Good morning, and welcome to Q3 2024 Medical Properties Trust Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is 60-minute presentation and is being recorded. I would now like to turn the conference over to Charles Lambert. Please go ahead.

Good morning. Welcome to the Medical Properties Trust conference call to discuss our third quarter 2024 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 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 thanks to all of you for joining us this morning on our third quarter 2024 earnings call. I'm pleased to be joined again today by Steven Hamner, Kevin Hanna and Rosa Hooper and Jason Frey. Before you hear from the rest of the team, I'll spend a few minutes covering a few important recent strategic updates. The big news during the quarter was our global settlement with Steward and its creditors that enabled us to take back control of our real estate and several of our relationship with Steward. While there has been widespread media attention on Steward's bankruptcy process over the past few months, we believe these stories failed to note the significant steps that MPT has taken throughout the process to avoid hospital closures, protect jobs and ensure continuity of patient care. When Steward was unable to complete transactions with buyers for its operations around the country, our team worked around the clock for weeks to identify a diverse set of qualified operators to take over facilities in five markets. We are confident these five operators are better positioned to serve their respective communities in Arizona, Florida, Louisiana, Ohio and Texas. The four operators that assumed management of 15 facilities in September, HSA, HonorHealth, InsightHealth and QuorumHealth, have already done a tremendous job of stabilizing the hospitals in each markets and laying the foundations to return them to profitability, by providing high-quality patient care. They have dedicated significant time and energy to employee, physician and community outreach, all of which have reportedly been well received. While it will take time for these facilities to return to pre-bankruptcy operational performance, we are very impressed with what we have seen so far. In most cases, October discharges are trending higher than the low point in September…

Thank you, Ed. As usual, I will take you through some of the highlights across our portfolio of critical hospital real estate. We are encouraged by the positive utilization and revenue trends we continue to see across our portfolio. In line with what's recently been reported by several large public operators, hospital fundamentals continue to strengthen, admissions are growing, surgical volumes are increasing and operators are starting to realize the benefits from cost efficiency programs they've been implementing over the past few years. Within our portfolio of hospitals, General Acute Care properties reported the largest increase in year-over-year revenues, followed by our Behavioral Health properties, which have delivered steady performance over the past several quarters. In the UK, utilization of private medical insurance and self-pay has hit a new all-time high, as patient demand for quality and timely access to care continues. Circle Health is a clear beneficiary of this trend, reporting consistent growth in both private medical insurance and self-pay volume. Circle's performance has also benefited from improved patient acuity mix, as more complex cases are now being addressed in the private sector. In addition, the U.K. Health Secretary has called for the NHS to grow its partnership with the private sector to reduce their backlog. Priory, the largest independent mental health care provider in the UK, continued to produce positive cash flow from operations in 2023 and its cash flow generation has accelerated year-to-date in 2024. In fact, revenue and EBITDARM are meaningfully outperforming prior year. Last quarter, we mentioned their focus on a comprehensive strategy for improving quality and optimizing our occupancy mix. Continued focus on this strategy has increased security, driving reimbursement rates higher while promoting a more efficient utilization of external labor, resulting in bolstered financial performance, including improved coverages for the portfolio. Notably, the…

Thank you, Rosa. This morning, we reported GAAP net loss of $1.34 per share and normalized FFO of $0.16 per share for the third quarter of 2024. As disclosed in our Form 8-K filed on September 17th, our global settlement with Steward and its creditors resulted in multiple one-time accounting items that impacted our GAAP results and resulted in adjustments to normalized FFO. First, we impaired approximately $425 million of working capital loans previously made to Steward. Second, we recorded impairments of approximately $183 million of which $180 million related to the real estate of the Space Coast facilities and certain excess properties, charges for property taxes and other obligations, net of recovery and the donation of our former Steward-operated hospital in Hope, Arkansas to the local community rounded out the balance. Lastly, the termination of our master lease agreement with Steward resulted in an accelerated amortization of about $115 million of lease intangible assets during the quarter. Before wrapping up on Steward, as noted in our press release this morning, we have received substantially all of the $45 million of proceeds expected from the sale of Space Coast hospitals to Orlando Health. Normalized FFO was also adjusted during the quarter for the reduction in fair value or investment in PHP Holdings by approximately $130 million to roughly $200 million based on the most recent independent third-party appraisal. With that, I will hand the call over to Steve to discuss liquidity and capital allocation. Steve?

Thank you, Kevin. At the end of the third quarter, we had cash balances of approximately $275 million and revolver capacity of about $880 million. Year-to-date, we have executed more than $2.9 billion in profitable asset sales and other monetization transactions, including the approximately $350 million during the third quarter that we have previously described. These are primarily the sales for $246 million of 18 freestanding emergency rooms plus a general acute hospital that Ed mentioned, along with repayment by Prime of a $100 million mortgage loan. These transactions have effectively demonstrated, especially over the recent year, since COVID, the strength of our business model in general and our real estate underwriting in particular. Not only have our real estate investments held their values in a volatile macroeconomic environment, but they have actually increased in value. This has provided us significant flexibility and optionality as we execute our delivering strategy. Since the beginning of 2023, we have repaid $2.2 billion in debt. We have aggregate 2025 maturities of approximately $1.2 billion, which we believe we are well-positioned to address with our current liquidity and other options, including additional possible monetization transactions. For example, since the end of the quarter, we have settled certain insurance litigation that will result in incremental cash to us during the fourth quarter. We closed the Space Coast sale resulting in about $45 million to us. The Watsonville and small FSED sales mentioned earlier resulted in another $45 million. And we have signed non-binding LOIs and offer sheets for profitable sales that would generate additional cash proceeds. The aggregate of these transactions approximates another $400 million. With respect to these non-binding LOIs and offer sheets, I will point out that, there are buyer diligence rights and other conditions, and there is no certainty that these proposed…

[Operator Instructions] Our first question will come from Michael Carroll with RBC Capital Markets. You may now go ahead.

Yes, thanks. Can you talk about why, the working capital loans to, I guess, the former on the operators taking over the former Steward assets increased to $90 million. And kind of highlight the timing of the expected repayments? I mean how long does it take for these operators to get the necessary ABL that could pay back those working capital loans?

Mike, it's a simple question simple answer on the $90 million and that was additional primary professional fee cost not related to MPT or the new operators for the transitions. On the ABL, some of them already have replacement ABLs that they're in and worked with. Others believe that, they'll have them completed either by the end of this quarter or the early part of 2025. These are short-term loans and we expect them to be all repaid in 2025.

Okay. Great. And then can you provide an update on the PHP sale? I mean, Ed, I believe last call, you kind of highlighted that the final bids for this asset was due in August. I guess, did that sale process, is that starting to get completed? And then, maybe kind of when you're answering that, can you highlight why the write down in the PHP, why did that specifically occur again this quarter?

Mike, the write down is based on the most recent, what we believe reliable information that's available to us. We can't comment further on the status of what our continued confidential negotiations amongst the buyers and seller, which is PHP.

Okay, great. Thank you.

Our next question will come from Omotayo Okusanya with Deutsche Bank. You may now go ahead.

Hi, yes. Good morning, everyone. Could you please for the assets that have not -- the Steward assets that have not yet been transitioned that you guys are now operating, could you just give us a sense of the earnings impact of those assets in third quarter? And how should we kind of think about that going forward, until you can also transition those assets?

Tayo, these aren't operational facilities. These include the Youngstown, Ohio facility, which has been closed for years, the San Antonio facility, which was closed, I believe, last year. It also includes, Sharon, Pennsylvania, which is operational and but it's not operational by us. It's still being operated, by Steward. And then, it also includes a facility in Miami, which is, when Steward still owned it, it had been rehabbed and was getting ready to open, and it's still closed at this particular time. It shouldn't have any additional impact negative on MPT.

Okay. That's helpful. All right. That's about it for me. Thank you.

Our next question will come from Nikita Bali with JPMorgan. You may now go ahead.

Good morning, guys. A couple of modeling questions. Where do you think you could issue new secured and unsecured debt today? At what cost?

Yes. We're not contemplating that right now. As I mentioned a few minutes ago, we think we're hopeful, I think with good reason that, the yields on the outstanding notes are coming in. I think that's a result of two things. One, improving macroeconomic conditions in capital markets. And then, obviously as we resolve Steward. And our hope and anticipation is that, Prospect follows shortly on that with resolution that the market spreads will also come in. But, again, right now, we're not even out testing that market.

What about the early thoughts on the '25 term loan maturity? Do you think you'll extend it or pay it off with sales?

We think we have options on that. That's a good question. As we've laid out, our liquidity allows us a lot of optionality whether that gets extended, partially extended, paid. We have liquidity now and with anticipated transactions that I walked through a few minutes ago. We think that gives us the optionality that I mentioned.

Okay.

This concludes our question-and-answer session. I would like to turn the conference back over to Ed Aldag for any closing remarks.

Thank you, Anthony, and thank you all for listening in today. And as always, if you have any questions later on, please give Drew or Tim a call.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.