Q2 2026 Medical Properties Trust Inc Earnings Call

August 10, 2026

Operator: Welcome to Medical Properties Trust Q2 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Charles Lambert, Senior Vice President. Charles, please go ahead.

Speaker #1: To withdraw your question, press *1 again. I will now hand the conference over to Charles Lambert, Senior Vice President. Charles, please go ahead.

Speaker #2: Good morning. Welcome to the MPT conference call to discuss our Q2 2026 financial results. With me today are Edward K. Aldag, Jr., Chairman, President, and Chief Executive Officer of the company; Stephen Hamner, Executive Vice President and Chief Financial Officer; Kevin Hanna, Senior Vice President, Controller, and Chief Accounting Officer; Rosa Williams, Senior Vice President of Operations and Secretary; and Jason Fry, Managing Director, Asset Management and Underwriting.

Charles Lambert: Good morning. Welcome to the MPT conference call to discuss our Q2 2026 financial results. With me today are Edward K. Aldag Jr., Chairman, President, and Chief Executive Officer of the company; Steven Hamner, Executive Vice President and Chief Financial Officer; Kevin Hanna, Senior Vice President, Controller, and Chief Accounting Officer; Rosa Hooper, Senior Vice President of Operations and Secretary; and Jason Frey, Managing Director, Asset Management, and Underwriting. 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 mpt.com in the investor relations section. Additionally, we are hosting a live webcast of today's call, which you can access in that same section.

Speaker #2: Our press release was distributed this morning and furnished on Form 8K with the securities and exchange commission. If you did not receive a copy, it is available on our website at mpt.com in the investor relations section.

Speaker #2: Additionally, we're hosting a live webcast of today's 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.

Charles Lambert: 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 events to differ materially from those expressed and/or underlying such forward-looking statements. We refer you to the company's reports filed with the Securities and Exchange Commission for 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.

Speaker #2: These forward-looking statements are subject to known and unknown risks, uncertainties, and other factors that may cause our financial results and future events to differ materially from those expressed in or underlying such forward-looking statements.

Speaker #2: We refer you to the company's reports filed with the securities and exchange commission for discussion of the factors that could cause the company's actual results or future events to differ materially from those expressed in this call.

Speaker #2: 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.

Speaker #2: 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.

Charles Lambert: 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 mpt.com for the most directly comparable financial results and related reconciliations. I will now turn the call over to our Chief Executive Officer, Ed Aldag.

Speaker #2: Please note that in our press release, Medical Properties Trust is reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements.

Speaker #2: You can also refer to our website at mpt.com for the most directly comparable financial results in related reconciliations. I will now turn the call over to our Chief Executive Officer, Ed Aldag.

Speaker #3: Thank you, Charles. And thanks to all of you for joining us this morning on our Q2 2026 earnings call. Before I begin today, we'd like to extend our thoughts and prayers to the people of Columbia after this morning's earthquake.

Edward K. Aldag Jr.: Thank you, Charles, and thanks to all of you for joining us this morning on our Q2 2026 earnings call. Before I begin today, we would like to extend our thoughts and prayers to the people of Colombia after this morning's earthquake. Now let me begin with the most significant update. Today, we announced a comprehensive refinancing transaction that extends $2.4 billion of debt maturities to 2032, significantly reducing near-term maturities and positioning us well to pursue a balanced capital allocation strategy moving forward. Steve will discuss this transaction in more detail shortly. Turning to our performance highlights. Total portfolio EBITDARM coverage remains steady as we continue to see robust demand for rehabilitation services around the world.

Edward K. Aldag: Thank you, Charles, and thanks to all of you for joining us this morning on our Q2 2026 earnings call. Before I begin today, we would like to extend our thoughts and prayers to the people of Colombia after this morning's earthquake. Now let me begin with the most significant update. Today, we announced a comprehensive refinancing transaction that extends $2.4 billion of debt maturities to 2032, significantly reducing near-term maturities and positioning us well to pursue a balanced capital allocation strategy moving forward. Steve will discuss this transaction in more detail shortly. Turning to our performance highlights. Total portfolio EBITDARM coverage remains steady as we continue to see robust demand for rehabilitation services around the world.

Speaker #3: Now, let me begin with the most significant update. Today, we announced a comprehensive refinancing transaction that extends $2.4 billion of debt maturities to 2032, significantly reducing near-term maturities and positioning us well to pursue a balanced capital allocation strategy moving forward.

Speaker #3: Steve will discuss this transaction in more detail shortly. Turning to our performance highlights, total portfolio EBITDA arm coverage remains steady. As we continue to see robust demand for rehabilitation services around the world, our post-acute operators again delivered the strongest growth in the portfolio, with EBITDA arm increasing more than $70 million year over year.

Edward K. Aldag Jr.: Our post-acute operators again delivered the strongest growth in the portfolio, with EBITDARM increasing more than $70 million year over year, led by a 24% increase in MEDIAN and a 13% increase in Ernest Health. General acute performance was stable. Behavioral health remains a source of pressure on the overall portfolio, despite the increased importance and demand for these services we continue to see around the world. In the UK market especially, revenue continues to be impacted by funding pressures at the NHS as the new administration in the UK works to rebalance its entire budget. I spent last week in the UK spending time with many of our operators there. I walked away from those meetings impressed with the level of activity across those facilities, confident in the opportunities for high-quality general acute providers, and encouraged that behavioral market remains a compelling long-term investment.

Edward K. Aldag: Our post-acute operators again delivered the strongest growth in the portfolio, with EBITDARM increasing more than $70 million year-over-year, led by a 24% increase in MEDIAN and a 13% increase in Ernest Health. General acute performance was stable. Behavioral health remains a source of pressure on the overall portfolio, despite the increased importance and demand for these services we continue to see around the world. In the UK market especially, revenue continues to be impacted by funding pressures at the NHS as the new administration in the UK works to rebalance its entire budget. I spent last week in the UK spending time with many of our operators there. I walked away from those meetings impressed with the level of activity across those facilities, confident in the opportunities for high-quality general acute providers, and encouraged that behavioral market remains a compelling long-term investment.

Speaker #3: Led by a 24% increase in median and a 13% increase in earnest health. General acute performance was stable, behavioral health remains a source of pressure on the overall portfolio, despite the increased importance and demand for these services.

Speaker #3: We continue to see around the world. In the UK market especially, revenue continues to be impacted by funding pressures at the NHS as the new administration in the UK works to rebalance its entire budget.

Speaker #3: I spent last week in the UK, spending time with many of our operators there. I walked away from those meetings impressed with the level of activity across those facilities.

Speaker #3: Confident in the opportunities for high-quality general acute providers, and encouraged that the behavioral market remains a compelling long-term investment. As most of you know, our Swiss joint venture went public this summer and is now listed on the SIX Exchange.

Edward K. Aldag Jr.: As most of you know, our Swiss joint venture went public this summer. It is now listed on the SIX Exchange. Infracore continues to see attractive opportunities for growth, and the company was able to access capital for further growth. We retain a significant ownership position in Infracore and remain bullish on Switzerland and look forward to seeing our overall investments grow there. Finally, to further strengthen our portfolio, we consolidated all of our ScionHealth general acute hospitals and LifePoint leases into one LifePoint master lease. As a part of this conversion, ScionHealth transitioned certain MPT-owned acute hospitals to LifePoint, and we are pleased with the resulting single lease relationship with a mature operator with an enhanced credit profile.

Edward K. Aldag: As most of you know, our Swiss joint venture went public this summer. It is now listed on the SIX Exchange. Infracore continues to see attractive opportunities for growth, and the company was able to access capital for further growth. We retain a significant ownership position in Infracore and remain bullish on Switzerland and look forward to seeing our overall investments grow there. Finally, to further strengthen our portfolio, we consolidated all of our ScionHealth general acute hospitals and LifePoint leases into one LifePoint master lease. As a part of this conversion, ScionHealth transitioned certain MPT-owned acute hospitals to LifePoint, and we are pleased with the resulting single lease relationship with a mature operator with an enhanced credit profile.

Speaker #3: InfraCore continues to see attractive opportunities for growth, and the company was able to access capital for further growth. We retain a significant ownership position in InfraCore and remain bullish on Switzerland and look forward to seeing our overall investments grow there.

Speaker #3: Finally, to further strengthen our portfolio, we consolidated all of our Sion Health general acute hospitals and Lifepoint leases into one Lifepoint master lease. As part of this conversion, Sion transitioned certain MPT-owned acute hospitals to Lifepoint, and we are pleased with the resulting single-lease relationship with a mature operator with an enhanced credit profile.

Speaker #3: With a strong trend, we continue to see across our diverse portfolio of operators the proving enduring value of our assets, and a plan to clear the runway of debt maturities until late 2028, we are well positioned to achieve our goal of over $1 billion annualized cash rent by the end of the year, and to create value for the shareholders moving forward.

Edward K. Aldag Jr.: With the strong trends we continue to see across our diverse portfolio of operators, the proving enduring value of our assets, and a plan to clear the runway of debt maturities until late 2028, we are well-positioned to achieve our goal of over $1 billion annualized cash rent by the end of the year and to create value for the shareholders moving forward. Rosa?

Edward K. Aldag: With the strong trends we continue to see across our diverse portfolio of operators, the proving enduring value of our assets, and a plan to clear the runway of debt maturities until late 2028, we are well-positioned to achieve our goal of over $1 billion annualized cash rent by the end of the year and to create value for the shareholders moving forward. Rosa?

Speaker #3: Rosa?

Speaker #1: Thank you, Ed. As usual, I will walk through the trends we are seeing, the continued progress of our recently transitioned operators, and the steps tenants are taking to enhance performance.

Rosa Hooper: Thank you, Ed. As usual, I will walk through the trends we are seeing, the continued progress of our recently transitioned operators, and the steps tenants are taking to enhance performance. Across our core portfolio, performance trends remain broadly stable. General acute operators still comprise the majority of the portfolio and reported aggregate EBITDARM coverage of 2.8 times during the quarter. As Ed mentioned, our post-acute portfolios delivered another really strong performance, with coverage of 2.4 times. Finally, our behavioral portfolio coverage was down slightly to 1.4 times, reflecting the discrete headwinds in the UK and US markets that we have discussed all year. For individual operator coverage details, we would encourage you to review the supplemental published on the investor relations page of our website. Our international portfolio continues to provide meaningful stability.

Speaker #1: Across our core portfolio, performance trends remain broadly stable. General acute operators still comprise the majority of the portfolio, and reported aggregate EBITDA arm coverage of $2.8 times during the quarter.

Speaker #1: As Ed mentioned, our post-acute portfolio delivered another really strong performance, with coverage of 2.4 times. Finally, our behavioral portfolio coverage was down slightly to 1.4 times, reflecting the discrete headwinds in the UK and US markets that we have discussed all year.

Speaker #1: For individual operator coverage details, we would encourage you to review the supplemental published on the Investor Relations page of our website. Our international portfolio continues to provide meaningful stability.

Speaker #1: Swiss Medical Network, Median, and Circle continue to produce strong, stable earnings, executing on their respective growth and innovation strategies. Swiss Medical Network is advancing its integrated care strategy, with revenue growth supported by recent acquisitions and an ongoing shift toward higher value outpatient and primary care.

Rosa Hooper: Swiss Medical Network, MEDIAN, and Circle continue to produce strong, stable earnings, executing on their respective growth and innovation strategies. Swiss Medical Network is advancing its integrated care strategy with revenue growth supported by recent acquisitions and an ongoing shift toward higher-value outpatient and primary care. In Germany, MEDIAN continues to build on its momentum, with year-to-date EBITDA running ahead of budget. At Priory, proactive measures are being taken to address challenges related to the previously discussed shift in NHS referral patterns. With the ongoing budget constraints in the UK, management is focused on implementing even more disciplined cost control measures and optimizing services to better align with demand. Turning to the US, NOR continues to produce strong results. NOR began paying 50% contractual rent in June. Operationally, NOR delivered encouraging momentum, with admissions, emergency department visits, and surgeries all higher year-over-year, reflecting volume recovery across the platform.

Speaker #1: In Germany, Median continues to build on its momentum, with year-to-date EBITDA running ahead of budget. At Priory, proactive measures are being taken to address challenges related to the previously discussed shift in NHS referral patterns.

Speaker #1: With the ongoing budget constraints in the UK, management is focused on implementing even more disciplined cost control measures and optimizing services to better align with demand.

Speaker #1: Turning to the US, NOR continues to produce strong results. NOR began paying 50% contractual rent in June. Operationally, NOR delivered encouraging momentum with admissions, emergency department visits, and surgeries all higher year over year, reflecting volume recovery across the platform.

Speaker #1: The emergency department project at Culver City is progressing and remains scheduled to open in the fourth quarter of 2027. HSA, which operates hospitals in Florida, Louisiana, and Texas, saw mixed results in the second quarter due to certain disruptions that caused lower cash collections and volume declines in some markets.

Rosa Hooper: The emergency department project at Culver City is progressing and remains scheduled to open in Q4 2027. HSA, which operates hospitals in Florida, Louisiana, and Texas, saw mixed results in Q2 due to certain disruptions that caused lower cash collections and volume declines in some markets. First, the MEDITECH EMR conversion caused a temporary inability to bill and collect cash for a period during the month of May, resulting in lower collections in May and June. Additionally, prior to the conversion, HSA transitioned its revenue cycle management to an outsourced firm. Because HSA operates in markets where they serve an above-average number of indigent patients, reliance on supplemental payments from federal and state agencies is necessary. These payments are not always predictable and can therefore be a strain on cash flows.

Speaker #1: First, the Meditech EMR conversion caused a temporary inability to bill and collect cash for a period during the month of May, resulting in lower collections in May and June.

Speaker #1: Additionally, prior to the conversion, HSA transitioned its revenue cycle management to an outsourced firm. And because HSA operates in markets where they serve an above-average number of indigent patients, reliance on supplemental payments from federal and state agencies is necessary.

Speaker #1: These payments are not always predictable, and can therefore be a strain on cash flows. That was evident when the Florida supplemental funding that was due in April was delayed until August, which caused further short-term pressure on HSA's liquidity.

Rosa Hooper: That was evident when the Florida supplemental funding that was due in April was delayed until August, which caused further short-term pressure on HSA's liquidity. With the MEDITECH conversion largely behind them, HSA has brought revenue cycle management back in-house and expects to improve revenue cycle and operational efficiency in the coming months. While cash collections are still lagging, HSA has received significant payments from the Florida Supplemental Funding Program in August, enabling them to begin repayment of the working capital advances we made during the quarter. While trailing 12 months EBITDARM to cash rent coverage of 2 times, we remain cautiously optimistic about the trajectory of HSA and will continue carefully monitoring their operations. Our US post-acute portfolio remains an area of strength.

Speaker #1: With the MEDITECH conversion largely behind them, HSA has brought revenue cycle management back in-house and expects to improve revenue cycle and operational efficiency in the coming months.

Speaker #1: While cash collections are still lagging, HSA has received significant payments from the Florida supplemental funding program in August, enabling them to begin repayment of the working capital advances we made during the quarter.

Speaker #1: While trailing 12-month EBITDA ARMs to cash rent coverage of two times, we remain cautiously optimistic about the trajectory of HSA and will continue carefully monitoring their operations.

Speaker #1: Our US post-acute portfolio remains an area of strength, earnest health is a standout, and we're excited to see earnest continue to grow with its acquisition of reunion rehabilitation hospitals adding seven hospitals with closing expected this summer.

Rosa Hooper: Ernest Health is a standout, and we are excited to see Ernest continue to grow with its acquisition of Reunion Rehabilitation Hospitals, adding 7 hospitals, with closing expected this summer. Finally, we remain confident in the long-term earnings power of these assets and in our path toward normalized rent across the portfolio. With that, I will turn it over to Kevin.

Speaker #1: Finally, we remain confident in the long-term earnings power of these assets and in our path toward normalized rent across the portfolio. With that, I'll turn it over to Kevin.

Speaker #2: Thank you, Rosa. Today, we reported normalized FFO of 15 cents per share for the second quarter of 2026, which was in line with our expectations as last quarter's results were 14 cents per share and we expected the rent from HSA and NOR to continue to increase in accordance with our lease agreements as a reminder, HSA is currently paying 75% of their contractual rents, increases to 100% in mid-September, while NOR starting started paying rent in mid-June equal to 50% of contractual rents, increases to 100% in mid-December.

Kevin Hanna: Thank you, Rosa. Today, we reported normalized FFO of $0.15 per share for Q2 2026, which was in line with our expectations, as last quarter's results were $0.14 per share, and we expected the rent from HSA and NOR to continue to increase in accordance with their lease agreements. As a reminder, HSA is currently paying 75% of their contractual rents, increases to 100% in mid-September, while NOR started paying rent in mid-June equal to 50% of contractual rents, increases to 100% in mid-December. As Ed noted in his remarks, we have combined LifePoint Behavioral, and all but one Scion post-acute property into a combined single master lease. Cash rent from this combined lease will be basically the same as it was previously.

Speaker #2: As Ed noted in his remarks, we have combined the lifepoint, lifepoint behavioral, and all but one scion post-acute property into a combined single master lease.

Speaker #2: Cash rent from this combined lease will be basically the same as it was previously. GNA expense for the quarter was higher year over year, primarily driven by stock compensation expense due to the change in fair market value of certain cash total stock awards and the increase in depreciation expense of the corporate headquarters building that was placed in the service during the first quarter of this year.

Kevin Hanna: G&A expense for the quarter was higher year-over-year, primarily driven by stock compensation expense due to the change in fair market value of certain cash total stock awards and the increase in depreciation expense of the corporate headquarters building that was placed into service during Q1 of this year. Finally, during the quarter, we impaired approximately $17 million in working capital loans, primarily related to Steward replacement tenants in the Midwest. Steve?

Speaker #2: Finally, during the quarter, we impaired approximately 17 million dollars in working capital loans, primarily related to the two steward replacement tenants in the Midwest.

Speaker #2: Steve?

Speaker #3: Thank you, Kevin. As Ed mentioned, this morning we announced a two-step process to fully satisfy our 2026 and 2027 debt maturities. Totaling about 2.7 billion dollars.

R. Steven Hamner: Thank you, Kevin. As Ed mentioned, this morning we announced a two-step process to fully satisfy our 2026 and 2027 debt maturities, totaling about $2.7 billion, along with an additional approximately $1.2 billion of longer-dated unsecured notes. Step one, which we expect to complete later today, is the issuance of $2.4 billion in secured notes, the proceeds of which will be used as follows. First, to fully redeem the upcoming maturity of our €500 million in unsecured notes and approximately $738 million, or about 53%, of our unsecured notes due in 2027. We will also exchange at a discount another approximately $1.2 billion of longer-dated unsecured notes, reducing gross debt by about $123 million.

Steven Hamner: Thank you, Kevin. As Ed mentioned, this morning we announced a two-step process to fully satisfy our 2026 and 2027 debt maturities, totaling about $2.7 billion, along with an additional approximately $1.2 billion of longer-dated unsecured notes. Step one, which we expect to complete later today, is the issuance of $2.4 billion in secured notes, the proceeds of which will be used as follows. First, to fully redeem the upcoming maturity of our €500 million in unsecured notes and approximately $738 million, or about 53%, of our unsecured notes due in 2027. We will also exchange at a discount another approximately $1.2 billion of longer-dated unsecured notes, reducing gross debt by about $123 million.

Speaker #3: Along with an additional approximately $1.2 billion of longer-dated unsecured notes. Step one, which we expect to complete later today, is the issuance of $2.4 billion in secured notes.

Speaker #3: The proceeds of which will be used as follows. First, to fully redeem the upcoming maturity of our 500 million euro in unsecured notes, and approximately 738 million dollars or about 53% of our unsecured notes due in 2027.

Speaker #3: We will also exchange at a discount another approximately $1.2 billion of longer-dated unsecured notes, reducing gross debt by about $123 million.

Speaker #3: Step two, which we have commenced and expect to complete in the coming weeks, will repay the remainder of the 2027 unsecured notes, complete a new multi-year bank revolver, and repay our $200 million term loan.

R. Steven Hamner: Step two, which we have commenced and expect to complete in coming weeks, will repay the remainder of the 2027 unsecured notes, complete a new multi-year bank revolver, and repay our $200 million term loan in 2027. MPT will then have no debt maturing in 2026 or 2027. In fact, our sole maturity over the next three years will be a modest balance of about $600 million of notes due in June 2028. Moreover, with $1.1 billion of expected liquidity based on recent and expected near-term asset sales, we will have substantial flexibility for further de-levering in the near term. Also importantly, our single bond maintenance covenant that requires 150% of unencumbered assets over unsecured debt will be substantially improved, up to almost 300%, depending on how we deploy our liquidity.

Steven Hamner: Step two, which we have commenced and expect to complete in coming weeks, will repay the remainder of the 2027 unsecured notes, complete a new multi-year bank revolver, and repay our $200 million term loan in 2027. MPT will then have no debt maturing in 2026 or 2027. In fact, our sole maturity over the next three years will be a modest balance of about $600 million of notes due in June 2028. Moreover, with $1.1 billion of expected liquidity based on recent and expected near-term asset sales, we will have substantial flexibility for further de-levering in the near term. Also importantly, our single bond maintenance covenant that requires 150% of unencumbered assets over unsecured debt will be substantially improved, up to almost 300%, depending on how we deploy our liquidity.

Speaker #3: MPT will then have no debt maturing in 2026 or 2027. In fact, our sole maturity over the next three years will be a modest balance of about $600 million of notes due in June 2028.

Speaker #3: Moreover, with $1.1 billion of expected liquidity, based on recent and expected near-term asset sales, we will have substantial flexibility for further delevering in the near term.

Speaker #3: Also importantly, our single bond maintenance covenants, that requires 150% of unencumbered assets over unsecured debt, will be substantially improved. Up to almost 300%, depending on how we deploy our liquidity.

Speaker #3: The new notes have a coupon of 9 and a quarter percent, a 5 and a half year term that becomes prepayable after two years, and other customary re-type provisions all of which we describe and qualify by reference to the descriptions and documents included in a 2B filed current report on Form 8K.

R. Steven Hamner: The new notes have a coupon of 9.25%, a five-and-a-half year term that becomes pre-payable after two years, and other customary REIT-type provisions, all of which we describe and qualify by reference to the descriptions and documents included in a to-be-filed current report on Form 8-K. I will make a few additional observations about our overall financial position. Once again, and in several ways, sophisticated third-party investors have affirmed that market values of our hospital assets exceed their book values. First, some of the most sophisticated global fixed income investors underwrote the value of the assets that secure the $2.4 billion of notes we just discussed. Moreover, recent transactions, including the IPO of Infracore in Switzerland, have established market values of our hospital assets above our original investments.

Steven Hamner: The new notes have a coupon of 9.25%, a five-and-a-half year term that becomes pre-payable after two years, and other customary REIT-type provisions, all of which we describe and qualify by reference to the descriptions and documents included in a to-be-filed current report on Form 8-K. I will make a few additional observations about our overall financial position. Once again, and in several ways, sophisticated third-party investors have affirmed that market values of our hospital assets exceed their book values. First, some of the most sophisticated global fixed income investors underwrote the value of the assets that secure the $2.4 billion of notes we just discussed. Moreover, recent transactions, including the IPO of Infracore in Switzerland, have established market values of our hospital assets above our original investments.

Speaker #3: I'll make a few additional observations about our overall financial position. Once again, and in several ways, sophisticated third-party investors have affirmed that market values of our hospital assets exceed their book values.

Speaker #3: First, some of the most sophisticated global fixed income investors underwrote the value of the assets that the that secure the 2.4 billion dollars of notes we just discussed.

Speaker #3: Moreover, recent transactions, including the IPO of Infracor in Switzerland, have established market values of our hospital assets above our original investments. In another pending sale that will close imminently, we will receive about $172 million in after-debt cash proceeds, reflecting a 60% increase over our original investment and an IRR of about 34%.

R. Steven Hamner: In another pending sale that will close imminently, we will receive about $172 million in after-debt cash proceeds, reflecting a 60% increase over our original investment and an IRR of about 34%. In addition to these recently completed transactions, we are in discussions with potential buyers of additional assets that, if completed, will generate hundreds of millions of dollars more in sale proceeds at pricing well above our original investments. There is no assurance that these transactions will be completed, but the fact that sophisticated parties are even initially offering this level of pricing is encouraging validation of our overall asset values. Upon completion of these refinancings, we will retain significant additional collateral value and flexibility for future de-levering. Just to reiterate, no debt maturities until June of 2028, and then a modest $600 million.

Steven Hamner: In another pending sale that will close imminently, we will receive about $172 million in after-debt cash proceeds, reflecting a 60% increase over our original investment and an IRR of about 34%. In addition to these recently completed transactions, we are in discussions with potential buyers of additional assets that, if completed, will generate hundreds of millions of dollars more in sale proceeds at pricing well above our original investments. There is no assurance that these transactions will be completed, but the fact that sophisticated parties are even initially offering this level of pricing is encouraging validation of our overall asset values. Upon completion of these refinancings, we will retain significant additional collateral value and flexibility for future de-levering. Just to reiterate, no debt maturities until June of 2028, and then a modest $600 million.

Speaker #3: In addition to these recently completed transactions, we are in discussions with potential buyers of additional assets that, if completed, will generate hundreds of millions of dollars more in sale proceeds at pricing well above our original investments.

Speaker #3: There's no assurance that these transactions will be completed, but the fact that sophisticated parties are even initially offering this level of pricing is an encouraging validation of our overall asset values.

Speaker #3: Upon completion of these refinancings, we will retain significant additional collateral value and flexibility for future delivery. Just to reiterate, no debt maturities in June until June of 2028 and then a modest 600 million dollars.

Speaker #3: Up to $1.1 billion in liquidity, dependent only on completion of certain asset sales that are already in process of being negotiated. And substantial cushion in our UAUD bond covenant that opens up opportunities for certain additional delevering strategies.

R. Steven Hamner: Up to $1.1 billion in liquidity, dependent only on completion of certain asset sales that are already in process of being negotiated. And substantial cushion in our UA/UD bond covenant that opens up opportunities for certain additional de-levering strategies. In closing, our business model remains attractive, and growth opportunities continue to present themselves in our markets. With our assets continuing to demonstrate attractive market value, and with significant liquidity on hand, we are well-positioned to continue to focus on reducing debt while capitalizing on strategic growth opportunities. With that, we will open up the call for questions. Operator?

Steven Hamner: Up to $1.1 billion in liquidity, dependent only on completion of certain asset sales that are already in process of being negotiated. And substantial cushion in our UA/UD bond covenant that opens up opportunities for certain additional de-levering strategies. In closing, our business model remains attractive, and growth opportunities continue to present themselves in our markets. With our assets continuing to demonstrate attractive market value, and with significant liquidity on hand, we are well-positioned to continue to focus on reducing debt while capitalizing on strategic growth opportunities. With that, we will open up the call for questions. Operator?

Speaker #3: In closing, our business model remains attractive, and growth opportunities continue to present themselves in our markets. With our assets continuing to demonstrate attractive market value, and with significant liquidity on hand, we are well positioned to continue to focus on reducing debt while capitalizing on strategic growth opportunities.

Speaker #3: With that, we will open up the call for questions. Operator?

Speaker #4: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand.

R. Steven Hamner: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Mike Mueller with JPMorgan. Mike, please go ahead.

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Mike Mueller with JPMorgan. Mike, please go ahead.

Speaker #4: To withdraw your question, press star one. Again, we ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #4: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Mike Mueller with JP Morgan.

Speaker #4: Mike, please go ahead.

Speaker #2: Yeah, thanks. Hi. So, I guess, for the balance of the 2027 notes that you're looking to pay off, is that just going on basically a new credit line? Is that going to be the near-term mechanism?

Michael Mueller: Yeah, thanks. Hi. I guess for the balance of the 2027 notes that you are looking to pay off, is that just going on basically a new credit line that is going to be the near-term mechanism? And what is going to be the rate on that facility?

Mike Mueller: Yeah, thanks. Hi. I guess for the balance of the 2027 notes that you are looking to pay off, is that just going on basically a new credit line that is going to be the near-term mechanism? And what is going to be the rate on that facility?

Speaker #2: And what's going to be the rate on that facility?

Speaker #3: No, that's not the expectation, Mike. In fact, phase two—or step two, as we call it—will include, as I noted, the repayment of those 2027 notes.

R. Steven Hamner: No, that is not the expectation, Mike. In fact, phase II, or step 2 as we call it, will include, as I noted, the repayment of those 2027 notes, but it will not be just based on using the credit line.

Steven Hamner: No, that is not the expectation, Mike. In fact, phase II, or step 2 as we call it, will include, as I noted, the repayment of those 2027 notes, but it will not be just based on using the credit line.

Speaker #3: But it will not be just based on using the credit line.

Speaker #2: Okay. Will it be all from asset sales?

Michael Mueller: Okay. Will it be all from asset sales?

Mike Mueller: Okay. Will it be all from asset sales?

Speaker #3: No, we have a number of options that we've always had, including asset sales, liquidity that we have, and additional secured debt opportunities.

R. Steven Hamner: No. We have a number of options that we have always had, including asset sales, including liquidity that we have, and including additional secured debt opportunities.

Steven Hamner: No. We have a number of options that we have always had, including asset sales, including liquidity that we have, and including additional secured debt opportunities.

Speaker #2: Got it. Okay. Okay, thank you.

Michael Mueller: Got it. Okay. Okay, thank you.

Mike Mueller: Got it. Okay. Okay, thank you.

Speaker #4: Your next question comes from the line of John Kilikowski with Wells Fargo. John, your line is open.

Michael Mueller: Your next question comes from the line of John Kilichowski with Wells Fargo. John, your line is open. Please go ahead.

Operator: Your next question comes from the line of John Kilichowski with Wells Fargo. John, your line is open. Please go ahead.

Speaker #2: Hi.

Speaker #4: Please go ahead.

Speaker #5: Thank you. Hi, good morning. Just to clarify, as I'm looking at the press release, we talked through in the opening remarks about 26 and 27, but this also talks about refinancing the 27 through 21 or excuse me, 2031 notes.

John Kilichowski: Thank you. Hi, good morning. Just to clarify, as I am looking at the press release, we talked through in the opening remarks about 2026 and 2027, but this also talks about refinancing the 2031 notes. Could you just kind of clarify that timing and when this goes into place, and then the pro forma cash interest from this move?

Speaker #5: Could you just clarify the timing and when this goes into effect, and then the pro forma cash interest from this move?

Speaker #3: John, we're having a lot of trouble getting your question here.

R. Steven Hamner: John, we are having a lot of trouble getting your question here. Can you

Steven Hamner: John, we are having a lot of trouble getting your question here. Can you

Speaker #5: John, maybe you can try speaking up a little bit. Yours was very, very soft.

R. Steven Hamner: John, maybe you can try speaking up a little bit. Yours was very soft.

Edward K. Aldag: John, maybe you can try speaking up a little bit. Yours was very soft.

Speaker #6: Apologies. Can you hear me better now?

John Kilichowski: Apologies. Can you hear me better now?

Speaker #3: Yeah, much better.

R. Steven Hamner: Yeah, much better.

Steven Hamner: Yeah, much better.

Speaker #5: Thank you.

Edward K. Aldag Jr.: Yes, thank you.

Edward K. Aldag: Yes, thank you.

Speaker #3: Yeah.

Speaker #5: All right, thank you. The opening remarks focused mostly on the '26 and '27 maturities, but I'm also seeing commentary in the press release about the '27 through 2031 notes.

John Kilichowski: All right. Thank you. The opening remarks focused mostly on the 2026 and 2027 maturities, but I am also seeing commentary in the press release about the 2027 through 2031 notes. Could you just talk through the timing and clarify, is all of that being refied now as well and the pro forma cash interest number following this move?

Speaker #5: Could you just talk through the timing and clarify, is all of that being refined now as well? And the pro forma cash interest number following this move?

Speaker #3: No, it comes in two steps. Step one is the 2.4 billion dollars that we announced this morning. That will fully prepay repay the 26s.

R. Steven Hamner: No, it comes in two steps. Step one is the $2.4 billion that we announced this morning. That will fully repay the 2026s, and cash and exchange a combined of about $740 million of the 2027s. Then the step next, which we expect to complete in the coming weeks, will satisfy the remainder of the 2027s. In addition, as we mentioned during step one, we will also exchange about $1.5 billion of the longer-dated notes.

Steven Hamner: No, it comes in two steps. Step one is the $2.4 billion that we announced this morning. That will fully repay the 2026s, and cash and exchange a combined of about $740 million of the 2027s. Then the step next, which we expect to complete in the coming weeks, will satisfy the remainder of the 2027s. In addition, as we mentioned during step one, we will also exchange about $1.5 billion of the longer-dated notes.

Speaker #3: And cash and exchange combined of about 740 million dollars of the 27s. And then step next which we expect to complete in the coming weeks will satisfy the remainder of the 27s.

Speaker #3: And in addition, as we mentioned during step one, we'll also exchange about $1.5 billion of the longer-dated notes.

Speaker #5: Okay. Very helpful. Thank you.

John Kilichowski: Okay. Very helpful. Thank you.

Speaker #4: Your next question comes from the line of Michael Carroll with RBC Capital Markets. Michael, please go ahead.

John Kilichowski: Your next question comes from the line of Michael Carroll with RBC Capital Markets. Michael, please go ahead.

Operator: Your next question comes from the line of Michael Carroll with RBC Capital Markets. Michael, please go ahead.

Speaker #2: Yeah, thanks. Can you guys provide some more color on the HSA situation? I mean, how confident are you that Conifer can push cash collections where they need to be?

Michael Carroll: Yeah, thanks. Can you guys provide some more color on the HSA situation? How confident are you that Conifer can push cash collections in where they need to be? I believe you indicated last quarter that they were up to 82% from 78%, but it needs to be in the 90-plus percent range. It sounds like it dipped in May and June just due to some of the transfers that you were talking about.

Speaker #2: I mean, I believe you indicated last quarter that they were up to 82% from 78%, but it needs to be in the 90-plus-percent range.

Speaker #2: And it sounds like it dipped in May and June just due to some of the transfers that you were talking about.

Speaker #5: Yeah, Mike, things have been a lot slower than we hoped they would be. It's still in the 80s. If you look at it from an operational standpoint, the good news is, as Rosa pointed out, they're generating two times coverage.

Edward K. Aldag Jr.: Yeah, Mike, it has been a lot slower than we hoped it would be. It is still in the 80s. The good news from an operational standpoint, as Rosa pointed out, they are generating 2x coverage. But that does not do you any good if you are not collecting the cash. Then you had the late payments from Florida. If you add all of that in together, we are cautiously optimistic, but they still have got to improve the cash collections greatly.

Edward K. Aldag: Yeah, Mike, it has been a lot slower than we hoped it would be. It is still in the 80s. The good news from an operational standpoint, as Rosa pointed out, they are generating 2x coverage. But that does not do you any good if you are not collecting the cash. Then you had the late payments from Florida. If you add all of that in together, we are cautiously optimistic, but they still have got to improve the cash collections greatly.

Speaker #5: But that doesn't do you any good if you're not collecting the cash. And then you had the late payments from Florida. If you add all of that together, we're cautiously optimistic, but they still have to improve the cash collections greatly.

Speaker #2: So, what gives you confidence that they're able to do that? And did they already receive the Florida DPP payments, and that's how the first $20 million got paid back?

Michael Carroll: What gives you confidence that they are able to do that? Did they already receive the Florida DPP payments, and that is how the first $20 million got paid back? Can you talk about how and when you expect the next $20 million will be paid? It was unclear in the press release, is $10 million of that just going to be outstanding, or will that be repaid soon, too?

Speaker #2: And can you talk about how and when you expect the next $20 million will be paid? It was unclear in the press release. I mean, is $10 million of that just going to be outstanding, or will that be repaid soon too?

Speaker #5: Yeah, so they have received approximately half of the DPP money from Florida. The other could come in as early as today, but certainly in the next week or so.

Edward K. Aldag Jr.: They have received approximately half of the DPP money from Florida. The other could come in as early as today, but certainly in the next week or so. With that money, they will pay back the additional $20 million. Then they will have the remaining $10 million repaid sometime in the next quarter.

Edward K. Aldag: They have received approximately half of the DPP money from Florida. The other could come in as early as today, but certainly in the next week or so. With that money, they will pay back the additional $20 million. Then they will have the remaining $10 million repaid sometime in the next quarter.

Speaker #5: And with that money they'll pay back the additional 20 million dollars. And then they will have the additional 10 million or the remaining 10 million dollars repaid sometime in the next quarter.

Speaker #2: Okay. And then just lastly from me, I know Nora was supposed to start paying rent in June. Did they pay that rent? And are they current right now, too?

Michael Carroll: Okay, and then just lastly from me. I know NOR Healthcare Systems Corp. was supposed to start paying rent in June. Did they pay that rent, and are they current right now too?

Speaker #5: Yes, Nora did pay the rent, and Nora is doing well. Remember, those are two different entities: Nora and HSA. Nora's operations are doing very well.

Edward K. Aldag Jr.: Yes, NOR Healthcare Systems Corp. did pay the rent, and NOR Healthcare Systems Corp. is doing well. Remember, those are two different entities, NOR Healthcare Systems Corp. and Healthcare Systems of America. NOR Healthcare Systems Corp.'s operations are doing very well.

Edward K. Aldag: Yes, NOR Healthcare Systems Corp. did pay the rent, and NOR Healthcare Systems Corp. is doing well. Remember, those are two different entities, NOR Healthcare Systems Corp. and Healthcare Systems of America. NOR Healthcare Systems Corp.'s operations are doing very well.

Speaker #2: Okay. Great. Thanks.

Michael Carroll: Okay, great. Thanks.

Speaker #4: Your next question comes from the line of Michael Diana with Maxim Group. Your line is open. Please go ahead.

R. Steven Hamner: Your next question comes from the line of Michael Diana with Maxim Group. Your line is open. Please go ahead.

Steven Hamner: Your next question comes from the line of Michael Diana with Maxim Group. Your line is open. Please go ahead.

Speaker #2: Thank you. I wanted to ask about asset sales. Obviously, there are a lot of moving parts. Could you review for us the asset sales you know you're going to make?

Michael Diana: Thank you. I wanted to ask about asset sales. Obviously, a lot of moving parts. Could you review for us the asset sales you know you are going to make, the asset sales that you are probably going to make, and the calculus that you are using when you are determining whether or not to sell an asset?

Speaker #2: The asset sales that you're probably going to make, and the calculus that you're using when you're determining whether or not to sell an asset?

Speaker #3: So what we know has—was that it, Mike? Okay. So what we know, what has happened and is happening, in fact, as we speak—we mentioned the InfraCore transaction, which generates about $140 million—has already generated about $140 million in proceeds for us.

R. Steven Hamner: What we know has. Was that it, Mike?

Steven Hamner: What we know has. Was that it, Mike?

Michael Diana: No, that is it. Thanks.

R. Steven Hamner: What we know, what has happened and is happening, in fact, as we speak, we mentioned the Infracore transaction, which has already generated about $140 million in proceeds for us. I will just point out again, I will reiterate that that pricing, tested by the market, was at a higher valuation than we carried the assets on our books for. Secondly, today, a transaction is closing that we are regrettably not able to identify, but will be within a matter of hours. We can tell you a transaction is closing that will generate, after debt payment, about $172 million to us today. That is the transaction that I spoke of that, once again, validates across the portfolio, the value of our assets exceeding, sometimes by a significant amount, our original investment.

Steven Hamner: What we know, what has happened and is happening, in fact, as we speak, we mentioned the Infracore transaction, which has already generated about $140 million in proceeds for us. I will just point out again, I will reiterate that that pricing, tested by the market, was at a higher valuation than we carried the assets on our books for. Secondly, today, a transaction is closing that we are regrettably not able to identify, but will be within a matter of hours. We can tell you a transaction is closing that will generate, after debt payment, about $172 million to us today. That is the transaction that I spoke of that, once again, validates across the portfolio, the value of our assets exceeding, sometimes by a significant amount, our original investment.

Speaker #3: And I'll just point out again, I'll reiterate that that pricing tested by the market was at a higher valuation than we carried the assets on our books for.

Speaker #3: Secondly, today a transaction is closing that we are regrettably not able to identify, but we will be within a matter of hours. But we can tell you a transaction is closing that will generate, after debt payment, about $172 million to us today.

Speaker #3: That's the transaction that I spoke of that once again validates, across the portfolio, the value of our assets—exceeding, sometimes by a significant amount, our original investment.

Speaker #3: In this case, an aggregate 60% plus gain on our original recording of that investment, representing about a 34% IRR. In addition, we are in various stages of negotiation.

R. Steven Hamner: In this case, an aggregate 60%-plus gain on our original recording of that investment, representing about a 34% IRR. In addition, we are in various stages of negotiation for a handful of other significantly valued assets, each of which, if they were to trade at the values that we are negotiating, would again represent significant gains over not just net book depreciated value, but our original investment. We think that could be realistically over the next few weeks

Steven Hamner: In this case, an aggregate 60%-plus gain on our original recording of that investment, representing about a 34% IRR. In addition, we are in various stages of negotiation for a handful of other significantly valued assets, each of which, if they were to trade at the values that we are negotiating, would again represent significant gains over not just net book depreciated value, but our original investment. We think that could be realistically over the next few weeks

Speaker #3: For a handful of other significantly valued assets, each of which, if they were to trade at the values that we're negotiating, would again represent significant gains over not just net book depreciated value, but our original investment.

Speaker #3: We think that could be realistically over the next few weeks. Another between $200 and $400 million in cash proceeds—possibly could be more than that—but we're relatively confident that we'll be in that additional $200 to $400 million of proceeds level.

R. Steven Hamner: another between $200 million and $400 million in cash proceeds. Possibly could be more than that, but we are relatively confident that we will be in that additional $200 million to $400 million proceeds level.

Steven Hamner: another between $200 million and $400 million in cash proceeds. Possibly could be more than that, but we are relatively confident that we will be in that additional $200 million to $400 million proceeds level.

Speaker #2: Okay, and, well, obviously that's very good news on sales value versus book value. What impact will this have on the income statement, broadly?

Michael Diana: Well, obviously, that is very good news on sales value versus book value. What impact will this have on the income statement broadly?

Speaker #3: That's obviously a great question, and it depends on a number of things that are kind of self-evident to people on this call. Obviously, the gain on sale—in other words, we're earning rent typically on these assets based on our original investment. To the extent we can sell for more than that and take those proceeds and apply them to, for example, 9.25% interest that we just issued this morning...

R. Steven Hamner: Obviously, a great question. It depends on a number of things that kind of, self-evident to people on this call. Obviously, the gain on sale. In other words, we are earning rent typically on these assets based on our original investment. To the extent we can sell for more than that and take those proceeds and apply them to, for example, 9.25% interest that we just issued this morning, one would think that has a very positive, perhaps even accretive impact on normalized FFO. Obviously, timing of completion of the secured issuance we announced this morning. Timing in terms of step 2, the refinance of the bank facility and completion of pay down of the 27s. Execution and timing of asset sales, and then further de-levering by use of these asset sale proceeds will all have an impact on go-forward normalized FFO.

Steven Hamner: Obviously, a great question. It depends on a number of things that kind of, self-evident to people on this call. Obviously, the gain on sale. In other words, we are earning rent typically on these assets based on our original investment. To the extent we can sell for more than that and take those proceeds and apply them to, for example, 9.25% interest that we just issued this morning, one would think that has a very positive, perhaps even accretive impact on normalized FFO. Obviously, timing of completion of the secured issuance we announced this morning. Timing in terms of step 2, the refinance of the bank facility and completion of pay down of the 27s. Execution and timing of asset sales, and then further de-levering by use of these asset sale proceeds will all have an impact on go-forward normalized FFO.

Speaker #3: One would think that has a very positive, perhaps even accretive, impact on normalized FFO. Obviously, timing of completion of the secured issuance we announced this morning.

Speaker #3: Timing, in terms of step two—the refinance of the bank facility and completion of paydown of the '27s, execution and timing of asset sales, and then further delevering by use of these asset sale proceeds—will all have an impact on go-forward normalized FFO.

Speaker #3: As we continue to ramp up the HSA and Nora relationships, as those become more definitive, we’ll be able to better predict and return to providing run rate guidance in future quarters.

R. Steven Hamner: As we'll continue ramp up of the HSA and NOR relationships. As those become more definitive, we'll be able to better predict and return to providing run rate guidance in future quarters.

Steven Hamner: As we'll continue ramp up of the HSA and NOR relationships. As those become more definitive, we'll be able to better predict and return to providing run rate guidance in future quarters.

Speaker #2: Okay. Great. Thanks very much.

Michael Diana: Okay, great. Thank you very much.

Speaker #4: Your next question comes from the line of Pharrell Granath from Bank of America. Pharrell, your line is open. Please go ahead.

Michael Diana: Your next question comes from the line of Pharrell Granath from Bank of America. Pharrell, your line is open. Please go ahead.

Operator: Your next question comes from the line of Pharrell Granath from Bank of America. Pharrell, your line is open. Please go ahead.

Speaker #1: Thank you very much. Good afternoon, or morning. My question is on any collateral restrictions. I know you had mentioned some of that in your opening remarks, but hoping that you could just dive a little bit deeper on how you're thinking about any of your credit facilities' maintenance covenants, as well as what would step two potentially influence on some of those unencumbered headroom that you'd still have available.

Pharrell Granath: Thank you very much. Good afternoon or morning. My question is on any collateral restrictions. I know you had mentioned some of that in your opening remarks, but hoping that you just dive a little bit deeper on how you're thinking about any of your credit facilities' maintenance covenants, as well as what would step two potentially influence on some of those unencumbered headroom that you'd still have available.

Farrell Granath: Thank you very much. Good afternoon or morning. My question is on any collateral restrictions. I know you had mentioned some of that in your opening remarks, but hoping that you just dive a little bit deeper on how you're thinking about any of your credit facilities' maintenance covenants, as well as what would step two potentially influence on some of those unencumbered headroom that you'd still have available.

Speaker #3: So both step one and step two have positive impacts on the UAUD. Really, Pharrell is the only maintenance covenant we have. And while it will not go away because that's a bond covenant, the cushion—the headroom—it brings, I mentioned earlier, the minimum requirement is one and a half times.

R. Steven Hamner: Both step 1 and step 2 have positive impacts on the UIUD. That really, Pharrell, is the only maintenance covenant we have. While it will not go away because that is a bond covenant, the cushion, the headroom it brings, I mentioned earlier, the minimum, the requirement is 1.5 times. We have been in that range, 155% to 160% over the last several quarters. We expect that with completion of step 1, again, which will happen very likely today, that will go all the way up to an actual of almost 200%, and completion of step next will drive it up again as much as to 300%. What that does is give us additional flexibility to use different strategies and give us the opportunity to further de-lever, which is the goal.

Steven Hamner: Both step 1 and step 2 have positive impacts on the UIUD. That really, Pharrell, is the only maintenance covenant we have. While it will not go away because that is a bond covenant, the cushion, the headroom it brings, I mentioned earlier, the minimum, the requirement is 1.5 times. We have been in that range, 155% to 160% over the last several quarters. We expect that with completion of step 1, again, which will happen very likely today, that will go all the way up to an actual of almost 200%, and completion of step next will drive it up again as much as to 300%. What that does is give us additional flexibility to use different strategies and give us the opportunity to further de-lever, which is the goal.

Speaker #3: And we've been in that range of 155 to 160 over the last several quarters. We expect that, with completion of step one—which will very likely happen today—that will go all the way up to an actual of almost 200%.

Speaker #3: And completion of step next, we'll drive it up again as much as to 300%. So what that does is give us additional flexibility to use different strategies and give us the opportunity to further delever which is the goal.

Speaker #3: The goal is not simply to continue to extend maturities. But to actually reduce leverage and these transactions we're announcing this morning take us a very long step toward being able to do that more aggressively.

R. Steven Hamner: The goal is not simply to continue to extend maturities, but to actually reduce leverage. These transactions we are announcing this morning take us a very long step toward being able to do that more aggressively.

Steven Hamner: The goal is not simply to continue to extend maturities, but to actually reduce leverage. These transactions we are announcing this morning take us a very long step toward being able to do that more aggressively.

Speaker #1: Okay, thank you. And my second question is, I know the Prime Minister of the UK has made some commentary about potentially having social care for all adults over there.

Pharrell Granath: Okay. Thank you. My second question is on, I know the Prime Minister of the UK has made some commentary about potentially having social care for all adults over there. I am just curious, in your conversations that you were mentioning in your recent travels, has that been coming up as a concern or actually a tailwind for the companies that are over there?

Farrell Granath: Okay. Thank you. My second question is on, I know the Prime Minister of the UK has made some commentary about potentially having social care for all adults over there. I am just curious, in your conversations that you were mentioning in your recent travels, has that been coming up as a concern or actually a tailwind for the companies that are over there?

Speaker #1: I'm just curious—in your conversations that you were mentioning in your recent travels, has that been coming up as a concern, or actually as a tailwind for the companies that are over there?

Speaker #5: Yeah. So social care is very different from healthcare. Social care is primarily focused on end-of-life and dementia-type items, as well as other items that aren't included in the current NHS services.

Edward K. Aldag Jr.: Yeah. Social care is very different than healthcare. Social care is primarily focused on the end of life and dementia-type items and other items that are not included in the current NHS services.

Edward K. Aldag: Yeah. Social care is very different than healthcare. Social care is primarily focused on the end of life and dementia-type items and other items that are not included in the current NHS services.

Speaker #1: Okay. Thank you.

Pharrell Granath: Okay. Thank you.

Farrell Granath: Okay. Thank you.

Speaker #4: Your next question comes from the line of Vikram Malhotra with Mizuho. Vikram, your line is open. Please go ahead.

Pharrell Granath: Your next question comes from the line of Vikram Malhotra with Mizuho. Vikram, your line is open. Please go ahead.

Operator: Your next question comes from the line of Vikram Malhotra with Mizuho. Vikram, your line is open. Please go ahead.

Speaker #2: Good morning. Thanks so much. Sorry if I joined late and missed this. Do you mind just clarifying for any additional, like the '27 and any future maturities or other payments—just what the thinking is post this transaction?

Vikram Malhotra: Good morning. Thanks so much. Sorry if I joined late and missed this. Do you mind just clarifying, for any additional, like the 2027 and any future maturities or other payments, just what the thinking is post this transaction?

Speaker #3: And I'm sorry. Vikram, the question was about 27s?

R. Steven Hamner: I am sorry, Vikram, the question was about 2027s?

Steven Hamner: I am sorry, Vikram, the question was about 2027s?

Speaker #2: Yeah. Just after you’ve done this transaction, you’ve pushed out the maturities, right? Like you said, there’s nothing now through ’26, ’27.

Vikram Malhotra: Yeah. Just after you have done this transaction, you have pushed out the maturities, right? Like you said, there is nothing now through 2026, 2027. Sorry, I meant post 2027. Just maybe give us the latest thinking on plans that you might sort of raise additional capital to take care of additional future maturities.

Speaker #2: Sorry, I meant Post 27. Could you maybe just give us the latest thinking on plans to potentially raise additional capital to address future maturities?

Speaker #3: Well, the primary immediate liquidity comes from the asset sales. That even assuming—which we're not disclosing a new credit facility yet—but even assuming a meaningful decline in our current $1.3 billion revolver, we expect to reduce the out year.

R. Steven Hamner: Well, the primary immediate liquidity comes from the asset sales, that even assuming, which we are not disclosing a new credit facility yet, but even assuming a meaningful decline in our current $1.3 billion revolver, we expect to reduce the out year, and I think this is your question, your longer date.

Steven Hamner: Well, the primary immediate liquidity comes from the asset sales, that even assuming, which we are not disclosing a new credit facility yet, but even assuming a meaningful decline in our current $1.3 billion revolver, we expect to reduce the out year, and I think this is your question, your longer date.

Speaker #3: And I think this is your question—your longer-dated, yeah. The immediate reduction would come from asset sale proceeds.

Vikram Malhotra: Yes

R. Steven Hamner: Yeah, the immediate reduction would come from asset sale proceeds.

Steven Hamner: Yeah, the immediate reduction would come from asset sale proceeds.

Speaker #2: Yeah. I guess I should have expanded. I meant, like you said, look, we want to reduce overall leverage, and in the view that cash flow maybe takes a bit longer to ramp up from all the transitions, or just overall say there's another tenant issue that you haven't called out, but say there's something.

Vikram Malhotra: Yeah, I guess I should have expanded. I meant, like you said, look, we want to reduce overall leverage, and in the view that cash flow maybe takes a bit longer to ramp up from all the transitions or just overall, say, there is another tenant issue that you have not called out, but say there is something. I am just trying to figure out, over the next 2 years, how to, in absolute, get net debt to EBITDA down from here, if there is any other plan. And maybe that works into a broader question. As you were contemplating this, any latest thoughts on, I guess I should not call it simplifying, but maybe shrinking the overall portfolio? You have US, you have global. Any thoughts on taking pieces from here and doing a bigger, broader strategic transaction?

Speaker #2: I'm just trying to figure out, over the next two years, how to, in absolute terms, get net debt to EBITDA down from here—if there's any other plan.

Speaker #2: And maybe that works into a broader question. As you were contemplating this, any latest thoughts on I guess I shouldn't call it simplifying, but maybe shrinking the overall portfolio, you've got US, you've got global, any thoughts on taking pieces from here and doing a bigger broader strategic transaction?

Speaker #3: Well, as we've been saying now, really going on a couple of years, we have a number of alternatives. Those really haven't changed. With our announcement this morning, we retain all of them.

R. Steven Hamner: Well, as we've been saying now, really going on a couple of years, we have a number of alternatives. Those really haven't changed with our announcement this morning. We retain all of them, and they include maybe some things that you may be alluding to. There are a couple of ways to easily raise liquidity for debt reduction. One I've described, selling assets. We're doing that. Another is selling equity. We don't think it's the right time to sell equity with the stock where it is. We think the valuation is significantly greater than that, and we think that's proved almost every time we sell an asset, that our assets are significantly more valuable than what's reflected on our balance sheet. But it'd be wrong not to acknowledge that that's one way to reduce debt.

Steven Hamner: Well, as we've been saying now, really going on a couple of years, we have a number of alternatives. Those really haven't changed with our announcement this morning. We retain all of them, and they include maybe some things that you may be alluding to. There are a couple of ways to easily raise liquidity for debt reduction. One I've described, selling assets. We're doing that. Another is selling equity. We don't think it's the right time to sell equity with the stock where it is. We think the valuation is significantly greater than that, and we think that's proved almost every time we sell an asset, that our assets are significantly more valuable than what's reflected on our balance sheet. But it'd be wrong not to acknowledge that that's one way to reduce debt.

Speaker #3: And they include maybe some things that you may be alluding to. There are a couple of ways to easily raise liquidity for debt reduction.

Speaker #3: One I've described is selling assets—we're doing that. Another is selling equity. Well, we don't think it's the right time to sell equity with the stock where it is.

Speaker #3: We think the valuation is significantly greater than that. And we think that's proved almost every time we sell an asset—that our assets are significantly more valuable than what's reflected on our balance sheet.

Speaker #3: So, it would be wrong not to acknowledge that that's one way to reduce debt. But we've cleared the runway to continue to be able to improve the operations.

R. Steven Hamner: But we've cleared the runway to continue to be able to improve the operations, continue to see the asset values grow, and continue to pay down debt in ways that aren't so grossly dilutive to selling stock when you think it's not the right time to sell stock.

Steven Hamner: But we've cleared the runway to continue to be able to improve the operations, continue to see the asset values grow, and continue to pay down debt in ways that aren't so grossly dilutive to selling stock when you think it's not the right time to sell stock.

Speaker #3: Continue to see the asset values grow, and continue to pay down debt in ways that aren't so grossly dilutive to selling stock, when you think it's not the right time to sell stock.

Speaker #2: That's fair. And then, just lastly, if I can clarify: with the sales you're contemplating, how should we think about where multiples or cap rates are today?

Vikram Malhotra: That's fair. Then just lastly, if I can clarify, so with the sales you're contemplating, how should we think about where multiples are or cap rates are today? What's the broad range, and how should we think about a core asset in the US versus maybe one that's more struggling? Maybe just give us some sense of how the private market's valuing these assets relative to public.

Speaker #2: What's the range? And how should we think about a core asset in the U.S. versus maybe one that's more challenged? Maybe just give us some sense of how the private market is valuing these assets relative to public.

Speaker #5: Vikram, I think that it goes across the board, but if you look at what Steve mentioned earlier in the call, every single one of the assets that we're in current negotiations with, or have actually closed, we weren't out marketing them.

Edward K. Aldag Jr.: Abram, I think that it goes across the board, but if you look at what Steve mentioned earlier in the call, every single one of the assets that we're in current negotiations with or have actually closed, we weren't out marketing them. People came to us. There's a high demand for our assets, both in the US and in Europe.

Edward K. Aldag: Abram, I think that it goes across the board, but if you look at what Steve mentioned earlier in the call, every single one of the assets that we're in current negotiations with or have actually closed, we weren't out marketing them. People came to us. There's a high demand for our assets, both in the US and in Europe.

Speaker #5: People came to us. There's a high demand for our assets, both in the U.S. and in Europe.

Speaker #2: Thank you.

Vikram Malhotra: Thank you.

Speaker #4: Your next question comes from the line of Michael Carroll with RBC Capital Markets.

Vikram Malhotra: Your next question comes from the line of Michael Carroll with RBC Capital Markets.

Operator: Your next question comes from the line of Michael Carroll with RBC Capital Markets.

Speaker #6: Yeah, thanks. Steve, where is MPT at on its secured debt ratio? Correct me if I'm wrong here, but I think that covenant is about 40%.

Michael Carroll: Yeah, thanks. Steve, where is MPT at on its secured debt ratio? Correct me if I am wrong here, but I think that covenant is about 40%, and it sounds like with the phase 1 secured debt issuance, that kind of puts you pretty close to that ratio. Does MPT have capacity to issue additional secured debt via phase 2?

Speaker #6: And it sounds like with the phase one secured debt issue, that kind of puts you pretty close to that ratio. So does MPT have capacity to issue additional secured debt via phase two?

Speaker #3: We do. But you're absolutely right, Mike. It does drive us up from where we were this morning, which was around 25%, to much closer to that 40% level.

R. Steven Hamner: Well, we do. You are absolutely right, Mike. It does drive us up from where we were this morning, which was around 25%, to much closer to that 40% level.

Steven Hamner: Well, we do. You are absolutely right, Mike. It does drive us up from where we were this morning, which was around 25%, to much closer to that 40% level.

Speaker #6: So then, can you—so I guess we'll use additional asset sales to give you more capacity, to make more room on that secured debt ratio. And I mean, I'm calculating that you're pretty tight, where you don't really have much more secured debt.

Michael Carroll: So I guess, will these additional asset sales give you more capacity to make more room on that secured debt ratio? I am calculating that you are pretty tight, where you do not really have much more secured debt. Is there any color on how you can regain additional secured debt via this phase 2 path?

Speaker #6: So, is there any color on how you can regain additional secured debt via this phase two path?

Speaker #3: So just by definition, you're right, Mike. Asset sales would provide more headroom for that. Use of proceeds to reduce debt would provide more headroom for that.

R. Steven Hamner: Just by definition, you are right, Mike. Asset sales would provide more headroom for that. Use of proceeds to reduce debt would provide more headroom for that.

Steven Hamner: Just by definition, you are right, Mike. Asset sales would provide more headroom for that. Use of proceeds to reduce debt would provide more headroom for that.

Speaker #6: Okay. And then just lastly, can you talk about an update related to Norwood? And then what is MPT's cost basis in that asset? I know there is some filing saying that it's about 350 million dollars.

Michael Carroll: Okay. Then just lastly, can you talk about an update related to Norwood? What is MPT's cost basis in that asset? I know there is some filings saying that it is about $350 million. I was under the impression it was just above $200 million. Is that just additional dollars that MPT had to put into that asset to weatherize it, which pushed that cost basis up into that mid-$300 million range?

Speaker #6: I was under the impression it was just above 200 million dollars. Is that just additional dollars that MPT had to put into that asset to kind of weatherize it, which pushed that cost basis up into that mid 300 million range?

Speaker #5: Mike, as you know, there's a lot going on with Norwood and various discussions. With the state, we've made public statements; those are listed on our website.

Edward K. Aldag Jr.: Mike, as you know, there is a lot of stuff going on with Norwood and various discussions with the state. We have made public statements. Those are listed on our website, and that is where we will leave it right now.

Edward K. Aldag: Mike, as you know, there is a lot of stuff going on with Norwood and various discussions with the state. We have made public statements. Those are listed on our website, and that is where we will leave it right now.

Speaker #5: And that's where we'll leave it for now.

Speaker #6: Okay. Great. Thanks.

Michael Carroll: Okay, great. Thanks.

Speaker #4: There are no further questions at this time. I will now turn the call back to Ed Aldag, CEO, for closing remarks.

Michael Carroll: There are no further questions at this time. I will now turn the call back to Ed Aldag, CEO, for closing remarks.

Operator: There are no further questions at this time. I will now turn the call back to Ed Aldag, CEO, for closing remarks.

Speaker #5: Thank you very much for everyone's interest today. If you have any additional questions, please don't hesitate to reach out to us. Thank you very much.

Edward K. Aldag Jr.: Thank you very much for everyone's interest today. If you have any additional questions, please don't hesitate to reach out to us. Thank you very much.

Edward K. Aldag: Thank you very much for everyone's interest today. If you have any additional questions, please don't hesitate to reach out to us. Thank you very much.

Edward K. Aldag Jr.: This concludes today's call. Thank you for attending. You may now disconnect.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

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