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

Tayo Okusanya: Okay, great. Then can we move over to kind of current leverage and just taking a look at the balance sheet and some of the moving items there that kind of contributed towards higher leverage with the line of credit kind of going up a decent amount. It seems like, again, your accounts receivables increased there’s this kind of additional mortgage loans increase of about $60 million. Just kind of talk about kind of some of the items that may have contributed to the higher use of the line and higher net debt.

Steven Hamner: Sure. The calculation we showed this morning at 6.4 times — and just to be clear, we footnoted that based on the range of potential outcome with Prospect. But starting with the baseline 6.4 is up from last quarter 5.8. That’s due primarily, as I mentioned, to the effect of the range of Prospect assumptions. Secondly, as you mentioned, our acquisition of the Priory assets in the fourth quarter funded with seller financing and the impact of currency movements. The $60 million you mentioned was a European investment we made in the fourth quarter. And I think that’s about it, right, yes.

Tayo Okusanya: And then the AR receivables being up $50 million, and anything going on there with would kind of slower.

Steven Hamner: Yes, Prospect is a big piece of unpaid billed rent.

Tayo Okusanya: Got you. Okay. And then from an accounting perspective, just bear with me. I appreciate the explanation about the change to net investments that you discussed earlier on, Steve. The only challenge is when we have that change, when we don’t see gross investments, we can’t really see any additional investments that were made — could you just talk about, again, since you guys did the $250 million of investments to Steward and Prospect if there were any additional investments to those two operators since that time?

Steven Hamner: No, other than routing order business, for example, the development funding that goes on with — of course, there’s no development funding and prospect. There’s the Norwood construction projects with Steward. But that that’s the increased investment.

Tayo Okusanya: Got you. Okay. That’s helpful. And then just one final comment from me. I think, again, just having the EBITDA rent coverages that you used to provide in the past, I think investors do find that useful. It would be great if you could see a return of those metrics in the next supplemental in 1Q 2023. Thank you very much.

Edward Aldag: Thanks Tayo.

Operator: Our next question comes from John Pawlowski from Green Street Advisors. Please go ahead with your question.

John Pawlowski: Thanks for the time. Maybe a follow-up to Tayo’s question. Did you provide any operators at all financial support in the fourth quarter through the rent deferrals, loans, equity stakes? Or do you expect to have to in the coming quarters outside of Prospect?

Steven Hamner: Was that final part? Do we expect to–

John Pawlowski: Yes, do you expect to outside of Prospect?

Edward Aldag: Aside from Prospect. No, we don’t.

John Pawlowski: Okay. Maybe going back to the prospects restructuring, Steve, I think you alluded to — you expect to collect most of the California rents. So — can you just take a step back, and I know you put some scenarios in there. I’m less concerned about worst-case scenarios that are embedded in guidance. I’m just trying to understand the actual reality in terms of how much cash is going to come in the door this year. So, the total Prospect relationship what percent of your annual cash payments that are owed by Prospect do you actually expect to collect this year, use a range, if you like? And just — we just need some quantification.