Medical Properties Trust, Inc. (NYSE:MPW) Q4 2022 Earnings Call Transcript

Steven Hamner: Well, that would be right. But just to point out that even in our high end of the range of $1.65. We’re not counting on rent from Pennsylvania.

Austin Wurschmidt: Got it. Understood. Just trying to understand what you’ll need to reinvest just sort of recapture I guess that earned rent. That’s all for me. I’ll hop back into the queue. Thank you.

Operator: Our next question comes from Vikram Malhotra from Mizuho. Please go ahead with your question.

Vikram Malhotra: Thanks for taking the questions. Maybe just first on Steward post the Utah transaction, can you maybe just provide two things. One, just any update on your view on underlying cash flow projections as we look at 2023 or other ins and outs? And then just second, the remaining non-Utah, would you give us a sense of like the underlying health of those businesses rent coverage?

Edward Aldag: Sure, Vikram. The expectations for 2023 continues to be in excess of $350 million, including the Utah facilities. Utah facilities represent approximately $80 million of that. So, somewhere in the $300 million annualized 2023 post the Utah transaction. I think there is a public misnomer thinking that the Utah properties are the most profitable properties in the Steward portfolio. Actually, that is not the case. When the Utah property transaction closes, their overall coverage will actually increase. So, it’s an opportunity for them to take proceeds from a mature market from their concern into markets where they had the ability to grow even more. As we’ve stated before, the Florida properties, in particular, continue to way outperform our original underwriting, and Steward still believes there’s tremendous growth there.

Vikram Malhotra: Okay, that’s helpful. And then just so on this the disclosure based on the new GAAP guidance or SEC guidance, I guess, maybe it seems like a sizable change, and maybe I’m not fully understanding what changed. Would you mind — I typically won’t do this on the call, but would you mind just giving us an example, like takes the Steward Florida or Circle Health, — just explain to us like what changed in the disclosure — and it would be helpful if you can maybe in an update, give us just — I know it’s a lot more pages, but give us the pro forma versus what changed? And I guess, again, I’m not understanding what changed because I didn’t see like other REITs having to make this change in their supplements?

Steven Hamner: So, the biggest change is, I’ll just address that generally, and we can absolutely supplement our supplement with our prior guidance. But the big changes were, again, just changes, for example, to deduct depreciation, accumulative depreciation, that affects obviously the relative and the overall denominator of the calculation. And then in our prior pro forma examples, we would pro forma for example, binding contracts for transactions that had not yet closed. So, just by the way, I’ll give you a very brief example here. If you have the supplement in front of you, page11, and you look at the Steward Health care, the aggregate of all of the Steward Health care markets shown in the GAAP basis statement is 24.2%. Had we presented this on the old method, it would have been, as the footnote says, it would have been 19.8%. And again, instead of going through line by line, the details of that, we’ll get, as I say, a supplement to the supplement.

Vikram Malhotra: Okay. That would be helpful. If you can bridge the two with all the gap like you said, depreciation because I felt both were net, but maybe I’m just reading it incorrectly and then any pro forma adjustments. Just to clear — just to make it like crystal clear, in terms of what you did. Just last question. Can you remind us just in an effort to shore up more cash flow and hopefully reduce leverage going forward? Can you remind us sort of any update on, say, the Australian assets or other assets that you may be monetizing? What the underlying appetite is for hospital real estate today?