Medical Properties Trust Inc Q1 2022 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Michael Albert Carroll - RBC Capital Markets, Research Division - Analyst : I wanted to touch on the current private market valuations for hospital assets. And I guess, specifically, has the uptick in interest rates and inflationary expectations, does that kind of affected investors' return expectations? And in turn, have you seen cap rates for hospitals trend a little bit higher over the past 6 months or so?

Question: Michael Albert Carroll - RBC Capital Markets, Research Division - Analyst : Okay. Great. Hopefully, you can hear me better. I try to change up my system. I also want -- can you talk a little bit about your current JV discussions? I know that those have been ongoing. I mean, can you kind of highlight how active those are right now? And what are investors currently saying? And has those discussions changed or advanced over the past several quarters?

Question: Michael Albert Carroll - RBC Capital Markets, Research Division - Analyst : And what about like on individual assets? I know you kind of mentioned this in your prepared remarks that there are some assets that you're willing to sell or part with. I mean how many of those are within the portfolio? I'm assuming there are some opportunistic deals. I don't know if you can REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2022 / 3:00PM, MPW.N - Q1 2022 Medical Properties Trust Inc Earnings Call talk about -- I mean, I'm assuming HCA would want to own those Utah assets? Is there something that you could do there at some pretty attractive cap rates just on the opportunistic side?

Question: Connor Serge Siversky - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : First one is quick. I just wonder if you could provide any additional color on the lease terms for the acquisitions completed during the quarter. I'm just trying to get the puts and takes to work back to a cash yield on those acquisitions.

Question: Connor Serge Siversky - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Okay. And then just jump back to coverage real quick. I really appreciate the color -- the additional color provided there. Now just thinking into context of the inflationary pressure. So correct me if I'm wrong here, but I think we should be working under the assumption that we should see those coverage levels kick down for Q1 '22 and probably through the end of the year. And then within that framework, I'm just wondering, given the reimbursement rate hike, I think the budget increase was $1.6 billion. Can you just provide any commentary here whether or not that's viewed favorably or unfavorably by the operator base? And then in the same vein, how is the top line on these procedures looking for private pay models? I mean are you seeing any improvement in the reimbursement rates there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2022 / 3:00PM, MPW.N - Q1 2022 Medical Properties Trust Inc Earnings Call

Question: Connor Serge Siversky - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Yes, both from CMS and commercial.

Question: Connor Serge Siversky - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Okay. I appreciate the color there. And then just one last quick one on the development pipeline. I noticed I think one of those projects time line got pushed out a little bit. Just wondering how rising costs of construction inputs might be affecting your yield projections.

Question: Omotayo Tejamude Okusanya - CrTdit Suisse AG, Research Division - Analyst : I think I've done over 60 earnings calls with you guys, and this is by far the most exciting. So Steve's on fire today. Not very often I hear he does that but he did it. Anyway, first of all, congrats on the -- again, on all the disclosure. I think, again, stuff that the sell side and buy side have been covering for a long time. So it is really, really good to see that information, and I continue to kind of encourage that going forward. Guidance-wise, I just wanted to make sure I fully understood what was in there, given you've now switched back to guidance that's kind of more in line with how your peers provided. So you do have in there or just acquisitions that have been done year-to-date, but you don't have any prospective acquisitions in there. You don't have any prospective capital related transactions in there, but you do have some expectation of client asset sales in there mucking around Prospect and what they're doing with some other sales of the operations.

Question: Omotayo Tejamude Okusanya - CrTdit Suisse AG, Research Division - Analyst : Okay. That's helpful. And then lease coverage, again, the additional detail is great. I'm just kind of curious if we were trying to do the back of the envelope math between you guys provide EBITDA coverage for all the tenants. If we were trying to look at EBITDAR, not DARM coverage, what's kind of a good sense of -- I know all the companies have different EBITDA margins and things of that nature, but is there a way you could guide as to what EBITDAR could look like rather than the DARM?

Question: Omotayo Tejamude Okusanya - CrTdit Suisse AG, Research Division - Analyst : But that's a 4% fee on the revenue on the top line, correct?

Question: Omotayo Tejamude Okusanya - CrTdit Suisse AG, Research Division - Analyst : Yes. Exactly, and I don't even know what the margin is exactly. So kind of hard back into it. But I -- that's helpful. And then acquisition-wise, the $1.1 billion to $3 billion range that you kind of talked about, again, if it's not -- you've given an impression you're not really -- you're not likely to do a very big deal this year. But again, I'm just kind of curious, when you look out into the landscape, I mean, are the actual big deal opportunities around? And why wouldn't you consider that?

Question: Omotayo Tejamude Okusanya - CrTdit Suisse AG, Research Division - Analyst : Got you. Excellent. Again, I think the information is great, and I just really encourage you guys to do more of it going forward.