Community Healthcare Trust Inc (CHCT)

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, changes in interest rates, supply chain disruptions, labor conditions, prolonged government shutdown or budgetary reductions or impasses, tariffs and global trade tensions, and/or conflicts in Ukraine and the Middle East, and 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, 2025, 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.

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

Asset Acquisitions

During the first quarter of 2026, the Company acquired one inpatient rehabilitation facility totaling approximately 37,151 square feet for an aggregate purchase price and cash consideration of approximately $28.5 million. The property was 100.0% leased with a lease expiration in 2044. The acquisition was funded with net proceeds from the Company's Revolving Credit Facility and from asset sales. See Note 4 – Real Estate Acquisition, Disposition, and Asset Held for Sale to the Condensed Consolidated Financial Statements for more details on this acquisition.

Acquisition Pipeline

The Company has four properties under definitive purchase agreements, to be acquired after completion and occupancy, for an aggregate expected purchase price of approximately $99.0 million. The Company anticipates closing on one of these properties in the third quarter of 2026 and another in the fourth quarter of 2026 and the remaining two properties in 2027; 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 from operations, with net proceeds from equity or debt issuances, with the Company's Revolving Credit Facility, or from asset sales.

Asset Dispositions

During the second quarter of 2026, the Company sold a property, received net proceeds of approximately $0.4 million, and recorded a $46,000 gain on sale. During the first quarter of 2026, the Company sold a property, received net proceeds of approximately $5.2 million, and recorded a $46,000 loss on sale. During the first quarter of 2026, the Company also received net cash proceeds of approximately $0.7 million for a property disposed of during the fourth quarter of 2025. The net proceeds were used to repay outstanding balances on the Company's Revolving Credit Facility.

Leased Square Footage

As of June 30, 2026, our real estate portfolio was approximately 89.8% leased. During the first six months of 2026, we had expiring or terminated leases related to approximately 388,000 square feet, and we leased or renewed leases relating to approximately 342,000 square feet.

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 June 30, 2026, the Company had an aggregate gross investment of approximately $38.2 million in 11 real estate properties with purchase options outstanding at June 30, 2026 that had not been exercised.

Interest Expense

On March 29, 2026, the Company's interest rate swaps that had fixed the interest rate at a weighted average rate of approximately 3.8% on $75.0 million of its Revolving Credit Facility balance matured. The Company has not replaced these interest rate swaps, so interest on the $75.0 million is now under the Revolving Credit Facility floating rate. The floating rate for the Revolving Credit Facility at June 30, 2026 was approximately 5.3%. See Note 5 – Debt, net for more details on the Company's debt.

Inflation

Inflation has significantly increased during the past several years 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 raised interest rates in 2022 and 2023, however, the Federal Reserve lowered interest rates in 2024 and 2025, and may provide additional

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

rate changes during 2026. Higher interest rates may adversely impact real estate asset values and increase our interest expense on our variable-rate borrowings under our revolving credit facility.

Results of Operations

The Company's results of operations for the three and six months ended June 30, 2026 compared to the same period in 2025 were impacted by real estate acquisitions and dispositions, and interest expense, as well as other items discussed in more detail below.

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Revenues

Rental income increased approximately $0.8 million, or 2.8%, for the three months ended June 30, 2026 compared to the same period in 2025 due mainly to the following:

•Acquisitions of properties during 2025 and 2026 resulted in an increase in rental income of approximately $2.3 million in 2026 compared to 2025; offset partially by

•A decrease in rental income of approximately $0.3 million and non-cash straight line rent of approximately $0.6 million related to a tenant placed on cash basis during the three months ended June 30, 2026; and

•Dispositions of properties during 2025 and 2026 resulted in a decrease in rental income of approximately $0.7 million in 2026 compared to 2025;

•The remaining $0.1 million net increase resulted from various other items, including leasing activities.

Other operating interest increased approximately $1.3 million for the three months ended June 30, 2026 compared to the same period in 2025 due mainly to the following:

•During the three months ended June 30, 2025, the Company reversed interest receivables due from a geriatric behavioral hospital tenant totaling approximately $1.6 million, net of cash collections; offset partially by

•Interest income recognized during the three months of June 30, 2025 totaling approximately $0.2 million related to a loan that was repaid in June 2025.

Expenses

Property operating expenses increased approximately $0.3 million, or 5.0%, for the three months ended June 30, 2026 compared to the same period in 2025 due mainly to the following:

•Leasing commission amortization increased approximately $0.2 million; and

•Repairs and maintenance expenses increased approximately $0.1 million.

General and administrative expenses decreased approximately $5.7 million, or 53.7%, for the three months ended June 30, 2026 compared to the same period in 2025 due mainly to:

•During the second quarter of 2025, upon termination of a former executive officer, in accordance with the terms of his employment agreement, the Company accelerated the unamortized remaining balance of deferred compensation and recognized approximately $4.6 million of non-cash amortization expense. Additionally, the Company recognized approximately $1.3 million of severance and transition-related expenses; offset partially by

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

•Non-cash amortization of other stock-based compensation increased approximately $0.2 million for the three months ended June 30, 2026 compared to the same

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ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 liquidity. MD&A is provided as a supplement to, and should be read in conjunction with, the Company's Consolidated Financial Statements and accompanying notes.

Overview

We were organized in the State of Maryland in March 2014 and began operations upon the completion of our initial public offering in May 2015. We are a self-administered, self-managed healthcare 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.

Real estate acquisitions

During the year ended December 31, 2025, the Company acquired three real estate properties for an aggregate purchase price of approximately $64.5 million. Upon acquisition, the properties, totaling approximately 113,000 square feet, were 100.0% leased in the aggregate with lease expirations through 2040.

Real estate dispositions and Assets Held for Sale

During the year ended December 31, 2025, the Company disposed of five properties. The Company received net proceeds of approximately $32.9 million, including $0.7 million where cash was received subsequent to December 31, 2025, and recognized a net gain on sales, net of losses and impairments, totaling approximately $11.6 million.

Additionally, during the second quarter of 2025, the Company amended an operating lease on a property that resulted in a sales-type lease. As such, the Company reclassified the net book value of the real estate totaling $3.7 million to a net lease investment in other assets on the Condensed Consolidated Balance Sheet and recognized a gain on sale totaling approximately $1.3 million (see Sales-type leases in Note 3 – Real Estate Leases in the Consolidated Financial Statements for more details).

The Company has one property with a carrying balance of $5.3 million classified as held for sale at December 31, 2025. During the year ended December 31, 2025, the Company recorded impairment charges of $1.1 million on this property. See Note 4 – Real Estate Acquisitions, Dispositions, and Assets Held for Sale in the Consolidated Financial Statements for more details.

Acquisition pipeline

The Company has five properties under definitive purchase agreements, to be acquired after completion and occupancy, for an aggregate expected purchase price of approximately $122.5 million. The Company's expected returns on these investments are approximately 9.1% to 9.75%. The Company anticipates closing on one of these properties in the first quarter of 2026 with the remainder throughout 2026 and 2027; however, the Company cannot provide assurance as to the timing of when, or whether, these transactions will actually close.

Leased square footage

As of December 31, 2025, our real estate portfolio was approximately 90.6% leased, excluding the real estate asset held for sale. During the year ended December 31, 2025, we had expiring or terminated leases related to approximately 712,000 square feet, and we leased or renewed leases related to approximately 683,000 square feet.

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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. The Company had an aggregate gross investment of approximately $42.0 million in 13 real estate properties as of December 31, 2025 that were subject to exercisable purchase options.

Lease Expirations

Approximately 6.1% to 9.0% of our leases (based on annualized rent) will expire in each of the next 5 years. Management expects that many of the tenants will renew their leases, but in cases where they do not renew, the Company believes it will generally be able to re-lease the space to existing or new tenants without significant loss of rental income. See "Properties" in Item 2 for a schedule of the Company's lease expirations.

Inflation

Inflation has significantly increased during the past several years 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 raised interest rates in 2022 and 2023, however, the Federal Reserve lowered interest rates in 2024 and 2025, and may provide additional rate changes during 2026. Higher interest rates may adversely impact real estate asset values and increase our interest expense on our variable-rate borrowings under our revolving credit facility.

Credit Loss on Loans and Interest Receivables

During the second quarter of 2025, the Company recorded reserves, fully reserving its notes and interest with a geriatric inpatient behavioral hospital tenant, totaling approximately $8.7 million on its notes and approximately $1.7 million of interest receivables. See Note 1 – Summary of Significant Accounting Policies and Note 10 – Other Assets, net to the Condensed Consolidated Financial Statements for more details on these reserves.

Accelerated Amortization of Restricted Stock and Restricted Stock Units

The Company's former Executive Vice President, Asset Management was terminated effective May 31, 2025. In accordance with his employment agreement, his unvested restricted shares totaling 198,015 shares vested and his unvested restricted stock units totaling 18,275 units vested at target upon termination. As such, upon termination and vesting of these shares, the Company accelerated the unamortized remaining balance of his deferred compensation at May 31, 2025 and recognized $4.6 million of amortization expense. Also, the Company recognized severance and transition expense totaling approximately $1.3 million.

Interest Expense

At December 31, 2025, the Company had fixed the $275.0 million outstanding under the Term Loans and $75.0 million of its Revolving Credit Facility which had an aggregate fixed weighted average interest rate under the swaps of approximately 4.7% and 3.8%, respectively. These swaps that fix the interest rates on the Revolving Credit Facility mature in March 2026. If the Company does not enter into new interest rate swaps, the interest on this $75.0 million will be under a floating rate. The floating rate for the unhedged portion of the Revolving Credit Facility at December 31, 2025 was approximately 5.4%. See Note 5 – Debt, net and Note 6 – Derivative Financial Instruments for more details on the Company's debt and interest rate swaps.

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Results of Operations

The Company's consolidated results of operations for 2025 compared to 2024 were significantly impacted by acquisitions, including depreciation and amortization on our real estate portfolio, asset dispositions, leasing activities, collectibility of lease payments, notes receivable and related interest, interest expense, and general and administrative expenses, including severance and the accelerated amortization of stock-based compensation upon the termination our former Executive Vice President, Asset Management in 2025.

Year Ended December 31, 2025 Compared to December 31, 2024

Revenues

Rental income increased approximately $6.8 million, or 5.9%, for the year ended December 31, 2025 compared to the same period in 2024 due mainly to the following:

•Income on properties acquired during 2025 and 2024 increased rental income by approximately $5.4 million;

•Rental income related to tenants on cash basis increased by approximately $0.9 million for the twelve months ended December 31, 2025 as compared to the same period in 2024, mainly due to the non-cash write-off of straight-line rent in 2024 for the geriatric inpatient behavioral hospital tenant accrued prior to 2024; partially offset by

•Properties sold during 2025 and 2024 resulted in a decrease in rental income of approximately $1.1 million, including $0.4 million related to a lease that was converted from an operating lease to a sales-type lease in 2025;

•A net decrease in the allowance for doubtful accounts for 2025 compared to 2024 totaling approximately $0.2 million; and

•The remaining $1.8 million net increase resulted from annual rent increases, net leasing activities, including the rent commencement of leases previously under construction and various other items.

Other operating interest decreased approximately $1.4 million, or 112.8%, for the year ended December 31, 2025 compared to the same period in 2024 due mainly to the following:

•A reduction in interest totaling $1.5 million due to reserving interest on notes in 2025 with a geriatric behavioral hospital borrower/tenant in six properties, net of cash collections differences in 2025 compared to 2024 for that borrower/tenant;

•A reduction in interest totaling $0.3 million due to amortizing payments on notes receivable; offset partially by

•An increase in interest of approximately $0.4 million from interest on a new note entered into during 2024, as well as interest on a financing and sales-type leases.

Expenses

Property operating expenses increased approximately $0.8 million, or 3.5%, for the year ended December 31, 2025 compared to the same period in 2024 due mainly to the following:

•Property operating expenses on properties acquired during 2025 and 2024 resulted in an increase of approximately $0.4 million;

•Utilities expenses (on a same store basis) increased approximately $0.3 million;

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•Landscaping expenses, including snow plow expenses, (on a same store basis) increased approximately $0.2 million; and

•Property insurance expenses (on a same store basis) increased approximately $0.1 million; offset partially by

•A reduction of expenses totaling approximately $0.2 million due to properties sold during 2025 and 2024.

General and administrative expenses increased approximately $6.0 million, or 31.7%, for the year ended December 31, 2025 compared to the same period in 2024 due mainly to the following:

•On May 31, 2025, the Company terminated its former Executive Vice President of Asset Management. Upon termination, unvested shares of restricted stock and restricted stock units vested in accordance with the terms of his employment agreement, and the Company accelerated the unamortized remaining balance of deferred compensation and recognized approximately $4.6 million of non-cash amortization expense. Additionally, the Company recognized approximately $1.3 million of severance and transition-related expenses; and

•Compensation expense increased approximately $0.5 million for the twelve months ended December 31, 2025 compared to the same period in 2024, partially related to a $0.3 million increase to non-cash amortization of stock-based compensation; offset partially by

•A decrease in professional fees of $0.3 million for the twelve months ended December 31, 2025 compared to the same period in 2024.

Depreciation and amortization expense increased approximately $0.8 million, or 1.8%, for the year ended December 31, 2025 compared to the same period in 2024 due mainly t

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