Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you provide additional details on the plan for Prospect Medical Group's real estate? Will all properties be sold, or is there a possibility of retaining and re-leasing some facilities? A: The settlement agreement, subject to court approval, treats MPT as a secured creditor. Prospects' advisors will seek resolutions that provide the best financial outcomes for creditors, including sales of hospital real estate and operations together or separately, or sales of operations with a new MPT lease. The resolution for each asset, including those in Philadelphia, Connecticut, Rhode Island, and California, is uncertain and may vary.
Q: Are there any other asset sales currently being evaluated beyond Prospect? A: No major sales have been announced beyond some small transactions pending from last quarter, totaling less than $100 million. These are minor compared to the broader strategy.
Q: Regarding the new tenants taking over former Steward assets, have they become cash flow positive excluding rent? A: Most operators began in September, and while cash collections are ramping up, the majority are now cash flow positive. The ramp-up in rental payments was structured to accommodate this transition.
Q: Can you clarify the ramp-up in rent payments for the new tenants? Will they pay a quarter of the $90 million annualized target in Q4 2024? A: The ramp-up is not uniform across all tenants, as there are six different lessees with varying terms. However, the expectation is that the ABLs will be paid back by the end of the year.
Q: What led to the decline in Codian Health Services' coverage from 0.9 times to 0.7 times this quarter? A: The decline is due to ongoing healthcare reform challenges in Colombia, not operational issues. The government is currently paying fees with IOUs, but we are confident they will catch up.
Q: What was the cap rate on the $100 million of asset sales, and do you see more opportunities for asset sales domestically or internationally? A: The sales total closer to $50 million, all in the US. The market remains vibrant globally, and asset sales are a lever for accessing additional liquidity and equity.
Q: Why not upsize the recent offering to cover all 2026 maturities, given the strong demand? A: The focus was on achieving an attractive coupon and maintaining flexibility for future strategies, including asset sales. The current offering addresses 2025 and 2026 needs while retaining flexibility for better terms in the future.
Q: Are there any amendments to the credit agreement, and do you expect any covenant breaches before September 2025? A: The previous amendments have been replaced, reverting to a 40% ability to secure unencumbered properties with a reduced rate. There are no expected covenant breaches.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.