Medical Properties Trust Stock

Hello, everyone. Thank you for joining us, and welcome to Medical Properties Trust Second Quarter 2026 Earnings Conference Call. [Operator Instructions]

I will now hand the conference over to Charles Lambert, Senior Vice President. Charles, please go ahead.

Good morning. Welcome to the MPT conference call to discuss our second quarter 2026 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 Williams, 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 mpt.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 mpt.com for the most directly comparable financial results 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 second quarter 2026 earnings call. Before I begin today, we'd like to extend our thoughts and prayers to the people of Colombia after this morning's earthquake.

Now let me begin with the most significant update. Today, we announced a comprehensive refinancing transaction that extends $2.4 billion of debt maturities to 2032 significantly reducing near-term maturities and positioning us well to pursue a balanced capital allocation strategy moving forward. Steve will discuss this transaction in more detail shortly.

Turning to our performance highlights. Total portfolio EBITDARM coverage remained steady as we continue to see robust demand for rehabilitation services around the world. Our post-acute operators again delivered the strongest growth in the portfolio with EBITDARM increasing more than $70 million year-over-year led by a 24% increase in Median and a 13% increase in Ernest Health.

General acute performance was stable. Behavioral Health remains a source of pressure on the overall portfolio despite the increased importance and demand for these services, we continue to see around the world. In the U.K. market, especially, revenue continues to be impacted by funding pressures at the NHS as the new administration in the U.K. works to rebalance its entire budget. I spent last week in the U.K. spending time with many of our operators there. I walked away from those meetings impressed with the level of activity across those facilities, confident in the opportunities for high-quality general acute providers and encouraged that behavioral market remains a compelling long-term investment.

As most of you know, our Swiss joint venture went public this summer and is now listed on the SIX Exchange. Infracore continues to see attractive opportunities for growth, and the company was able to access capital for further growth. We retain a significant ownership position in Infracore and remain bullish on Switzerland and look forward to seeing our overall investments grow there.

Finally, to further strengthen our portfolio, we consolidated all of our ScionHealth, general acute hospitals and LifePoint leases into one LifePoint master lease. As a part of this conversion, Scion transitioned certain MPT-owned acute hospitals to LifePoint, and we are pleased with the resulting single lease relationship with a mature operator with an enhanced credit profile.

With the strong trends we continue to see across our diverse portfolio of operators, the proving enduring value of our assets and a plan to clear the runway of debt maturities until late 2028, we are well positioned to achieve our goal of over $1 billion annualized cash rent by the end of the year and to create value for the shareholders moving forward. Rosa?

Thank you, Ed. As usual, I will walk through the trends we are seeing, the continued progress of our recently transitioned to operators and the steps tenants are taking to enhance performance. Across our core portfolio, performance trends remain broadly stable. General acute operators still comprise the majority of the portfolio and reported aggregate EBITDARM coverage of 2.8x during the quarter.

As Ed mentioned, our post-acute portfolio delivered another really strong performance with coverage of 2.4x. Finally, our behavioral portfolio coverage was down slightly to 1.4x, reflecting the discrete headwinds in the U.K. and U.S. markets that we have discussed all year. For individual operator coverage details, we would encourage you to review the supplemental published on the Investor Relations page of our website.

Our international portfolio continues to provide meaningful stability. Swiss Medical Network, MEDIAN and Circle continue to produce strong, stable earnings, executing on their respective growth and innovation strategies. Swiss Medical Network is advancing its integrated care strategy with revenue growth supported by recent acquisitions and an ongoing shift toward higher-value outpatient and primary care.

In Germany, MEDIAN continues to build on its momentum with year-to-date EBITDA running ahead of budget. At Priory, proactive measures are being taken to address challenges related to the previously discussed shift in NHS referral patterns. With the ongoing budget constraints in the U.K., management is focused on implementing even more disciplined cost control measures and optimizing services to better align with demand.

Turning to the U.S. NOR continues to produce strong results. NOR began paying 50% contractual rent in June. Operationally, NOR delivered encouraging momentum with admissions emergency department visits and surgeries, all higher year-over-year, reflecting volume recovery across the platform. The emergency department project at Culver City is progressing and remains scheduled to open in the fourth quarter of 2027.

HSA which operates hospitals in Florida, Louisiana and Texas saw mixed results in the second quarter due to certain disruptions that caused lower cash collections and volume declines in some markets. First, the MEDITECH EMR conversion caused a temporary inability to bill and collect cash for a period during the month of May, resulting in lower collections in May and June.

Additionally, prior to the conversion, HSA transitioned its revenue cycle management to an outsourced firm. And because HSA operates in markets where they serve an above-average number of indigent patients, reliance on supplemental payments from federal and state agencies is necessary. These payments are not always predictable and can therefore be a strain on cash flows. That was evident when the Florida supplemental funding that was due in April was delayed until August which caused further short-term pressure on HSA's liquidity.

With the MEDITECH conversion largely behind them, HSA has brought revenue cycle management back in-house and expects to improve revenue cycle and operational efficiency in the coming months. While cash collections are still lagging, HSA has received significant payments from the Florida supplemental funding program in August, enabling them to begin repayment of the working capital advances we made during the quarter. While trailing 12-month EBITDARM to cash rent coverage of 2x, we remain cautiously optimistic about the trajectory of HSA and we'll continue carefully monitoring their operations.

Our U.S. post-acute portfolio remains an area of strength. Ernest Health is a stand out, and we're excited to see Ernest continue to grow with it's acquisition of Reunion Rehabilitation Hospitals adding 7 hospitals with closing expected this summer. Finally, we remain confident in the long-term earnings power of these assets and in our path toward normalized rent across the portfolio.

With that, I'll turn it over to Kevin.

Thank you, Rosa. Today, we reported normalized FFO of $0.15 per share for the second quarter of 2026, which was in line with our expectations as last quarter's results were $0.14 per share, and we expected the rent from HSA and NOR to continue to increase in accordance with their lease agreements. As a reminder, HSA is currently paying 75% of their contractual rents, increases to 100% in mid-September, while NOR started paying rent in mid-June equal to 50% of contractual rents increases to 100% in mid-December.

As Ed noted in his remarks, we have combined the LifePoint and LifePoint Behavioral and all but one Scion post-acute property into a combined single master lease. Cash rent from this combined lease will be basically the same as it was previously.

G&A expense for the quarter was higher year-over-year, primarily driven by stock compensation expense due to the change in fair market value of certain cash total stock awards and the increase in depreciation expense of the corporate headquarters building that was placed into service during the first quarter of this year. Finally, during the quarter, we impaired approximately $17 million in working capital loans, primarily related to the 2 Steward replacement tenants in the Midwest. Steve?

Thank you, Kevin. As Ed mentioned, this morning, we announced a 2-step process to fully satisfy our 2026 and 2027 debt maturities, totaling about $2.7 billion, along with an additional approximately $1.2 billion of longer-dated unsecured notes.

Step 1, which we expect to complete later today, is the issuance of $2.4 billion in secured notes, the proceeds of which will be used as follows: first, to fully redeem the upcoming maturity of our EUR 500 million in unsecured notes and approximately $738 million or about 53% of our unsecured notes due in 2027. We will also exchange at a discount, another approximately $1.2 billion of longer-dated unsecured notes, reducing gross debt by about $123 million.

Step 2, which we have commenced and expect to complete in coming weeks, will repay the remainder of the 2027 unsecured notes, complete a new multiyear bank revolver and repay our $200 million term loan due in June 2027. MPT will then have no debt maturing in 2026 or 2027. In fact, our sole maturity over the next 3 years will be a modest balance of about $600 million of notes due in June 2028. Moreover, with $1.1 billion of expected liquidity based on recent and expected near-term asset sales, we will have substantial flexibility for further delevering in the near term.

Also importantly, our single bond maintenance covenants that requires 150% of unencumbered assets over unsecured debt will be substantially improved, up to almost 300%, depending on how we deploy our liquidity. The new notes have a coupon of 9.25%, a 5.5-year term that becomes prepayable after 2 years and other customary REIT-type provisions, all of which we describe and qualify by reference to the descriptions and documents included in a to-be filed current report on Form 8-K.

I'll make a few additional observations about our overall financial position. Once again, and in several ways, sophisticated third-party investors have affirmed that market values of our hospital assets exceed their book values. First, some of the most sophisticated global fixed income investors underwrote the value of the assets that secure the $2.4 billion of notes we just discussed. Moreover, recent transactions, including the IPO of Infracore in Switzerland have established market values of our hospital assets above our original investments.

In another pending sale that will close imminently, we will receive about $172 million in after debt cash proceeds, reflecting a 60% increase over our original investment and an IRR of about 34%. In addition to these recently completed transactions, we are in discussions with potential buyers of additional assets that if completed, will generate hundreds of millions of dollars more in sale proceeds at pricing well above our original investments. There's no assurance that these transactions will be completed but the fact that sophisticated parties are even initially offering this level of pricing is encouraging validation of our overall asset values.

Upon completion of these refinancings, we will retain significant additional collateral value and flexibility for future delevering. Just to reiterate, no debt maturities until June of 2028 and then a modest $600 million, up to $1.1 billion in liquidity dependent only on completion of certain asset sales that are already in process of being negotiated and substantial cushion in our UA/UD bond covenant that opens up opportunities for certain additional delevering strategies.

In closing, our business model remains attractive and growth opportunities continue to present themselves in our markets. With our assets continuing to demonstrate attractive market value and with significant liquidity on hand, we are well positioned to continue to focus on reducing debt while capitalizing on strategic growth opportunities.

With that, we will open up the call for questions. Operator?

[Operator Instructions] Your first question comes from the line of Mike Mueller with JPMorgan.

So I guess for the balance of the 2027 notes that you're looking to pay off, is that just going on basically a new credit line that's going to be the near-term mechanism? And what's going to be the rate on that facility?

No, that's not the expectation, Mike. In fact, Phase 2 or step 2, as we call it, will include, as I noted, the repayment of those 2027 notes, but it will not be just based on using the credit line.

Okay. Will it be all from asset sales?

No, we have a number of options that we've always had including asset sales, including liquidity that we have and including additional secured debt opportunities.

Your next question comes from the line of John Kilichowski with Wells Fargo.

Just to clarify, as I'm looking at the press release, we talked through in the opening remarks about '26 and '27, but this also talks about refinancing the '27 through '21 -- or excuse me, 2031 notes. Could you just kind of clarify that timing and when this goes into place and then the pro forma cash interest from this move?

John, we're having a lot of trouble getting your question here.

John, maybe you can try speaking up a little bit. Yours was very, very soft.

Apologies. Can you hear me better now?

Much better now.

All right. The opening remarks focused mostly on the '26 and '27 maturities, but I'm also seeing commentary in the press release about the '27 through 2031 notes. Could you just talk through the timing and clarify, is all of that being refied now as well and the pro forma cash interest number following this move?

No, it comes in 2 steps. Step 1 is the $2.4 billion that we announced this morning. That will fully prepay -- repay the '26s and cash and exchange combined of about $740 million of the '27. And then step next, which we expect to complete in the coming weeks will satisfy the remainder of the '27s. And in addition, as we mentioned during step 1, we'll also exchange about $1.5 billion of the longer-dated notes.

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

Can you guys provide some more color on the HSA situation? I mean how confident are you that Conifer can push cash collections and where they need to be? I mean I believe you indicated last quarter that they were up to 82% from 78%, but it needs to be in the 90-plus percent range. And it sounds like it dipped in May and June just due to some of the transfers that you're talking about.

Yes, Mike, it's been a lot slower than we hoped it would be. It's still in the 80s. The -- if you look from an operational -- the good news from an operational standpoint, as Rosa pointed out, they're generating 2x coverage. But that doesn't do you any good if you're not collecting the cash. And then you had the late payments from Florida. If you add all of that in together, we're cautiously optimistic, but they still got to improve the cash collections greatly.

So what gives you confidence that they're able to do that? And did they already receive the Florida DPP payments, and that's how the first $20 million got paid back? And can you talk about how and when you expect the next $20 million will be paid? And it was unclear in the press release. I mean, is $10 million of that just going to be outstanding? Or will that be repaid soon, too?

So they have received approximately half of the DPP money from Florida. The other could come in as early as today, but certainly, in the next week or so. And with that money, they'll pay back the additional $20 million. And then they will have the additional $10 million -- or the remaining $10 million repaid sometime in the next quarter.

Okay. And then just lastly for me. I know NOR was supposed to start paying rent in June. Did they pay that rent? And are they current right now, too?

Yes. NOR did pay the rent, and NOR is doing well. Remember, those are 2 different entities, NOR and HSA. NOR's operations are doing very well.

Your next question comes from the line of Michael Diana with Maxim Group.

I wanted to ask about asset sales. Could you just -- obviously, a lot of moving parts. Could you review for us the asset sales you know you're going to make the asset sales that you're probably going to make and the calculus that you're using when you're determining whether or not to sell an asset.

So what we know has -- was that it, Mike?

No, that's it.

Okay. So what we know, what has happened and is happening in fact, as we speak, we mentioned the Infracore transaction, which generates about 140 -- has already generated about $140 million in proceeds for us. And I'll just point out, again, I'll reiterate that, that pricing tested by the market was at a higher valuation than we carried the assets on our books.

Secondly, today, a transaction is closing that we are regrettably not able to identify, but will be within a matter of hours, but we can tell you a transaction is closing that will generate after debt payment, about $172 million to us today. That's the transaction that I spoke of that once again validates across the portfolio, the value of our assets exceeding sometimes by a significant amount, our original investment. In this case, an aggregate 60%-plus gain on our original recording of that investment representing about a 34% IRR.

In addition, we are in various stages of negotiation for a handful of other significantly valued assets each of which, if they were to trade at the values that we're negotiating would again represent significant gains over not just net book depreciated value but our original investment. We think that could be realistically over the next few weeks, another between $200 million and $400 million in cash proceeds. Possibly it could be more than that, but we're relatively confident that we'll be in that additional $200 million to $400 million proceeds level.

Okay. And obviously, that's very good news on sales value versus book value. What impact will this have on the income statement broadly?

So obviously, a great question. and it depends on a number of things that kind of self evident to people on this call. Obviously, the gain on sale. In other words, we're earning rent typically on these assets based on our original investment. To the extent we can sell for more than that and take those proceeds and apply them to, for example, 9.25% interest that we just issued this morning, one would think that has a very positive perhaps even accretive impact on normalized FFO.

Obviously, timing of completion of the secured issuance we announced this morning, timing in terms of step 2, the refinance of the bank facility and completion of paydown of the '27s, execution and timing of asset sales and then further delevering by use of these asset sale proceeds will all have an impact on go-forward normalized FFO as will continued ramp up of the HSA and nor relationships. So as those become more definitive, we'll be able to better predict and return to providing run rate guidance in future quarters.

Your next question comes from the line of Farrell Granath from Bank of America.

My question is on any collateral restrictions. I know you had mentioned some of that in your opening remarks, but hoping that you just dive a little bit deeper on how you're thinking about any of your credit facilities maintenance covenants as well as what would step 2 potentially influence on some of those unencumbered headroom that you still have available?

So both step 1 and step 2 have positive impacts on the UA/UD. That really Farrell, is the only maintenance covenant we have. And while it will not go away because that's a bond covenant, the cushion, the headroom it brings, I mentioned earlier, the minimum, the requirement is 1.5x. And we've been in that range, 155 to 160 over the last several quarters. And we expect that with completion of step 1, again, which will happen very likely today, that will go all the way up to an actual of almost 200% and completion of step next will drive it up again as much as to 300%.

So what that does is give us additional flexibility to use different strategies and give us the opportunity to further delever, which is the goal. The goal is not simply to continue to extend maturities, but to actually reduce leverage. And these transactions we're announcing this morning take us a very long step toward being able to do that more aggressively.

Okay. And my second question is on -- I know the Prime Minister of the U.K. has made some commentary about potentially having social care for all adults over there. I'm just curious in your conversations that you're mentioning in your recent travels, has that been coming up as a concern or actually a tailwind for the companies that are over there?

Yes. So social care is very different than health care. Social care is primarily focused on the end of life and dementia type items and other items that aren't included in the current NHS services.

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

Sorry if I joined late and missed this. Do you mind just clarifying for any additional like the '27 and any future maturities or other payments, just what the thinking is post this transaction?

And I'm sorry, Vikram, the question was about '27's?

Yes. Like just after you've done this transaction, you pushed out the maturities, right? Like you said there's nothing now through '26, '27 -- sorry, I meant post '27. Just maybe give us the latest thinking on plans that you might sort of raise additional capital to take care of additional future maturities.

Well, the primary immediate liquidity comes from the asset sales that even assuming which we're not disclosing a new credit facility yet, but even assuming a meaningful decline in our current $1.3 billion revolver, we expect to reduce the -- out year, and I think this is your question, your longer date with the immediate reduction would come from asset sale proceeds.

Yes. I guess I should have expanded -- I meant like you said, look, we want to reduce overall leverage. And in the view that cash flow maybe takes a bit longer to ramp up from all the transitions or just overall, say, there's another tenant issue that you haven't called out but say there's something. I'm just trying to figure out like over the next 2 years, how to like in absolute get net debt to EBITDA down from here if there's any other plan. And maybe that works into a broader question.

As you were contemplating this, any latest thoughts on -- I guess, I shouldn't call it simplifying, but maybe shrinking the overall portfolio. You've got U.S., you've got global. Any thoughts on like taking pieces from here and doing a bigger, broader strategic transaction?

Well, as we've been saying now, really going on a couple of years, we have a number of alternatives. Those really haven't changed with our announcement this morning. We retain all of them. And they include maybe some things that you may be alluding to. There are a couple of ways to easily raise liquidity for debt reduction. One I've described, selling assets. We're doing that.

Another is selling equity. Well, we don't think it's the right time to sell equity with the stock where it is. We think the valuation is significantly greater than that. And we think that's proved almost every time we sell an asset that our assets are significantly more valuable than what's reflected on our balance sheet. So -- but it would be wrong not to acknowledge that, that's one way to reduce debt. But we've cleared the runway to continue to be able to improve the operations, continue to see the asset values grow and continue to pay down debt in ways that aren't so grossly dilutive to selling stock when you think it's not the right time to sell stock.

That's fair. And then just lastly, if I can clarify. So with the sales you're contemplating, like, how should we think about where multiples are or cap rates are today? Like what's the broad the range? And how should we think about like a core asset in the U.S. versus maybe one that's more struggling? Maybe just give us some sense of how the private market is valuing these assets relative to public.

Vikram, I think that it goes across the board. But if you look at what Steve mentioned earlier in the call, every single one of the assets that we're in current negotiations with or have actually closed, we weren't out marketing them. People came to us. There's a high demand for our assets, both in the U.S. and in Europe.

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

Steve, where is MPT at on its secured debt ratio? And correct me if I'm wrong here, but I think that covenant is about 40%. And it sounds like with the Phase 1 secured debt issuance that kind of puts you pretty close to that ratio. So does MPT have capacity to issue additional secured debt via Phase 2.

We do. But you're absolutely right, Mike. It does drive us up from where we were this morning, which was around 25% to much closer to that 40% level.

So then can you -- so I guess, will these additional asset sales give you more capacity to make more room on that secured debt ratio? And I mean I'm calculating that you're pretty tight where you don't really have much more secured debt. So is there any color on how you can regain additional secured debt via this Phase 2 path?

So just by definition, you're right, Mike, asset sales would provide more headroom for that. Use of proceeds to reduce debt would provide more headroom for that.

Okay. And then just lastly, can you talk about an update related to Norwood? And then what is MPT's cost basis in that asset? I know there are some filings saying that it's about $350 million. I was under the impression it was just above $200 million. Is that just additional dollars that MPT had to put into that asset to kind of weatherize it, which pushed that cost basis up into that mid-$300 million range?

Mike, as you know, there is a lot of stuff going on with Norwood and various discussions with the state. We've made public statements. Those are listed on our website, and that's where we'll leave it right now.

There are no further questions at this time. I will now turn the call back to Ed Aldag, CEO, for closing remarks.

Thank you very much for everyone's interest today. If you have any additional questions, please don't hesitate to reach out to us. Thank you very much.

This concludes today's call. Thank you for attending. You may now disconnect.

Thank you for standing by. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Medical Properties Trust First Quarter 2026 Earnings Conference Call. [Operator Instructions].

I would now like to turn the call over to Charles Lambert, Senior Vice President. Please go ahead.

Good morning. Welcome to the MPT conference call to discuss our first quarter 2026 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 Williams, 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 mpt.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, MPT 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 mpt.com for the most directly comparable financial results 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 first quarter 2026 earnings call. In a moment, you will hear details from the rest of the team, but let me first summarize what we're seeing across our diverse portfolio of hospitals. Total portfolio EBITDARM coverage remained steady year-over-year at 2.5x. Our post-acute portfolio delivered standout results with EBITDARM increasing approximately $80 million year-over-year, led by a 24% increase in Median, a 16% increase at Ernest Health and a 61% increase at Vibra which continues to deliver excellent results following the new 20-year master lease agreement executed in late 2025.

General acute performance was largely stable with EBITDARM increasing nearly $40 million year-over-year. These strong results were partially offset by our behavioral health portfolio, which continues to navigate to entirely separate challenges in the U.S. and U.K. markets. While both markets continue to experience strong demand in the U.S., providers are grappling with staffing shortages and in the U.K., demand is being dampened by funding pressures at the NHS. Rosa will elaborate shortly on strategic actions being taken to address this.

Looking ahead, we are encouraged by the trends we see across the portfolio in early 2026. Our momentum continues to build in post-acute. Our general acute care performance remained stable with strong performance across the portfolio, and we continue to see solid demand trends in the behavioral sector. Additionally, our portfolio of recently transitioned tenant rent continues to ramp as expected, with our tenants across Florida, Texas, Arizona and Louisiana fully current on rent due through April. Quorum and HonorHealth reached their fully stabilized rents in the third quarter of last year and HSA ramped to 75% in March, and we continue to expect 100% of monthly payments from HSA beginning in October. Based on these encouraging trends, we remain confident in reaching our goal of over $1 billion and annualized cash rent by year-end.

Rosa?

Thank you, Ed. This past quarter marked a period where our mature portfolio continued to deliver steady results, while new operators began moving from transition towards stabilization. That progress is increasingly visible as we look forward through 2026 and beyond. In this context, our international assets have provided a meaningful stabilizing force. In Germany, Median delivered one of its best operating periods today, supported by high occupancy, improving reimbursements and sustained demand across orthopedics and other rehabilitation services.

We are confident in Median's ability to drive strong performance throughout 2026, given its scale and operating discipline. Swiss Medical Network reinforced its leading position in the Swiss health care market through strategic acquisitions and expanded outpatient activities, focusing on disciplined capital deployment and the growth of their integrated care models. In the U.K., Circle Health continues to perform well within the general acute segment, benefiting from private pay utilization and higher acuity case mix.

Priory reports the demand for inpatient mental health services in the U.K. continues at record levels. Historically, the National Health Service has reimbursed private providers for a substantial majority of these patients. But as we have reported on previous earnings updates, the NHS is significantly reducing that reimbursement. In reaction, Priory continues to prioritize service line optimization, cost management and selective repositioning of certain facilities. We and Priory believe this to be a temporary condition, but the timing and degree of any recovery is unpredictable.

For purposes of our reported Priory EBITDARM coverages in this morning's supplemental, we have revised our allocated central costs, better reflecting retrospective, recent and future facility-level actual performance. Applying these allocations retrospectively has the effect of reducing trailing 12 months coverage by 40 basis points for Priory by 20 basis points for the behavioral health property type and not at all for the consolidated portfolio.

Turning to the U.S. portfolio. I'll begin with the operators most closely tied to recent transitions. At HSA, management is focused on improving its constrained liquidity and cash collections. In April, HSA engaged and fully onboarded Conifer to manage its revenue cycle operations. Additionally, HSA will be utilizing its own MEDITECH electronic health record system beginning tomorrow. These are critically important steps that HSA is confident, will improve collections, drive operational efficiency and reduce IT expense.

Management is also continuing efforts to add service lines, recruit positions and improve the facilities and equipment. HSA recently obtained equipment financing and has already begun ordering high-priority replacement equipment with these funds. Additionally, CMS recently granted contingent approval for the State of Florida's Medicaid directed payment program. HSA expects a significant increase in their net benefit compared to 2025, which would substantially improve their liquidity position. HSA has numerous capital projects in process, including a new parking deck, structural and electrical recertification, wound care center improvements, elevator upgrades and modernization, roof restoration and replacement of critical equipment.

Turning to NOR. Operations have been stable in the first few months with EBITDARM already in excess of its full contractual rent obligation, which goes into effect at the end of the year. Inpatient admissions are ahead of prior year and NOR is working to add service lines such as interventional radiology and restarting construction of a new emergency department at Culver City. This new state-of-the-art ED includes 23 private patient rooms, increases treatment and office space by 80% and fully meets state mandated seismic standards. This project is expected to be completed in the summer of 2027. We are encouraged by the steps NOR is taking to improve these facilities that anchor care for some of the most underserved communities in Los Angeles County.

More broadly, across the transition to U.S. portfolio, performance remains aligned with underwriting expectations. As Ed mentioned, Quorum and HonorHealth are paying fully stabilized rent as of the third quarter 2025. And with HSA now ramped to 75% and we have line of sight towards full contractual rents across these assets as we move through the ramp period.

Turning to the rest of our U.S. operators. Performance trends remain stable. Ernest Health remains a standout across post-acute rehabilitation with strong inpatient rehab performance, improving operating leverage and balance sheet strengthening following its refinancing. Ernest plans to convert all 6 MPT-owned LTAC facilities to IRFs by the end of 2026 as it transforms into a pure-play rehab operator. Ernest's rehabilitation hospitals have historically had meaningfully higher EBITDARM coverages than their average LTAC. At LifePoint, while performance has moderated from the elevated growth experienced in 2024, admissions and acuity continue to support stable cash generation.

Following the balance sheet and portfolio repositioning actions discussed last quarter, Vibra's EBITDARM coverage improved to 3x driven by accelerating volumes across both the rehabilitation and long-term acute care segments. Vibra's California assets performed particularly well, including the Reading facility, which is tracking ahead of MPT's underwriting expectations. As we look into 2026, we expect sustained progress around rent ramps, stabilization across transitioned assets and steady performance from our core operators. Collectively, these trends give us a clear view toward normalized contractual rent across the portfolio as we approach 2027. We believe the portfolio is increasingly positioned to deliver durable, sustainable cash flows and strategic growth opportunities over the long term.

Kevin?

Thank you, Rosa. Today, we reported normalized FFO of $0.14 per share for the first quarter of 2026, which was in line with our expectations. As we disclosed in last quarter's results, we're approximately $0.03 to $0.04 higher than it otherwise would have been due to onetime cash rent receipts. G&A expense was lower year-over-year in the quarter, primarily driven by the lower stock compensation expense due to the change in fair market value of certain cash settled awards in 2024 and 2025, of which no award has been or invested at this time. Additionally, and as discussed in our Form 10-K filing, we moved 7 additional legal entities into our U.K. restructure, effective in the first quarter, which resulted in a onetime $44 million tax benefit in the first quarter.

Steve?

Thank you, Kevin. I have just a few brief comments. Our balance sheet is relatively unchanged from the fourth quarter. Our nearest maturity is a EUR 500 million unsecured notes issue due in October of this year, which has a coupon of only 0.99%. Our $200 million term loan will mature in June of 2027 as will our revolver, subject to our extension right. Our $1.4 billion unsecured note issue matures in October 2027. We retain the options that we have discussed on recent quarterly updates, and we continue to plan around our ample security value and indenture flexibility to maximize delevering and interest coverage as our revenue continues to grow.

As we have previously suggested, our near-term use of capital for acquisitions is expected to be modest, strategic and accretive. During the quarter, we completed only the EUR 23 million acquisition of a hospital in Germany that we had previously reported and had been negotiating for well over a year. Separately, and again, consistent with our previous guidance that dispositions may continue at modest levels. We completed the sales of 2 small hospitals in the U.S.

Operationally, as already discussed, cash rent collections from the hospitals we re-tenanted in September 2024, continue to be paid in accordance with the contractual ramp with the exception of the small Ohio and Pennsylvania facilities that we had previously explained. Based on cash rent received for April, our annualized rent for these facilities, net of those we have sold represents about 74% of the contractual cash rent that was required under the previous master lease at the time of the September 2024 transition.

And once HSA reaches its fully stabilized cash rent beginning in this year's fourth quarter, that percentage is expected to grow to about 98% of the previous rent. The remaining 2-ish percent generally relate to the Ohio and Pennsylvania facilities. We again received no rent from these tenants in the first quarter, and we believe it is increasingly unlikely that they will return to operational profitability in the immediate future, partially because local health regulators have not granted necessary approvals to reopen. Accordingly, we recognized an impairment of our loan collateral related to these 2 facilities.

As Ed mentioned, we remain confident that our fourth quarter run rate for cash rents, including our portion of JV rents will approximate $1 billion. During the quarter, Prospect completed the sales of its remaining hospitals and continues to collect patient and other receivables in the ordinary course. MPT's previously discussed DIP loan at quarter end was approximately $60 million, and is secured primarily by the proceeds from the claims that the bankruptcy estate is litigating. As of March 31, those proceeds are estimated to substantially exceed our DIP loan commitment.

To the extent there is such an excess, we will also receive a significant but as yet undetermined portion over and above our DIP loan balance. While outstanding, the DIP loan accrues interest at all-in rates approximating 16%, although we will recognize any such income only as received.

And with that, I will turn the call back to the operator to queue any questions. Jeannie?

[Operator Instructions] Your first question comes from the line of Mike Mueller with JPMorgan.

I know you gave some color around the percentage of rent tied, I guess, the cash collections in April as compared to the prior master lease. But can you give us any more clarity in terms of the actual dollars -- dollar amounts collected? And are you still targeting that roughly $160 as it relates to that Steward pool?

We are, Mike. And when I gave those percentages 74%, 98%, that's with respect to that $160 million target amount. So going forward, again, pro forma for what we collected in April, we'll be collecting 74% of that $160 million.

Got it. Okay. I just wanted to make sure that, that was the right way to think about that. And then Second question, I know you talked about maintaining financial flexibility as it relates to upcoming maturities. But can you just tell us if you were heading down that path today, number one, where do you think refi -- are you largely looking particularly for the '26 maturity at a refi? What would rates be? I mean just talk -- get a little more granular, if you can, about what we should be expecting in the next couple of quarters there?

Yes. We're not in a position to really know with any precision what a coupon may be, that will be driven by a lot of things, including, as you point out, the sequencing of what we might address first, what we might address comprehensively. I'll just point just for reference and nothing else, our most recent secured lending has been done with our German portfolio that we did about a year ago at a 10-year roughly 5-plus percent coupon. Obviously, a little over a year ago, we did secured senior notes that are today trading in the 6% to 7% range. I'm not predicting that, that's what we'll be able to refinance at. But those are data points that we all have to look at.

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

Can you guys provide us some color on HSA's current financial position just given the noise that has occurred over the past few months. And will the Florida [ DPP ] payments that Rosa mentioned, will that just be used to catch up on their accounts payable? Or do you think that they could use some of those proceeds to pay down the working capital loan that you have out to them?

Mike, to answer the last part of that question first. The answer is yes. We think they'll use some of the [ DIP ] funding to repay our ABL. We also believe that they are in a position now where they've got real interest in getting a permanent ABL, which hopefully will replace our 100% of our ABL in the recent near future.

Second part of the question was how they doing financially? From an EBITDARM standpoint, they continue to perform exceptionally well. They're generating approximately 3x EBITDARM coverage on a current cash rent basis. But they're still are continuing not to collect as much cash as we and they would like to see.

If you remember recently in their press releases, they've entered into a transaction with Conifer to take over their revenue cycle management that literally just happened last month. And they have just recently begun getting off of the old Steward MEDITECH license and having their own, literally going, the first hospital, I believe, was sometime in late April. They've gone from roughly a 78% to roughly an 82% in cash collections. That's a big number, but they need to get up in, obviously, in the 90s for those numbers to work well.

Okay. That's helpful. And then just switching to Priority real quick. When Rosa was kind of highlighting that the NHS payment reductions were dropped or reduced, when does that actually start hitting their P&L? So does the 1.6 coverage ratio in the supplemental, does that fully reflect those lower payments? Or should we expect that coverage ratio to continue to drop as more quarters of that lower payment starts to roll on into that calculation?

No. We're hopeful that we're near the bottom of that. As I think I said or Rosa said in her prepared remarks, we think it's a temporary situation. But there's no predictability of that. Historically, private providers in the U.K. have provided a significant majority of all of the mental health, especially inpatient services. And so what that means is if the NHS is not paying, then those people are going untreated, and we think that's unsustainable. So we're hopeful that at a trailing 12, 1.6x coverage. And again, keep in mind that's an EBITDARM coverage, that were near the bottom. But there's no assurance of that.

We're comfortable with our original underwriting. Our facilities continue to be fully paid rent. And I think, again, the biggest takeaway is this really isn't sustainable. But once again, we can't predict about -- predict the timing or the velocity of any recovery.

Mike, it's really a political issue here. The good news for us and for all behavioral health operators in the U.K. is that demand is exceptionally strong, continues to increase. The NHS has limited the number of beds available in private care for NHS patients in the behavioral sector. Obviously, as Steve points out, that can't last forever.

And then just real quick. When you say it's temporary, do you think that NHS could change those standards? And I'm assuming that's going to take some time, right? That's not going to happen in the next year or so?

I don't know that we agree with that. With the amount of demand that you have for the patients there. It literally is just a funding and political issue, a political issue in the funding for the NHS and the demand in the public that they have access to behavioral health matters. It literally could be fixed overnight. I'm not suggesting that it will be, but it could be.

Your next question comes from the line of John Kilichowski with Wells Fargo.

My first question is just on the potential impacts of the One Big Beautiful bill to your portfolio. When you think about the flow-throughs of once that bill is implemented, how will that affect your tenants and maybe specifically HSA as it's tracking towards you said onetime coverage at full rent.

Yes. John, from the One Big Beautiful bill overall, very broadly speaking, our operators do not believe overall that it will have a negative effect. There are obviously a few hospitals that will have more of effect than it will on others. HSA is fortunate in their portfolio that they don't believe it will have a significant effect on -- negative effect on any of their facilities.

Okay. That's helpful. And then my second question, did you lend to any of your tenants in the quarter?

Very limited. During the quarter, the only working capital loan we made was to the small Pennsylvania tenant that I mentioned earlier, and that was for less than $1 million. We previously reported, we're funding through a secured loan, the approximate $25 million cost of HSA's conversion to the MEDITECH EMR system that Rosa mentioned that actually goes into effect. She may have said as early as today or tomorrow, we loaned about $13 million during the quarter under that loan. And then we also funded through a second secured loan approximately $12 million in capitation liabilities that remained at the Prospect California hospitals when they exited bankruptcy very early this year.

Your next question comes from the line for Farrell Granath with Bank of America.

This is Farrell Granath. My first question was just about the dispositions. I quickly wanted to touch on the first quarter disposition that was expected that was mentioned on the last call. I believe it was with the prospect remaining Waterbury asset. Was that completed in this quarter? Or is that still ongoing?

Yes. The broader Waterbury transaction was completed in the quarter. I think I mentioned on my remarks that while those proceeds have been received and paid to us, the estate continues to collect receivables, and we'll continue to do that probably for at least a few more months just in the ordinary course, and those proceeds will also come in to repay our DIP loan.

And then also when just considering your portfolio, how do you evaluate potential targets for dispositions? Or is there a certain product that you're receiving inbound either as a value-add or more stabilized assets that get more attention that you'd consider disposing of?

Yes. Farrell, we obviously get a lot of inbounds and have for the last 20-something years on different assets. And when those come in, we look at the total picture and whether or not it's something that we would like to get rid of or whether the price was not that would be something that we would be willing to accept. We don't have a list of properties other than some of the few remaining Steward closed facilities that we're actively marketing. But other than that, we don't have facilities that we're actively marketing.

There are no further questions at this time. I will now turn the call back over to Ed Aldag for closing remarks.

Thank you very much. And as always, if you have any additional questions, don't hesitate to call us once the call is over. Thank you for your time.

Ladies and gentlemen that concludes today's call. Thank you all for joining. You may now disconnect.

Thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Medical Properties Trust Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Charles Lambert, Senior Vice President. Please go ahead.

Thank you, and good morning. Welcome to the MPT conference call to discuss our fourth quarter and full year 2025 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 Williams, 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 mpt.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 mpt.com for the most directly comparable financial measures and related reconciliations.

I will now turn the call over to our Chief Executive Officer, Edward Aldag.

Thank you, Charles, and thanks to all of you for joining us this morning on our fourth quarter 2025 earnings call. Before you hear from the rest of the team, I'll spend a few minutes discussing what we're seeing across our diverse portfolio of hospitals as well as a few recent strategic updates. Beginning with performance trends, total portfolio EBITDARM coverage increased year-over-year to 2.6x. General acute operators delivered particularly strong performance with more than $130 million EBITDARM increase versus the same quarter last year. For the second consecutive quarter, post acute care operators reported a $50 million EBITDARM increase year-over-year, led by a 15% improvement at Ernest Health, a 28% improvement at [indiscernible] and an 8% increase at Median. Finally, our behavioral health portfolio was down slightly year-over-year, driven by certain volume headwinds in the U.K. market and labor cost pressures in the U.S., which Rosa will elaborate on shortly.

During the quarter, we continued to take decisive steps to strengthen our portfolio. Given the strong performance of its post-acute facilities over the past few quarters, we are pleased to enter into a new 20-year master lease agreement with Vibra. We capitalized on an opportunity to acquire a high-performing post-acute facility in California for approximately $32 million with a strong cap rate. More recently, we acquired a new post acute care facility in Europe for EUR 23 million. We also continue to identify opportunities within the portfolio to achieve attractive returns that enhance our capital allocation flexibility moving forward. To that end, we sold 6 smaller properties during the quarter.

Before turning it over to Rosa, I also want to acknowledge that 2025 marked our 20th anniversary as a publicly traded company. Throughout the past 2 decades, we have been guided by the same core principles, providing hospital operators with capital solutions that allow them to focus on patient care, acquiring high-value real estate to deliver attractive returns for our shareholders and supporting the communities we serve around the world. These principles have stayed true as we've navigated periods of significant opportunities and challenges, and they continue to shape the strength of our business today. We are entering our third decade as a public company with strong conviction in our business model and a clear focus on strengthening our platform for the long term. We recently unveiled an updated brand identity, and we were able to acquire MPT as our stock ticker. Given the encouraging performance trends across the portfolio, we remain confident in reaching our goal of over $1 billion in annualized cash rent by year-end. Rosa?

Thank you, Ed. Entering 2026, I'm encouraged by the strength and steadiness we see across our global portfolio. Echoing Ed's comments, was a year in which we solidified our foundation for long-term sustainable performance. Our operators' discipline coupled with our own structured approach to retenanting and portfolio positioning gives us confidence as we look ahead to 2026 and beyond.

Our international portfolio today comprises 50% of our investments, and these operators continue to be a cornerstone of portfolio stability. In Germany, Median recorded its strongest quarter since entering the portfolio with quarterly EBITDARM increasing more than 20% year-over-year with occupancy at 90%. Improving reimbursement levels, growing orthopedics demand contributed to notable operational momentum that positions Median for continued strong performance in 2026.

In the U.K., general acute operators such as Circle Health sustained strong performance in the face of an evolving health care landscape. As a result of NHS budget constraints impacting the behavioral health market, Priory remains focused on adjusting to shifts in referral patterns and strategically modifying service lines to meet market demand at certain of its facilities. Across Continental Europe, Swiss Medical Network reported solid year-over-year growth in hospital EBITDARM. Its new clinical collaboration with the Mayo Clinic enhances its long-term capabilities and international reputation. Additional operators such as HM Hospitality, EMA and Atos continue to produce steady performance trends.

Turning to the U.S. portfolio. Ernest Health delivered double-digit growth in EBITDARM year-over-year, supported by strong performance of their inpatient rehabilitation facilities and expansion of inpatient rehab units within LTAC facilities. Ernest also successfully refinanced their 2026 term loan and revolver in Q4, extending maturities out to 2030 and compressing the rate, a significant credit enhancement.

At LifePoint Behavioral, new leadership is implementing forward-looking program enhancements that will modernize the segment, control labor cost, and support a strong revenue mix throughout 2026. As Ed mentioned, we recently entered into a new master lease agreement with Vibra, who increased EBITDARM coverage 28% year-over-year in Q3, driven by strong earnings in the rehab division. Our other long-standing tenants such as Surgery Partners and pipeline continue to report healthy performance trends.

Finally, our portfolio of recently transitioned tenants rent continues to ramp, and we expect them to be at 100% contractual rent by the end of 2026. During the quarter, we entered into a new 15-year lease agreement with NOR Healthcare Systems in California, which is expected to reach stabilized annual cash rent of $45 million in December, in line with the rent previously paid by Prospect for these facilities. HSA showed measured progress in Q4 with modest improvements in collections across its markets. Upcoming supplemental receipts and the expected implementation of the MEDITECH EMR system in Q2 are anticipated to support operations and facilitate cost savings. While HSA remains focused on improving cash collections, it's important to remember that HSA will finally be fully stand-alone operationally once the EMR system is implemented. We feel comfortable with the steps underway to drive revenue cycle management enhancements. Our team continues to carefully monitor performance across these new operators. In fact, just last week, members of our team visited the NOR and HSA Miami facilities, all of which had high patient activity. It's clear the efforts to bring back doctors and improved EMS turnaround times are already having a positive impact.

While the facilities are generally clean and in good condition, each operator is actively undertaking projects to modernize the properties. Taken together, the consistent performance of our international assets, the steady execution of our core U.S. operators and the ongoing ramp of our transition tenants provide us with a clear, confident outlook heading into 2026. We expect 2026 to be a year of continued stabilization and increasing cash rents as our tenants capitalize on service line enhancements, reimbursement tailwinds, EMR modernization, and operating efficiencies gained throughout 2025.

Our global portfolio is stronger, more diversified and more resilient than it has ever been. We are confident in the long-term earnings power of these assets, and we remain steadfast in our commitment to generating stable, growing cash flows for shareholders. Kevin?

Thank you, Rosa. Today, we reported normalized FFO of $0.18 per share for the fourth quarter and $0.58 per share for the full year 2025. As mentioned in our press release this morning, we completed a restructuring transaction with fiber in the fourth quarter, resulting in a new master lease agreement and collection of approximately $18 million in the form of a onetime rent payment for past obligations. In October, we received a $4 million payment of September rent from HSA. As a result of these cash receipts, normalized FFO was approximately $0.03 to $0.04 higher than it otherwise would have been for the quarter. In the fourth quarter, we entered into a new lease with NOR Healthcare Systems for the 6 California properties previously leased to Prospect. NOR is contractually scheduled to begin paying partial rent in June 2026 and with ramp up to 100% of contractual rents in December of 2026. We plan to account for their revenue on a cash basis as well. G&A expense was lower year-over-year in the quarter, primarily driven by the lower stock compensation expense due to the change in fair market value of certain performance-based equity compensation.

Finally, we recorded approximately $34 million of impairment charges in the quarter, the majority of which related to Prospect. From a cash flow perspective, we received approximately $70 million of net proceeds from the Prospect bankruptcy in the quarter with a remaining investment of $60 million expected to be collected in 2026 as the bankruptcy process nears in the end. Steve?

Thank you, Kevin. I just have a few general comments about our financial position and outlook, and then we can take any questions. First, a general reminder of our debt maturities and our options for refinancing and deleveraging. Our nearest maturity is a EUR 500 million unsecured notes issue due in October of this year. We are paying a rate of 0.99% on these notes. And so we'll, of course, maximize the time benefit from that rate. Our bank revolver and $200 million term loan will mature in June of 2027 after our presumed extension of this facility. And then our $1.4 billion unsecured notes issue matures in October 2027. We retained numerous options for refinancing maturing debt over the next 2 years.

Without belaboring those options, which we have discussed previously, they include refinancing with secured debt, additional asset sales and other transactions as the capital markets and our cost of capital continue to evolve. We are confident in these options because of our recent successes generating highly profitable sales of hospital real estate. Achieving attractive terms on the $2.5 billion of secured notes we issued a year ago, the euro portion of which are now trading at premiums implying a 5-ish percent rate, and the successful 10-year secured financing of our German rehab portfolio in June of last year at a similar 5-ish percent coupon. Our carefully crafted covenants have provided plenty of headroom to be able to consider each of these potential options.

As Ed mentioned, we announced a $150 million share repurchase plan last quarter that we used to repurchase a little less than 1% of our market cap through the end of the year. We also invested about $60 million in 2 attractively priced and well-performing post-acute rehabilitation facilities, which we intend to add to the respective master leases of 2 important long-term tenants. While these are relatively modest acquisitions, the acute and post-acute hospital real estate market continues to offer attractive growth opportunities, both in the U.S. and Europe that we will take advantage of as our cost of capital continues to improve.

And with that, I will turn the call back over to the operator to queue any questions. Regina?

[Operator Instructions] Our first question will come from the line of Michael Diana with Maxim Group.

I'd like to talk a little about your facility recycling during the quarter. I think you mentioned you sold 6 small properties and a surprise to me anyway, bought 2 properties. So maybe you could talk about those 8 properties, but also just more in general, what your view is on the recycling.

Sure, Michael. But let me first take the opportunity to thank you for picking up coverage on us and the time you spent with us to fully understand the company and our business model, and we certainly look forward to working with you. So the 6 properties that we sold were smaller properties. They were properties that were underperforming for the rest of the portfolio. We will continue to look at opportunities like that going forward. But also, we're in a position now where we can go back into the acquisition mode. We'll do it very selectively. We believe that the 2 properties that we acquired are very good investments and the opportunity for us to continue to support our existing tenants.

Our next question will come from the line of John Kilichowski with Wells Fargo.

Maybe if we could just start on the prospect sales. If you could just kind of help me source of uses. I think you gave some helpful color in the opening remarks, but maybe just to tie it all together. Could you talk about the sales proceeds from the assets that have closed the expectations of the asset under contract and then maybe what's going to be above and beyond the debt financing and where those proceeds will go.

So the only remaining transaction that's pending is the binding contract to acquire the water bearing facility in Connecticut, and we expect that to close in this quarter. That will significantly finalize the major components of the Prospect bankruptcy. We expect proceeds that will come from that sale, along with collecting of the receivables that will probably take over the next 60 to 90 days, will fully pay the [indiscernible] financing. And as we announced previously, probably going back as many as 2 quarters, we've committed to a super secured DIP commitment that we may fund going forward that the proceeds from causes of action, that is litigation that's being pursued by the litigation trust, we have first claim on those proceeds, and we remain highly confident, frankly, that the super secure DIP financing will be repaid from those proceeds.

That's helpful. And then maybe just jumping to your 26 rent target and the ramp from your legacy assets, legacy Stewart assets, the $22 million that you got this quarter. I believe last quarter, we got some color on expectations looking forward. Are you able to provide any color on what you expect to receive in the first quarter of this year?

No, we're not yet giving guidance on quarterly or annual amounts for a couple of reasons. One is, as Kevin mentioned, we still have several fairly significant tenants that we are accounting for on the cash received basis. And -- so we continue to watch that rent ramp. It has ramped in accordance with the contract that we entered into with those tenants going on 18 months ago now. And I think we said in our press release this morning that virtually all of them are fully paid as we sit here today. Now I'll qualify that with the 2 very small tenants that in recent quarters, we've also called out roughly 3% of the total replacement rents are not yet paying rent. But nonetheless, and as Ed pointed out, we continue to expect through 2026, by the end of 2026, will be at an annualized run rate of cash collections exceeding $1 billion.

And John, I think just further answer that question with Steve, is that there was one payment that HSA made for that was received last quarter that was for the previous quarter. Kevin went through that. The next big jump will be when NOR starts paying rent in June, I believe it is.

Our next question will come from the line of Austin Wurschmidt with KeyBanc.

This is Vikram Garewal on for Austin. Just one for me. Can you provide us with some additional color on the Vibra restructuring. Specifically, what was previous -- and what is the new cash rent expected from Vibra.

No. We haven't detailed that out. I'll remind you for the last couple of years, we've referred to this tenant kind of vaguely as the 1% tenant that we've been restructuring that was consummated in the fourth quarter, and therefore, the collection of $18 million of rent that was due, although not paying pending restructuring. And going forward, Vibra is a significantly stronger tenant for us. And I'll just again reiterate based on your question that there's no impact on previous rental revenue because we haven't been recognizing it because fiber has been on the cash basis. I don't know often that addressed your question.

Nick, as a part of answering that question, over refinanced all of their debt. So as Steve said, they're in a much better position today than they have previously been couple of their properties are actually now leased to Select Medical and rather than Vibra from our standpoint.

Our next question will come from the line of Michael Carroll with RBC Capital Markets.

Sorry. I wanted to stay on the Vibra transaction. I just wanted to confirm, in the press release, it sounded like the $32 million acquisition was leased to Vibra, I mean, did you buy that from Vibra? And if so, why was that included in this transaction?

We did buy it from Vibra and it is a great facility that we feel very good about and glad to have had the opportunity to acquire.

okay. And then the cash went to Vibra for that specific deal then?

Correct. Just to clarify a little bit, the $18 million we've actually had on our books, a significant part of that since this time last year when Vibra remained a deposit of $20 million and up at about half of it, we held in reserve to apply to rent. So your point is well taken. Yes, we provided proceeds by virtue of acquiring this asset. But fiber itself has put in probably upwards of $70 million over the course of this restructuring.

And not recall the proceeds from this sale to pay off debt that they had.

Okay. I mean is there -- I mean maybe it's just because the transaction is pretty complicated. I know that we've been talking about the 1% tenant fibra for it seems like the past few years now. is there a reason why it took so long to get this done? And is there anything I guess, and back to your earlier comments, Steve, you said that you weren't recognizing any rent from Vibra. So did Vibra have 0 rent payment in quarter outside of that $8 million payment, so it will be additive as you go into 1Q '26?

No, they were actually paying rent. This was just additional rent that they owed as well.

That had not previously been recognized.

David, the first part of your question, as I said, it was a total refinancing of Vibra's balance sheet. So there were multiple parties involved.

Our next question will come from the line of Mike Mueller with JPMorgan.

Yes. A couple of questions. I guess, on the first one, for this acquisition and the other acquisition, can you talk about pricing, I guess, the cap rates and coverages? And then for the second question, maybe just a little bit bigger picture. I know you bought some stock back in the quarter, but you also went through all the debt maturities coming due over the next couple of years. How are you thinking about today kind of buybacks versus delevering?

So let me answer the first part of that, Mike. The coverage on both of these were very strong. The cap rates are also very attractive. As you know, it's not our policy. It is our policy not to go disclose each individuals on the various properties, but these are very strong both on the coverage and from our standpoint on the cap rate.

Going forward, Michael, on the balance sheet, and we invested, what, roughly $25 million in our own stock over the quarter, relatively modest amount. We'll continue to evaluate when it's appropriate to be in the market with the stock. We have multiple opportunities that I tried to summarize very briefly in my prepared remarks to address the upcoming maturities and have a high level of confidence that we'll have some attractive options for addressing that, obviously, beginning this year as we have the very, very low rate euro issuance coming due in October.

Our next question will come from the line of Vikram Malhotra with Mizuho.

I guess two. One, just bigger picture. You mentioned the acquisitions. I'm just wondering sort of as the portfolio stands today, whether it's just noncore or international. Can you just talk about potential sales and give us an update on like how the buyer pool has shaped up, what sort of capital is still interested in owning hospital real estate.

So Vikram, if I understood your question correctly, there still continues to be a very strong market for people interested in acquiring our properties. We get calls often, but where we are today, we are much more likely to be in an acquisition mode than a disposition mode. We'll do dispositions as we review various items and think it's appropriate for us. but we are more in an acquisition mode.

And then I guess just on that acquisition point, just looking at the different, I guess, sub-asset classes, behavioral -- leaving hospital side. I'm wondering sort of the opportunity set when you look at post-acute and behavior, are there any specific focus areas, any types of assets -- just -- and I'm wondering just if you look to sort of maybe -- I don't want to call it expand, but maybe shift the focus in terms of types of healthcare/hospital settings in terms of acquisitions.

Sure. Our focus will continue to be general acute care, which it has been through the vast majority of the life of medical properties. But we will continue to look at post-acute, but that's primarily almost exclusively in the rehab sector, which we've been very strong on since the inception of the company. We're still big believers in behavioral. In the U.S., behavioral softness has not come from lack of demand, but lack of ability to have nurses and staff at each of the facilities. In the U.K., it's much more of a funding issue with NHS. If you follow the U.K., you'll know that the need is there. The desire is there. It's just more of a political funding standpoint. Still believers in both sectors, but probably the biggest acquisitions we'll make today will be in general acute care followed by post-acute care being rehab.

Our next question will come from the line of Farrell Granath with Bank of America.

This is Farrell Granath. I just wanted to also dig in a little bit more on your acquisitions. Just when thinking about Europe versus the U.S., especially now that we've seen some pressures just on public pay with headlines and reimbursement rates. -- does that weigh in on how you're evaluating your pipeline? Or can you give a quantifiable qualitative of how you think about your pipeline in both regions?

That's a good question, Farrell. And as you know, we're roughly 50-50 now, 50% of the United States and 50% outside of the United States. Still believe that the United States is the best health care in the world, and we obviously will continue to focus here. but it is less political outside of the United States. And so we like our investments outside of the United States very strongly. We're in 9 different countries. We'll continue to invest in the countries that we're in, and we'll continue to look for expansion places in Europe in places where we are not. We still feel very good about where health care in general is in the United States and feel very good that the -- we feel very strongly as they'll continue to be ups and downs, but we don't think there'll be any big ups and downs in the reimbursement in the United States.

And I guess also on that when thinking about the people who are selling, are these in the properties that you're acquiring? Are these marketed deals? Are you having reverse inquiries? Are these also just operators that you have passed business with? Just curious how that pipeline is building out.

Yes, it's probably 50% or slightly more of people that we've already done business with existing tenants or tenants that had formally been our tenants. There's still a very strong pipeline of people who know who we are that are looking to make acquisitions and to use our type of funding for those acquisitions. I would say most of the deals that come to us outside of our existing tenants are marketed transactions.

Farrell, I'll just point out in addition, just a little bit. We did a pretty limited amount, $60 million in total. That's a result of actually many quarters of negotiation and exploration. So it's not just something that generates just in the quarter. We're able to be and we are being very selective. Right now, again, we still want to see our cost of capital improve. And the point I think we want to make is as that happens, there is a pretty vibrant market. The fact that we did only $60 million in 2 transactions is not indicative of the size and vibrancy of the market. We could have. I'll put it this way, there were available many more transactions that we could have done that we evaluate. But again, we're being very selective.

Our next question is a follow-up from the line of Michael Carroll with RBC Capital Markets.

I guess, Ed or Rosa, I wanted to follow up and circle back on the comments related to HSA. Can you remind us, is that operator cash flow positive today with the rent fully ramped? I know that you indicated that last quarter that their coverage was above 1 on the full year rent ramps, but obviously, it takes time for cash collections to pick up to equal that.

Yes. The cash collections, as Rosa pointed out, are not where any of us would like to see them. However, if you look at this from where they came from, not just as a typical startup, they actually started out in the whole picking up the Steward properties. We're very pleased with where they are. We obviously want them to be much better. We talked about there being able to -- in the second quarter that we believe that they'll be totally independent acquiring the MEDITECH license and all that goes along with that, taking great steps in the cash collections. And we hope and feel good about their ability to do better than that. Where they are right now is still continuing to be at 1x full rent coverage.

Okay. And then just last 1 for me. I mean, does HSA or NOR need to be -- does MPW needing to provide the working capital loans still? Or have they weaned off of those specific loans and are able to work with what they have on their own balance sheets?

Yes. We have not provided any additional working capital loans for either one of those entities. We have provided HSA with funding to help them acquire the MEDITECH license and with no or the last fundings that we were participating in those were left over prospect bills.

And I will now turn the call back over to Edward Aldag for closing comments.

Regina, thank you very much. And again, thank all of you for listening today. And as always, if you have any additional questions, please don't hesitate to reach out to us. Thank you very much.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Thank you for standing by. My name is Kayla, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Medical Properties Trust Third Quarter 2025 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Charles Lambert, Senior Vice President. Please go ahead.

Good morning. Welcome to the Medical Properties Trust conference call to discuss our third quarter 2025 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 Williams, 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 2025 earnings call. Before you hear from the rest of the team, I'll spend a few minutes discussing recent strategic updates, including a few notable developments during the quarter in the Prospect bankruptcy process.

First, across all asset types, our tenants are delivering exceptional performance. General acute care operators reported a more than $200 million increase in EBITDARM year-over-year with tenants such as LifePoint Health and ScionHealth delivering double-digit percentage revenue increases during the quarter. Post-acute operators reported a $50 million EBITDARM increase versus the same quarter last year. That includes Ernest Health, up 17%, Vibra up 33% and MEDIAN up 7%. Finally, in our behavioral health portfolio, EBITDARM increased $10 million year-over-year. Rosa will share more details on this performance trends across our portfolio shortly.

In August, NOR Healthcare Systems in California was named the successful bidder for Prospect's 6 California facilities. We promptly agreed to a new lease agreement with NOR, the terms of which are broadly similar to those agreed to with other operators in our transitional portfolio. All rent will be deferred for the first 6 months, ramping to 50% for an additional 6 months and then reaching total stabilized annual rent of $45 million per year thereafter.

More recently, we reached a settlement agreement with Yale New Haven and Prospect, whereby Prospect will receive $45 million from Yale. This payment from Yale will be additive to the ultimate proceeds that Prospect receives for these properties. Prospect has already entered into an agreement to sell 2 of its Connecticut facilities to another operator and is actively engaged in negotiation with buyers around the third hospital.

Finally, our portfolio of new tenants continues to ramp monthly rent on schedule. With a few exceptions that are mentioned in our press release. We have collected all rent due from these operators through October, including 100% of rent from HSA.

In August, we sold 2 facilities from this portfolio in Phoenix, Arizona to a tenant for approximately $50 million pursuant to a purchase option in the lease. We continue to own approximately 15 acres of land in the area. We are increasingly confident in our ability to generate total annualized cash rent of more than $1 billion by year-end 2026. Notably, this $1 billion target does not reflect any rent contributions from any of the California Prospect properties.

Reflecting this confidence as well as our strong belief that our share price remains significantly undervalued, our Board of Directors has authorized a new $150 million share repurchase program that we intend to deploy opportunistically.

Furthermore, I want to call your attention to a comprehensive reaffirmation of our business model presentation posted to our website earlier this week. In this presentation, we directly address a range of false narratives that critics have been spreading about our business model. We believe it is important that shareholders, operators, journalists and lawmakers all have a complete understanding of the truth around MPT. There remains a dynamic macro policy environment, making the permanent and flexible capital solutions that MPT offers more important now than ever.

Rosa?

Thank you, Ed. As always, I will cover some highlights from the quarter across our diverse global portfolio beginning with Europe. As a reminder, international operators comprise approximately 50% of our total portfolio, and we continue to be pleased with the consistency of coverages exceeding 2x across this portfolio. This performance reflects these operators' strategic focus on high-quality patient care as well as continuous expansion of access to care within their communities.

In the U.K., Circle repeatedly ranks among the highest of all health care operators in patient satisfaction, maintaining a reputation score well above its next closest competitor. Circle continues to make significant investments in advanced technologies, including AI and robotics, strengthening its competitive advantages and reinforcing its position as one of the leading health care providers in the U.K. market.

Our Sulis Bath Hospital (sic) [ Sulis Hospital Bath ] in the U.K. is the first independent hospital to receive accreditation as an elective surgical hub deemed by the NHS and the Royal College of Surgeons of England. This recognition highlights the hospital's high standards in clinical performance, operational efficiency and patient care.

With coverages consistently above 2x, Priory has demonstrated its ability to adapt its service lines to the needs of each market, allowing for flexibility as the NHS' mental health model evolves. Priory continues to explore technological opportunities such as its partnership with Psyomics to launch an innovative digital pathway that aims to revolutionize access to personalized mental health care.

In Germany, MEDIAN continues to report strong negotiated reimbursement rates and occupancy trends, enabling them to meaningfully outperform prior year revenue and earnings.

In Switzerland, Swiss Medical has launched integrated care models in each of the French, German and Italian-speaking regions. With these new platforms successfully supplementing Swiss Medical's strong organic growth, EBITDAR grew more than 10% trailing 12 months year-over-year.

In Spain, IMED continues to progress construction on new hospitals in Alicante and Barcelona with scheduled openings during 2026 with over 70% of construction completed.

Turning to our U.S. portfolio. Ernest Health has continued increasing consolidated coverage every quarter over the past year with legacy IRFs reporting strong results and new developments rapidly ramping. As such, consolidated EBITDARM coverage is now approaching 2.4x. LifePoint Health continues to deliver high-margin growth at a steady, stable rate versus the rapid acceleration observed in 2024. Conemaugh Memorial continues to be the most significant growth driver within LifePoint -- MPT's LifePoint portfolio with trailing 12-month admissions increasing 15% year-over-year.

Surgery Partners 3 facilities delivered another quarter of strong performance with consolidated EBITDARM coverage above 6x. Our hospital in Wisconsin recently completed a much anticipated expansion to their operating suite to accommodate additional surgeons wanting to bring cases to this respective facility. HSA continues to improve operations and staffing across markets with Q2 and Q3 EBITDARM coverage approaching 1x on fully ramped rent, which, as a reminder, does not fully ramp until September of 2026.

Summer seasonality drove softer volumes in the third quarter, but revenue remained strong due to a higher patient acuity mix. MPT has committed to funding approximately $40 million over the next 2 years for necessary infrastructure and other capital improvement projects, including HVAC and elevator replacements. The vast majority of this amount is for a newly constructed 7-story parking deck. These costs will be added to the lease space upon which the tenants will owe rent.

HonorHealth launched its rebranding in Arizona by renaming Mountain Vista to Four Peaks Medical Center. In addition, Honor remains focused on physician recruitment, executing its self-funded CapEx strategy and upgrading facilities ahead of anticipated volume recovery.

Quorum Health's Odessa facility continues to improve performance with stronger-than-expected admissions and surgical volumes. In August, Odessa Regional announced that it achieved Silver certification as a Cribs for Kids National Safe Sleep Hospital, demonstrating adherence to rigorous guidelines established by the Cribs for Kids National Safe Sleep Hospital Certification program. Insight Health reopened ER services at Trumbull, Ohio earlier this month with plans to slowly open more services as volumes come back along with physicians and staff.

Prime Healthcare's MPT facilities continue to show improved performance with EBITDARM coverage over 2x as volumes and ER conversion rates have increased across the portfolio. Prime received credit rating upgrades from Fitch, Moody's and S&P during the third quarter. Pipeline Health continues to demonstrate growth with EBITDARM coverage over 2x. Additionally, they are opening new service lines for patients at all 4 hospitals.

In summary, we are very encouraged by performance trends across our portfolio. Our portfolio of new tenants continues to ramp monthly rent payments, and we remain well positioned to generate significant cash flow from our 388 properties and approximately 39,000 licensed beds around the world, enabling us to create value for shareholders moving forward. Kevin?

Thank you, Rosa. Today, we reported normalized FFO of $0.13 per share for the third quarter of 2025. The normalized FFO result would have been $0.01 higher if not for the payment of September rent by cash basis HSA on October 1. These results fully reflect the full quarter dilutive impact of not only our first quarter secured bonds, the second quarter MEDIAN joint venture refinancing.

Higher G&A expense versus the second quarter also impacted GAAP results, primarily driven by higher stock compensation expense resulting from the change in the fair market value of 2024 and 2025 performance-based equity compensation, of which no shares have been earned or vested as of September 30, 2025.

Our earnings from equity interest were higher in the quarter as changes in German tax policy resulted in a net deferred tax benefit to our German JV and as the value of the underlying real estate in the CommonSpirit joint venture continues to adjust upwards. Neither of these items are included in our normalized FFO results.

We recorded approximately $82 million in net impairments, the majority of which related to Prospect and the decline in expected proceeds of certain Pennsylvania and Rhode Island assets. We continue to expect that cash proceeds from both the settlement with Yale and Connecticut and the sale of the Connecticut facilities will be more than sufficient to repay MPT's outstanding DIP loan balances. Despite this expectation, accounting rules require that we record impairments to our Prospect carrying values. There are other immaterial adjustments to carrying values during the quarter, including routine adjustments to marketable securities that were disclosed as noncash fair value adjustments in our reporting.

I will now hand the call over to Steve to discuss our liquidity and capital strategy moving forward. Steve?

Thank you, Kevin. I'll wrap up quickly with just a few points, none of which will be surprising, and then we can take any questions.

First, a quick summary of the strategies we have been executing for repaying and otherwise addressing future maturities. We've sold at significant gains and financed at above book values many billions of dollars in highly attractive hospital assets. Almost without exception, these transactions have provided clear validation of our underwriting rigor and the resulting asset values. Access to these values has given us the assurance and flexibility to repay and refinance several billion dollars of debt in 2025 alone. The secured notes we issued in February are now trading at significant premiums. And our most recent transaction financed more than $2 billion of German rehabilitation hospitals at a 5.1% coupon.

This access to capital has also given us the ability to re-tenant and begin collecting what is now scheduled to be an incremental $200 million plus in annual cash rent from new operators, resolve the issues around Prospect bankruptcies and address debt maturing in 2027 and beyond, all of which we are doing successfully.

Along with our clear visibility into rent ramping to a scheduled incremental $200-plus million, the upcoming 2026 annual escalations, cash payment of our roughly $100 million DIP loan and periodic asset sales similar to what we have reported in the last few quarters, we also have reason to expect even more liquidity. Specifically, and while there is no certainty, Prospect is expected to generate proceeds in excess of the $100 million balance of our DIP loan. A substantial majority of any such proceeds will flow to MPT.

We are evaluating the sale or lease of several assets, which are not currently yielding meaningful returns. And we also continue to evaluate sales of earning assets and portfolios for attractive gains. For example, Aevis Victoria, our co-owner of Infracore and the parent of Infracore's Swiss Medical Network lessee, is currently exploring various strategic options for its affiliates, including Infracore, to support their long-term development. Infracore is considering various opportunities to open up its capital or even list on a stock market in order to meet the growing demand for sale and leaseback solutions in the public and private hospital market in Switzerland.

As this and other market indicators demonstrate, demand for hospital real estate is strong across virtually all geographies. Our cost of capital is still higher than we expect it will be. But as we have previously said, we may make modest acquisitions when strategically important. But as Ed pointed out, repurchasing our own common stock is among our very best and most accretive uses of capital. And for that reason, we announced this morning that we have implemented a $150 million strategic stock repurchase plan that will make available some of this expected growing liquidity to capture that permanent value.

This announcement demonstrates our conviction that recent prices of our common stock do not reflect our assets' underlying value, and we have, therefore, not issued any shares under our recently implemented at-the-market offering program. We reestablished that program and the long-term opportunistic flexibility it provides us in August, shortly after the effectiveness of our new 3-year shelf registration statement.

Importantly, some of our unsecured notes outstanding still trade at discounts in today's markets. And nothing we may consider with respect to share repurchase or ATM programs rules out continuation of possible debt refinancing or redemption strategies. We've conclusively demonstrated that we have the asset values to accomplish these strategies.

Moreover, as you would expect, we carefully monitor and plan for the maintenance of all debt covenants as we look into possible future capital transactions. We consciously designed and negotiated these covenants to provide us the opportunistic flexibility to execute these strategies, and we are confident that we will do so.

And with that, I will turn the call back to the operator to queue any questions. Kayla?

[Operator Instructions] Your first question comes from the line of Mike Mueller with JPMorgan.

I guess on the buyback, the question here. I mean, how do you weigh looking at a buyback versus using the capital to either pay down debt, buy back other debt, just given where the leverage level is today and even on a pro forma basis, where it will be? And I guess the follow-up to that is in terms of funding a buyback, would you only use asset sales? Or would you use cash on hand or tap the credit line? Can you just put that whole buyback into perspective for us?

Sure, Mike. We, first of all, have a number of opportunities, and we've been talking about these for several quarters, and that's reinvest in the business with, as I mentioned, and as we've done on a very limited basis, strategically buying new assets. We certainly recognize the trading volumes and levels of some of the unsecured bonds that could provide attractive opportunities for tendering or repurchasing on either small or large scale. And we recognize, as we've just conceded that we think our shares are significantly undervalued. So we have all of those options. We have resources available. We will continue to evaluate the opportunities and the timing of those opportunities and the sources of that capital. I can't say I doubt we're going to borrow money -- incremental money in order to fund the buyback.

And we've mentioned a few of the increasing -- possibly increasing cash resources that we'll have, including some assets that are currently not earning much, if anything, and possibly some of the well-received earning assets that we've demonstrated just as in the last several billion dollars of asset sales, we expect any additional asset sale, earning asset sales would also be at very attractive profitable gains. So all of that is available. And as we've been doing for a couple of years now, we evaluate periodically, constantly, in fact, what's the best use of the available capital that we have.

And your next question comes from the line of Michael Carroll with RBC Capital Markets.

I just want to follow up on Mike's questions related to the buyback. I mean is this -- can you kind of highlight the timing of this of when some of these purchases could occur? I mean I know you have a big debt maturity in 2027. You still are pulling money on the line of credit for -- to meet some of the debt covenants. You're still kind of cash flow negative, at least in terms of some of the investments you made, I guess, post that. I mean, do we need to have all that kind of resolved before you start to buy back stock? Or are you willing to do that in the near term?

Yes, Mike, I think you should assume it will start immediately.

Okay. And then, Ed, can you give us an update on HSA? I know you were -- you had some positive commentaries on their progress and the ramp-up that they've been doing. Maybe provide some details on what drove the late September rent payment? And is that a concern that -- like does that cause you any concerns of their ability to pay the ramped up rent over time? Can you provide some color on that?

Sure. They continue to perform very well. The biggest improvements in Florida come from recruiting the doctors back to the facilities that left during the Steward debacle. They also have been extremely successful, probably exceeding even our expectations in Texas. From the standpoint of their cash delay in October -- in September -- excuse me, it was the -- we believe, the final steps of getting the TSA in order, getting the money repaid to the lender that they had for the DIP money in Florida, and we do not expect any additional issues.

And I'll just point out one last thing. And you remember, September, the rent actually doubled. And so they paid twice in September, actually on October 1 and what they had been paying. And again, I think we made clear in the press release, they've already paid October rent.

And your next question comes from the line of Farrell Granath with Bank of America.

I was just wondering if you could add a little commentary around the Yale New Haven hospitals. I saw the update with having at least 2 with greater line of sight of a potential close. Is there anything else that you can share and also the potential third if there's any further interest?

So Farrell, I think you're going to need to repeat that. No one around the table heard the first part of your question.

So sorry about that. I was just asking about the Yale New Haven hospitals and the progress on having those either re-leased or sold under the binding agreements? Or is that involved as well as the third property?

Yes, sure. So the 2 facilities are under binding agreement. We expect those to close hopefully before year-end, if not shortly thereafter. The other one, we hope to have a binding agreement imminently with another buyer.

Okay. And also, I saw a little bit of commentary on the NHS restructuring and impacting of the referral on the behavioral providers. Does that grant you any concern on the future health of that sector for Priory for their EBITDARM coverage? Or does that maybe add a little target if that could be something to dispose of and use for capital funding?

So we've talked about this in the last quarter, I know, perhaps the one before, too. So NHS, as they have did with acute care a few years back, they want to try to keep as much of their mix of patients in their own hospitals, and now they're doing the same thing with behavioral. It's our belief that they ultimately will realize the benefit of having independent hospitals to treat some of those patients because they're just -- the resources are needed in the independent sector to assist with getting the volume of patients treated. So no, we think it's short term and will come back around. And in the meantime, Priory has, as evidenced by their 2x coverage, been able to put operational items in place to continue to perform very well.

The operator there does not expect to see a significant decrease in their coverage.

And your next question comes from the line of Omotayo Okusanya with Deutsche Bank.

In terms of the rent collections in the quarter, I think in the press release, you did mention that there was maybe not as much of collection as you expected in Pennsylvania and Ohio. Curious if that relates to Insight in particular? And if you could just kind of give us an update on that asset transition.

Yes. Tayo, it's almost exclusively the Ohio facility, as you probably know, probably read, they were delayed in reopening the facility that's up and -- has gotten open. Senator Moreno has been very helpful in that. So we expect that to change. We have delayed when we expect their actual full rent to begin, and I believe that's in -- moved to January. And then the -- in Pennsylvania, that's a very, very small amount of money. The facility continues to improve and not exactly sure when that one will start paying rent.

That's a $30,000 a month rent payment, Tayo.

Got you. Okay. That's helpful. And then just kind of looking through the sub, it looks like there was some additional about $20 million of new loans in the quarter. Just kind of curious if you could kind of talk us through who that was to, if it's to any of the kind of operators of the assets in transition?

There were 2 loans to operators, one being insight, and that was for CapEx and for reopening cost. And then there was a loan to the facility in Pennsylvania, Tenor, and that too was for CapEx.

Got you. That's helpful. And then another one for me. The 8 assets, I mean, you took about 23 assets, 15 were leased, 8 were kind of out there and you kind of were kind of looking at what to ultimately do with those 8 assets, including some other developments. Could you just walk us through kind of the status of those 8 and kind of what's happening?

Tayo, I'm not sure exactly the 8. I guess the 2 big ones would be the one in Massachusetts in Norwood and then the other one in Texas in Texarkana. Both of those facilities remain under construction. And other than about all I can say at this particular point because of various NDAs, we are in negotiations with people about those facilities.

I will now turn the call back over to Ed Aldag for closing remarks.

Thank you very much, and thank you all for joining us. As always, if you have any questions, please don't hesitate to reach out to Drew, and we'll get back with you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.