Good afternoon. My name is Dennis, and I will be your conference operator today. At this time, I would like to welcome everyone to the Medical Properties Trust Second Quarter 2022 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Charles Lambert, Vice President. Please go ahead.

Good afternoon. Welcome to the Medical Properties Trust conference call to discuss our second quarter 2022 financial results. With me today are Edward K. Aldag, Jr., Chairman, President and Chief Executive Officer of the company; and Steven Hamner, Executive Vice President and Chief Financial Officer. Our press release was distributed this morning and furnished on Form 8-K with the Securities and Exchange Commission. If you did not receive a copy, it is available on our website at medicalpropertiestrust.com in the Investor Relations section. 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. 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. We refer you to the company's reports filed with the Securities and Exchange Commission for a discussion of the factors that could cause the company's actual results or future events to differ materially from those expressed in this call. The information being provided today is as of this date only, and except as required by the federal securities laws, the company does not undertake a duty to update any such information. In addition, during the course of the conference call, we will describe certain non-GAAP financial measures, which should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release, Medical Properties Trust has reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. You can also refer to our website at medicalpropertiestrust.com for the most directly comparable financial measures and related reconciliations. I will now turn the call over to our Chief Executive Officer, Ed Aldag.

Thank you, Charles, and thank all of you for listening in today to our second quarter earnings call for 2022. You all will recall that the public reporting hospital operators reported Q1 2022 results, reflecting the issues with the Omicron surge in December, January and part of February. As we predicted last quarter, since we report coverages one quarter in arrears, the results we reported from our operators today show that same softening. Furthermore, just as we predicted with the public health systems like HCA and Tenet, who have both published their Q2 results, the positive trends that we are seeing in March and April have accelerated into May and June. There are several points that we believe are important for us to address today. First, we underwrite every investment at the facility level. We believe reporting coverages at the facility level is the appropriate metric. Whether we acquire a large portfolio of hospitals or a single hospital, we underwrite that acquisition at the facility level, understanding the competition market, the physician referral sources and the operator. We must be right on the market and the referral sources, but long-term collection of our rent does not depend on the financial results of a particular operator. In the few times that we've had to transition from one operator to another, we have been successful in attracting high capable and qualified operators because we had acquired hospital real estate that was essential to the community and in the right hand could be operated profitably. And as a reminder, our rent typically represents approximately 5% to 7% of a hospital's net revenue. Two, Radley is an operator's real estate subject to an MPT lease, [Radley] is 100% of an operator's real estate subject to an MPT lease. In many cases, MPT does not…

Thank you, Ed. This morning, we reported normalized FFO of $0.46 per diluted share. The $0.01 change from the first quarter's result was expected and is primarily related to the effect of the late first quarter close of the Macquarie joint venture. As this morning's press release noted, our 2022 calendar year guidance of $1.78 to $1.82 per share remains unchanged. Adjustments to normalized FFO are routine and immaterial individually and in the aggregate, and I'll be happy to address any questions during our Q&A. So for the next few minutes, I want to discuss a few of the slides we posted this morning as an investor update. Frankly, these slides are more of an investor reminder that an update because nothing has changed from how we have run the company and underwritten the real estate that comprises about 85% of our total assets since our inception. But of course, as we have grown from $0 in assets in 2004 to $22 billion today, our investor base has certainly changed, and some investors do not have the long-term history that others have. So we believe this is a good time to describe our general strategy for investing in hospital real estate and review the outstanding successes our strategy has delivered over that 18-year period. Then before we go to Q&A, I will briefly describe our expectations about investments and capital markets activities in the present market and economic environment. First and foremost, we invest primarily in real estate. We underwrite our real estate investments to attract successful operators such that just like most REITs and other real estate investors, if any particular lessee is unable to continue paying our rent, we expect to find another lessee that can. In other words, it is the characteristics of our real assets that…

[Operator Instructions] And your first question is from the line of Steven Valiquette with Barclays.

Great. I guess just a follow-up on the disclosure around the Steward financials, it's annual run rate is close to the $800 million of EBITDA somewhere in there. I guess you mentioned that's still unadjusted but there were similar adjustments you'd make to that as you've done for the other numbers you report when you do your rent coverage ratios. Is there any way just to give us the math on where that would shake out on either EBITDAR or EBITDARM and rent coverage the way it stands right now, just looking for color around that?

There are no adjustments. Those are just the numbers. We do not make any adjustments to any of the EBITDAR numbers in any of the tenants and those that we report for tenant are not adjusted either. They're unadjusted.

And then I guess it did dip from 2.8 to 2.6 on a sequential basis, but again, that is in one quarter in arrears. So based on what you're saying, we should assume that when you're reporting this next quarter, all else being equal, that probably trends back upwards. That sounds like that's kind of the message that you're trying to convey I want to confirm that.

Well, all of these are numbers from the first quarter. So we're behind the quarter in all the publicly reporting. So all of our tenants were experiencing the same issues that the publicly reported about the same time we were reporting our first quarter earnings.

Your next question is from the line of Austin Wurschmidt with KeyBanc Capital Markets. Okay. We'll move on to the next person, and that is from the line Joshua Dennerlein with Bank of America.

I appreciate all the new color in the presentation. That 5% proxy to go from EBITDARM to EBITDAR. I guess I heard the details, but I'm just curious why you wouldn't actually just use the actual and you use that 5% sounds like it's always more?

Yes, Josh, that's a fair question. So we've been doing this a long time. And the reason is that we're trying to get a number that's standard across the board for us when we're doing our analysis. We obviously are looking at all of the numbers all of the time. But even when the tenants are providing us what their management cost are. They fluctuate quarter-to-quarter. They're based on what they allocate to their particular properties. And remember that very seldom do we own 100% of all of any one tenant's properties. So it gets very confusing and sometimes can be misleading. So we've just decided to be very conservative and use the 5% number.

Okay. So it sounds like that's kind of like the upper limit you would ever kind of?

Yes, the vast majority of our tenants' actual numbers that they provide are much less than that 5%. It doesn't change some of the people's very much. I listed some of the ones that some of our bigger tenants in my script there.

Okay. And then you mentioned Prospect Health. It sounds like they're having like a bit slower recovery on the cash flow front and put they're below EBITDAR. Just curious what's driving that

Yes. So the East Coast facilities have never done as well as their West Coast facilities. They're very bullish on the West Coast facilities and continue to believe that those facilities will generate good coverage. They had the same issues in the first quarter that everybody else did. Some of our California properties saw more of those issues from a labor standpoint than across the country. In Pennsylvania, they're probably very extremely bullish on where they are in Pennsylvania. But as you know, they are in active negotiations on selling both Pennsylvania and the Connecticut facilities.

Your next question is from the line of Michael Carroll with RBC Capital Markets.

Yes. Just digging into prospect a little bit more. I know that -- I guess, and it sounded like in your prepared remarks that they're not hitting your expectations too, so they're underperforming where you thought that they should be. I mean, has their results started to rebound kind of post this Omicron wave? And are they heading in the right direction now?

So they are, Mike. I guess I should have gone into a little more detail about why my expectations were more. They think they're right on track. They feel very, very good about it. And when you talk to them, I just expected the improvements to be a little bit better than they were -- maybe now that we're past the Omicron surge that we saw in the first quarter, they will be. When we report third quarter, their second quarter -- but they're just where I was hoping that they would be, but the management continues. I spoke with the CEO early this week, and he continues to feel good about where they are.

And were they impacted more by Omicron than some of your other tenants look like their coverage ratio dropped a little bit more, kind of compare them versus the other tenants between 1Q and 4Q?

Yes. I don't know about volume-wise, but certainly, they had probably more hospitalizations on the East Coast for those Omicron patients that didn't generate the profit margins that previous COVID patients were generating.

Okay. And then in your remarks, too, you were kind of highlighting that they are excited about California, Pennsylvania is turning a corner. But what about Connecticut? You haven't -- you didn't mention about the viewpoint on what's going on with that portfolio?

Yes. I think that's because they're the furthest along with their negotiations with the potential buyer there, though I haven't had as many discussions about operations as I have where they are about selling those facilities. But as I said in my prepared remarks, we still haven't had any discussions with a potential purchaser.

Okay. And when does that typically occur when do they bring you in to kind of get approval on executing that transaction?

Well, probably soon. I think there have been some public going back and forth between Yale and Prospect at this point, but they're probably pretty close to where they think they need to be to bring us in.

Okay. And then is the expectation still that the Pennsylvania and the Connecticut assets will be sold?

That is certainly for Connecticut, that is their expectations. I'm not sure that Prospect fills that way about Pennsylvania anymore.

And then just last one for me. I don't know if I heard an update on the prime purchase options. So we have a viewpoint of what's going on with those assets?

No, there is no update, Mike. We remain kind of ambivalent -- on the one hand, of course, it's a very nice if you return for us. On the other hand, it's about 300 -- upwards of $360 million that we would apply to debt, reduce our leverage. So that's as much of a report as we have.

And when do those leases officially expire?

Well, the termination is really not that relevant. They actually expired at the end of last month, but it's typical on any expiration or extension to continue to negotiate. There still leasing they're still leasing from us at this point.

Your next question is from the line of Connor Siversky with Berenberg.

I hate to go back to this, but just in terms of Steward's EBITDA run rate, -- just so we're clear, this only happens after we get through the $200 million investment in Florida, $420 million in MAD obligations and that delay in Texas funding. But to get to that point, -- is that what necessitates the $150 million debt facility to Steward in the intern?

It really is, Connor, when you add up all of that hitting in a very kind of tight time table. And so that's really what facilitated us being willing, frankly, a little bit eager to make this investment. We truly expect fourth quarter and Steward to be generating the very strong levels of EBITDAR, if not the $800 million, then certainly very strong cash flow -- free cash flow coverage.

And then on Page 5 of the investor presentation slides. Obviously, you outlined several models of success repositioning properties over the years. And then in consideration of some of the deferrals booked over the last several quarters, are there any assets that are kind of falling into this pool right now? Or anything you're repositioning currently? And if so, what the time frame on that could look like?

No. The only new deferral is a very limited amount down in Australia because they, once again, earlier in the year, shut down elected procedures. So you remember in the very earliest days of COVID, we deferred a couple of -- 50% of a couple of quarters. We're now collecting that back. we agreed to a very limited amount that ended in May. So we're -- back in June, we were fully collecting again. That's the only deferral we've done that's not in accordance with lease terms.

And then last one for me, just considering what happened in Utah. I mean, from your perspective, what's the most attractive avenue to take here? I mean do you leave Steward in the facilities? Or do you seek a JV partner, which might be a little more difficult given the rate environment? Or is there another operator that could potentially step in to buy those operations? I'm just curious to see what the most attractive outcome to you guys would be?

Well, from selling the operations, that's a steward decision. Steward is doing very, very well, as we mentioned. If you take roughly $125 million run rate EBITDAR for Utah alone and put a market multiple on that, that's EBITDA, by the way. Has options. They may elect to sell or joint venture with another operating partner. For us, the biggest advantage, frankly, would be in diversification. But we're very confident in having Steward as our tenant in Utah and that may ultimately be what they choose to do. There's a lot of opportunity as a very strong market.

Your next question is from the line of Vikram Malhotra with Mizuho.

So just maybe going back to the coverages and just bigger picture how the lease may be structured. So if I heard you correct, you highlighted, obviously, labor costs are an issue. We're probably coming off of funds that the government has provided in the care funds, some of the public hospitals like HCA, et cetera, said volumes are a little lighter. Can you give us a sense of what the trailing 3-month coverages, just so we know what spot looks like? And do you anticipate that to dip before things improve?

So Vik, I don't -- to make sure I understand your question. You're asking what the coverages were for the last 3 quarters.

The quarter.

For second quarter to third quarter. Just for the quarter.

Well, if you have the spot or you have like -- I mean, I guess you gave it a 1Q trailing, if you just have like what's the in-place if you do it on a trailing 3-month because the number went from 2 to 1.7 on an EBITDA basis. So I'm just wondering like on a spot basis, what would that be?

Yes. I don't have the exact number for you other than to tell you that it is -- they are up from where they were in the first quarter, quarter-over-quarter, not trailing 12 just quarter-over-quarter.

And quarter-over-quarter, that's essentially 2Q over 1Q?

That's correct.

Okay. And then in these leases, I just want to clarify, when you have a say, a leaves with a hospital and in some -- I'm assuming you mentioned you have a guarantee. Is this -- the way hospitals are structured? Is this a guarantee with the sort of the mother ship, the obligated group? Or is this a guarantee with the SPV at a state or city level?

No. It's the parent typically. And of course, every relationship has differences. But typically, it's the parent company. So every one of our facilities is occupied and leased by, as you point out, a special entity. And that's where we derive that facility level coverage, but we also have the protection of the guarantee typically by the parent company.

Okay. That's helpful. And then just last one, I guess, the -- given where you are cost of capital in the past, you've talked about potential new JVs. There's also some talk about KKR and Ramsey. And I'm just wondering or -- what sort of have you seen broadly in the hospital space JV for your assets? And can you talk -- give us an is the Ramsey transaction something of interest to you?

Well, we typically wouldn't comment on transactions that we may or may not be involved with. But frankly, I'll show my hand here by saying I'm really not up-to-date on what's going on with Ramsay and KKR at this point. My impression was the fee cap rate that KKR was seeking was going to be hard to get done. But that's just my historical recollection There is, nonetheless, remains a very, very strong interest in these types of assets. And it's driven really by 2 criteria. One, I mentioned at the end of my prepared remarks, and that's just really, really strong inflationary protection. That is long term and is permanent. That's very attractive in today's market. And then secondarily, of course, really going back to just before COVID started COVID demonstrated the absolute certainty that governments and people are going to support their infrastructure like hospitals. And so all of that has led to a very high level of interest in the private area, and that's with sovereigns and pension funds and asset managers and people like you just mentioned KKR. So we expect that, that continues. As in any real estate cycle, typically, I think the sellers are the last ones to come up to the table and recognize that, well, I'm not going to get a 4% cap rate like I could have 12 months ago. But as I mentioned earlier, we're seeing that shift. We're seeing some recognition that the current interest rate and cost of capital environment is not going to support pricing that it may have supported a couple of years ago.

So Vik, on top of the pricing that Steve was just referring to, we like Ramsey. We think Ramsey is a good operator. We own 6 Ramsey hospitals. But we're not interested in the structure that was the original. And I feel like Steve haven't kept up with it, but the original structure was asked to investors to be a part of a fund and we didn't have any interest in that. But we do like Ramsay as an operator.

Your next question is from the line of Derek Johnston with Deutsche Bank.

Ed. So how is your acquisition pipeline standing today? And really, what's it going to take to drive acquisition volumes -- are you seeing any positive developments to get back to like precoded activity levels?

So the pipeline is still there. It didn't go anywhere. There's still plenty of things out there that are all just kind of floating around. But I think everybody from the sellers and potential like us or are all kind of sitting around waiting to see where the world goes. I don't think there are many deals getting done right now. We certainly on the interest in doing any deals right now with the market as confused as it is. So I'm not sure I can give you an exact answer for when we get back to the regular normalized-type acquisition levels. It's not that the opportunities aren't there. it's that the world is in such a flux right now. We aren't actively trying to pursue the levels that we have been historically.

And then switching gears a bit. So the slipping coverage ratios are a bit of an issue. And I feel like we've covered that, right? But the question is, can they also be a leading indicator for future acquisitions, potentially like driving higher volumes as hospitals look to sales leasebacks to unlock capital or reinvest?

I think that implies that hospitals in financial distress are more willing to do sale-leaseback transactions. And that may be, but that's never been our target. Again, using trailing 12, particularly including the trailing 6 months and as of the end of the first quarter is really not the right baseline. In any year, the first quarter is the weakest quarter. We all know that first quarter activity in particularly general acute hospitals is weaker than the other quarters. But in this particular first quarter, it's exponentially weaker than any other quarter would be. So I'd be careful. I think we're careful of reading into the decline in coverage as indicated by our calculations that that's something that's not going to be recovered pretty quickly.

And maybe we would have been concerned if they didn't all bounce back like we knew they were going to bounce back as we already saw what the end of February and March were looking like when we did the first quarter earnings call.

Your next question is from the line of Michael Mueller with JPMorgan Chase.

I guess going back to acquisitions. As you move into 2023, if the stock isn't back to a level where you like to where you feel more comfortable issuing equity. Should we think of you as having another pool of assets that you would potentially sell or joint venture or just potentially kind of weighted out and keep the pause on the acquisition volume?

Yes, Mike, I don't -- I know I'm not ready to try to predict what 2023 is going to look like at this point with the economy where it is, the Fed as confused as it is with the administration -- and so it's not just our stock price, obviously, but it's all of those pieces together. So we wouldn't have the need to do the big joint venture if we didn't -- if we weren't in an acquisition mode.

Your next question is from the line of Tayo Okusanya with Credit Suisse.

First of all, Ed, Steve and the team, thank you so much for all the additional disclosure. It's super, super helpful, and I hope that this is kind of here to stay. So thanks for that. First question is Steward. I have a 2-parter there. The term loan, the 5-year term loan, could you tell us again exactly when that kicks in and what the interest rate audit is and any kind of kicker interest payments that you talked about. If you could just show a little bit more detail about what potential upside could come from that. And then second of all, Stewart itself, their line of credit is mentioned mature. They are terming on our revolving line is meant to mature in September. And I think it's like the one thing you haven't talked about in your Steward update. If you have any update for us in regards to that particular line item?

Sure, Tyle. Let me take the ABL first, and you and I have been together for a long time. So I know your health care background. And you know that ABLs are highly secured loans. They're secured by the receivables and have very good margins. So it's usually not something that we even think about mentioning. Obviously, we've never had an issue in any of our tenants being able to renew their ABL and certainly don't expect that situation here either.

I'll just go about I'll take the opportunity, the Shasta Hospital that was in our prepared remarks, and it is in the Slide 5 of the update. Even as we were transitioning from one operator to another and coming through bankruptcy, Chester redid their ABL, again, because Ed said, and again, you know, it's well over secured by government receivables primarily with the discount on that. So that's the reason it just doesn't get a lot of attention from us. With respect to the credit facility we provided, -- it was closed and completed by the end of the quarter, frankly, well before the end of the quarter. It has a nominal and escalating interest rate that would be equivalent to a lease. And as you know, we don't disclose specific terms of those. The kicker is attractive. I mean it's not hundreds of millions of dollars by any means, but it would increase the nominal interest rate by several turns. And aside from that, I mean, it's generally what we would disclose about any particular transaction, very well secured, of course, and pride as an accretive even in today's market at a nicely accretive transaction.

What causes the kicker to kick in? Is this they have margin.

I'm sorry, you broke up, Tayo.

Yes. I thought what causes the kicker to kick in? Like what are the terms that make you kind of get the kicker?

New payment Yes. It's built -- it's not dependent on any particular transaction.

That's helpful and good to know. And Ed, in prior quarters with your rent coverage, you've always kind of helped us understand what the government grant in that number what kind of anti was having on the rent coverage. Is that something you could provide this quarter as well of -- if you took that out, plus coverage dropped 30 bps or 40 bps like you kind of expressed last quarter?

You're talking about the grants. There aren't that many brands still left in the coverage. I don't have to get that exact number, Tayo, but we're about done with those. So I don't know the exact number what it is right now.

Okay. That's helpful. And then just on from one more. Direct deferrals again, $7 million year-to-date. I think you mentioned earlier on that, that all relates to health scope. Is that correct? Or were there any other kind of rent deferrals in that number?

No, that's correct. And again, already back to paying 100% of that.

Your next question is from the line of Jonathan Hughes with Raymond James.

Just kind of following up on Tayo's question a second ago on that $150 million debt facility, I think did you say that it was extended at the end of the quarter? Was that -- is that as of June 30? Or are you talking about like this quarter? And I guess maybe why wasn't it put on the investment page in the supplement?

No, it was completely closed during June. And it's not a long-term sustained investment kind of like what's our bread and butter. That's really the only reason we didn't put it on there. certainly will be clear in the 10-Q, and we were eager to get it out there today in this morning's comments. So that's really all there was to that.

And then -- earlier you talked about potential JVs, and I know there's a lot of demand out there. But if there are any other transactions, could we expect kind of the entirety of any of those potential JV proceeds to be used for debt repayment and/or capital recycling? Or could we see some use for stock buybacks. I understand that likely wouldn't be huge, but and leverage does play a part. But that is an investment in your own company that comes with no underwriting uncertainty and would be at an attractive kind of high 6 cash yield, a 15% discount to consensus.

Yes, all of which makes medical sense, of course, but we don't have a JV yet. We don't have anticipated proceeds. So we certainly haven't given thought to how we might apply those proceeds. It will depend, just to sort of repeat what Ed said a minute ago, it will depend on a lot of things we don't know right now. What is going on in the economic environment. I mean, what's going on in the political and global environment, what's available to us in the bar as higher cap rate investments potentially, we just don't know. But all of the uses that you named are certainly available to us.

Yes. Okay. And then one more on the kind of CapEx disclosure clarification. And I realized it was kind of standard practice and a standard cost for hospitals, but it's a little unique in the traditional net lease world is -- is that part of the reason why maybe it wasn't emphasized before this is just that it's kind of status quo on the hospital side. But as we look at other types of traditional net lease real estate, we generally see that below the EBITDA line.

Jonathan, I think it's because hospitals are what we know, and sometimes we forget, it's not what everybody else knows, and we're not traditional real estate people.

Your next question is from the line of John Pawlowski with Green Street.

Steve, do you expect to release an amended 10-K with Steward's audited financials this year?

Not at this point. And the reason is primarily because we always want to follow what the SEC rules are and the SEC rules do not require it. So because they don't require it, we would have some issues with our tenants in -- on our own filing financial statements.

All right. Do you -- so I struggle with the optics of that. You disclosed it a few years in the past, and now you're extending additional financing to a highly levered entity that struggle with cash flow. It's an issue for the stock. So I may feel better about the selective disclosure of doing it in the past and not doing it today. during a very tough operating climate where we need visibility on financial health?

All fair points, John, but we disclosed it in the past because of the SEC requirements. -- and we're not required now. It's a very specific requirement. And if we do become required to disclose it under the SEC rules, we absolutely will. We're trying to provide as much as we can. I know we're doing that gradually, but we made a lot of progress over the last couple of quarters. Ed described kind of the high-level results on an unaudited basis early in his prepared remarks. And so that's where we have it now.

Okay. I want to spend a minute on Prospect. So property level coverage of 0.6x, and that excludes lower quality hospitals. So I know you've vendors prospect and others as high-quality operators. So I just don't see a scenario where a next operator can come in and cover ranks. So can you help us feel better about rent come for prospect hospitals given the high-quality hospitals are at 0.6x.

Yes. So we don't share the same. It sounds like kind of more urgent, immediate concern that you have on prospect. -- if there are hospitals in any of our tenant portfolios that are weaker than other hospitals in that tenant portfolio, that's the power usually of the master lease arrangement. We've emphasized as prospect management has emphasized the value of the West Coast portfolio. And any so-called excess value over our lease base in those West Coast hospitals is applied to what could be a deficiency -- and I'm not saying there is, but if there is a deficiency on the East Coast, then we get the benefit of the excess value on the West Coast.

Okay. I guess my point is there's no excess in the West Coast because you're sub 1x. But maybe the final question would be do you plan to extend incremental debt financing to prospect to bridge them similar to Steward?

No, we don't expect that will be necessary -- yes, we don't expect that to be necessary. And we are aware of conversations and potential transactions that we can't speak to in the public environment, but we have reason to think that prospect is not going to result in any material impairment or loss to MPT.

Your next question is from the line of Jon Petersen with Jefferies.

So just a follow-up on the Steward financials. You have a footnote where you say that the -- because the value of it is less than 20%, you don't have to disclose it. I think that's the SEC rules. So your revenues are 2% can you pull back the curtain a little bit and maybe just help us better understand how you value the assets internally in your portfolio to get to that hurdle?

It's a GAAP basis calculation. There's no valuation other than what's on the books.

I see. Okay. And then you guys -- you had -- I appreciate your comments on the HCA Steward breakup in Utah. Just curious if there's any more just higher-level thoughts there on, I guess, the ability for your tenants to sell their operations are you guys to re-tenant if the FTC is going to step in when they have some of these concerns, it would seem like the natural operator to come in would be one of the larger ones in the market. But if the FTC is just going to block those deals, I mean, how should we think about prospects for retenanting hospitals?

Well, fair point. We have an extreme environment in antitrust today. It's not just hospitals, particularly hospitals, but it's all around -- but HCA is already a competitor in the market that was defined by the others may reasonably object to that definition. But the fact is the fact the FTC said there's a particular market. HCA was already in it. And therefore, this transaction was FTC objective to it. So the simple answer there, and it is quite a simplistic answer is if -- generally, if a prospective operator comes in and is not already a competitor, then it wouldn't have the same propane of the FTC for getting terminated.

John, I don't dare speak for the FTC, but in addition to that, not only was HCA already in the market HCA and Steward would have represented 30% of the market, so not a huge number. But HCA is the highest cost provider. And that's primarily -- and if you read the information, that's what the FTC hung their hat on that the -- if HCA Vault Steward, they would raise the prices and the market would lose their -- one of their low-cost providers. That's not the case for some of the other people in the market that don't have the same percentage that HCA had and certainly aren't recognized as a high-cost provider.

Your next question is from the line of Austin Wurschmidt with KeyBanc Capital Markets.

Given the current cost of capital today and sort of the leverage position, you discussed the low end of the $1 billion to $3 billion range as being a higher likelihood at this point. I guess, one, is achieving or exceeding that $1 billion dependent at all on the outcome of the primes repurchase option? And then second, what's sort of the right level of investment you're comfortable with going forward if there isn't a meaningful change in your cost of capital.

Yes. And Austin, sorry about the earlier when we -- I don't know what the glitch was when we called on you, I apologize about that. I'm not -- I certainly can't tell you where I think we'll get back to. We certainly ought to be able to, in a regular environment, continue to do $3-plus billion in acquisitions. But given where the market is a bigger driver right now, by market, I mean just the entire market, not MPT stock, not the cost of capital, but just to the confusions within the market as a whole, where we are in the recession or whatever you want to call it, and those types of questions as to whether or not we'll exceed the $1 billion by much or exceeded at all. So it's not dependent on the prime potential repurchase of their properties.

And then just secondly, I guess given the comment earlier on disclosure requirements for Stewart, should we expect that you could continue to give us updates on tenant health and maybe that run rate EBITDA figure at least in the short run going forward?

Yes, absolutely, Austin. We're doing all that we can to continue to provide information to get everybody comfortable.

And this does conclude the Q&A session of the call. I will now turn the call back over to Ed for closing remarks.

Dennis, thank you very much, and thank you all again for listening in today. If you have any follow-up questions, please don't hesitate to call Drew or Tim.

This does conclude the Medical Properties Trust Second Quarter 2022 Earnings Conference Call. Thank you all for joining. You may now disconnect.