate properties (including a portion of one property accounted for as a ~~financing~~sales-type lease with a gross amount totaling approximately $3.0 million). The properties are located in 34 states, totaling approximately ~~3.5~~4.0 million square feet in the aggregate and were approximately ~~90.8%~~91.6% leased at ~~September 30, 2022~~March 31, 2023 with a weighted average remaining lease term of approximately ~~7.8~~7.4 years. Any references to square footage, property count, or occupancy percentages, and any amounts derived from these values in these notes to the ~~condensed consolidated financial statements,~~Condensed Consolidated Financial Statements, are outside the scope of our independent registered public accounting firm's review.

Basis of Presentation

The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. This interim financial information should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, ~~2022.~~2023. All intercompany accounts and transactions have been eliminated.

Use of Estimates in the Condensed Consolidated Financial Statements

Preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Actual results may materially differ from those estimates.

Cash and Cash Equivalents and Restricted Cash

Cash and cash equivalents includes short-term investments with original maturities of three months or less when purchased. Restricted cash consists of amounts held by the lender of our mortgage note payable to provide for future real estate tax, insurance expenditures and tenant improvements related to one property. The carrying amounts approximate fair value due to the short term maturity of these investments. The following table provides a reconciliation of cash and cash equivalents and restricted cash:


		Balance as of September 30,					Balance as of March 31,
(Dollars in thousands)	(Dollars in thousands)	2022		2021		(Dollars in thousands)	2023		2022
Cash and cash equivalents	Cash and cash equivalents	$	2,656	$	1,641	Cash and cash equivalents	$	3,666	$	1,178
Restricted cash	Restricted cash	682		456		Restricted cash	959		521
Cash, cash equivalents and restricted cash	Cash, cash equivalents and restricted cash	$	3,338	$	2,097	Cash, cash equivalents and restricted cash	$	4,625	$	1,699

Income Taxes

The Company has elected to be taxed as a real estate investment trust ("REIT"), as defined under the Internal Revenue Code of 1986, as amended (the "Code"). The Company and two subsidiaries have also elected for those subsidiaries to be treated as taxable REIT subsidiaries ("TRSs"), which are subject to federal and state income taxes.

~~Notes to Condensed Consolidated Financial Statements - Continued~~

No provision has been made for federal income taxes for the REIT; however, the Company has recorded income tax

Notes to Condensed Consolidated Financial Statements - Continued

expense or benefit for the TRSs to the extent applicable. The Company also evaluates the realizability of its deferred tax assets and will record valuation allowances if it is determined that more likely than not the asset will not be recovered. The Company intends at all times to qualify as a REIT under the Code. The Company must distribute at least 90% per annum of its REIT taxable income to its stockholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with ~~generally accepted accounting principles)~~GAAP) and meet other requirements to continue to qualify as a REIT.

~~New Accounting Pronouncements~~

~~Reference Rate Reform~~

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

NOTE 2. REAL ESTATE PROPERTIES

As of ~~September 30, 2022,~~March 31, 2023, we had investments of approximately ~~$890.0~~$974.0 million in ~~161~~181 real estate properties (including a portion of one property accounted for as a financing lease with a gross amount totaling approximately $3.0 million). The Company's investments are diversified by property type, geographic location, and tenant as shown in the following tables:


Property Type	Property Type	# of Properties	Gross Investment (in thousands)		Property Type	# of Properties	Gross Investment (in thousands)
Medical Office Building	Medical Office Building	65	$	301,297	Medical Office Building	82	$	370,918
Inpatient Rehabilitation Facilities	Inpatient Rehabilitation Facilities	7	151,234		Inpatient Rehabilitation Facilities	7	151,234
Acute Inpatient Behavioral	Acute Inpatient Behavioral	5	130,410		Acute Inpatient Behavioral	5	130,410
Specialty Centers	Specialty Centers	34	106,187		Specialty Centers	37	119,618
Physician Clinics	Physician Clinics	30	86,358		Physician Clinics	30	86,496
Surgical Centers and Hospitals	Surgical Centers and Hospitals	10	55,158		Surgical Centers and Hospitals	10	55,974
Behavioral Specialty Facilities	Behavioral Specialty Facilities	9	44,393		Behavioral Specialty Facilities	9	44,455
Long-term Acute Care Hospitals	Long-term Acute Care Hospitals	1	14,937		Long-term Acute Care Hospitals	1	14,937
Total	Total	161	$	889,974	Total	181	$	974,042


State	State	# of Properties	Gross Investment (in thousands)		State	# of Properties	Gross Investment (in thousands)
Texas	Texas	15	$	137,881	Texas	15	$	138,931
Illinois	Illinois	16	121,006		Illinois	16	121,640
Ohio	Ohio	23	101,448		Ohio	25	110,087
Florida	Florida	14	67,443		Florida	22	94,375
All Others	All Others	93	462,196		All Others	103	509,009
Total	Total	161	$	889,974	Total	181	$	974,042


Primary Tenant	# of Properties	Gross Investment (in thousands)
LifePoint Health (1)	5	$	82,113
US Healthvest	3	77,964
All Others	173	813,965
Total	181	$	974,042
_________
(1) During the first quarter of 2023, Everest Rehabilitation assigned its leases to LifePoint Health on four properties in which the Company had a gross investment totaling $80.7 million at March 31, 2023.

Notes to Condensed Consolidated Financial Statements - Continued

Primary Tenant # of Properties Gross Investment
(in thousands)
Everest Rehabilitation 4 $ 80,658
US Healthvest 3 77,964
All Others 154 731,352
Total 161 $ 889,974

NOTE 3. REAL ESTATE LEASES

Lessor Accounting

The Company’s properties are generally leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2039. The Company’s leases generally require the lessee to pay minimum rent, with fixed rent renewal terms or increases based on a Consumer Price Index and may also include additional rent, which may include the reimbursement of taxes (including property taxes), insurance, maintenance and other operating costs associated with the leased property.

Some leases provide the lessee, during the term of the lease, with an option or right of first refusal to purchase the leased property. Some leases also allow the lessee to renew or extend their lease term or in some cases terminate their lease, based on conditions provided in the lease.

Future minimum lease payments under the non-cancelable operating leases due to the Company for the years ending December 31, as of ~~September 30, 2022,~~March 31, 2023, are as follows (in thousands):


2022 (three months ending December 31)		$	20,533
2023		79,758
2023 (nine months ended December 31)				2023 (nine months ended December 31)	$	67,851
2024	2024	75,114		2024	86,063
2025	2025	69,609		2025	79,894
2026	2026	62,475		2026	70,085
2027 and thereafter		393,358
2027				2027	64,285
2028 and thereafter				2028 and thereafter	367,034
		$	700,847		$	735,212

Rental income is recognized as earned over the life of the lease agreement on a straight-line basis when collection of rental payments over the term of the lease is probable. Straight-line rent included in rental income was approximately $0.9 million and ~~$0.9~~$0.8 million, respectively, for the three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021, and was approximately $2.6 million and $2.7 million, respectively, for the nine months ended September 30, 2022 and 2021.~~2022.

Purchase Option Provisions

Certain of the Company's leases provide the lessee with a purchase option or a right of first refusal to purchase the leased property. The purchase option provisions generally allow the lessee to purchase the leased property at fair value or at an amount greater than the Company's gross investment in the leased property at the time of the purchase.

At ~~September 30, 2022,~~March 31, 2023, the Company had an aggregate gross investment of approximately ~~$28.1~~$40.7 million in ~~five~~12 real estate properties with purchase options exercisable at ~~September 30, 2022~~March 31, 2023 that had not been exercised.

~~Notes to Condensed Consolidated Financial Statements - Continued~~

Sales-type Lease

The Company has a portion of one property accounted for as a sales-type lease with a gross amount totaling approximately $3.0 million included in other assets, net on the Company's Condensed Consolidated Balance Sheets. Future lease payments due to the Company under this lease for the years ending December 31, as of ~~September 30, 2022,~~March 31, 2023, are as follows (in thousands):


2022 (three months ended December 31)		$	83
2023		336
2023 (nine months ended December 31)				2023 (nine months ended December 31)	$	253
2024	2024	346		2024	346
2025	2025	356		2025	356
2026	2026	367		2026	367
2027 and thereafter		5,587
2027				2027	378
2028 and thereafter				2028 and thereafter	5,210
Total undiscounted lease receivable	Total undiscounted lease receivable	7,075		Total undiscounted lease receivable	6,910
Discount	Discount	(4,041)		Discount	(3,877)
Lease receivable	Lease receivable	$	3,034	Lease receivable	$	3,033

Notes to Condensed Consolidated Financial Statements - Continued

The Company recognized interest income of approximately $0.1 million and $0.1 million, respectively, during the three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021 and recognized approximately $0.2 million and $0.3 million, respectively, of interest income during the nine months ended September 30, 2022 and 2021~~ related to this lease which is included in other operating interest on the Company's Consolidated ~~Statement~~Statements of ~~Income.~~Operations.

Lessee Accounting

At ~~September 30, 2022,~~March 31, 2023, the Company was obligated, as the lessee, under four non-prepaid ground leases accounted for as operating leases with expiration dates, including renewal options, through 2076, and two non-prepaid ground leases accounted for as financing leases with expiration dates through 2109, including renewal options. Any rental increases related to the Company's ground leases are generally either stated or based on the Consumer Price Index. The Company's future lease payments under these non-prepaid ground leases were as follows (in thousands):


		Operating		Financing			Operating		Financing
2022 (three months ended December 31)		$	11	$	35
2023		42		141
2023 (nine months ended December 31)						2023 (nine months ended December 31)	$	32	$	106
2024	2024	43		154		2024	43		154
2025	2025	44		154		2025	44		154
2026	2026	44		154		2026	44		154
2027 and thereafter		1,193		7,109
2027						2027	45		154
2028 and thereafter						2028 and thereafter	1,148		6,956
Total undiscounted lease payments	Total undiscounted lease payments	1,377		7,747		Total undiscounted lease payments	1,356		7,678
Discount	Discount	(589)		(4,469)		Discount	(573)		(4,400)
Lease liabilities	Lease liabilities	$	788	$	3,278	Lease liabilities	$	783	$	3,278

The following table discloses other information regarding the ground leases.


	Three Months Ended March 31,
	2023		2022
Operating leases:
Weighted-average remaining lease term in years (including renewal options)	36.03		36.73
Weighted-average discount rate	4.0	%	4.0	%

Financing leases:
Weighted-average remaining lease term in years (including renewal options)	40.56		36.75
Weighted-average discount rate	4.2	%	4.1	%

Notes to Condensed Consolidated Financial Statements - Continued

~~The following table discloses other information regarding the ground leases.~~

September 30,
2022 2021
Operating leases:
Weighted-average remaining lease term in years (including renewal options) 36.13 37.33
Weighted-average discount rate 4.0 % 4.0 %
Financing leases:
Weighted-average remaining lease term in years (including renewal options) 41.03 35.25
Weighted-average discount rate 4.2 % 4.1 %

NOTE 4. REAL ESTATE ACQUISITIONS

During the ~~third~~first quarter of ~~2022,~~2023, the Company acquired ~~two~~seven real estate properties. Upon acquisition, the properties were ~~100%~~100.0% leased in the aggregate with lease expirations through ~~2037.~~2031. Amounts reflected in revenues and net (loss) income for these properties for the three months ended ~~September 30, 2022~~March 31, 2023 were approximately ~~$0.1~~$0.5 million and ~~$76,000,~~$0.1 million, respectively, and transaction costs totaling approximately ~~$0.2~~$0.4 million were capitalized relating to these property acquisitions.

During the second quarter of 2022, the Company acquired one real estate property. Upon acquisition, the property was 100% leased with a lease expiration in 2037. Amounts reflected in revenues and net income for this property for the nine months ended September 30, 2022 were approximately $1.0 million and $0.9 million, respectively, and transaction costs totaling approximately $0.1 million were capitalized relating to the property acquisition.


Location	Property Type (1)	Date Acquired	Purchase Price		Cash Consideration		Real Estate		Other (2)		Square Footage
			(000's)		(000's)		(000's)		(000's)
LaGrange, GA	MOB	01/18/23	$	8,007	$	8,087	$	8,118	$	(31)	55,310
West Point, GA	MOB	01/18/23	811		819		822		(3)		5,600
Canton, OH	MOB	01/30/23	3,669		3,706		4,287		(581)		27,920
Scranton, PA	MOB	02/23/23	1,957		2,165		2,317		(152)		22,743
Scranton, PA	MOB	02/23/23	2,207		2,366		2,340		26		15,768
Lagrange, GA	MOB	03/06/23	6,469		6,458		6,622		(164)		31,473
Lagrange, GA	MOB	03/06/23	249		294		300		(6)		2,972
			$	23,369	$	23,895	$	24,806	$	(911)	161,786

(1) MOB - Medical Office Building
(2) Includes other assets acquired, liabilities assumed, and above and below-market intangibles recognized at acquisition.

During the first quarter of 2022, the Company acquired two real estate properties. Upon acquisition, the properties were 100% leased in the aggregate with lease expirations through 2028. Amounts reflected in revenues and net income for these properties for the nine months ended September 30, 2022 were approximately $0.5 million and $72,000, respectively, and transaction costs totaling approximately $0.1 million were capitalized relating to these property acquisitions.

Location
Property
Type (1)
Date
Acquired Purchase
Price Cash
Consideration Real Estate Other Square Footage
(000's) (000's) (000's) (000's)
Toledo, OH MOB 03/09/22 $ 2,606 $ 2,621 $ 2,735 $ (114) 17,465
Fremont, NE MOB 03/09/22 3,232 3,224 3,443 (219) 12,850
Cincinnati, OH IRF 05/12/22 23,500 22,826 23,558 (732) 37,720
Marne, MI BSF 09/01/22 13,238 12,986 13,415 (429) 96,886
Des Moines, IA PC 09/20/22 4,272 4,313 3,818 495 17,318
$ 46,848 $ 45,970 $ 46,969 $ (999) 182,239
(1) MOB - Medical Office Building; IRF - Inpatient Rehabilitation Facility; BSF - Behavioral Specialty Facility; PC - Physician Clinic

~~Notes to Condensed Consolidated Financial Statements - Continued~~

The following table summarizes the relative fair values of the assets acquired and liabilities assumed in the property acquisitions for the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023.


				Relative Fair Value		Estimated Useful Life				Relative Fair Value		Estimated Useful Life
				(in thousands)		(in years)				(in thousands)		(in years)
Land and land improvements	Land and land improvements			$	5,347	11.3	Land and land improvements			$	4,961	7.4
Building and building improvements	Building and building improvements			39,889		39.6	Building and building improvements			16,791		23.2
Intangibles:	Intangibles:						Intangibles:
		At-market lease intangibles		1,733		4.6		At-market lease intangibles		3,054		3.5
		Above-market lease intangibles		87		4.6		Above-market lease intangibles		199		3.3
		Below-market lease intangibles		(194)		6.1		Below-market lease intangibles		(1,188)		5.8
			Total intangibles	1,626					Total intangibles	2,065

Financing right-of-use lease asset assumed				728
Financing lease liability assumed				(308)

Accounts payable, accrued liabilities and other liabilities assumed	Accounts payable, accrued liabilities and other liabilities assumed			(1,021)			Accounts payable, accrued liabilities and other liabilities assumed			(46)
Accounts receivable and other assets acquired							Accounts receivable and other assets acquired			224
Prorated rent, interest and operating expense reimbursement amounts collected	Prorated rent, interest and operating expense reimbursement amounts collected			(291)			Prorated rent, interest and operating expense reimbursement amounts collected			(100)
		Total cash consideration		$	45,970			Total cash consideration		$	23,895

Notes to Condensed Consolidated Financial Statements - Continued

NOTE 5. DEBT, NET

The table below details the Company's debt as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.


		Balance as of						Balance as of
(Dollars in thousands)	(Dollars in thousands)	September 30, 2022		December 31, 2021		Maturity Dates	(Dollars in thousands)	March 31, 2023		December 31, 2022		Maturity Dates

Credit Facility:	Credit Facility:						Credit Facility:
Revolving Credit Facility	Revolving Credit Facility	$	57,000	$	12,000	3/26	Revolving Credit Facility	$	12,000	$	—	3/26
A-2 Term Loan, net		49,876		49,813		3/24
A-3 Term Loan, net	A-3 Term Loan, net	74,578		74,487		3/26	A-3 Term Loan, net	74,639		74,609		3/26
A-4 Term Loan, net	A-4 Term Loan, net	124,380		124,296		3/28	A-4 Term Loan, net	124,437		124,409		3/28
A-5 Term Loan, net							A-5 Term Loan, net	149,091		149,059		3/30
Mortgage Note Payable, net	Mortgage Note Payable, net	4,947		5,029		5/24	Mortgage Note Payable, net	4,894		4,920		5/24
		$	310,781	$	265,625			$	365,061	$	352,997

On ~~March 19, 2021,~~December 14, 2022, Community Healthcare Trust Incorporated, as borrower, entered into a first amendment (the "First Amendment") to the third amended and restated credit ~~facility~~agreement (the "Credit Facility") by and among Community Healthcare Trust Incorporated, as borrower, the several banks and financial institutions party thereto as lenders, and Truist Bank, as administrative ~~agent~~agent. The First Amendment amended the Credit Facility to, among other things, (i) establish a new seven-year and three-month term loan facility in the aggregate principal amount of $150.0 million (the ~~"Credit Facility"~~"A-5 Term Loan")., which matures on March 14, 2030 and (ii) replace LIBOR as a benchmark interest rate for loans under the Credit Facility with SOFR. The proceeds from the A-5 Term Loan were used in part to repay the seven-year term loan facility in the aggregate principal amount of $50.0 million (the "A-2 Term Loan") which was set to mature on March 29, 2024.

The Credit Facility allows the Company to borrow, through the accordion feature, up to ~~$600.0~~$700.0 million, including the ability to add and fund incremental term ~~loans, and provides~~loans. The Company's material subsidiaries are guarantors of the ~~Company~~obligations under the ~~ability to apply lower margins to its annual interest rate after it obtains an investment grade rating of BBB-/Baa3 (or the equivalent) from a rating agency, and modified its debt covenants.~~Credit Facility.

The Credit Facility provides for a $150.0 million Revolving Credit Facility and ~~$250.0~~$350.0 million in term loans (the "Term Loans"). The Revolving Credit Facility matures on March 19, 2026 and includes one 12-month option to extend the maturity date, subject to the satisfaction of certain conditions. The Term Loans include a seven-year term loan facility in the aggregate principal amount of ~~$50.0~~$75.0 million (the ~~"A-2~~"A-3 Term Loan"), which matures on March 29, ~~2024, a seven-year term loan facility in the aggregate principal amount of $75.0 million (the "A-3 Term Loan"),~~

~~Notes to Condensed Consolidated Financial Statements - Continued~~

~~which matures on March 29,~~ 2026, ~~and~~ a seven-year term loan facility in the aggregate principal amount of $125.0 million (the "A-4 Term Loan"), which matures on March 19, ~~2028.~~2028, and the A-5 Term Loan, which matures on March 14, 2030.

~~Amounts~~Under the First Amendment, amounts outstanding under the Revolving Credit Facility will bear ~~annual~~ interest at a floating rate ~~that is~~ based aton the ~~Company’s~~Company's option, on either: (i) ~~LIBOR~~adjusted term SOFR or adjusted daily simple SOFR plus 1.25% to 1.90% or (ii) a base rate plus 0.25% to 0.90% in each case, depending upon the Company’s leverage ratio. In addition, the Company is obligated to pay an annual fee equal to 0.20% of the amount of the unused portion of the Revolving Credit Facility if amounts borrowed are greater than 33.3% of the borrowing capacity under the Revolving Credit Facility and 0.25% of the unused portion of the Revolving Credit Facility if amounts borrowed are less than or equal to 33.3% of the borrowing capacity under the Revolving Credit Facility. The Company had ~~$57.0~~$12.0 million outstanding under the Revolving Credit Facility with a weighted average interest rate of ~~4.47%~~6.55% and a borrowing capacity remaining of ~~$93.0~~$138.0 million at ~~September 30, 2022.~~March 31, 2023.

~~Amounts~~Under the First Amendment, amounts outstanding under the Term Loans ~~as amended,~~will bear ~~annual~~ interest at a floating rate that is based, at the ~~Company’s~~Company's option, on ~~either:~~either (i) ~~LIBOR~~adjusted term SOFR or adjusted daily SOFR plus 1.45% to 2.30% or (ii) a base rate plus 0.45% to 1.30%, in each case, depending upon the Company’s leverage ratio. The Company has entered into interest rate swaps to fix the interest rates on the Term Loans. See Note 6 – Derivative Financial Instruments for more details on the interest rate swaps. At ~~September 30, 2022,~~March 31, 2023, the Company had ~~$250.0~~$350.0 million outstanding under the Term Loans which had a fixed weighted average interest rate under the swaps of approximately ~~3.79%~~4.3%.

Notes to Condensed Consolidated Financial Statements - Continued

Mortgage Note Payable

The Company's mortgage note payable is secured by a building which had a $6.4 million carrying balance at March 31, 2023. The mortgage note amortizes monthly at a fixed interest rate of 4.98% with a balloon payment of approximately $4.8 million due upon maturity on May 1, 2024.

NOTE 6. DERIVATIVE FINANCIAL INSTRUMENTS

Risk Management Objective of Using Derivatives

The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. The Company does not intend to utilize derivatives for speculative or other purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company does not anticipate that any of the counterparties will fail to meet their obligations.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

As of ~~September 30, 2022,~~March 31, 2023, the Company had ~~twelve~~seventeen outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk for notional amounts totaling ~~$250.0 million.~~$350.0 million, including two forward-starting interest rate swaps for notional amounts totaling $50.0 million, which will not become effective until March 29, 2024.

~~Notes to Condensed Consolidated Financial Statements - Continued~~

Tabular Disclosure of Fair Value of Derivative Instruments on the Balance Sheet

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.

Asset Derivatives Fair Value at

Liability Derivatives Fair Value at

Asset Derivatives Fair Value at

Liability Derivatives Fair Value at

(Dollars in thousands)

September 30, 2022

December 31, 2021

Balance Sheet Classification

September 30, 2022

December 31, 2021

Balance Sheet Classification

(Dollars in thousands)

March 31, 2023

December 31, 2022

Balance Sheet Classification

March 31, 2023

December 31, 2022

Balance Sheet Classification

Interest rate swaps

21,468

343

Other assets, net

—

5,324

Other liabilities, net

Interest rate swaps

16,397

22,667

Other assets, net

712

—

Other liabilities, net

The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income ~~(loss)~~ ("AOCI") and are subsequently reclassified to interest expense in the period that the hedged forecasted transaction affects earnings.

Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s Term Loans. During the next twelve months, the Company estimates that an additional ~~$6.3~~$8.5 million will be reclassified from AOCI as a decrease to interest expense.

Notes to Condensed Consolidated Financial Statements - Continued

Tabular Disclosure of the Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income ~~(Loss)~~

The table below details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2022		2021		2022		2021		(Dollars in thousands)	2023		2022
Amount of unrealized gain recognized in OCI on derivatives		$	8,983	$	289	$	24,974	$	304
Amount of unrealized (loss) gain recognized in OCI on derivatives										Amount of unrealized (loss) gain recognized in OCI on derivatives	$	(4,973)	$	11,407
Amount of (gain) loss reclassified from AOCI into interest expense	Amount of (gain) loss reclassified from AOCI into interest expense	$	(276)	$	1,181	$	1,474	$	3,273	Amount of (gain) loss reclassified from AOCI into interest expense	$	(2,010)	$	1,115
Total interest expense presented in the Condensed Consolidated Statements of Income in which the effects of the cash flow hedges are recorded		$	3,028	$	2,788	$	8,409	$	7,753
Total interest expense presented in the Condensed Consolidated Statements of Operations in which the effects of the cash flow hedges are recorded										Total interest expense presented in the Condensed Consolidated Statements of Operations in which the effects of the cash flow hedges are recorded	$	3,992	$	2,626

Tabular Disclosures of Offsetting Derivatives

The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company's derivatives as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the Condensed Consolidated Balance Sheets.


Offsetting of Derivative Assets (as of September 30, 2022)
Offsetting of Derivative Assets (as of March 31, 2023)														Offsetting of Derivative Assets (as of March 31, 2023)
								Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets													Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
(In thousands)	(In thousands)	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Condensed Consolidated Balance Sheet		Net Amounts of Assets in the Condensed Consolidated Balance Sheets		Financial Instruments		Cash Collateral Received		Net Amount		(In thousands)	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Condensed Consolidated Balance Sheet		Net Amounts of Assets in the Condensed Consolidated Balance Sheets		Financial Instruments		Cash Collateral Received		Net Amount
Derivatives	Derivatives	$	21,468	$	—	$	21,468	$	—	$	—	$	21,468	Derivatives	$	16,397	$	—	$	16,397	$	(712)	$	—	$	15,685


Offsetting of Derivative Liabilities (as of March 31, 2023)
							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
(In thousands)	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Condensed Consolidated Balance Sheet		Net Amounts of Liabilities in the Condensed Consolidated Balance Sheets		Financial Instruments		Cash Collateral Received		Net Amount
Derivatives	$	(712)	$	—	$	(712)	$	712	$	—	$	—


Offsetting of Derivative Assets (as of December 31, 2022)
							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
(In thousands)	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Condensed Consolidated Balance Sheet		Net Amounts of Assets in the Condensed Consolidated Balance Sheets		Financial Instruments		Cash Collateral Received		Net Amount
Derivatives	$	22,667	$	—	$	22,667	$	—	$	—	$	22,667

Notes to Condensed Consolidated Financial Statements - Continued

Offsetting of Derivative Liabilities (as of ~~September 30,~~December 31, 2022)

Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets

(In thousands)

Gross Amounts of Recognized Liabilities

Gross Amounts Offset in the Condensed Consolidated Balance Sheet

Net Amounts of Liabilities in the Condensed Consolidated Balance Sheets

Financial Instruments

Cash Collateral Received

Net Amount

Derivatives

—

Offsetting of Derivative Assets (as of December 31, 2021)
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
(In thousands) Gross Amounts of Recognized Assets Gross Amounts Offset in the Condensed Consolidated Balance Sheet Net Amounts of Assets in the Condensed Consolidated Balance Sheets Financial Instruments Cash Collateral Received Net Amount
Derivatives $ 343 $ — $ 343 $ (247) $ — $ 96

Offsetting of Derivative Liabilities (as of December 31, 2021)
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
(In thousands) Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Condensed Consolidated Balance Sheet Net Amounts of Liabilities in the Condensed Consolidated Balance Sheets Financial Instruments Cash Collateral Received Net Amount
Derivatives $ (5,324) $ — $ (5,324) $ 247 $ — $ (5,077)

Credit-risk-related Contingent Features

As of ~~September 30, 2022,~~March 31, 2023, the Company did not have any derivatives in a net liability position. As of ~~September 30, 2022,~~March 31, 2023, the Company had not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company terminated these interest rate swaps or breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value.

NOTE 7. STOCKHOLDERS' EQUITY

Common Stock

The following table provides a reconciliation of the beginning and ending common stock balances for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 and for the year ended December 31, ~~2021:~~2022:

(In thousands) Nine Months Ended
September 30, 2022 Year Ended
December 31, 2021
Balance, beginning of period 24,983 23,888
Issuance of common stock — 823
Restricted stock issued 319 273
Restricted stock withheld and forfeited (3) (1)
Balance, end of period 25,299 24,983


(In thousands)	Three Months Ended March 31, 2023	Year Ended December 31, 2022
Balance, beginning of period	25,897	24,983
Issuance of common stock	249	600
Restricted stock issued	129	318
Restricted stock withheld and forfeited	(1)	(4)
Balance, end of period	26,274	25,897

ATM Program

The Company has an at-the-market offering program ("ATM Program"), with Piper Sandler & Co., Evercore Group L.L.C., Truist Securities, Inc., Regions Securities LLC, Robert W. Baird & Co. Incorporated, Fifth Third Securities, Inc. and Janney Montgomery Scott ~~LLC.,~~LLC, as sales agents (collectively, the “Agents”). Under the ATM Program, the

~~Notes to Condensed Consolidated Financial Statements - Continued~~

Company may issue and sell shares of its common stock, having an aggregate gross sales price of up to ~~$360.0~~$500.0 million. The shares of common stock may be sold from time to time through or to one or more of the Agents, as may be determined by the Company in its sole discretion, subject to the terms and conditions of the agreement and applicable law.

The ~~Company elected not to issue any shares~~Company's activity under the ATM Program during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023 is detailed in the table below. As of ~~September 30, 2022,~~March 31, 2023, the Company had ~~approximately $101.0~~approximately $469.9 million re~~maining~~remaining that may be issued under the ATM Program.


			Three Months Ended March 31, 2023
Shares issued (in thousands)			249
Net proceeds received (in millions) (1)			$8.9
Average gross sales price per share			$36.69
___________
(1) Net proceeds received includes shares sold on March 30, 2023 and reflected in shares outstanding at March 31, 2023, for which $0.7 million of cash proceeds was received by the Company on April 3, 2023.

Notes to Condensed Consolidated Financial Statements - Continued

NOTE 8. NET (LOSS) INCOME PER COMMON SHARE

The following table sets forth the computation of basic and diluted net (loss) income per common share for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(In thousands, except per share data)	(In thousands, except per share data)	2022		2021		2022		2021		(In thousands, except per share data)	2023		2022
Net income		$	5,673	$	5,354	$	16,781	$	16,379
Net (loss) income										Net (loss) income	$	(6,922)	$	5,524
Participating securities' share in earnings	Participating securities' share in earnings	(759)		(612)		(2,086)		(1,697)		Participating securities' share in earnings	(822)		(658)
Net income, less participating securities' share in earnings		$	4,914	$	4,742	$	14,695	$	14,682
Net (loss) income, less participating securities' share in earnings										Net (loss) income, less participating securities' share in earnings	$	(7,744)	$	4,866

Weighted average Common Shares outstanding	Weighted average Common Shares outstanding									Weighted average Common Shares outstanding
Weighted average Common Shares outstanding	Weighted average Common Shares outstanding	25,221		24,826		25,123		24,448		Weighted average Common Shares outstanding	26,043		25,060
Unvested restricted shares	Unvested restricted shares	(1,634)		(1,354)		(1,545)		(1,287)		Unvested restricted shares	(1,816)		(1,490)
Weighted average Common Shares outstanding–Basic	Weighted average Common Shares outstanding–Basic	23,587		23,472		23,578		23,161		Weighted average Common Shares outstanding–Basic	24,227		23,570

Dilutive potential common shares	Dilutive potential common shares	—		—		—		—		Dilutive potential common shares	—		—
Weighted average Common Shares outstanding –Diluted	Weighted average Common Shares outstanding –Diluted	23,587		23,472		23,578		23,161		Weighted average Common Shares outstanding –Diluted	24,227		23,570

Basic Net Income per Common Share		$	0.21	$	0.20	$	0.62	$	0.63
Basic Net (Loss) Income per Common Share										Basic Net (Loss) Income per Common Share	$	(0.32)	$	0.21

Diluted Net Income per Common Share		$	0.21	$	0.20	$	0.62	$	0.63
Diluted Net (Loss) Income per Common Share										Diluted Net (Loss) Income per Common Share	$	(0.32)	$	0.21

NOTE 9. STOCK INCENTIVE PLAN

A summary of the activity under the Company's 2014 Incentive Plan, as amended, for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ is included in the table below, as well as compensation expense recognized from the amortization of the value of shares over the applicable vesting periods.


			Three Months Ended September 30,				Nine Months Ended September 30,						Three Months Ended March 31,
(Dollars and shares in thousands)	(Dollars and shares in thousands)		2022		2021		2022		2021		(Dollars and shares in thousands)		2023		2022
Stock-based awards, beginning of period	Stock-based awards, beginning of period		1,512		1,260		1,416		1,165		Stock-based awards, beginning of period		1,708		1,416
		Stock in lieu of compensation	64		46		116		96			Stock in lieu of compensation	62		44
		Stock awards	136		111		203		177			Stock awards	67		48
		Total stock granted	200		157		319		273			Total stock granted	129		92
		Vested shares	—		—		(22)		(21)			Vested shares	—		(5)
		Forfeited shares	—		(1)		(1)		(1)			Forfeited shares	(1)		(1)
Stock-based awards, end of period	Stock-based awards, end of period		1,712		1,416		1,712		1,416		Stock-based awards, end of period		1,836		1,502
Amortization expense(1)	Amortization expense(1)		$	2,464	$	2,004	$	6,770	$	5,168	Amortization expense(1)		$	14,346	$	2,122
___________											___________
(1) Amortization expense for the three months ended March 31, 2023 includes the accelerated amortization totaling $11.8 million recognized upon the passing of our former CEO and President.											(1) Amortization expense for the three months ended March 31, 2023 includes the accelerated amortization totaling $11.8 million recognized upon the passing of our former CEO and President.

Accelerated Amortization of Restricted Stock

The Company's former CEO and President, Timothy Wallace, passed away on March 3, 2023. At the time of his passing, Mr. Wallace had 624,725 shares of restricted stock that had not been fully amortized. Upon his passing, Mr. Wallace's unvested shares of restricted stock vested in accordance with the terms of his employment agreement, and the Company accelerated the unamortized remaining balance of deferred compensation related to his unvested shares and recognized an additional $11.8 million of amortization expense in the first quarter of 2023.

Notes to Condensed Consolidated Financial Statements - Continued

NOTE 10. OTHER ASSETS, NET

Other assets, net on the Company's Condensed Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 are detailed in the table below.

Balance as of
(Dollars in thousands) September 30, 2022 December 31, 2021
Notes receivable $ 29,250 $ 26,000
Accounts and interest receivable 2,414 2,116
Straight-line rent receivable 14,575 11,968
Prepaid assets 1,139 701
Deferred financing costs, net 737 896
Leasing commissions, net 1,536 1,239
Deferred tax assets, net 328 348
Fair value of interest rate swaps 21,468 343
Above-market lease intangible assets, net 568 611
Sales-type lease receivable 3,034 3,031
Financing right-of-use asset 2,560 1,870
Operating lease right-of-use assets 766 788
Other 298 426
$ 78,673 $ 50,337


	Balance as of
(Dollars in thousands)	March 31, 2023		December 31, 2022
Notes receivable	$	33,250	$	32,705

Accounts and interest receivable	5,387		2,679
Straight-line rent receivable	16,342		15,429

Prepaid assets	1,341		980
Deferred financing costs, net	630		683
Leasing commissions, net	2,036		1,848
Deferred tax assets, net	271		306
Fair value of interest rate swaps	16,397		22,667
Above-market lease intangible assets, net	2,441		2,399
Sales-type lease receivable	3,033		3,035
Financing right-of-use asset	2,530		2,545

Operating lease right-of-use assets	751		759
Other	580		496
	$	84,989	$	86,531

The Company's notes receivable mainly included:

•At ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, notes receivable included a ~~$9.8~~$8.3 million and ~~$12.0~~$9.0 million, respectively, term loan, secured by all assets and ownership interests in seven long-term acute care hospitals and one inpatient rehabilitation hospital owned by the borrower. The term loan will be repaid in equal monthly installments of $250,000 through the maturity date of December 31, 2025 and bears interest at 9% per annum.

•At ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022, notes receivable included a ~~$6.0~~$17.0 million term loan and a ~~$13.5~~$5.5 million and ~~$8.0~~$5.0 million, respectively, revolving credit facility, secured by assets and ownership interests of six geriatric behavioral hospitals and affiliated companies all of which are co-borrowers on the loans. The term loan bears interest at 9% per annum, with interest only payments due initially and then equal monthly installments of principal payments due beginning ~~June 30, 2023.~~March 31, 2024. The term loan facility matures on ~~July 1, 2027.~~December 31, 2032. The revolving credit facility bears interest at 9% per annum and matures on December 31, ~~2025.~~2025. In addition, the Company has committed to fund, at the Company’s discretion, additional amounts, up to $5.0 million with interest at 9% per annum on any amount funded, that may be used by the borrower to pay existing liabilities of co-borrowers. The term loan, the revolving credit facility and the additional commitment all include a 3% non-cash interest charge that is due and payable upon the earlier of the repayment or maturity of each note.

•At March 31, 2023 and December 31, 2022, notes receivable included a $2.5 million and $1.7 million, respectively, revolving credit facility. Commencing on October 1, 2023, the revolving credit facility will be repaid in equal monthly installments of $40,000 through the maturity date of April 1, 2027. The revolving credit facility bears interest at 9% per annum, as well as a 3% non-cash interest charge that is due and payable upon the earlier of the repayment or maturity of the note.

Notes to Condensed Consolidated Financial Statements - Continued

The Company identified the borrowers of these notes as variable interest entities ("VIEs"), but management determined that the Company was not the primary beneficiary of the VIEs because we lack either directly or through related parties any material decision-making rights or control of the entities that impact the borrowers' economic performance. We are not obligated to provide support beyond our stated commitment to the borrowers, and accordingly our maximum exposure to loss as a result of this relationship is limited to the amount of our outstanding notes receivable. The VIEs that we have identified at ~~September 30, 2022~~March 31, 2023 are summarized in the table below.


Classification	Classification	Carrying Amount (in thousands)		Maximum Exposure to Loss (in thousands)		Classification	Carrying Amount (in thousands)		Maximum Exposure to Loss (in thousands)
Note receivable (term loan)	Note receivable (term loan)	$	9,750	$	9,750	Note receivable (term loan)	$	8,250	$	8,250
Note receivable (revolving credit facility)	Note receivable (revolving credit facility)	$	13,500	$	13,500	Note receivable (revolving credit facility)	$	5,500	$	5,500
Note receivable (term loan)	Note receivable (term loan)	$	6,000	$	6,000	Note receivable (term loan)	$	17,000	$	17,000
Note receivable (revolving credit facility)						Note receivable (revolving credit facility)	$	2,500	$	2,500

NOTE 11. OTHER LIABILITIES, NET

Other liabilities, net on the Company's Condensed Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 are detailed in the table below.


		Balance as of					Balance as of
(Dollars in thousands)	(Dollars in thousands)	September 30, 2022		December 31, 2021		(Dollars in thousands)	March 31, 2023		December 31, 2022
Prepaid rent	Prepaid rent	$	3,749	$	3,791	Prepaid rent	$	4,862	$	3,853
Security deposits	Security deposits	5,565		4,640		Security deposits	3,615		5,766
Below-market lease intangibles, net	Below-market lease intangibles, net	672		616		Below-market lease intangibles, net	2,144		1,075
Fair value of derivatives		—		5,324
Fair value of interest rate swaps						Fair value of interest rate swaps	712		—
Financing lease liability	Financing lease liability	3,278		2,973		Financing lease liability	3,278		3,279
Operating lease liability	Operating lease liability	788		795		Operating lease liability	783		786

Other	Other	467		512		Other	846		478
		$	14,519	$	18,651		$	16,240	$	15,237

NOTE 12. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practical to estimate the fair value.

Cash and cash equivalents and restricted cash - The carrying amount approximates the fair value.

Notes receivable - The fair value is estimated using cash flow analyses, based on an assumed market rate of interest or at a rate consistent with the rates on notes carried by the Company and are classified as level 2 inputs in the hierarchy.

Borrowings under our Credit Facility - The carrying amount approximates the fair value because the borrowings are based on variable market interest rates. The fair value estimates were determined using level 2 inputs.

Derivative financial instruments (Interest rate swaps) - The fair value is estimated using discounted cash flow techniques. These techniques incorporate primarily level 2 inputs. The market inputs are utilized in the discounted cash flow calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative valuation model for interest rate swaps are observable in active markets and are classified as level 2 inputs in the hierarchy.

Notes to Condensed Consolidated Financial Statements - Continued

Mortgage note payable - The fair value is estimated using cash flow analyses which are based on an assumed market rate of interest or at a rate consistent with the rates on mortgage notes assumed by the Company and are classified as level 2 inputs in the hierarchy.

The table below details the fair values and carrying values for our notes receivable, interest rate swaps, and mortgage note payable at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, using level 2 inputs.


		September 30, 2022				December 31, 2021					March 31, 2023				December 31, 2022
(Dollars in thousands)	(Dollars in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value		(Dollars in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value

Notes receivable	Notes receivable	$	29,250	$	28,069	$	26,000	$	25,869	Notes receivable	$	33,250	$	33,319	$	32,705	$	32,716
Interest rate swap asset	Interest rate swap asset	$	21,468	$	21,468	$	343	$	343	Interest rate swap asset	$	16,397	$	16,397	$	22,667	$	22,667
Interest rate swap liability	Interest rate swap liability	$	—	$	—	$	5,324	$	5,324	Interest rate swap liability	$	712	$	712	$	—	$	—
Mortgage note payable (principal amount)	Mortgage note payable (principal amount)	$	4,977	$	4,800	$	5,076	$	5,129	Mortgage note payable (principal amount)	$	4,915	$	4,766	$	4,947	$	4,761

NOTE 13. SUBSEQUENT EVENTS

Dividend Declared

On ~~October~~April 27, ~~2022,~~2023, the Company’s Board of Directors declared a quarterly common stock dividend in the amount of ~~$0.4450~~$0.45 per share. The dividend is payable on ~~November 25, 2022~~May 26, 2023 to stockholders of record on ~~November 10, 2022.~~May 12, 2023.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Disclosure Regarding Forward-Looking Statements

This report and other materials that Community Healthcare Trust Incorporated (the "Company") has filed or may file with the Securities and Exchange Commission, as well as information included in oral statements or other written statements made, or to be made, by management of the Company, contain, or will contain, statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “believes”, “expects”, “may”, "will', “should”, “seeks”, “approximately”, “intends”, “plans”, “estimates”, “anticipates” or other similar words or expressions, including the negative thereof. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. Because forward-looking statements relate to future events, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company’s control. Thus, the Company’s actual results and financial condition may differ materially from those indicated in such forward-looking statements. Some factors that might cause such a difference include the following: general volatility of the capital markets and the market price of the Company’s common stock, changes in the Company’s business strategy, availability, terms and deployment of capital, the Company’s ability to refinance existing indebtedness at or prior to maturity on favorable terms, or at all, changes in the real estate industry in general, interest rates or the general economy, adverse developments related to the healthcare industry, changes in governmental regulations, the degree and nature of the Company’s competition, the ability to consummate acquisitions under contract, catastrophic or extreme weather and other natural events and the physical effects of climate change, the occurrence of cyber incidents, effects on global and national markets as well as businesses resulting from increased inflation, rising interest rates, supply chain disruptions, labor conditions, the COVID-19 pandemic, and/or the conflict between Russia and Ukraine, and the other factors described in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, and the Company’s other filings with the Securities and Exchange Commission from time to time. Readers are therefore cautioned not to place undue reliance on the forward-looking statements contained herein which speak only as of the date hereof. The Company intends these forward-looking statements to speak only as of the time of this report and the Company undertakes no obligation to update forward-looking statements, whether as a result of new information, future developments, or otherwise, except as may be required by law.

The purpose of this Management's Discussion and Analysis ("MD&A") is to provide an understanding of the Company's consolidated financial condition, results of operations and cash. MD&A is provided as a supplement to, and should be read in conjunction with, the Company's Condensed Consolidated Financial Statements and accompanying notes.

Overview

References such as "we," "us," "our," and "the Company" mean Community Healthcare Trust Incorporated, a Maryland corporation, and its consolidated subsidiaries.

We were organized in the State of Maryland on March 28, 2014. We are a self-administered, self-managed healthcare real estate investment trust, or REIT, that acquires and owns properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers.

Trends and Matters Impacting Operating Results

Management monitors factors and trends that it believes are important to the Company and the REIT industry in order to gauge their potential impact on the operations of the Company. Certain of the factors and trends that management believes may impact the operations of the Company are discussed below.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued

Real Estate Acquisitions

During the first ~~nine~~three months of ~~2022,~~2023, the Company acquired ~~five~~seven real estate properties totaling approximately ~~182,239~~161,786 square feet for an aggregate purchase price of approximately ~~$46.8~~$23.4 million and cash consideration of approximately ~~$46.0~~$23.9 million. Upon acquisition, the properties were ~~100%~~100.0% leased in the aggregate with lease expirations through ~~2037.~~2031. These acquisitions were funded with cash on hand and proceeds from the Company's Revolving Credit Facility. See Note 4 – Real Estate Acquisitions to the Condensed Consolidated Financial Statements for more details on these acquisitions.

Acquisition Pipeline

The Company has 20four properties under definitive purchase agreements for an aggregate expected purchase price of approximately ~~$71.6~~$19.7 million. The Company's expected returns on these investments range from ~~9.0%~~9.16% to ~~10.17%~~9.25%. The Company expects to close on these properties in the ~~fourth~~second quarter of ~~2022;~~2023; however, the Company cannot provide assurance as to the timing of when, or whether, these transactions will actually close. ~~The Company expects to fund these acquisitions with cash on hand, proceeds from the Company's ATM Program, or proceeds from the Company's Revolving Credit Facility.~~

The Company also has ~~five~~nine properties under definitive purchase agreements, to be acquired after completion and occupancy, for an aggregate expected purchase price of approximately ~~$117.5~~$214.5 million. The Company's expected return on these investments will approximate 9.75% to 10.25%. The Company anticipates closing on these properties throughout ~~2023;~~2023, 2024 and 2025; however, the Company cannot provide assurance as to the timing of when, or whether, these transactions will actually close.

Leased Square Footage

As of ~~September 30, 2022,~~March 31, 2023, our real estate portfolio was approximately ~~90.8%~~91.6% leased. During the first ~~nine~~three months of ~~2022,~~2023, we had expiring or terminated leases related to approximately ~~337,000~~114,000 square feet, and we leased or renewed leases relating to approximately ~~351,000~~82,000 square feet.

Purchase Option Provisions

Inflation

~~In the last several years, we do not believe that inflation~~Inflation has ~~had a material impact on the Company. However, recent inflation has~~been increasing significantly ~~increased~~ and a prolonged period of high and persistent inflation could cause an increase in our expenses, capital expenditures, and cost of our variable-rate borrowings which could have a material impact on our financial position or results of operations. Many of our lease agreements contain provisions designed to mitigate the adverse impact of inflation, including annual rent increases based on stated increases or CPI increases. In response to inflationary pressures, the Federal Reserve ~~has begun~~began raising interest rates in 2022 and has indicated that it foresees further interest ~~rate increases~~rates throughout ~~the year and into~~ 2023 and 2024. Higher interest rates imposed by the Federal Reserve to address inflation may adversely impact real estate asset values and increase our interest expense on our variable-rate borrowings under our revolving credit facility.

~~New Accounting Pronouncements~~

See Note 1 – Summary of Significant Accounting Policies to the Company’s Condensed Consolidated Financial Statements accompanying this report for information on new accounting standards recently adopted and not yet adopted.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued

Results of Operations

The Company's results of operations for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 compared to the same periods in ~~2021~~2022 were impacted by real estate acquisitions, capital market activity, the amortization of non-cash compensation, including the non-cash accelerated amortization of unvested restricted shares upon the passing of the Company's CEO and President, as well as other items discussed in more detail below.

Three Months Ended ~~September 30, 2022~~March 31, 2023 Compared to Three Months Ended ~~September 30, 2021~~March 31, 2022

The table below shows our results of operations for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021~~2022 and the effect of changes in those results from period to period on our net (loss) income.


		Three Months Ended September 30,				Increase (Decrease) to Net income					Three Months Ended March 31,				Increase (Decrease) to Net income
(Dollars in thousands)	(Dollars in thousands)	2022		2021		$		%		(Dollars in thousands)	2023		2022		$		%
REVENUES	REVENUES									REVENUES
Rental income	Rental income	$	23,919	$	22,447	$	1,472	6.6	%	Rental income	$	26,128	$	22,604	$	3,524	15.6	%

Other operating interest	Other operating interest	888		807		81		10.0	%	Other operating interest	1,048		877		171		19.5	%
		24,807		23,254		1,553		6.7	%		27,176		23,481		3,695		15.7	%
EXPENSES	EXPENSES									EXPENSES
Property operating	Property operating	4,327		4,051		(276)		(6.8)	%	Property operating	4,873		4,091		(782)		(19.1)	%
General and administrative	General and administrative	3,762		3,206		(556)		(17.3)	%	General and administrative	16,205		3,316		(12,889)		n/m
Depreciation and amortization	Depreciation and amortization	8,003		7,812		(191)		(2.4)	%	Depreciation and amortization	9,018		7,942		(1,076)		(13.5)	%
		16,092		15,069		(1,023)		(6.8)	%		30,096		15,349		(14,747)		(96.1)	%

INCOME BEFORE INCOME TAXES AND OTHER ITEMS	INCOME BEFORE INCOME TAXES AND OTHER ITEMS	8,715		8,185		530		6.5	%	INCOME BEFORE INCOME TAXES AND OTHER ITEMS	(2,920)		8,132		(11,052)		(135.9)	%

Interest expense	Interest expense	(3,028)		(2,788)		(240)		(8.6)	%	Interest expense	(3,992)		(2,626)		(1,366)		(52.0)	%
Deferred income tax expense		(21)		(45)		24		53.3	%
Deferred income tax (expense) benefit										Deferred income tax (expense) benefit	(35)		17		(52)		n/m
Interest and other income	Interest and other income	7		2		5		250.0	%	Interest and other income	25		1		24		n/m

NET INCOME		$	5,673	$	5,354	$	319	6.0	%
NET (LOSS) INCOME										NET (LOSS) INCOME	$	(6,922)	$	5,524	$	(12,446)	(225.3)	%

n/m - not meaningful

Revenues

Rental income increased approximately ~~$1.5~~$3.5 million, or ~~6.6%~~15.6%, for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021 due mainly to acquisitions of real estate in~~2022. Income on properties acquired during 2022 and ~~2021.~~2023 increased rental income by approximately $3.0 million.

Other operating interest increased ~~$0.1~~$0.2 million, or ~~10.0%~~19.5%, for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021.~~2022. This increase in interest was due to additional amounts funded under existing notes receivable.

Expenses

Property operating expenses increased approximately ~~$0.3~~$0.8 million, or ~~6.8%~~19.1%, for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021 mainly due to acquisitions of real estate in~~2022. Expenses on properties acquired during 2022 and ~~2021.~~2023 increased property operating expenses by approximately $0.7 million.

General and administrative expenses increased approximately ~~$0.6~~$12.9 million ~~or 17.3%,~~ for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021~~2022 due ~~mainly~~ to ~~the non-cash amortization~~several factors. Shares of non-vested restricted common shares granted in 2023 and 2022 resulted in an increase of approximately $0.4 million in non-cash amortization expense in 2023 compared to 2022; salary and ~~2021.~~other compensation-related expenses increased approximately $0.3 million in 2023 compared to 2022; and professional and service fees increased approximately $0.4 million in 2023 compared to 2022. Also, the Company's former CEO and President, Timothy Wallace, passed away on March 3, 2023. Upon his passing, Mr. Wallace's unvested shares of restricted stock vested in accordance with the terms of his employment

Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued

agreement, and the Company accelerated the unamortized remaining balance of deferred compensation related to his unvested shares and recognized an additional $11.8 million of amortization expense in the first quarter of 2023.

Depreciation and amortization ~~expense~~expense increased approximately ~~$0.2~~$1.1 million, or ~~2.4%~~13.5%, for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021.~~2022. This increase was comprised mainly of the following:

•Acquisitions of real estate in ~~2022~~2023 and ~~2021~~2022 resulted in an increase of approximately ~~$0.6~~$1.3 million;

~~Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued~~

•Tenant improvements and other capital expenditures resulted in an increase of approximately ~~$0.1~~$0.2 million; and

•Fully amortized real estate lease intangibles which generally have a shorter depreciable life than a building resulted in a decrease of approximately ~~$0.5~~$0.4 million.

Interest expense

Interest expense increased approximately ~~$0.2~~$1.4 million, or ~~8.6%~~52.0%, for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021 mainly~~2022. Contractual interest due ~~to an increase in borrowings and interest rates~~ under the ~~Credit Facility.~~

~~Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021~~

The table below shows our results of operations for the nine months ended September 30, 2022 compared to the same period in 2021 and the effect of changes in those results from period to period on our net income.

Nine Months Ended September 30, Increase (Decrease) to
Net income
(Dollars in thousands) 2022 2021 $ %
REVENUES
Rental income $ 69,720 $ 65,233 $ 4,487 6.9 %
Other operating interest 2,617 2,104 513 24.4 %
72,337 67,337 5,000 7.4 %
EXPENSES
Property operating 12,480 11,623 (857) (7.4) %
General and administrative 10,688 8,958 (1,730) (19.3) %
Depreciation and amortization 24,022 22,576 (1,446) (6.4) %
47,190 43,157 (4,033) (9.3) %
INCOME BEFORE INCOME TAXES AND OTHER ITEMS 25,147 24,180 967 4.0 %
Interest expense (8,409) (7,753) (656) (8.5) %
Deferred income tax expense (20) (104) 84 80.8 %
Interest and other income 63 56 7 12.5 %
NET INCOME $ 16,781 $ 16,379 $ 402 2.5 %

~~Revenues~~

~~Revenues increased approximately $4.5 million, or 6.9%, for the nine months ended September 30, 2022 compared to the same period in 2021 due mainly to acquisitions of real estate in 2022 and 2021.~~

Other operating interest increased $0.5 million, or 24.4%, for the nine months ended September 30, 2022 compared to the same period in 2021. This increase in interest was due to additional amounts funded under existing notes receivable.

~~Expenses~~

Property operating expenses increased approximately $0.9 million, or 7.4%, for the nine months ended September 30, 2022 compared to the same period in 2021 due mainly to acquisitions of real estate in 2022 and 2021.

General and administrative expenses increased approximately $1.7 million, or 19.3%, for the nine months ended September 30, 2022 compared to the same period in 2021 due mainly to the non-cash amortization of non-vested restricted common shares granted in 2022 and 2021.

~~Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued~~

~~Depreciation and amortization expense increased approximately~~ ~~$1.4 million, or 6.4%,~~ ~~for the nine months ended September 30, 2022~~ ~~compared to the same period in 2021. The increase was comprised mainly of the following:~~

•~~Acquisitions of real estate in 2022 and 2021 resulted in an increase of approximately $2.1 million;~~

•~~Tenant improvements and other capital expenditures resulted in an increase of approximately $0.5 million; and~~

•~~Fully amortized real estate lease intangibles which generally have a shorter depreciable life than a building resulted in a decrease of approximately $1.2 million.~~

~~Interest expense~~

~~Interest expense increased approximately~~ ~~$0.7 million, or 8.5%,~~ ~~for the nine months ended September 30, 2022 compared to the same period in~~ ~~2021. This increase relates mainly to:~~

•~~Interest on the Company's Revolving~~ Credit Facility increased approximately ~~$0.4~~$1.3 million due to ~~borrowings under~~ the ~~facility and an increase~~Credit Facility refinancing in the fourth quarter of 2022, along with a rise in interest ~~rates;~~

•~~The Company's Term Loans were refinanced in March 2021, which resulted in an increase of approximately $0.5 million;~~

•~~Interest capitalized on construction projects resulted in a decrease of approximately $0.3 million; and~~

•~~A ground lease assumed in an acquisition during 2021, which is being accounted for as a financing lease, resulted in an increase of approximately $0.1 million.~~rates.

Non-GAAP Financial Measures and Key Performance Indicators

Management considers certain non-GAAP financial measures and key performance indicators to be useful supplemental measures of the Company's operating performance. A non-GAAP financial measure is generally defined as one that purports to measure financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable measure determined in accordance with GAAP. The Company reports non-GAAP financial measures because these measures are observed by management to also be among the most predominant measures used by the REIT industry and by industry analysts to evaluate REITs. For these reasons, management deems it appropriate to disclose and discuss these non-GAAP financial measures. Set forth below are descriptions of the non-GAAP financial measures management considers relevant to the Company's business and useful to investors, as well as reconciliations of those measures to the most directly comparable GAAP financial measure.

The non-GAAP financial measures and key performance indicators presented herein are not necessarily identical to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. These measures should not be considered as alternatives to net income, as indicators of the Company's financial performance, or as alternatives to cash flow from operating activities as measures of the Company's liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of the Company's needs. Management believes that in order to facilitate a clear understanding of the Company's historical consolidated operating results, these measures should be examined in conjunction with net income and cash flows from operations as presented in the Condensed Consolidated Financial Statements and other financial data included elsewhere in this Quarterly Report on Form 10-Q.

Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO")

FFO ~~and FFO per share are~~is an operating performance ~~measures~~measure adopted by the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”). NAREIT defines FFO as the most commonly accepted and reported measure of a REIT’s operating performance equal to net income (calculated in accordance with GAAP), excluding gains or losses from the sale of certain real estate assets, gains and losses from change in control, impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, plus depreciation and amortization related to real estate properties, and after adjustments for unconsolidated partnerships and joint ventures. NAREIT also provides REITs with an

~~Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued~~

option to exclude gains, losses and impairments of assets that are incidental to the main business of the REIT from the calculation of FFO.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued

In addition to FFO, the Company presents AFFO and AFFO per share. The Company defines AFFO as FFO, excluding certain expenses related to closing costs of properties acquired accounted for as business combinations and mortgages funded, excluding straight-line rent and the amortization of stock-based compensation, and including or excluding other non-cash items from time to time. AFFO presented herein may not be comparable to similar measures presented by other real estate companies due to the fact that not all real estate companies use the same definition.

Management believes that net income, as defined by GAAP, is the most appropriate earnings measurement. However, management believes FFO, AFFO, FFO per share and AFFO per share provide an understanding of the operating performance of the Company’s properties without giving effect to certain significant non-cash items, primarily depreciation and amortization expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. The Company believes that by excluding the effect of depreciation, amortization, impairments and gains or losses from sales of real estate, losses and impairment of incidental assets, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO, AFFO, FFO per share and AFFO per share can facilitate comparisons of operating performance between periods.

The table below reconciles net (loss) income to FFO and AFFO for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021.~~2022.


		Three Months Ended September 30,					Three Months Ended March 31,
(In thousands, except per share amounts)	(In thousands, except per share amounts)	2022		2021		(In thousands, except per share amounts)	2023		2022
Net income		$	5,673	$	5,354
Net (loss) income						Net (loss) income	$	(6,922)	$	5,524
Real estate depreciation and amortization	Real estate depreciation and amortization	8,078		7,871		Real estate depreciation and amortization	9,088		8,001

FFO	FFO	$	13,751	$	13,225	FFO	$	2,166	$	13,525
Straight-line rent	Straight-line rent	(853)		(895)		Straight-line rent	(917)		(820)
Stock-based compensation	Stock-based compensation	2,464		2,004		Stock-based compensation	2,547		2,122
Accelerated amortization of stock-based compensation						Accelerated amortization of stock-based compensation	11,799		—
AFFO	AFFO	$	15,362	$	14,334	AFFO	$	15,595	$	14,827

FFO per diluted common share		$	0.57	$	0.55
FFO per diluted common share (1)						FFO per diluted common share (1)	$	0.09	$	0.56

AFFO per diluted common share	AFFO per diluted common share	$	0.63	$	0.59	AFFO per diluted common share	$	0.62	$	0.61
Weighted average common shares outstanding - diluted (1)		24,312		24,220
Weighted average common shares outstanding - diluted (2)						Weighted average common shares outstanding - diluted (2)	25,298		24,344

___________________

(1) In the first quarter of 2023, the Company accelerated the amortization of stock-based compensation totaling $11.8 million, impacting FFO per diluted share by $0.47, upon the passing of our former CEO and President.

(2) Diluted weighted average common shares outstanding for FFO and AFFO are calculated based on the treasury method, rather than the 2-class method used to calculate earnings per share.

Net Operating Income ("NOI")

NOI is a key performance indicator. NOI is defined as net income or loss, computed in accordance with GAAP, generated from our total portfolio of properties and other investments before general and administrative expenses, depreciation and amortization expense, gains or loss on the sale of real estate properties or other investments, interest expense, and income tax expense. We believe that NOI provides an accurate measure of operating performance of our operating assets because NOI excludes certain items that are not associated with management of the properties. The Company's use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing NOI.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued

The table below reconciles net (loss) income to NOI for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021.~~2022.


			Three Months Ended September 30,						Three Months Ended March 31,
(In thousands)	(In thousands)		2022		2021		(In thousands)		2023		2022
Net income			$	5,673	$	5,354
Net (loss) income							Net (loss) income		$	(6,922)	$	5,524
								General and administrative (1)	4,406		3,316
		General and administrative	3,762		3,206			Accelerated amortization of stock-based compensation	11,799		—
		Depreciation and amortization	8,003		7,812			Depreciation and amortization	9,018		7,942

		Interest expense	3,028		2,788			Interest expense	3,992		2,626
		Deferred income expense	21		45			Deferred income tax expense (benefit)	35		(17)
		Interest and other income	(7)		(2)			Interest and other income	(25)		(1)
NOI	NOI		$	20,480	$	19,203	NOI		$	22,303	$	19,390
__________							__________
(1) Excludes accelerated amortization of stock-based compensation shown separately below.							(1) Excludes accelerated amortization of stock-based compensation shown separately below.

EBITDAre and Adjusted EBITDAre

The Company uses the NAREIT definition of EBITDAre which is net income or loss plus interest expense, income tax expense, and depreciation and amortization, plus losses or minus gains on the disposition of depreciable property, including losses/gains on change of control, plus impairment write-downs of depreciable property and of investments in unconsolidated affiliates caused by a decrease in value of depreciable property in the affiliate, plus or minus adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates and consolidated affiliates with non-controlling interest. The Company also presents Adjusted EBITDAre which is EBITDAre before non-cash stock-based compensation expense.

We consider EBITDAre and Adjusted EBITDAre important measures because they provide additional information to allow management, investors, and our current and potential creditors to evaluate and compare our core operating results and our ability to service debt.

The table below reconciles net (loss) income to EBITDAre and Adjusted EBITDAre for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021.~~2022.


			Three Months Ended September 30,						Three Months Ended March 31,
(In thousands)	(In thousands)		2022		2021		(In thousands)		2023		2022
Net income			$	5,673	$	5,354
Net (loss) income							Net (loss) income		$	(6,922)	$	5,524
		Interest expense	3,028		2,788			Interest expense	3,992		2,626
		Depreciation and amortization	8,003		7,812			Depreciation and amortization	9,018		7,942
		Deferred income tax expense	21		45			Deferred income tax expense (benefit)	35		(17)

EBITDAre	EBITDAre		$	16,725	$	15,999	EBITDAre		$	6,123	$	16,075
		Non-cash stock-based compensation expense	2,464		2,004			Non-cash stock-based compensation expense (1)	2,547		2,122
								Accelerated amortization of non-cash stock-based compensation expense	11,799		—
Adjusted EBITDAre	Adjusted EBITDAre		$	19,189	$	18,003	Adjusted EBITDAre		$	20,469	$	18,197
____________							____________
(1) Excludes accelerated amortization of stock-based compensation shown separately below.							(1) Excludes accelerated amortization of stock-based compensation shown separately below.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued

Liquidity and Capital Resources

The Company monitors its liquidity and capital resources and relies on several key indicators in its assessment of capital markets for financing acquisitions and other operating activities as needed, including the following:

•Leverage ratios and financial covenants included in our Credit Facility;

~~Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued~~

•Dividend payout percentage; and

•Interest rates, underlying treasury rates, debt market spreads and equity markets.

The Company uses these indicators and others to compare its operations to its peers and to help identify areas in which the Company may need to focus its attention.

Sources and Uses of Cash

The Company derives most of its revenues from its real estate properties. Our rental income represents our primary source of liquidity to fund our dividends, general and administrative expenses, property operating expenses, capital improvements on our properties, interest expense on our Credit Facility, and other expenses incurred related to managing our existing portfolio. To the extent additional resources are needed, the Company will fund its investment activity generally through equity or debt issuances either in the public or private markets or through proceeds from our Credit Facility.

The Company expects to meet its liquidity needs through cash on hand, cash flows from operations and cash flows from sources discussed above. The Company believes that its liquidity and sources of capital are adequate to satisfy its cash requirements. The Company cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet its liquidity needs.

Credit Facility

The Company's first amendment (the "First Amendment") to the third amended and restated credit facility (the "Credit Facility") provides for a $150.0 million Revolving Credit Facility that matures on March 19, 2026 and includes one 12-month option to extend the maturity date, and ~~$250.0~~$350.0 million in Term Loans, as well as an accordion feature which allows borrowings up to a total of ~~$600.0~~$700.0 million, including the ability to add and fund additional term loans. Note 5 – Debt, net to the Condensed Consolidated Financial Statements provides more details on the Company's Credit Facility. At ~~September 30, 2022,~~March 31, 2023, the Company had borrowing capacity remaining under the Revolving Credit Facility of approximately ~~$93.0~~$138.0 million.

The Company’s ability to borrow under the Credit Facility is subject to its ongoing compliance with a number of customary affirmative and negative covenants, including limitations with respect to liens, indebtedness, distributions, mergers, consolidations, investments, restricted payments and asset sales, as well as financial maintenance covenants. Also, the Company’s current financing policy prohibits aggregate debt (secured or unsecured) in excess of 40% of the Company's total capitalization, except for short-term, transitory periods. At ~~September 30, 2022,~~March 31, 2023, our debt to total capitalization ratio (debt plus stockholders' equity plus accumulated depreciation) was approximately ~~32.8%~~35.3%. The Company was in compliance with its financial covenants under its Credit Facility as of ~~September 30, 2022.~~March 31, 2023.

~~Mortgage~~Mortgage Note ~~Payable~~Payable

The Company also had outstanding at ~~September 30, 2022,~~March 31, 2023, a ~~$5.0~~$4.9 million mortgage note payable, secured by one of its properties. The mortgage note amortizes monthly at a fixed interest rate of 4.98% with a balloon payment of approximately $4.8 million due upon maturity on May 1, 2024. The Company expects to fund the balloon payment with proceeds from the Company's ATM Program or proceeds from the Company's Revolving Credit Facility.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued

Ground Leases

At March 31, 2023, the Company was obligated, as the lessee, under four non-prepaid ground leases accounted for as operating leases with expiration dates, including renewal options, through 2076, and two non-prepaid ground leases accounted for as financing leases with expiration dates through 2109, including renewal options. Any rental increases related to the Company's ground leases are generally either stated or based on the Consumer Price Index. At March 31, 2023, the Company's aggregate obligation under these ground leases was approximately $9.0 million. See Note 3 – Real Estate Leases to the Condensed Consolidated Financial Statements.

Acquisition Pipeline

The Company has 204 properties under definitive purchase agreements for an aggregate expected purchase price of approximately ~~$71.6~~$19.7 million. The Company's expected returns on these investments range from ~~9.0%~~9.16% to ~~10.17%~~9.25%. The Company expects to close on these properties in the ~~fourth~~second quarter of ~~2022;~~2023; however, the Company cannot provide assurance as to the timing of when, or whether, these transactions will actually close. The Company expects to fund these acquisitions with ~~cash on hand,~~ proceeds from the Company's ATM Program or proceeds from the Company's Revolving Credit Facility.

~~Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued~~

~~Other Contractual Obligations~~Tenant Improvements and Capital Improvements

Subject to Company approval, we may fund or reimburse tenants for tenant improvements, which are allowed for in certain leases, of up to approximately ~~$12.0~~$12.7 million as of ~~September 30, 2022.~~March 31, 2023.

The Company has also entered into contracts regarding certain capital expenditures with remaining commitments totaling approximately ~~$5.2~~$4.9 million as of ~~September 30, 2022.~~March 31, 2023. Reimbursement of these expenditures by our tenants will be determined by each tenant's lease.

~~The Company has ground lease obligations relating to six properties, with total obligations of approximately $9.1 million with maturities through 2109, including renewals.~~

The Company expects to fund these obligations with cash on hand, proceeds from the Company's ATM Program, proceeds from the Company's Revolving Credit Facility, or other debt or equity offerings.

Notes Receivable

The Company had entered into notes with one tenant with a maximum commitment remaining to fund totaling $5.0 million at March 31, 2023. See Note 10 – Other Assets, net to the Condensed Consolidated Financial Statements.

Automatic Shelf Registration Statement

On November ~~5, 2019,~~2, 2022, the Company filed an automatic shelf registration statement on Form S-3 with the Securities and Exchange Commission. The registration statement is for an indeterminate number of securities and is effective for three years. Under this registration statement, the Company has the capacity to offer and sell from time to time various types of securities, including common stock, preferred stock, depository shares, rights, debt securities, warrants and units.

Operating Activities

Cash flows provided by operating activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were approximately ~~$44.9~~$12.7 million and ~~$41.4~~$14.4 million, respectively. Cash flows provided by operating activities were generally provided by contractual rents and interest on our notes receivable, net of property operating expenses not reimbursed by the tenants and general and administrative expenses.

~~Investing Activities~~

Cash flows used in investing activities for the nine months ended September 30, 2022 and 2021 were approximately $55.9 million and $93.1 million, respectively. During the nine months ended September 30, 2022, the Company invested in five properties for an aggregate cash consideration of approximately $46.0 million and funded notes totaling approximately $5.5 million. Also, during the nine months ended September 30, 2022, the Company received payments on its notes totaling $2.3 million and funded capital expenditures on its existing portfolio totaling approximately $6.7 million.

During the nine months ended September 30, 2021, the Company invested in 10 properties for an aggregate cash consideration of approximately $78.2 million and funded notes receivable totaling approximately $13.4 million. Also, during the nine months ended September 30, 2021, the Company received payments on its notes receivable totaling $3.0 million and funded capital expenditures on its existing portfolio totaling approximately $4.5 million.

~~Financing Activities~~

Cash flows provided by financing activities for the nine months ended September 30, 2022 and 2021 were approximately $11.5 million and $51.0 million, respectively. During the nine months ended September 30, 2022, the Company borrowed $45.0 million under its Revolving Credit Facility and paid dividends totaling approximately $33.2 million.

3029

Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued

Investing Activities

Cash flows used in investing activities for the three months ended March 31, 2023 and 2022 were approximately $28.6 million and $8.5 million, respectively. During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2023, the Company ~~repaid $29.0~~invested in seven properties for an aggregate cash consideration of approximately $23.9 million and funded notes totaling approximately $1.3 million. Also, during the three months ended March 31, 2023, the Company received payments on its notes totaling $0.8 million and funded capital expenditures on its existing portfolio totaling approximately $4.1 million.

During the three months ended March 31, 2022, the Company invested in two properties for an aggregate cash consideration of approximately $5.8 million and funded notes receivable totaling approximately $1.5 million. Also, during the three months ended March 31, 2022, the Company received payments on its notes receivable totaling $0.8 million and funded capital expenditures on its existing portfolio totaling approximately $1.9 million.

Financing Activities

Cash flows provided by financing activities for the three months ended March 31, 2023 were approximately $8.4 million and cash used for financing activities for the three months ended March 31, 2022 were approximately $7.1 million. During the three months ended March 31, 2023, the Company borrowed $12.0 million under its Revolving Credit Facility, entered into an amended and restated credit facility in which the Company entered into a 7-year term loan facility totaling $125.0 million, repaid a $50.0 million term loan facility, and incurred $1.6 million in additional debt issuance costs. The Company also sold sharescompleted equity offerings under its ~~ATM Program~~at-the-market program, resulting in net proceeds, net of underwriters' discount and ~~received proceeds~~offering costs, of approximately ~~$38.4~~$8.1 million and paid dividends totaling approximately ~~$31.5~~$11.6 million.

During the three months ended March 31, 2022, the Company borrowed $4.0 million under its Revolving Credit Facility and paid dividends totaling approximately $11.0 million.

Security Deposits

As of ~~September 30, 2022,~~March 31, 2023, the Company held approximately ~~$5.6~~$3.6 million in security deposits for the benefit of the Company in the event the obligated tenant fails to perform under the terms of its respective lease. Generally, the Company may, at its discretion and upon notification to the tenant, draw upon the security deposits if there are any defaults under the leases.

Dividends

The Company is required to pay dividends to its stockholders at least equal to 90% of its taxable income in order to maintain its qualification as a REIT.

The ability of the Company to pay dividends is dependent upon its ability to generate cash flows and to make accretive new investments.

Corporate Responsibility

The Company is committed to conducting its business according to the highest ethical standards and upholding its corporate responsibilities as a public company operating for the benefit of its stockholders. ~~The Company's~~To that end, the Company modified its Governance Committee to be the Environmental, Social, and Governance (“ESG”) Committee with a revised charter is included on the Company’s website at www.chct.reit. Among other duties, the ESG Committee meets at least annually to review and recommend to the Board the general strategy and initiatives regarding ESG matters, including the Company’s internal and external communications and disclosures.

The Company’s Board of Directors has adopted a revised Code of Ethics and Business Conduct that not only applies to ~~the Company's~~its directors, officers, and other employees but also extends the Company's expectations that its vendors, service providers, contractors, and consultants will embrace the Company's commitment to integrity and personal responsibility by complying with this Code at all times. The Code of Ethics and Business Conduct includes the Company’s commitment to promote high standards of integrity by conducting its affairs honestly and ethically and to include in its periodic reports or other publicly available documents information and metrics related to internal monitoring, whistleblower, or reporting systems.

The Company’s whistleblower policy prohibits the Company and its affiliates and their officers, employees and agents from discharging, demoting, suspending, threatening, harassing or in any other manner discriminating against any employee for raising a concern. If an employee desires to raise a concern in a confidential or anonymous manner, the concern may be directed to the whistleblower officer at the Company’s whistleblower hotline. During the quarter ended ~~September 30, 2022,~~March 31, 2023, the whistleblower officer received no whistleblower complaints.

The Company’s Information Technology infrastructure is cloud-based, utilizing Software as a Service (“SaaS”) applications for substantially all of its software requirements. ~~The Company's~~Management has formed an IT Committee ~~consists~~consisting of the Chief Executive Officer, Chief Financial Officer, and the Vice President of Information ~~Technology. The IT Committee reviews~~Technology to review and ~~discusses~~discuss information security matters and cyber security risks. The committee meets at least twice a year and reports to the Board of Directors as ~~needed or at least annually.~~needed. The Company has adopted the Center of Internet Security (CIS) v8 IG1 cyber security controls including adopting an annual information security training program for its employees. The Company has partnered with a global cyber security leader to continuously and proactively manage and mitigate the ever growing list of cyber threats. As part of the managed monitoring and remediation platform, the Company benefits from a $100,000 breach prevention warranty. Since the Company’s inception, the Company has not had a security breach resulting in expenses, penalties or settlements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. We may use certain derivative financial instruments to manage, or hedge, interest rate risks related to our borrowings. We will not use derivatives for trading or speculative purposes and only enter into contracts with major financial institutions based upon their credit rating and other factors. An interest rate swap is a contractual agreement entered into by two counterparties under which each agrees to make periodic payments to the other for an agreed period of time based on a notional amount of principal. Under the most common form of interest rate swap, known from our perspective as a floating-to-fixed interest rate swap, a series of floating, or variable, rate payments on a notional amount of principal is exchanged for a series of fixed interest rate payments on such notional amount. During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, there were no material changes in the quantitative and qualitative disclosures about market risks presented in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer ~~have~~has concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective.

Changes In Internal Control Over Financial Reporting

There were no changes in our system of internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended ~~September 30, 2022~~March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company may, from time to time, be involved in litigation arising in the ordinary course of business or which may be expected to be covered by insurance. The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report on Form 10-Q, an investor should consider the risk factors included in its Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 and other reports that may be filed by the Company. There were no material changes in the risk factors presented in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended ~~September 30, 2022,~~March 31, 2023, the Company canceled shares of Company common stock to satisfy employee tax withholding obligations payable upon the vesting of non-vested shares, as follows:

Period Total Number of
Shares Purchased Average Price Paid
per share Total Number of Shares purchased
as part of publicly announced plans
or programs Maximum Number of Shares that may yet be purchased under the
plans or programs
July 1 - July 31 — $ — — —
August 1 - August 31 30 $ 39.56 — —
September 1 - September 30 — $ — — —
Total 30


Period	Total Number of Shares Purchased	Average Price Paid per share		Total Number of Shares purchased as part of publicly announced plans or programs	Maximum Number of Shares that may yet be purchased under the plans or programs

January 1 - January 31	98	$	37.77	—	—
February 1 - February 28	—	$	—	—	—
March 1 - March 31	—	$	—	—	—
Total	98

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The exhibits required by Item 601 of Regulation S-K which are filed with this report are listed in the Exhibit Index and are hereby incorporated in by reference.

EXHIBIT INDEX


Exhibit No.						Description
3.1						Corporate Charter of Community Healthcare Trust Incorporated, as amended (1)
3.2						Amended and Restated Bylaws of Community Healthcare Trust Incorporated (2)
10.1 †						Amended and Restated Employment Agreement between Community Healthcare Trust Incorporated and David H. Dupuy (3)
10.2 †						Fourth Amendment to Employment Agreement between Community Healthcare Trust Incorporated and David H. Dupuy (4 )
10.3 †						Fourth Amendment to Employment Agreement between Community Healthcare Trust Incorporated and Leigh Ann Stach (5 )
10.4 †						Second Amendment to Employment Agreement between Community Healthcare Trust Incorporated and Timothy L. Meyer (6 )
31.1 *						Certification of the Chief Executive Officer ~~of Community Healthcare Trust Incorporated pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Rule 302 of the Sarbanes-Oxley Act of 2002~~and
31.2 *						~~Certification of the~~ Chief Financial Officer of Community Healthcare Trust Incorporated pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Rule 302 of the Sarbanes-Oxley Act of 2002
32.1 **						~~Certifications~~Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS						Inline XBRL Instance Document
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Labels Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

___________________

(1)Filed as Exhibit 3.1 to Amendment No. 2 to the Registration Statement on Form S-11 of the Company filed with the Securities and Exchange Commission on May 6, 2015 (Registration No. 333-203210) and incorporated herein by reference.

(2)Filed as Exhibit 3.2 to the Quarterly Report on Form 10-Q of the Company filed with the Securities and Exchange Commission on November 3, 2020 (File No. 001-37401) and incorporated herein by reference.

(3)Filed as Exhibit 10.1 to the Form 8-K of the Company filed with the Securities and Exchange Commission on April 10, 2023 (File No. 001-37401) and incorporated herein by reference.

(4)Filed as Exhibit 10.2 to the Form 8-K of the Company filed with the Securities and Exchange Commission on January 4, 2023 (File No. 001-37401) and incorporated herein by reference.

(5)Filed as Exhibit 10.3 to the Form 8-K of the Company filed with the Securities and Exchange Commission on January 4, 2023 (File No. 001-37401) and incorporated herein by reference.

(6)Filed as Exhibit 10.4 to the Form 8-K of the Company filed with the Securities and Exchange Commission on January 4, 2023 (File No. 001-37401) and incorporated herein by reference.

* Filed herewith.

** Furnished herewith.

† Denotes executive compensation plan or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: ~~November 1, 2022~~May 2, 2023


			COMMUNITY HEALTHCARE TRUST INCORPORATED

			By:			/s/ ~~Timothy G. Wallace~~
						~~Timothy G. Wallace~~
						~~Chief Executive Officer and President~~

			~~By:~~			~~/s/~~ David H. Dupuy
						David H. Dupuy
						Chief Executive ~~Vice President~~Officer and Chief Financial Officer


	September 30,
	2022		2021
Operating leases:
Weighted-average remaining lease term in years (including renewal options)	36.13		37.33
Weighted-average discount rate	4.0	%	4.0	%

Financing leases:
Weighted-average remaining lease term in years (including renewal options)	41.03		35.25
Weighted-average discount rate	4.2	%	4.1	%


(In thousands)	Nine Months Ended September 30, 2022	Year Ended December 31, 2021
Balance, beginning of period	24,983	23,888
Issuance of common stock	—	823
Restricted stock issued	319	273
Restricted stock withheld and forfeited	(3)	(1)
Balance, end of period	25,299	24,983


	Nine Months Ended September 30,				Increase (Decrease) to Net income
(Dollars in thousands)	2022		2021		$		%
REVENUES
Rental income	$	69,720	$	65,233	$	4,487	6.9	%

Other operating interest	2,617		2,104		513		24.4	%
	72,337		67,337		5,000		7.4	%
EXPENSES
Property operating	12,480		11,623		(857)		(7.4)	%
General and administrative	10,688		8,958		(1,730)		(19.3)	%
Depreciation and amortization	24,022		22,576		(1,446)		(6.4)	%
	47,190		43,157		(4,033)		(9.3)	%

INCOME BEFORE INCOME TAXES AND OTHER ITEMS	25,147		24,180		967		4.0	%

Interest expense	(8,409)		(7,753)		(656)		(8.5)	%
Deferred income tax expense	(20)		(104)		84		80.8	%
Interest and other income	63		56		7		12.5	%

NET INCOME	$	16,781	$	16,379	$	402	2.5	%