Medical Properties Trust, Inc. common stock

Morning and welcome to the Medical Properties Trust third quarter 2023 earnings conference call. All participants will be in a listen-only mode on today's 60-minute call. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Charles Lambert, Vice President. Please go ahead.

Good morning and welcome to the Medical Properties Trust conference call to discuss our third quarter 2023 financial results. With me today are Edward K. Aldag, Jr., Chairman, President, and Chief Executive Officer of the company. and Stephen Hamner, Executive Vice President and Chief Financial Officer. Our press release was distributed this morning and furnished on Form 8K with the Securities and Exchange Commission. If you did not receive a copy, it is available on our website at medicalpropertystrust.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 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 this 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 medicalpropertystrust.com for the most directly comparable financial measures and related reconciliations. I will now turn the call over to our Chief Executive Officer, Ed Aldack.

Thank you, Charles, and thanks to all of you for joining us this morning on our third quarter 2023 earnings call. Steve and I are pleased to be joined for today's discussion by two of our esteemed colleagues, Rosa Hooper and Kevin Hanna. Rosa has been with NPT for 14 years, beginning as director in our asset management department underwriting group. In 2016, Rosa took over full responsibility for that group of some 30 people. Rosa started her career in public accounting and, among other roles, served as chief financial officer of a Birmingham-based hospital. As our current senior vice president of operations, Rosa is the perfect person to provide a detailed look at the strength and diverse nature of our portfolio and the reasons underpinning NPT's confidence in future cash rents. Kevin joined NPT in 2008. He started his career at Ernst & Young and has nearly 30 years of public accounting experience. Before MPT, Kevin served as controller for Fruit of the Loom, a Berkshire Hathaway subsidiary. Kevin currently serves as our senior vice president, controller, and chief accounting officer. And we thought his perspective would be valuable in addition to ours during the Q&A discussion today. I want to begin by reiterating our conviction in the underlying strength of our core business. For more than 20 years, our business model has centered on profitable, long-term investments in hospital real estate. This business model has not changed. Our primary focus is on executing, our current primary focus is on executing a capital allocation strategy that will provide the liquidity to satisfy our debt maturities even debt that doesn't mature for several years. Ultimately, we expect this strategy to enhance available liquidity, address our debt maturities, and solidify our portfolios for sustained long-term value creation. Upon successful execution, we'll be well positioned for a return to growth. In establishing this refreshed capital allocation approach, Our board carefully considered the cash profitability of our current portfolio, particularly the cash flow impact of the recent and pending transactions. We note that MPT has executed nearly $3 billion worth of asset sales over the past 18 months. While these sales have generally been quite profitable, they've also had a dilutive effect on AFFO that I'd like to address. The net cash impact of all acquisitions and divestitures since the end of 2021 has been an adjustment to AFFO of approximately a negative 21 cents per share. At our previous dividend level, that means asset dispositions alone would have increased our AFFO payout ratio to the mid 80% range after considering cash interest savings. When also considering the negative $0.16 per share impact of the prospect recapitalization transactions announced earlier this year, our AFFO payout ratio would have approached 100%. By right-sizing the dividend level to a near-term AFFO payout ratio below 60%, we expect to preserve approximately $335 million of cash per year. Notably, our new dividend has been set to a comfortable level to absorb the dilutive effects of additional near-term asset sales, which will obviously also be offset by some interest savings. Importantly, since announcing this update strategy, we've already made significant progress. Through a series of open market transactions, we repurchased approximately 50 million pounds of notes due in December of this year. And a few weeks ago, we closed on the sale of our four remaining Australian facilities for approximately $305 million, or a 5.7% cap rate. We are actively contemplating additional sales as sophisticated real estate, health care, and infrastructure investors continue to express appetite for our assets. on several occasions this year that has already manifested in unsolicited offers for various assets. We recently engaged a leading financial advisor to help evaluate these offers and explore the sale of various assets around the world. We will only execute transactions if we can realize attractive prices that confirm underwritten asset values. I'll now turn it to Rosa to update you on the performance of our portfolio during the past quarter.