Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2020 Medical Properties Trust Earning Inc. Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded.

Good morning. Welcome to the Medical Properties Trust conference call to discuss our fourth quarter and calendar year 2020 financial results. With me today are Edward K. Aldag, Jr., Chairman, President and Chief Executive Officer of the company and Steven Hamner, the Executive Vice President and Chief Financial Officer. 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 www.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 and/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 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 wwwmedicalpropertiesrust.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 good morning to all of you listening in today to our 2020 recap and insight into what 2021 will look like for MPT. 2020 will be a year that we will all remember for the rest of our lives. For those of us at MPT, it will be remembered not only for the pandemic, but how well MPT was positioned to continue our outperformance.

Thank you, Ed. This morning, we reported normalized FFO of $0.41 per diluted share for the fourth quarter of 2020. This represents growth of 17% over last year's fourth quarter results and on a full-year basis is an astounding 21% year-over-year growth rate during a period in which the entire world was battling a devastating pandemic. As Ed has just described, we expect continued double-digit per share FFO growth as we go into 2021, all else equal. Even if we stopped our acquisition activities today and based on the assumptions underlying our updated run rate guidance, FFO per share would be expected to increase by another 10-plus percent. And we certainly do not expect to stop our acquisition activities. I'll make a few points about the financial results we reported with this morning's press release. First, we recorded $27.6 million or $0.05 per share in a debt refinancing charge during the fourth quarter. This is related to our redemption of $800 million of unsecured notes that were due in 2024. We redeemed these notes, which had a weighted average coupon of 6% with proceeds from our recent issuance of new notes that have a 3.5% coupon, generating long-term interest savings and a strongly positive net present value. Second, our practice is to deduct from AFFO the unbilled or straight-line rent portion of revenue to reflect an amount closer to a cash basis. You will note that the $71.7 million deduction in our reconciliation to net income exceeds the $55.1 million of straight-line rent in the statement of income. That's because, to be more reflective of cash-like revenue, we also deduct, from AFFO, the straight-line rent that is recognized by our unconsolidated joint venture operations and other non-cash revenue. Finally, total G&A continues to represent about 9% of total revenue and that total revenue adjusted similarly includes unconsolidated joint venture revenue. It is also helpful to point out that 35% of G&A is for estimated share-based compensation, a significant portion of which is not actually paid unless we continue to deliver strongly accretive acquisitions, dividend growth and market-leading returns to our shareholders.

Thank you. Our first question comes from Joshua Dennerlein with Bank of America. You may proceed with your question.

Hey, good morning, guys, and thanks for the question. Ed, I just wanted to follow-up on a comment from your opening remarks. You mentioned that the Priory Group is going to be a platform for MPW within behavioral health. Curious, is that growth going to be focused on the UK or is it kind of a partnership across Europe?

Yes, I didn't mean to imply that it was a platform within the Priory organization, more of a platform for us to invest in more behavioral health. It's something that we wanted to do for a long time. We felt like it was very much needed. And certainly, as you know, under the Obamacare, it was something that was mandated to have coverage, but it's just not -- hasn't grown in the U.S. like it has outside of the U.S. So we're excited to have the Priory behavioral health. We think there are other opportunities outside of Priory, but we -- by having that big investment in Priory gives us the ability to approach other operators.

Interesting. So it sounds like, in Europe, it's a much bigger sector to invest in. Is that...

Yes, that is correct. That is correct.

Okay. Awesome. And then on the coverage ratios, can you remind me if the coverage ratio as you quote are trailing 12 months? And if so, how should we kind of think about the evolution going forward as kind of some of the pre-COVID operations rollout? And, I guess, I'm more focused on the coverage ratios, excluding the CARES Act grants.

Sure, absolutely. They are trailing 12. So what we reported includes, obviously, the first quarter, the second quarter where -- in which all hospitals were basically shutdown and in the third quarter in which they began to come back into operations. Does not include any of the fourth quarter because of the reporting that we get from our hospital operators. We do have the unofficial October, November numbers from some of our operators and it looks like the continuation of building back to where they were on a trailing 12 coverage to pre-COVID numbers look very, very positive. I certainly don't want to give the number where I think we'll be in the fourth quarter yet, but I think it'll be substantially higher without any CARES Act on where we are right now. Let me just give you a couple of statistics. As an example, just quarter-over-quarter, our same-store admissions for our acute care hospitals alone was up almost 20%, up 18%. In addition to that, many of the operators, as I mentioned on the last earnings call, were able to make a lot of expense adjustments. We've seen that with some of the HCA reporting, that's the same thing with our operators as well. So I think that as HCA reported, I think that they all will come out of this in a much stronger position and we are very excited about where they are operationally, and we'll continue to see those numbers grow. I don't know when we get back to a trailing 12 above where we were pre-COVID, but these are very, very strong numbers. When you think about it, a two times coverage with an entire quarter being shutdown, that's extremely strong.

Yes. Appreciate that. Thanks, Ed. I'll yield the floor.

Thank you. Our next question comes from Connor Siversky with Berenberg. You may proceed with your question.

Good morning, everybody. Thank you for having me on the call today. First one, just to add to...

Glad to have you, Connor.

Thanks. Just to add to Josh's question on the investment activity in the UK, I'm curious about behavioral health, some of the initiatives that have been laid out by the NHS there. I'm wondering if you can provide any color as to what kind of momentum that space is seeing in the UK in terms of funding from the NHS?

Absolutely. This actually started well before COVID. They made a very big push to outsource the behavioral health. NHS's facilities were very old, very dilapidated. They didn't build any additional facilities. They instead closed the facilities and decided they were going to use the third-party private sector. So they have pushed it in a very big way. They've added additional funding and all of this was pre-COVID. So during COVID, they actually used some of the behavioral health hospitals in those early months and the same thing that we had saw it happen over here in the U.S. where they used some of those for true acute care facility. They didn't need as many as they thought they needed, so they very quickly opened them back up to behavioral. Behavioral came back in a very, very big way without any additional COVID funding from the NHS. So if you look at just the hospitals that we acquired from Priory, and remember that Priory has 300-plus facilities, but a vast majority of those are educational or artistic, very small facilities that don't meet our criteria. So what we bought were the behavioral health hospitals. And when you look at those alone, they actually ended up 2020 about 2% better than they were in 2019 without any additional funding. But the NHS and all of England, as we've all learned even here in the U.S., that mental health, behavioral health is a real issue during the pandemic and they are absolutely committed to increase the funding that they committed to prior to COVID. So it's in a very strong position right now.

That's great color. Thanks for that. Can you give us a little bit, thinking about the race to distribute the vaccine versus some of the emerging virus variants that we're seeing news flow on? Is there any commentary available from your operators, whether in the U.S. or elsewhere, in regard to the take-up of the vaccinations by the healthcare workers and how quickly it's -- they are being distributed through the facilities?

Yes. It obviously varies from region and how the -- but it would follow the same, but you would see at people's attitudes about vaccines in general. But very generally speaking, very generally speaking, probably 70% of the hospital employees have agreed to take the vaccine. We don't have any operators at this point that have made the decision to require all of their operators. As all of us know, and some others have had the opportunity to talk to some of the experts, particularly, in my case, with the people at Pfizer, they think we need -- only need 40% of the population to take the vaccine along with the roughly 30% of us that have already had COVID to get us to a herd immunity-type situation. So the 70% of the healthcare workers that are taking the vaccine is a very, very strong number, stronger than what we're seeing throughout the population right now.

Okay, thanks for that. And then one more quick one from me. Just looking at pro forma leverage ticked up a little bit, so I'm just wondering when you consider the investment pipeline through the end of the year and maybe beyond, if you're going to consider different financing mix for future acquisitions?

No, it wouldn't be accurate to say different because over the last, especially, couple of years, we’ve really tapped any number of sources from a traditional common equity issuances to long-term unsecured notes with the joint ventures -- joint venture financing, equity financing, along with secured financing in those joint ventures. We've used the ATM over the course of those two years, not even including the Primonial joint venture a couple of years ago. We've sold several hundred million dollars of assets and that's provided accretive financing. We've got a handful of more assets that are ripe for sale that would allow accretive refinancing. And then at today's dividend rate, we know we're generating upwards of $200 million a year and returning to AFFO. So, we will continue to tap all of those as the need arises, and as the circumstances mandate, which of those various alternatives are better at any particular time.

Okay, thanks for that. That is all for me. I'll yield the floor.

Thanks, Connor.

Thank you. Our next question comes from Steven Valiquette with Barclays. You may proceed with your question.

Thanks, good morning, everybody.

Good morning, Steve.

So, Ed, when you were commenting in your prepared remarks around the pipeline, you talked about expanding investments in relationships in the U.S. So just curious, I may not be able to get more color on the pipeline overall, but sort of balancing U.S. versus international opportunities. And also you've talked a lot historically about being able to better penetrate the not-for-profit hospitals in the U.S. I don't know if the -- that portion of the U.S. pipeline has also accelerated. I just wanted to -- just get more color on the overall pipeline. Thanks.

Sure, Steve. And it really hasn't changed from my comment on the last earnings call that we had. Obviously, as we all know, the acquisitions don't all happen on the same day, and we just did a big U.K. acquisition. So it's a little bit skewed right now. But we continue to see about 60% of the portfolio in the U.S. and 40% outside. That obviously is -- it's not a fixed number as we go because of the way acquisitions work out, but we have a number of good large acquisition opportunities that we are actively working in the U.S., which we hope to be able to announce over the next couple of quarters. We still continue to have opportunities outside of the U.S. Again, most of what we're doing, it continues to be on a dollar basis, continues to be general acute care hospitals, but we also, as I mentioned earlier, have some good opportunities, good-sized opportunities outside of the U.S. for behavioral. We still have behavioral opportunities in the U.S., but they're not big opportunities. So the vast majority of what we're looking at in both international and national is general acute care hospitals.

Okay, great. Okay, that's it from me. Thanks.

Thanks, Steve.

Thank you. Our next question comes from Todd Stender with Wells Fargo. You may proceed with your question.

Hi, thank you. For the Priory deal, how many hospitals ended up coming with the portfolio?

So, Todd, it is approximately somewhere between 35 and 40 hospitals. And remember that, as I've said earlier, Priory has a total of 300-plus facilities, but many of those are very small facilities that don't fit our model. So if you look at their overall EBITDAR numbers, the vast majority of that comes from these 35, 40 facilities that we acquired.

All right. So you guys -- you've extended the loan, is it cash flowing or that really just turns into real estate ownership upon consummation of the merger or acquisition of the operators?

No, it's current paying. And we'll just convert invisibly to observers from what will be categorized initially as interest to lease payments as we actually close each individual hospital.

I see. And what's the rate of the loan right now relative to that GAAP yield of 8.6%?

Yes, there is no difference.

No difference. Okay. How about the timing of the bridge loan? Is that consummated in the first half here? So it happens or that...

The GBP250 million loan that we made to the acquirer was funded at the same time we closed on the real estate transaction, and we expect that to be repaid during 2021.

Got it, okay. And then, how about the 9.9% interest? Has that amount been determined yet or not yet?

That hasn't been disclosed.

Okay, got it. And then just for behavioral health, you underwrote this at a 2 times EBITDAR. Is that a fair number for us to kind of think about for the long term or should that trend a little bit higher into the 2.5 times range?

Oh, Yes, it will absolutely trend higher, that's a very strong going in coverage there in the U.K. and that will trend higher. That does not -- that is on existing numbers that does not take into consideration the improvements that the new operator will make.

Got it, okay. Thank you. One last one from me. Steve, you mentioned the Ernest transaction, was the South Carolina asset -- was that alone converted to real estate ownership in Q4?

No, that was actually the purchase of a recently completed development.

Understood. Okay, thank you.

Yes.

Thank you. Our next question comes from Omotayo Okusanya with Mizuho. You may proceed with your question.

Yes, good morning. Congrats on another strong quarter.

Thank you, Tayo.

My pleasure. Thanks for all the details in regards to rent coverage and the trend. Just kind of curious, is there a way you can share additional detail, a little bit more on the tenant level around rent coverages rather than the total portfolio? Even if you don't want to talk specifically about one tenant, just to get, are they all kind of trending the same way? Is there someone that's kind of behind all the others because of something unique, especially for some of your larger tenants? Just trying to understand what would be happening at that level.

Absolutely, Tayo, and you'll notice in my very last part of my prepared remarks, I talked about the portfolio being the strongest group of hospitals in the world and it truly is. These operators, all across the board in our portfolio, are trending in the same direction. They all have very strong coverages. We don't have any in the large group of operators that are having any issues whatsoever. You're seeing the same trends across the board. It is a very strong position where they are all right now.

Okay, that's helpful. And then second question just, and I think Steve Valiquette touched on it a little bit, just when you think about U.S. versus U.K. opportunities, I know you kind of said that this kind of 40-60 balance is kind of where you hope to end up. But, kind of, when you, kind of, think about near term, what could happen? Is it really more of a U.S. opportunity that kind of lined up or is it more of a European or international opportunity?

No, near-term it's more U.S.

Near-term, it's more U.S., okay, great.

Yes.

Okay, thank you.

Thanks, Tayo.

Thank you. Our next question comes from Jordan Sadler with KeyBanc Capital Markets. You may proceed with your question.

Thanks, good morning, guys.

Morning.

So, right, so a little bit deeper on Priory. So is it partnering MEDIAN? I'm sort of curious about the financing and, Steve, I think you touched on it a little bit, what was done with MEDIAN. Eventually, you brought in, I think, Primonial, and I was curious to see if -- to know if they were invited to participate in the Priory deal, given that they're a partner in MEDIAN.

No, we did, on our own, the Priory transaction.

Okay. Well, that I know. Would it be likely that you would look to execute a similar type of structure around the permanent capital base of Priory?

Yes, we have no plans for that as we sit here today. I made the point in my remarks because it -- the MEDIAN transaction with Primonial was so extraordinarily successful, it's certainly not impossible that we would want to replicate that. But that would be a longer-term process because, as I mentioned, that was several years. I think we began assembling that MEDIAN portfolio in 2013, 2014 and it was not until late in 2018 that we had completed assembling it, we had seasoned it, we had allowed MEDIAN to bring its efficiencies to bear, and only then did we take it out and recapitalize it. So that's possible, that the -- that Priory could follow that pattern, but there is certainly no plan or commitment to do that as we sit here today.

And, Jordan, just to belabor the point that Steve is making, if we'd have brought Priory or anyone else in on the front end, we wouldn't have had the ability to realize the gain that we think we could realize later down the road, if we did it at that time.

Okay. And then -- that makes sense, Ed. And then, as it relates to the dispositions during the quarter, Olympia Medical, and then, Steve, you talked about some other potential. So one on Olympia Medical. Anything you can offer up in terms of the economics there? I know there was $51 million of proceeds, but any other details around sort of yield on sort of the sale and then maybe the scale of additional dispositions or how much else do you have teed up?

So, remember, Olympia was a mortgage loan for us and the operator, Alecto sold it to UCLA and as part of our relationship with Alecto that we've been disclosing over the past couple of years, we've had a couple of facilities that we've taken impairment charges on, we've stopped recognizing current rent. And so the $51 million proceeds goes, not only to repay 100% of the mortgage balance -- our mortgage balance that was outstanding on the Olympia facility, but recovered some of those prior charges and provided for profit over and above that on other cross-collateralizing, cross-defaulted charges we had taken over the last couple of years.

Okay. Got it. And then other sales? Like just how much you have teed up?

We -- relatively minimal. But when considering combining various sources for capital, for recycling, meaningful upwards of a couple of hundred million dollars over the potential course of the next few quarters.

Okay, great. I can yield the floor. Thank you.

Thanks, Jordan.

Thank you. Our next question comes from Mike Mueller with J.P. Morgan. You may proceed with your question.

Hi, just a quick one. Is there any updated timing on recognizing the straight-line income from Priory?

Well, that will start -- the straight-line will start as we close each facility, as Ed mentioned. And just by way of a little background, we agreed with Waterland to provide GBP800 million of real estate financing, and it is our discretion as to which of the hundreds of facilities that Priory owns and operates we choose and that's why it comes up with the 35 to 40 facilities. We are in the process of selecting our facilities. That process then will lead to periodic closings of those facilities and as each facility is closed, we'll start recognizing the straight-line component of the master lease agreement.

Got it. So…

Mike, I -- we are hopeful that all of that is closed by the second quarter of this year.

Got it. Okay, that was it. Thank you.

Thanks, Mike.

Thank you. Our next question comes from Michael Carroll with RBC Capital Markets. You may proceed with your question.

Yes, thanks. I wanted to touch on the NHS deal that you guys announced, and it seems like this is with a, I guess, a private operator within NHS. I guess, how does that work out? I guess, is that with NHS or was it a private operator that has it's own special segments that they created?

So we acquired a 999-year ground lease on the real estate that has, the term used in the U.K. is an occupational lease, with the NHS operator. That occupational lease, I think, has 40-plus potential years running after which, just like any other transaction, then we would -- if they don't extend, we would -- the real estate would revert to us.

And now is that corporate guarantee or is that lease directly with NHS or is it a subsidiary of the NHS?

Well, a subsidiary is not the right term. The NHS is responsible for funding all NHS trust and operations. And so it's effectively, in our view, a government yield.

So, technically all of the trust operate independently of each other, but they are recognized as part of the NHS.

Okay. And then, I guess, how big of an opportunity is there for you to continue to grow with NHS in the U.K.? I know that most of the growth has been with private operators. I mean, is there an opportunity to make bigger investments with NHS?

We think so. We think this opportunity has been there for a very long time, but it's always getting that first one in the door. We thought we had an opportunity seven or eight years ago with the Manchester Trust University Hospital there. But with this one actually closed, we expect that there will be others that we can do.

Does NHS typically sell their real estate? I mean, I guess, do they own most of their own?

So the -- again, it's individual with each individual trust and each individual trust has done a lot of different transactions similar to this, not necessarily a sale leaseback-type transaction or exact transaction, but a sale leaseback-type transaction, so this isn't foreign to them.

Okay. And then, can you talk a little bit about the Swiss Medical Network deal? Did I hear that correctly, that was into the operator or was there some real estate investment type with it?

Yes, no, it is the real estate portion of it. You'll remember that our investment there is with an entity called Infracore, which -- and our tenant there is the Swiss Medical Network. And we bought out one of the other investors. This was something that we had planned on or hoped that we will be able to do when we made our original investment in Infracore. And so when the opportunity came along, we were very excited to consummate it.

Okay.

But it's entirely real estate.

Okay. And then I know that there was an opportunity or when you originally did that deal to kind of consolidate and grow in that market. I mean, have you started doing that yet or is there near-term opportunities to kind of start acquiring new properties and grow that entire venture?

Yes, I think, we were very close to adding new properties before COVID hit. So it is still the ultimate plan, but obviously with COVID, everything, and Switzerland got put on hold.

Okay. Good, great. Thanks, guys.

Thanks, Mike.

Thank you. Our next question comes from Tom Hennessy with Deutsche Bank. You may proceed with your question.

Good morning. Just going back to the pipeline real quick, could you just discuss the impacts of the pandemic on the pipeline, I guess, as you're progressing? I mean, I assume getting boots on the ground was a considerable challenge, but is there any way to quantify this, whether it be lost or delayed deals, how much capacity went unused as the year progressed? And then, I guess, any challenges carrying over to '21 and would you anticipate a meaningful acceleration once we get back to normal?

Yes. Thanks, Tom. I think that there weren't any deals that were lost. There were a large number of deals that got put on hold and delayed. Priory is a perfect example of that. We were working on Priory well before COVID hit and, obviously, when COVID hit, it along with everything else got put on hold. Most everything has opened back up, including opportunities that we were just really getting into. So I think the pipeline as a total figure is back to where we were on a pre-COVID basis. Some of the items still move a little slow. You talk about boots on the ground, we were very, very fortunate to have our Luxembourg office as well. Those of us here in the U.S. weren't allowed to come to Europe. Our Luxembourg office was still able to travel freely. We also had boots on the ground in Australia. So with some of the expansions, most of them were planned there. You remember when we did the original transaction with Healthscope in Australia, we had a $300 million planned addition to that portfolio, that obviously got put on hold, but as I've mentioned in the last earnings call, got started back up. And, again, having our boots on the ground there has been able to be very, very beneficial. In South America, in Colombia, they still let us in and so we've been able to have our team there and they continued that process. That's, as I have said to some of the people that have asked over the last few months, that's probably the biggest challenge that we have and going forward in '21, because it certainly is not going to be back to 2019 overnight. But it is our ability to operate in this new environment. I think, we've done a very good job of it. We pride ourselves on building relationships with people face-to-face, we have to -- have had to do some of that from a Zoom standpoint. But as we get into '21 and more and more people throughout the world are able to have the vaccine, we hope to be able to travel more freely. That obviously hasn't happened yet, but with our offices around the world, it hasn't slowed us down any. But that's where we are in the pipeline right now.

Great, that's it for me. Thanks for the additional color.

Thanks, Tom.

Thank you. Our next question comes from Michael Lewis with Truist Securities. You may proceed with your question.

Great, thank you. My first question is about the run rate FFO guidance and our ability to use that as a yardstick. And the reason I ask FFO guidance back in December 2019 and now a full year later, you still haven't quite hit it even though you've made billions of dollars of accretive investment since then, you're still above the financial leverage target that was contemplated in that run rate. And I assume it's wrong to presume that your FFO would be higher today had you made no investments in 2020 and delevered the balance sheet by almost a turn. So are you missing your guidance or is it just a timing-related thing where it can take a year or however long it takes to get to that run rate?

So a couple of points would be, firstly, we reported in 2020, FFO per share 21% higher than we did in 2019. And so I don't think we're lagging. But more importantly, as I made an attempt earlier in my prepared remarks to explain, there is lot that goes into a run rate guidance, and when a company is growing very, very rapidly, like ours. I mean, over the last almost 10 years at 30-plus percent compounded annually, the only way to get to a firm target of FFO is to stop that growth, because every single transaction that is done impacts the arithmetic, the calculation that goes in. So I'm not quite sure, I didn't quite hear all of your question. But are we lagging? I don't think so. We're growing almost exponentially, accretively, and that's what the guidance is really meant to show because unless, like I say, you wanted to stop all of the forward-looking assumptions, which include further growth, which include capital, which is a very significant part of the guidance, is to bring the leverage back down from where we are, which is slightly above the 6 times into something between 5 and 6. That's the most significant meaningful impact to a straight EBITDA-based accretion. So again, I'm around to repeating myself, but as long as we continue to grow, that run rate guidance is going to be a constantly moving target and the faster we grow, the more unpredictable it becomes. But it is important for investors to see that, nonetheless, we are investing accretively and frankly very strongly accretively. And I think that's the evidence given by the 21% year-over-year per share results.

Okay. So I guess, there is no time period on when you might hit this $1.72 to $1.76, for example?

Well, yes. Yes, if we stopped growing, yes, we would expect to hit that in 2021. But we're not going to stop growing.

I see, because the number you gave in December 2019 was $1.65 to $1.68, you just recorded $0.41, right, which if you annualize would be $1.64, which is why I asked the question, but we could do this offline too. My second question, I wanted to ask about -- and this one maybe has already been answered but, Ed, you talked about the trailing 12 months nature of the coverage ratios. I mean, is it fair again setting expectations? I would assume that we probably don't see much movement in that coverage than since 4Q is not going to be a unique comp -- year-over-year comp, 1Q won't be, and really we may not see real movement in that ratio -- in that coverage ratio until we get this really kind of bizarre 2Q out of the trailing equation. Is that a fair way to think about it?

Well, Mike, it is. But as I said earlier, while I don't want to set any expectations because we just have two months' unofficial numbers for a number of our tenants for the fourth quarter. For the fourth quarter numbers, even on a trailing 12, looks substantially better than they did even on the third quarter trailing 12. So as I said earlier, if you look at the same-store admissions compared to the third quarter, we're up -- or compared third quarter to second quarter, we're up 10% overall and up 18% in acute care. And then if you look at the reporting that we've had for October and November, they are very strong numbers. So, again, notwithstanding exact expectations, I do expect you to see good movement in the coverage for -- when we get through the first quarter and reporting fourth quarter numbers. But you're absolutely right, until we're through with the second quarter, in which case all hospitals were basically shut down, you're not going to see numbers back above 2019.

Okay, that makes sense. It sounds promising. Thank you.

Thank you. Our next question comes from Jordan Sadler with KeyBanc Capital Markets. You may proceed with your question.

Just a couple of quick follow-up. I was confused a little bit by your answer to Mike's question about the rate on the Waterland loan versus the GAAP yield. I think in a previous question -- previous answer, you said that they were the same yield, but then straight-line rent is supposed to kick in as you close these properties. So, I guess, from a modeling perspective, are we modeling the GBP800 million at an 8.6% yield going in?

So, good point. And I didn't mean to imply that we will be earning 8.6% during this interim period. I was really, in my own mind, comparing that to the cash rate that actually -- Yes. So, which we haven't disclosed, Yes.

Okay. So it's the same as the cash, so there will be a delta. And as you close the loans, the GAAP yield or FFO yield will step up...

Yes.

...incrementally throughout the second or like through the second quarter, basically as you close these.

That's correct, yes.

Got you. Thank you, Steve. And then one other on the refi opportunities ahead of you. So I meant to touch on this a little bit with the Priory earlier, but how do you intend to finance this portfolio with debt longer term?

So similar to our, kind of, long-term practice because of the very, very low rates away from the U.S. and because we naturally want to hedge our purchase price. Our expectation would be that long term, we would finance the Priory deal with as much unsecured local currency-based notes as we can.

Is there -- along those lines, earlier you did some refi or pre-refi opportunity redemptions. Anything else you're, sort of, eyeing in the capital structure that looks a little bit above market that can be taken out?

I don't think so. There is a couple of euro issuances. But it's not nearly as attractive at this point. So we're not expecting that in the near term. It will be much more likely if the new issuance is in the sterling market.

Okay, thank you.

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Ed Aldag for any further remarks.

Josh, thank you very much, and again thank all of you for listening in today. Thank you for your interest in Medical Properties Trust. And if you have any additional questions after the call, please don't hesitate to reach out to Drew or Tim and they'll get with the right people. So, thank you very much.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.