Medical Properties Trust Inc Q4 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 stay on Prospect. And I guess, Steve, you made some comments that you provided prospects with some percent potential deferred rent options. I mean, what do those options include? And had they made a decision on what they wanted to do with those options?

Question: Michael Albert Carroll - RBC Capital Markets, Research Division - Analyst : What -- under what scenario would you defer all your rent? I mean, if they ask for it, would you necessarily provide that to them?

Question: Michael Albert Carroll - RBC Capital Markets, Research Division - Analyst : Did Prospect pay their full rent in January and February?

Question: Michael Albert Carroll - RBC Capital Markets, Research Division - Analyst : Okay. Did they pay any rent in January and February?

Question: Michael Albert Carroll - RBC Capital Markets, Research Division - Analyst : Okay. And then under what scenario, I guess, do you expect that this will be completed. I know in the press release, you highlighted that this will take 12 to 18 months, but then you also indicated that you'd expect to get some recoveries in the second half of the year. I mean, what's the give and takes with that potential outcome?

Question: Michael Albert Carroll - RBC Capital Markets, Research Division - Analyst : Okay. And then last question for me. What -- why has this transaction taken so long? I know in the middle of 2022, you kind of expected something would get done in the fourth quarter. So why is it being pushed out further into '23 -- it sounds like probably 2024.

Question: Omotayo Tejamude Okusanya - CrTdit Suisse AG, Research Division - Analyst : So a couple from me. Again, still on Prospect. So again, you guys have moved to cash basis. I'm curious if from an auditor's perspective, Prospect has any issues around being a going concern. If it does, how do you guys kind of think about a potential bankruptcy there on a Plan B for getting a new operator for those assets?

Question: Omotayo Tejamude Okusanya - CrTdit Suisse AG, Research Division - Analyst : Okay. That's helpful. And then number two, moving on to Priory, could you talk a little bit about just the economics of that transaction, the cap rates you did the deal at and also the seller financing, what interest rates that was done at?

Question: Omotayo Tejamude Okusanya - CrTdit Suisse AG, Research Division - Analyst : But in regards to actual cap rates on it and as well as the funding cost on the seller financing and assumed debt, is that something you can provide? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 23, 2023 / 4:00PM, MPW.N - Q4 2022 Medical Properties Trust Inc Earnings Call

Question: Omotayo Tejamude Okusanya - CrTdit Suisse AG, Research Division - Analyst : Then can we move over to kind of current leverage and just taking a look at the balance sheet and some of the moving items there that kind of contributed towards higher leverage with the line of credit kind of going up a decent amount. It seems like, again, your accounts receivables increased. There's this kind of additional mortgage loans increase of about $60 million. Just kind of talk about some of the items that may have contributed to the higher use of the line and higher net debt.

Question: Omotayo Tejamude Okusanya - CrTdit Suisse AG, Research Division - Analyst : And then the AR receivables being up $50 million, and anything going on there with kind of slower...

Question: Omotayo Tejamude Okusanya - CrTdit Suisse AG, Research Division - Analyst : Got you. Okay. And then from an accounting perspective, just bear with me. I appreciate the explanation about the change to net investments that you discussed earlier on, Steve. The only challenge is when we have that change, when we don't see gross investments, we can't really see any additional investments that were made. Could you just talk about, again, since you guys did the $250 million of investments to Steward and Prospect, if there were any additional investments to those 2 operators since that time?

Question: Omotayo Tejamude Okusanya - CrTdit Suisse AG, Research Division - Analyst : Got you. Okay. That's helpful. And then just one final comment from me. I think, again, just having the EBITDA rent coverages that used to provide in the past, I think investors do find that useful. It would be great if you could see a return of those metrics in the next supplemental in 1Q '23. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 23, 2023 / 4:00PM, MPW.N - Q4 2022 Medical Properties Trust Inc Earnings Call