Steven Hamner: Well, you’re breaking up a little bit, but if I heard you correctly, of course, we’ve already achieved 80% of the $2 billion. And based on those results, and our visibility into the market into potential buyers and financing sources. That’s why we said we think we’ll ultimately exceed the $2 billion, through the remainder of 2024 and we think it will be at similar pricing, attractive pricing for us
Unidentified Analyst: Great. Thank you for taking my question.
Steven Hamner: Thank you.
Operator: The next question will come from Michael Carroll with RBC. Please go ahead.
Michael Carroll: Yes. Thanks. Steve and Rosa, I wanted to circle back on the prospect situation. I guess how concerning is it that they haven’t paid April and May rents? And I know Rosa, you said that QAF payments are going to come in. I mean, does that fix their situation? And what month do those QAF payments come in?
Steven Hamner: So your question, how concerning is, of course, the prospects have been on a cash basis for some time. And as Rosa mentioned, I’ll let her address the QAF in a minute. We’ve always had with our California operators this QAF issue. And then when you combine it with respect specifically to Prospect, and delays in disposing of other regions in the country, they have significant cash pressures on. But aside from that, having been paid through the quarter, with the QAF issue, that again, is not unexpected. We remain confident that ultimately the cash will come in to pay the rent in California.
Edward Aldag: And California coverage continues to improve.
Rosa Hooper: Those QAF payments are due at the end — or should come in by the end of this month into May, and it’s a substantial sum. It should really help them with their cash flow.
Edward Aldag: Work in February was almost one-third.
Michael Carroll: Yes. I’m assuming that what the Connecticut and Pennsylvania and maybe the Rhode Island assets are kind of weighing that down. If they — as they are missing these rent payments, do they have other cash pressures that are making their position tighter, I guess, does missing these rent payments in April and May solve their cash issues? Or are they falling behind another vendor payables that they may have?
Steven Hamner: I don’t think we have a comment on that. Again, we expect to get our rent, and they’re operating at a level. And again, as mentioned, the very positively improving coverage. Now you have to convert that coverage to cash, and that’s what we expect comes in with the QAF.
Michael Carroll: Okay. And then, just finally, Steve, can you talk a little bit about the — what you’re expecting for the Steward transitions? I know you said in your prepared remarks that didn’t need the 10% BK covenant test in September, do you expect it transitions to occur, do you expect a portion of transitions to occur? And I did look at the BK filing saying that they expect some of the stuff to get done by the beginning of August. I mean I’m assuming for this to get done by the beginning of August, you would need to have a lot of process already underway? I mean, can you comment on how much interest there are in those hospitals right now? And are people looking at the financials to get ready to put in bids? Or is that process just starting right now?
Edward Aldag: Mike, it’s been going on for almost five months now. We’re way down the road with many different people.
Michael Carroll: And then, Steve, your comment on the 10% BK covenant, was that — do you expect a percentage of the Steward hospitals to be transitioned? Or like can you kind of clarify that comment?
Steven Hamner: Well, I’ll try to clarify. I won’t try to predict. The point I was trying to make is, if we need relief from that covenant at the end of September, we would expect that need, all else equal, to be substantially mitigated by the number of hospitals that move away from the Steward relationship into new relationships. Now, we don’t try to predict exactly which hospitals will transition, on which date. But between now and the end of this almost five-month period, we do think that — again, based on what Ed just said, remember this didn’t just start with the filing of bankruptcy. They’ve been marketing these hospitals for at least five or six months. But we do expect, without specifying which hospitals, go win, we do expect that a meaningful amount of Steward exposure will be moved away to new operators before the end of September.
Michael Carroll: Okay. Great. Thank you.
Operator: Your next question will come from Mike Mueller with JPMorgan. Please go ahead.
Mike Mueller: Yes. Hi. Maybe a couple of quick ones here. I guess following up on the prior question. Can you give us a high level sense of at the end of this process, what portion of Steward assets you think you have now will ultimately be managed by other operators, either by sold or transitioned or whatever?
Edward Aldag: Mike, I’m not sure, I completely understand your question, but I think you said at the end of this transition whenever it is, do we expect any of the facilities to continue to be operated by Steward? Is that the question?
Mike Mueller: Let me rephrase it. I guess, at the end of this bankruptcy process at the other side of it, what portion of your Steward assets now do you think we’ll be in the hands of other operators as opposed to being operated by Steward?
Edward Aldag: I would guess, we’re close to 100%.
Mike Mueller: Okay. And then I guess, as it relates to the recent news with Connecticut, Yale New Haven, I guess can you give us, I guess, current thoughts on what the Plan B is there, if that — if those assets do not get sold?
Edward Aldag: Yes. With the ongoing discussions between the state Yale and prospect, we’re just not going to comment on that right now.
Mike Mueller: Got it. Okay. Thank you.
Operator: The next question will come from Jonathan Hughes with Raymond James. Please go ahead.
Jonathan Hughes : Hi. Good morning. Are there any concerns or discussions with new potential operators for the Steward properties, focusing on increasing market share that might lead to concentration issues and maybe scrutiny from the FTC? Or is it because Steward is in bankruptcy, the primary goal is to find a new operator and preserve health care services regardless of increased market share?
Edward Aldag: Yes, Jonathan, it’s a lot of different markets. So I can’t be 100% accurate on this, but the best of my recovery right this moment, I don’t think there are any that would require a market concentration issue.
