Medical Properties Trust Inc Q2 2024 Earnings Call Transcript

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

Question: Austin Wurschmidt - KeyBanc Capital Markets - Analyst : Ed, you expand on your comments about expecting positive results in the Steward from re-leasing the Steward assets? And just give us a sense how those negotiations are going, comparing kind of the in-place contractual rent today with Steward versus what you expect to achieve, and then also share what percent of the facilities leased to Steward currently have an operator lined up to take over operations at the appropriate time. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 3:00PM, MPW.N - Q2 2024 Medical Properties Trust Inc Earnings Call

Question: Austin Wurschmidt - KeyBanc Capital Markets - Analyst : Is there anything that you're able to share about percent of assets that you would expect to sell out of the $2.3 billion of total real estate investments?

Question: Austin Wurschmidt - KeyBanc Capital Markets - Analyst : Okay. Got it. And then how should we think about what the quarterly cash rent and interest payment from Steward should be for the third quarter?

Question: Joshua Dennerlein - BofA Global Research - Analyst : I guess just thinking through like the lease rejection in Steward Mass portfolio. Just like how do we get comfortable that that wouldn't happen across the rest of the Steward assets or maybe just even the broader portfolio, if there are other BKs? It just seems like it might be like one of the easier parts of the capital structure you could like adjust or kind of wipe out if you can't flex. I'm assuming it's hard to flex labor cost for hospitals. So just kind of how can we get comfortable that, that might not happen?

Question: Joshua Dennerlein - BofA Global Research - Analyst : Okay. And then on the -- Ed, you mentioned mass situation is causing some like noise with like potential buyers. What is it that like maybe scoop down and like what are they waiting for to kind of maybe come back and look at -- relook at some of the assets.

Question: Joshua Dennerlein - BofA Global Research - Analyst : Okay. That's fair.

Question: Vikram Malhotra - Mizuho Securities USA, LLC - Analyst : I guess you've talked -- you've given us some thoughts around Steward. The rest of the portfolio, given sort of where I guess, coming close to an election, there may be more changes on the regulatory front towards hospitals, payments. I'm just wondering, are you able to sort of maybe give us some color on any of the other tenants that may be sort of close to kind of one-times or anything that you may be monitoring from a watch list perspective, just as we model kind of the second half into '25?

Question: Vikram Malhotra - Mizuho Securities USA, LLC - Analyst : Okay. That makes sense. And then just on the CapEx side, I think it was about $100 million. I'm just wondering and maybe that was also development. I'm just wondering like on a go-forward basis, second half and maybe if you can give some color or thoughts into '25, how do you anticipate that CapEx, both maintenance as well as development CapEx trending into next year?

Question: Michael Carroll - RBC Capital Markets - Analyst : Just following up on your last comment regarding the Norwood Hospital, Ed. I guess those insurance proceeds, I know it's been kind of stuck in court for some time now. I mean do you need to go through the appeal process? I guess what's the timing of that happening? And is there a potential of a settlement occurring where you can get those proceeds sooner?

Question: Michael Carroll - RBC Capital Markets - Analyst : Okay. Great. And then just wanted to touch on the credit facility amendment. In the 8-K, you mentioned that MPW is required to repay outstanding amounts from certain proceeds from asset sales and debt transactions. I mean, what does that mean? I mean if you have a big asset sale, does 100% of those proceeds need to go pay down that credit facility? And can you pull on that credit facility right now? Is there any limitations on you pulling additional funds from the available -- from the availability under the facility?

Question: Michael Carroll - RBC Capital Markets - Analyst : But you don't lose the capacity once you pay down the availability?

Question: Mike Mueller - JPMorgan - Analyst : Since it seems like you can't talk about the go-forward mix of sales versus releasing for Steward, can you remind us, like at the beginning of this, what was the total investment when Steward filed? What have you addressed of that investment amount so far? And what you have definitively locked up? And I guess, including the givebacks as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 3:00PM, MPW.N - Q2 2024 Medical Properties Trust Inc Earnings Call

Question: Mike Mueller - JPMorgan - Analyst : Okay. Got it. So it's basically that. And then second question, any update you can give us on, I guess, with prospect, the Yale sale back and forth? And anything on the monetization timing for the managed care business?

Question: Michael Lewis - Truist Securities - Analyst : Ed and Steve, you both talked about the options available to you for refinancing debt or adjusting debt over the next several years. I see about $3 billion total in '25 and '26 at 2.8% interest rate. Should we assume that most of that will be addressed through property sales? Or what are kind of those other options that you've been exploring or that you alluded to?

Question: Michael Lewis - Truist Securities - Analyst : Do you think property level debt or maybe it's too early. You don't know what the public market --

Question: Michael Lewis - Truist Securities - Analyst : Okay. Understood. And then my second question, just on the liquidity transactions you've already done, the $2.5 billion plus. What -- is the quality and the yield of those assets kind of representative of the rest of the portfolio? And I'm thinking a little about if the sales are strengthening or weakening the overall risk and growth profile of the portfolio.

Question: Omotayo Okusanya - Deutsche Bank - Analyst : I just wanted to clarify on the dividend. Is the way it's going to work going forward is it's going to be $0.08 per quarter cash and that's going to be the number, unless, of course, you need to meet your norm dividend requirements. And then if there's any increment that has to get paid out then that gets paid out in some of the alternative forms such as stock or something of that nature. Is that the way we should be thinking about it?

Question: Omotayo Okusanya - Deutsche Bank - Analyst : For clarification. And then one other question I wanted to ask is just in regards to Steward and assets that may be transitioned to other operators. How does it work or could you just walk us through how exactly would it work, if Steward again, reject the lease between that period of them rejecting the lease and when you get a new operator in there. So I think you might be going through that at North Shore ready in Florida?