Medical Properties Trust, Inc. (MPT) Earnings

Management highlights

### Refinancing Transaction - Announced a comprehensive two-step refinancing that will eliminate all debt maturities through 2027, leaving only a $600 million maturity due in June 2028, reducing near-term refinancing risk significantly. - Step 1 (expected to close same-day as the call) is a $2.4 billion secured note issuance with a 9.25% coupon and 5.5-year term. Proceeds will redeem the 2026 €500 million unsecured maturity, repay ~$738 million of 2027 unsecured notes, and exchange ~$1.2 billion of longer-dated unsecured notes at a discount, reducing gross debt by ~$123 million. - Step 2 (expected to close in coming weeks) will repay the remaining 2027 unsecured notes, establish a new multiyear bank revolver, and repay the $200 million term loan due 2027. - The refinancing substantially improves the unencumbered assets to unsecured debt (UAUD) covenant cushion, expanding it from the prior 155-160% range to as much as 300% after full completion, opening additional flexibility for delevering. ### Portfolio and Operational Updates - The Swiss joint venture Infracore completed its IPO and is now publicly listed, having accessed public capital for further growth. MPT retains a significant ownership stake. - All ScionHealth general acute hospitals and LifePoint leases were consolidated into a single LifePoint master lease, simplifying the operator relationship and improving the credit profile of the lease. - In the US, HSA (operating in Florida, Louisiana, Texas) faced Q2 headwinds: a MEDITECH EMR conversion temporarily disrupted billing and collections, revenue cycle management transition issues and delayed Florida supplemental indigent care funding further pressured near-term liquidity. HSA has since brought revenue cycle back in-house, received August funding, and has started repaying MPT working capital advances. HSA currently pays 75% of contractual rent, scheduled to increase to 100% in mid-September. - US operator NOR began paying 50% of contractual rent in June, with admissions, ED visits, and surgeries all up year over year, reflecting positive volume recovery. 100% rent payment is scheduled for mid-December 2026. The Culver City ED expansion remains on track to open Q4 2027. - International assets overall delivered stable performance: Swiss Medical Network grows via acquisition and a shift to higher-value outpatient care, German Median's year-to-date EBITDA is ahead of budget, and UK Priory is implementing cost cuts to address NHS referral and budget pressures. Third-party market transactions confirm MPT hospital asset values exceed book values, with a pending imminent sale generating 60% gains over original investment and a 34% IRR. ### Financial Results - Normalized FFO per share for Q2 2026 was $0.15, in line with management expectations, up from $0.14 in the prior quarter. - G&A expense increased year over year, driven by higher stock compensation for cash-settled awards and depreciation on the newly completed corporate headquarters.

Guidance

- Management reaffirms the target of reaching over $1 billion annualized cash rent by the end of 2026. - Guidance for normalized FFO has not been updated, with management noting that final guidance will be provided once the timing of the refinancing step 2, asset sale completions, and rent ramp-ups for HSA and NOR become more definitive. - Management expects $200 million to $400 million in additional after-debt asset sale proceeds from ongoing negotiations in the coming weeks, with potential for higher proceeds.

Segment performance

1. General Acute: This is the largest segment by portfolio share, reporting aggregate EBITDARM coverage of 2.8x for Q2 2026. Performance was stable during the quarter. It was consolidated into a single master LifePoint lease alongside ScionHealth assets, resulting in a stronger credit profile for the lease relationship. 2. Post Acute: This segment delivered the strongest year-over-year growth, with portfolio EBITDARM increasing more than $70 million year over year. Aggregate EBITDARM coverage hit 2.4x for the quarter. Standout performers included Median (24% EBITDARM growth) and Ernest Health (13% EBITDARM growth), with Ernest Health currently acquiring 7 additional Reunion Rehabilitation Hospitals. 3. Behavioral Health: This segment remains a source of portfolio pressure. Aggregate EBITDARM coverage dipped slightly to 1.4x, driven by ongoing funding headwinds in the UK NHS market and discrete challenges in US markets. Operators are implementing stricter cost controls and service optimization to align with current demand.

Risks & headwinds

- Behavioral health segment faces ongoing near-term pressure from UK NHS budget constraints and shifting referral patterns, as well as discrete headwinds in the US market. - HSA still requires material improvement in cash collection rates (currently in the 80s, target 90%+) to return to full contractual rent performance, despite recent improvements in operating conditions. - While MPT has cleared debt maturities through 2027, the company is currently near the 40% secured debt ratio covenant limit following step 1 of the refinancing, requiring asset sale proceeds to create additional headroom for further secured debt issuance if needed. - There is no guarantee that ongoing negotiated asset sales will close at the currently expected valuations or timelines. - Market valuation of MPT's public equity is currently below management's estimate of underlying asset value, making issuing equity for delevering a dilutive unattractive option at the current time.

Analyst Q&A

• Q: How will MPT repay the remaining 2027 notes, and what is the funding mix? /

  A: Management noted the remainder of the 2027 maturities will not be repaid solely via a new credit line. The company has multiple available options, including completed and pending asset sales, existing liquidity, and additional secured debt opportunities.

• Q: What is the current status of HSA's cash collection improvement, repayment of MPT working capital advances, and NOR's rent payment? /

  A: HSA's collection progress has been slower than expected, still remaining in the 80% range (needs 90%+). Approximately half of the delayed Florida DPP funding has been received, with the remainder expected within a week. Full repayment of the $40 million working capital advance is expected by the end of next quarter, with $20 million repaid immediately after receiving the remaining funding. Management confirmed NOR paid its 50% contractual rent in June as scheduled and is current on obligations, with strong operational performance.

• Q: What is the status and valuation of pending asset sales, and their impact on income? /

  A: The Infracore IPO generated $140 million in proceeds at above book valuation, and an imminent unannounced sale closing the same day as the call will generate $172 million in after-debt proceeds, a 60% gain over original investment and 34% IRR. Management expects an additional $200 million to $400 million in after-debt proceeds from other ongoing negotiations, all at valuations above original cost. Gains on sale and applying proceeds to high-interest debt will have an accretive impact on normalized FFO, though final guidance will be provided once all transactions are complete.

• Q: What is MPT's long-term plan for delevering and potential portfolio restructuring? /

  A: Management's primary near-term delevering source is asset sales, which are attracting third-party buyer interest at valuations above book in both the US and Europe. Selling equity is an available option but is currently unattractive due to MPT's public share price trading below management's estimate of underlying asset value, which would be overly dilutive. MPT has cleared all maturities through 2027, giving time to improve operations and reduce leverage without dilutive transactions, while retaining all existing strategic alternatives including potential larger portfolio transactions.