Q2 2023 Medical Properties Trust Inc Earnings Call
Okay.
Good day and welcome to the medical properties Q2, 2022 trust earnings Conference call.
All participants will be in a listen only mode for the 60 minute call.
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After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchstone phone.
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Please note this event is being recorded.
I would now like to turn the conference over to Charles Lambert Vice President. Please go ahead.
Good morning welcome.
Welcome to the medical properties Trust conference call to discuss our second quarter 2023 financial results.
With me today are Edward Kaye, Outback Junior Chairman, President and Chief Executive Officer of the company.
And Steven Hamner, Executive Vice President and Chief Financial Officer.
Our press release was distributed this morning and furnished on form 8-K, with the Securities and Exchange Commission. If you did not receive a copy it is available on our website at medical properties Trust's Dot com in the Investor Relations section <unk>.
Additionally, we're hosting a live webcast of todays call, which you can access in that same section.
During the course of this call, we will make projections and certain other statements that may be considered forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995. These forward looking statements are subject to known and unknown risks uncertainties and other factors that may cause our financial results and future.
Or events to differ materially from those expressed in or underlying such forward looking statements. We refer you to the Companys reports filed with the Securities and Exchange Commission for a discussion of the factors that could cause the company's actual results or future events to differ materially from those expressed in this call.
The information being provided today is as of this date, only and except as required by the federal Securities laws. The company does not undertake a duty to update any such information.
In addition, during the course of the conference call, we will describe certain non-GAAP financial measures, which should be considered in addition to and not in lieu of comparable GAAP financial measures.
Please note that in our press release medical properties Trust has reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. You can also refer to our website at medical properties Trust Dot com for the most directly comparable.
Financial measures and related reconciliations.
I will now turn the call over to our Chief Executive Officer, Ed <unk>.
Thank you Charles and thanks to all of you for joining US. This morning on our second quarter 2023 earnings call.
And we've always said and continue to firmly believe there is no scenario where world exist without hospitals.
Even as health care delivery has changed over the years with technological advances the importance of hospitals to the delivery system not only remains critical but has grown in importance.
Hospital services remain the largest single category of spending in the U S health care. According to CMS projections Hospital services are expected to continue to make up 31% of total health care spending in 2023 that equates to approximately $1 five trillion dollars importantly.
Spittle services are projected to continue growing CMS expects hospital services to grow almost 6% over the next seven to eight years because of the aging population growing consumer demand and expanded medical service offerings.
This volume growth with the fact that our operators are generally seeing 3% to 6% average rate increases as they negotiate new payer agreements along with continued Medicare rate increases over the last several years and Youll see a compelling case for strong performance from the hospital sector.
During the Covid pandemic governments all over the world validated these essential nature of hospitals with various types of provider relief funds.
These bonds sustained hospitals through the pandemic and now as volumes have come back and continue to grow hospitals all over the world continued to show improvement in performance.
You can refer to our supplemental information filed this morning for more detailed information on our portfolio and remember while reviewing that information we report one quarter in arrears.
Most of you probably have seen the reporting by various publicly reporting hospital operators on their most recent quarters there.
Their numbers, which are one quarter more recent than ours continue to show the overall market improving.
Let me take a few moments to highlight some of our larger tenants.
This past Friday steward refinance their ABL five months ahead of the December 'twenty, two 'twenty three maturity.
The new ABL is led by a group of third party private credit lenders, whose aggregate assets under management exceed $50 billion than.
The new ABL will provide significantly more liquidity to steward than the most recent facility.
There are seven unrelated lenders in the a b L.
Stuart taking the concerns of the market for the ABL refinancing off the table and having a new ABL with a much larger liquidity availability with a maturity of four years plus Stewart, having the right to extend that maturity is a.
A very strong positive.
M P T's investment in the credit facility is Parry pursue with all the other lenders and provides MPT with a strong return.
This participation is not an operating loan to steward. This is well secured by receivables that MPT would not otherwise have a security interest in <unk>.
Steward continues to perform well operationally in fact their EBITDAR coverage is currently one of the strongest in our portfolio at two nine times.
Stewards volumes are doing well and they expect to continue improvement throughout 'twenty, three and 'twenty 'twenty four there.
Our primary focus going forward will be one to divest some of their lines that don't fit into their overall future plans and to continue to reduce their use of contract labor, which is down 43% from 12, 31 22 to around only 1% or their total ftes.
I spent some time in California, a few weeks ago visiting the prospect pipeline management teams and a few of the respective hospitals, let me start with prospect.
Prospect, California continues to perform in line with our expectations one of the hospitals I visited work the Culver City Hospital.
The area has seen an impressive revitalization and the hospital itself was extremely busy.
<unk> is making improvements to several areas of the facility, including a brand new state of the art Emergency Department.
Prospect is also moving their corporate headquarters to this area to be closer to this hospital.
The managed care business continues to be profitable and on track to meet revenue and EBITDA targets and timelines. They are still planning for a monetization event of the managed care business in 2024.
Some of you may have seen that late last week prospect was hit with a ransomware attack. The FBI is assisting in this case according to prospect patient care at prospect hospitals has been minimally impacted thanks to the extraordinary efforts of the nurses doctors and all of the hospital staff fall.
Blowing in place downtime procedures.
<unk> is working hard to bring the impact of systems back online.
Many other hospital providers in the country had been hit with similar attacks. During the first six months of 2023 alone the health care sector, including health care providers health plans and business Associates has suffered approximately 295 breaches. These include providers such as HCA common.
Spirit, Johns Hopkins CHS, Kaiser and many more.
The Connecticut transaction is still progressing to close pursuant to the a b a neither we nor prospect are aware of any opposition to this transaction.
I'm pleased to report that pipeline facilities in California, which only represent 1% of our portfolio continue to be on track.
Volumes are steadily improving and contract labor continues to subside.
They recently approved the behavioral hospital portion of Coast Plaza Hospital Coast Plaza should see significant increases to EBITDA from this unit in the near term the Grand opening of this unit was this past weekend.
Regarding life point the performance for their overall portfolio for the second water. So good improvement over our reporting today of the first quarter results.
You may have seen the bond issue that was recently announced by life like the bond issue had these second quarter results included and with upside from its original target. All of this is a good indication of their current operations. There are several initiatives going on in the third and fourth quarters that should show significant improvement in there.
Our results by end of the year Senior management team continues to be bullish on their facilities.
Moving on to the operations in the United Kingdom, We continue to be pleased with the overall performance of that portfolio. In addition, the recent press releases issued by the U K government, reflecting the elective recovering tax test sports implementation plan to address the historically large NHS patient wait list.
It was a further endorsement of the private health care sector.
Notably the plan contemplates utilization of available private sector capacity to help resolve that wait list as well as advocating increased patient choice to access more care. We believe this will positively impact our U K hospitals over time, most importantly this plan.
<unk> continues to validate what we've known all along that our private hospitals in the U K are a vital component of the health care landscape in the U K and continued momentum behind the alignment of the NHS and private health care sector, ensuring quality patient care overall in the UK or other European.
Hospitals continue to be a steady Iraq.
Overall from a trailing 12 month quarter over quarter, our acute care sector improved from two six in Q4 2022 to two eight times in Q1 'twenty two 'twenty three.
Inpatient rehabilitation facilities, and behavioral were essentially flat quarter over quarter at approximately one eight times.
L tags.
Well over 1% of our portfolio declined from one seven times to one five times also just as a reminder, we are no longer include any grant money in any of the trailing 12 month calculations.
While our stock and bond prices have recovered some in the past couple of months, we're not satisfied that they reflect the true value and strength of our portfolio, especially given the sustained inflated inflation protection and growing cash rents that our master lease structure to provide and the demonstrated value of our board.
Elliot.
More than a year ago, we told our investors that our board will continually evaluate our deleveraging and investment strategies as our debt and equity pricing reaction to our continued performance.
Dave.
Thank you Ed. This morning, we reported a GAAP net loss of seven cents and normalized F. F. O. A 48 cents per diluted share for the second quarter of 2023 there.
There are a few components of these reported results that I will point out and we will of course, then take questions in a few minutes.
First as we have previously disclosed our very attractive lease a former steward, Utah hospitals to common spirit resulted in a noncash charge for the acceleration of the amortization of intangible lease assets and the write off of straight line rent aggregating about $380 million.
Neither adjustment effect did normalize at that though.
Second we have restructured our ownership of most of our approximately $4 $1 billion of assets in the UK under a REIT regime.
Resulting in a tax benefit of approximately $160 million again, not affecting normalized F O.
However, in addition to providing more efficiency and strategic flexibility, we do expect it to be an important contributor to our cost reduction efforts going forward.
Third we recognized about $68 million in prospect rent and interest. This is based on the previously disclosed prospect recapitalization transactions that included our exchange of certain real estate and other assets for interest in prospect managed care business.
In brief summary, you will recall our may 23rd announcement that as of the end of the first quarter. We carry these assets at approximately $573 million.
After obtaining updated valuations and an appraisal to determine marketability discount the estimated value of our interest in managed care as of the May closing was approximately $655 million.
That's in addition to a roughly $515 million of leased California hospitals and $355 million of cash that we expect to collect from the sale to Yale of our Connecticut hospitals.
Accordingly, we recognized in the second quarter, the rent and interest that would have been collected in 2023 through the may closing date.
Those are the most significant items just a few additional and less important comments first cost related to our short seller litigation, which we normalize out of F. F O. We're about two and a half million dollars.
You May note that we added a line in our normalized F O reconciliation for adjustments, reflecting the likelihood of achieving certain performance metrics.
And which is partially offset by the acceleration of share based compensation related to the retirement of one of our founders.
And finally, the quarterly adjustment for non cash increases and decreases in mark to market investments was unfavorable this quarter by approximately $8 million.
During the quarter, we completed the sale of seven hospitals in Australia, and the related repayment of approximately 730 million Australian dollars and that is.
This had a nominal impact on normalized F F O.
During the third or early fourth quarter, we expect to complete the sale of the remainder of our Australian hospitals for approximately 470 million Australian dollars proceeds of which we expect to use for further debt reduction.
One last point, although it has no impact on normalized F. F. O. Subsequent to June 30, we completed the previously announced sale of three hospitals to prime for approximately $100 million.
Our primary focus continues to be on use of capital for debt reduction.
This includes the expected use of cash proceeds of approximately $800 million from sales of our Australian and $100 million from our prime portfolios the $355 million expected cash from the sale of our Connecticut hospitals to Gail.
And repayments of the $60 million mortgage loan to infra core affiliate that we received late in the second quarter.
There are also a few smaller transactions that are possible of closing during the remainder of 2023 that could aggregate as much as $200 million plus in cash proceeds.
During the second quarter. We also received from Stuart $100 million in repayment of the loan we made in 2022.
As our press release and add earlier described our primary new capital commitment came in the third quarter as we elected to participate and Stuart new syndicated ABL facility for up to $140 million.
This facility is secured by first lien interest in patient receivables that is receivables from government Payors commercial insurers managed care companies and others.
There are several compelling benefits to this investment.
Given the conditions in the bank lending markets since the SBB and other disruptions earlier this year. The return on these first lien collateralized facilities has been very attractive the lending group and the steward facility, including MPT will be paid monthly a double digit rate.
And as noted our investment is collateralized by a borrowing base of government and commercial receivables.
There is a well developed market for these participations and that should give us optionality for liquidity if during the four year term of the lending agreement, we elect to assign our investment and reallocate the capital for different uses.
In deciding to allocate this capital to this particular investment we considered among other things and in addition to the attractive collateral package and the cash return that stewards operations continue to perform well most recently generating EBITDAR coverage of approximately two nine times.
And our $140 million participation represents approximately 4% of our steward investment overall, and accordingly allows us to capture attractive incremental and accretive new operating income at nominal incremental risk.
So as we stated in this morning's press release, we have refined our 2023 calendar normalized <unk> estimate to a range of between $1 53, and $1 57 per share.
Simply as a directional indication based only on year to date inflation data in the countries, where we have meaningful investments and of course. This data will continue to evolve we anticipate that 2020 for cash rents will increase by more than $50 million.
Of that approximately $30 million is already included in our GAAP basis straight line projections.
And with that we have time for a few questions and I'll turn the call back over to the operator.
Thank you we will now begin the question and answer questions to ask a question.
One earlier.
If you are using a speakerphone please pick up the phone.
Christine.
Okay perfect.
Your question has been and you would like.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily.
Yeah.
Our first question comes from Joshua <unk> with Bank of America. Please go ahead.
Yeah, Hey, Hey, guys you bet, one comment I picked up on when you were mentioning that.
The U K REIT mentioned.
Yes.
Cost reduction I guess what else.
Are you looking to do as far as like reduce costs across the organization.
So as as the velocity of the acquisitions changes as the nature of the transactions over the last certainly a couple of years and the inflationary and in that environment.
Our our cost toward acquisitions.
Is continually monitored we look at really every component over the.
What impact G&A.
You will note also I think I mentioned.
Our share based compensation.
Was reduced because of.
Uh huh.
The unlikelihood that prior awards would be met with.
With respect to the taxes that you mentioned, we expect at least a $2 million quarterly benefit on a go forward basis simply from the UK restructuring.
That restructuring reflected Oh.
About 70%, 75% of our UK properties and as certain tax attributes evolve over the remainder of those properties that will be additional benefit that we pick up.
And then for the guidance range.
What's assumed in there.
11 cents from the PHP included.
And as the Stuart.
The Stewart loan included in there as well and then if so what were the kind of offsets.
The steward loan is marginal again it it represents as I mentioned, you know less than way less than 5% of what we already get from Stuart It's even at $140 million. It is.
It's not a relatively large that would impact.
That would have a net impact on <unk> going forward.
What was the first part of the question.
The 11th.
Oh, yes, yes, yes, yes, that's in there that's historical F. F. O now we've made clear of course, we are.
Said clearly that that's not cash I think the press release actually said it came in lieu of cash. It is it is a reflection of the excess in value of the managed care interests that we have over the book values.
The real estate and other assets that we exchanged for that managed care business.
Oh.
So just to be clear the darn thing.
I'm sorry go ahead no no.
I was going to ask was that included in the prior guidance that you are at least at <unk>, yes.
Yes, it was.
Yes, an estimate for that was included in the prior guidance.
Okay.
Okay I'll jump back in line. Thank you.
Thanks.
The next the next question comes from Austin, Flashman with Keybanc capital markets. Please go ahead.
Hey, good morning, everybody. So will the convertible loan related to PHP and any you know in your equity stake I guess will there be any recurring cash flow from.
From those investments.
No not at this time.
We expect to realize.
That value upon the ultimate monetization.
Of the of the PHP business, but no we're not expecting any.
Any cash income related to that instrument to be clear beginning in September we will start collecting at the 50% level.
The rent on the California facilities and that.
Increases to 100% collection in March of next year.
Got it understood and then so I know, it's all happening in real time, but what's what's sort of the.
The current plan to monetize the investment in and what does that timeline look like at this point.
So, yes, I'm sorry at all and that's still scheduled for 2024.
The revenue and EBITDA numbers are still on track they are still performing well probably doing slightly better than original projections.
And the hope is that they can monetize that sometime in 2024.
Got it and so then just last one for me just to help understand the guidance. So we really need to back out the 11.
From the current run rate to think about sort of that quarterly figure moving forward.
Then not plan on I guess any cash from PHP.
So really it's just a pickup that youre getting from California from this point.
So I can state that.
What was it 37, plus any California pick up in the back half of the year is that so that is all it.
That is all correct yep.
Okay. Thank you.
Our next question comes from Steven Valiquette with Barclays. Please go ahead.
Alright, Thanks, good morning, everyone.
Yes. My question was kind of similar to that or the one that Joe was just asked around the guidance because obviously if you are 38 cents in the first quarter on normalized at that though.
48 cents this quarter with some moving parts.
Back half guidance.
It was implying you only 68 to 72 cents on normalized that by what should be 35 cents a quarter, which is below where the street is right now at 40 cents a quarter, but it sounds like that's not the right way to think about it. So just want to make sure there's not some step down in the.
Quarterly run rate of about that though in the back half of the year versus what was happening.
Maybe you know versus that 38 cents in the first quarter just citizens just well.
Thanks.
Yeah, I'll only only to the extent of what you already know which is we've had some diluted sales, obviously, Australia a prime although.
Prime just not that meaningful, but but with those clarifications, yes youre correct.
Okay, Alright, just wanted to make sure okay that was it for me. Thanks.
Yeah.
The next question comes from Vikram Malhotra.
Mizuho. Please go ahead.
Thanks for taking the questions just wanted to go back to the <unk>.
Stuart ABL and your participation I know you said double digit.
You know our returns.
Also mentioned, it's not really moving the guidance. So can you maybe just step back and you know it.
Can you walk us through what was the need if there are six other investors what was the need for you to participate in that.
D and other syndicate members not want to participate and now that you're in the syndicate I'm assuming that the 2022 financials are.
<unk> done and dusted and you have access to them.
So background.
The dislocation in the lending market right now the main traditional banks national banks regional banks, just arent doing these types of loans anymore. So.
So that's why you've got these are different types of lenders that are in it now.
Is six other lenders totally on associated with any of us Oh with steward or with MPT. The reason for US participating is as simple as it was getting at the decision to getting it done right now versus maybe getting it done in 30 days.
There continues to be good interest from other potential lenders and participating in the syndicate, but this takes the ABL off the table. It takes the questions that we keep getting about when it's Stuart going to refinance or are they going to be able to refinance now having an ABL that's out there for four plus years, because they have the right to extend.
It merely merely a trade off on timing.
And yes, Big Vikram, we do plan to file stewards 2022 financials once once we receive them.
That will appear as a new exhibit to our 2022 10-K to be clear we're doing so at the request of the SEC specifically for 2022.
And it should not be taken as a precedent that we will file these annually going forward.
As a reminder, the SEC's rules provide very specific guidelines as to when tenant financials may need to be filed and we generally will nod.
And actually may not be permitted to file with tenants private financial statements unless clearly required by these guys.
That's helpful. Thanks, So much and then just bigger.
Bigger picture.
I mean on this is it is it fully but can you give us some sense of like what's the incremental liquidity and get fully drawn and just stepping back relate to that.
<unk>.
Uh huh and official or maybe an internal limit.
How much you know you can or would like to invest our lens.
Sure.
So we've got a really bad connection, but I think I can answer your question with respect to the sizing.
And the amount of incremental liquidity to steward that that's not for us to share and so so we can't comment on that other than what what what Ed said in his opening comments that it does provide.
Liquidity to steward.
Significantly more than they had under the old facility.
The second part of your question is.
I think no we don't have any any guideline we don't have any policies I'm not aware certainly other than the REIT rules and the various buckets that we're able to invest in as a REIT.
Which which this certainly does not implicate we have we have no plans at this point to make this.
Ongoing business line with vigor and with this further answering that question. These decisions are made at the board level.
Got it Okay and then just one last if I may maybe just stepping back with the environment.
We've talked on and off about you are still seeing interest from potential new investors in the hospital landscape, whether in the U S or globally any any anecdotal examples you can share of new investors stepping in finding clustering real estate attractive and you know what that May mean for pricing. Thanks.
Much.
Yeah, Vikram I don't think it's appropriate at this time given the some of the conversations that we have other than to tell you that we have had literally new people, calling us at least monthly.
Thank you.
The next question comes from Michael Mueller with Jpmorgan. Please go ahead.
Yes, Hi, a couple of things can you remind us how much California, where income is baked into the back half of the year guidance first.
Well I'll just give you off the top of my head maybe somebody can help me out here, while I'm, while I'm, telling you, but it's a roughly $500 million investment at.
At a eight plus percent contractual rate that we will collect 50% on for.
From September two.
Two.
Through the end of the year somebody writing something down and I can't read the writing here.
Is that $10 million, yeah about $10 million of rent.
Got it and then and then in March that goes to a 100% and exactly what that cash rate or is that is that a GAAP cash that's cash.
And in March that will be upwards of eight 4% I think.
On the <unk> 13 million.
Got it and then on the Stewart ABL, how much of that do you expect to be drawn down I guess initially I guess you didn't have up to $1 40 outstanding.
140, you should assume is initially drawn.
The one four days okay.
And last question.
It's possible to give a sense of where you think your 10 year debt costs are today across the regions U S U K Europe .
And now we really can't I mean, obviously you can imagine we follow that.
But there's there's actually very little trading in a disrupted market.
So we don't we don't necessarily believe that.
We're showing at a discount on a $1 million of trades for a bond issue that doesn't mature for six or eight years we.
We really don't take that as indication of where we would where we would refinance now very thankfully.
And by design of course, we don't have to refinance now we have the.
We have the single maturity coming due later this year 400 million pounds Sterling.
We have the liquidity and liquidity resources to to.
Simply write a check for that the only maturity again I'm repeating what we've been going through for a while but the only maturity. In 2024. Then is is the Australian term loan, which we've already paid down.
A significant majority of that.
And then.
As Ed alluded to earlier, we are we continue to monitor our cost of capital as reflected by those indications that you mentioned in the debt markets and certainly by our share price and our board.
Continually considers our you know the different levers that we have to pull to make sure that our or our liquidity is is significantly more than the minimum required.
Okay. Thank you.
Our next question comes from Conor O'shea with Wells Fargo. Please go ahead.
Good morning, Thanks for having me on the call.
A year or so ago MPW describe stewards operating restructuring efforts I believe there was a ramp of several hundred million dollars in improvement to EBITDAR I mean, how far along the line of these restructuring efforts as Stuart currently.
When can we expect for this to be completed and does this strategy changed at all with the new ABL and or input from the credit funds involved.
No not at all counter they they are they have completed all of their cost restructuring, they're benefiting from all of that cost restructuring. Our 2022 numbers will show a positive EBITDA number in 2023, and 2024 will continue to show vast improvement.
Okay and apologies if I missed this earlier, but related to victims question on asset pricing I mean, just looking down the line towards 2025, and 26, where there are significant debt maturities.
There a plan in place to sell more assets or if you could just walk us through what youre thinking two to refinance that stack.
So with what we just mentioned we have the levers to pull one one of which as you know asset sales and and I'll come back to pricing in a minute and the other is.
Something similar but not quite joint ventures like we've done in the past with promoting all in Macquarie and as already mentioned the kind of over the transom interest that we get.
Literally monthly from from others, who are who are very eager.
Defined similar ways to participate in and these assets are all on the pricing I mean, all we can point to is what we've done most recently and if you've seen our NAREIT.
Our investor deck, we've got a slide in there that list every transaction we've done since the beginning of 2022, which demonstrate that there remains a very vibrant private market for infrastructure lie community assets like like many of our assets are.
They're well underwritten.
Necessary in the community inflation protected.
And demonstrated as infrastructure like by virtue of what we saw during COVID-19 with government and people doing everything possible to maintain these community asset so so.
Obviously doesn't say that what we sold Australia and 45, seven or what we sold.
Steward Macquarie four at five six.
Or the great pricing, we're getting on common spirit.
That doesn't prove that it's going to happen.
In the future, but we've seen no indication that this private market.
Is diminishing at all four core assets like this so so again just to reiterate.
That is those are major levers, we can pull as we get closer to the 'twenty five 'twenty six time, that's our earlier there there may be opportunities to do things earlier of course.
Okay. Thank you.
Okay.
Our next question comes from Jonathan.
No.
Please go ahead.
Hi, there.
I was just curious why was guidance maybe not revised in conjunction with the prospect Recapitalization announcement for me was there just some timing uncertainty related to that I'm, just trying to understand why not do it then versus today.
And I hate to be thick, Jonathan, but but we did revise guidance are you, saying Wow Wow why didn't we do it earlier is that the question why do we make it at yes, yes back in may versus today.
Well.
A couple of reasons, one it's not our practice.
And in.
Based on my experience, probably not the practice of.
Many of our peers to revise guidance between quarterly reporting.
That may or may not be but it's not generally our practice secondly, it's a relatively minor a compression of guidance from what we had earlier thirdly, the transaction happened on may 23rd and <unk>.
Tried to pointed out earlier, we had multiple validation multiple independent third parties, who took different perspectives on the value of our managed care business. It's a private company. It's a it's not uncomplicated that what prospect has done is to extract there.
He has a different operations and subsidiaries from across the prospect ownership and put it into a single operating company and measure that and then provide that information to the appraisers.
And so forth such that we don't we only got you know something that the auditors were able to look at and we were confident in the $655 million value that didnt happen on may 23rd it it didn't happen for <unk>.
Six plus weeks afterwards, so you.
You know between those those two reasons you know, it's just a it's not what we do generally I mean, unless there was something really material and dramatic and we just simply didn't have the information until more recently.
Okay.
And then just sticking with that the updated guidance from this morning.
In the midpoint of kind of the third quarter and fourth quarter.
<unk> implied by the updated guidance is about 35.
And then if.
If you take out the noncash income you'd get to call. It 28 cents or so of assets, which would be below the quarterly dividend, but I know thats expected to prove in the next year.
And asked about sustainability of that dividend last quarter.
And you are comfortable with.
And you said you were comfortable with it.
The market today is still giving you line of credit with the stock yielding 13% and leverage is up from last quarter to nearly seven times. So.
You have to ask again has the board.
Seriously considering a cost you retain more funds to more quickly improve the balance sheet.
And then pay down debt.
So I would just reiterate what both Ed and I have already said.
And that is we're not satisfied with our with our cost of capital.
As implied by the share price.
We're not getting the credit that we think we should and so so going all the way back to I think our fourth quarter call back in February I think we actually said everything is on the table and Thats at the board level.
And then again just a few minutes ago I said the board is constantly evaluating considering that.
And and we we've talked already on this call about liquidity.
Opportunities and I'll just repeat it if everything is on the tape.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Albert.
For any closing remarks.
Thank you operator, and I appreciate everybody's interest today on a personal note I'd like to take just a moment. This today will will mark the very last time in almost 20 years that I will sit across the table with them at Mclean, one of our original founders as well.
We have previously announced them. It is retiring this month and we wish you. The very best we wish you the very best with your grandchildren. Your wife enjoy yourself well earned.
Yeah.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.