Medical Properties Trust Inc
NYSE:MPW
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Medical Properties Trust Inc
Earnings Call Analysis
Q2-2024 Analysis
Medical Properties Trust Inc
The second quarter of 2024 marked a pivotal period for Medical Properties Trust (MPT). Thanks to strategic execution, the company surpassed its earlier goal of $2 billion in monetization, reaching a remarkable $2.5 billion. This significant liquidity boost not only facilitated a debt paydown of $1.5 billion during the quarter but also positioned MPT favorably for its upcoming financial obligations. With all debt maturing in 2024 successfully addressed, the company is now confidently contemplating its path forward.
Central to MPT’s current operational landscape is the restructuring process surrounding Steward Healthcare, which has been a source of complexity. The Massachusetts facilities that MPT partially owns are entangled in a distinct master lease agreement, and while the Chapter 11 process presents challenges, it also creates opportunities. Several quality operators have shown interest in these facilities, although negative sentiments surrounding private healthcare ownership have complicated this dynamic. MPT remains committed to ensuring that these vital hospitals continue service without disruption, potentially allowing for a smooth transition to alternate operators.
Despite the challenges posed by Steward's restructuring, MPT has experienced positive trends across its broader portfolio. Admissions and surgical volumes are improving year-over-year, indicating a recovery in the healthcare sector. Significant investments into facilities have enhanced operational performance, with key operators demonstrating solid EBITDARM coverage. Notably, LifePoint Health's hospitals recorded their highest total admissions in nearly three years, signaling a revival in patient volumes and financial health.
MPT has skillfully navigated its liquidity profile, recently reducing its revolving credit commitment to $1.28 billion, reflecting a more streamlined approach in response to the absence of rapid growth aspirations. The company successfully amended its credit facility, granting leeway until September 2025 for certain financial covenants, including an adjusted consolidated net worth covenant of $5 billion. These adjustments provide substantial breathing room while MPT explores options for refinancing $3 billion in debt due in 2025 and 2026.
In alignment with its liquidity strategy, MPT has also made adjustments to its dividend approach. The board has committed to limiting cash dividends at $0.08 per share per quarter while retaining flexibility to issue alternative forms of dividends if necessary. This adjustment gives MPT a normalized FFO payout ratio of about 35%, with the dividend yield currently standing around 7% based on recent market prices.
As MPT moves forward, the company’s leadership underscored the importance of remaining adaptive in a changing market landscape. The successful execution of asset transactions has reassured investors that potential future sales would maintain strong valuations. The focus remains on the broader healthcare real estate market, which is responding positively to increased admissions and demand while minimizing any risks associated with the Steward situation. MPT remains optimistic about its prospects post-restructuring, with expectations of returning to a stable portfolio without relying on Steward.
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Good day, and welcome to the Medical Properties Trust Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, today's 60-minute call is being recorded. I would now like to turn the conference over to Charles Lambert. Please go ahead.
Thank you, and good morning. Welcome to the Medical Properties Trust conference call to discuss our second quarter 2024 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; and Rosa Hooper, Senior Vice President of Operations and Secretary.
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 second quarter 2024 earnings call. I'm pleased to be joined again today by Steve Hamner, Kevin Hanna and Rosa Hooper. Also joining the call for Q&A this morning is Jason Frey. Jason has been with the MPT for 15 years and was recently named Managing Director of Asset Management and Underwriting.
During the quarter, we continued to see positive trends across our global portfolio of hospital real estate, consistent with what's been reported by large public operators, admissions and surgical volumes are increasing year-over-year, and the overall financial health of our hospitals is improving.
Before Rosa discusses these portfolio trends in more detail, I would like to spend a few minutes providing an update on our capital allocation strategy as well as Steward Healthcare's ongoing Chapter 11 restructuring process.
Beginning with our strategy. We indicated last quarter that we were on track to exceed our initial $2 billion target for additional liquidity in 2024. We have successfully carried the momentum forward, executing several additional transactions at attractive valuations, including the July sale of freestanding emergency department facilities as well as 1 general acute care hospital in Arizona to Dignity Health for approximately $160 million or an implied cap rate of less than 7.5%.
As a result, we have generated $2.5 billion in total liquidity to date and repaid all debt scheduled to mature in 2024. We remain focused on accelerating debt paydown and have several available levers to create additional liquidity, comfortably satisfying our expected maturities in 2025 and beyond.
Turning to Steward. This is understandably a complicated restructuring process involving several interested stakeholders with competing priorities. The Massachusetts market has received the most public attention to date, which is particularly unfortunate as the noise in Massachusetts has slowed down sales process in other important markets, where transitioning Steward's ownership is expected to be more straightforward.
As a reminder, the 8 properties that Steward operates in Massachusetts are 50% owned by MPT through our interest in a joint venture with Macquarie Infrastructure Partners. These properties are also subject to a master lease agreement that's separate from all other Steward properties around the country.
Since early 2024, well before Steward's Chapter 11 filing in May, we have sought to work collaborating with Steward and the Commonwealth to keep its hospitals functioning and minimize patient disruption through the transition to new operators, including stepping in to provide necessary capital when no other party was willing to do so. We have regularly met with the Department of Health and Human Services. We have participated in several rounds of negotiations with state officials to discuss viable solutions.
We believe all of these hospitals are critical to the health care of their respective communities. And over the years, we have invested approximately $140 million over and above our original purchase price into these 8 facilities to fund various infrastructure upgrades. We have long maintained these facilities can be run profitably by other operators, and the recent bidding process validated this belief, quality operators, including some of the largest private hospital systems in the country showed early interest in submitting or actually submitted bids, contemplated various rent concession scenarios that MPT and Macquarie were willing to grant.
In short, we believe there were several viable paths to keeping all 8 of these hospitals open, and MPT was willing to be a part of the solution to avoid closure of any of the hospitals. Unfortunately, the considerable volume of inaccurate negative commentary scared away or discouraged many for-profit and out-of-state operators from participating in the process.
The Commonwealth focus seems to have been on transferring ownership of these hospitals only to in-state, not-for-profit operators and ultimately, the regulators determine who receives the license to operate these facilities. We are deeply concerned that the recent criticism of privately owned health care businesses and real estate owned by REITs stems for a misunderstanding that will only damage access to care and employment opportunities for health care workers over the long term.
The fact of the matter is every dollar of a hospital's own resources that is used for real estate is a dollar that is unavailable to invest in valuable patient-facing categories. And sale leasebacks have proven over the long term to be a relatively inexpensive financing alternative compared to the other choices.
Given the conditions currently being imposed on the sales process in Massachusetts, we believe exiting these 8 properties and allowing Steward and the Commonwealth to determine the most appropriate outcome is in the best interest of all stakeholders.
Our primary objectives have always been to ensure that the health care of these communities benefits from our business model and to protect the best interest of our shareholders. We are obviously disappointed with the outcome in Massachusetts. But subject to court approval, we expect positive results in Steward's remaining markets based on the real estate agreements, we have negotiated with new operators as well as others that are close to being finalized. We urge all parties in the process, to move with a greater sense of urgency for the sake of all of the local communities.
I'll now turn it over to Rosa to discuss the performance trends across our portfolio.
Thank you, Ed. As usual, I will take you through some of the highlights across our diverse portfolio of critical hospital real estate, beginning with a few high-level comments. As Ed mentioned, operators across our portfolio are reporting positive volume and EBITDARM coverage trends. General acute and behavioral health facilities which represent approximately 75% of our total assets reported particularly notable improvements.
The post-acute segment, which includes our inpatient rehabilitation and LTACH portfolios remained flat. In the U.K. and Continental Europe, we continue to benefit from increased demand for private hospitals, an unmistakable trend over the past few years. For example, the private health care information network in the U.K. recently reported a 7% year-over-year increase in incidence of patients choosing private treatment options in 2023, and the head of the NHS is reportedly urging the U.K. administration to allow for more collaboration with the private sector in order to alleviate NHS backlogs.
Circle Health, which was recently recognized by health investors as Private Hospital Group of the Year for the fourth consecutive year is clearly well positioned to capitalize on this trend and continues to deliver steady financial performance.
During the second quarter, we announced the successful completion of approximately $800 million of new nonrecourse, non-amortizing secured financing backed by some of our U.K. assets operated by Circle further demonstrating the tremendous value embedded in our U.K. portfolio. Also in the U.K. Priory, which is the largest independent mental health care provider in the country and which consistently delivers more than 2x coverage continues to take action to innovate in this space and position itself to most efficiently service the heightened demand it continues to see.
To that end, they are in the second year of implementing the Priory plan a comprehensive strategy for quality improvement through focusing on best-in-class services and measured outcomes. In Germany, Priory's parent company MEDIAN is delivering steady performance making incremental improvements through both increased occupancy and higher reimbursement rates.
Turning to our U.S. portfolio. Excluding Steward and prospect, general acute revenue trends remained strong, benefiting from higher admissions, acuity mix and reimbursement rates. During the quarter, we closed on our previously announced formation of a new JV with a leading institutional asset manager to hold our 5 Utah properties operated by CommonSpirit. This portfolio, in which we retain a 25% interest, is performing well with admissions up more than 20% year-over-year.
Ernest Health's consolidated EBITDARM coverage remains stable and above 2x with its same-store earth, delivering strong performance, partially offset by the LTACH and new IRF developments. In March, Ernest successfully opened its first inpatient rehab unit inside one of their LTACHs and is already seeing positive results from the unit. This was also the second consecutive quarter in which Ernest's new IRF development portfolio reported positive EBITDARM as admissions and revenues continue to ramp.
Our LifePoint Health portfolio of hospitals was a big standout this quarter, recording its highest total admissions in nearly 3 years. As a result, LifePoint has realized material EBITDARM improvement over the last several months. In fact, LifePoint's EBITDARM results in May of 2024 were its highest in more than 2 years. LifePoint behavioral's operating performance also benefited from steadily increasing inpatient volumes as well as continued decreases in physician-related costs.
Our Prime facility saw 3% growth in admissions year-over-year. This quarter, we also announced that we completed the sale to Prime of 5 hospitals in California and New Jersey for aggregate consideration of $350 million. This consideration consists of $250 million paid in cash and a $100 million interest-bearing mortgage.
Coverage at ScionHealth general acute facilities increased to almost 1x year-over-year, driven by double-digit volume increases and substantial reductions in contract labor.
Finally, Prospect's California facilities are seeing some positive momentum on the admission side so far this year with an approximate 2% increase year-over-year on a trailing 12-month basis. This momentum has helped California coverages rebound from last year's cyber attack.
Prospect fully paid its $18 million of cash rent due from the first and second quarters as well as $4 million of cash interest. In summary, MPT has a well-diversified portfolio with more than 50 unique tenants operating across care settings. We are confident the steadily improving volume and cost trends we are seeing will continue to drive solid financial performance for the vast majority of the operators in our portfolio, and, in turn, generate meaningful cash flows for MPT over the long term.
Kevin?
Thank you, Rosa. This morning, we reported a GAAP net loss of $0.54 per share and normalized FFO of $0.23 per share for the second quarter of 2024. As mentioned in our earnings release, second quarter results included approximately $19 million of consolidated cash revenue from Steward and $22 million from Prospect. It is worth noting that Steward additionally continue to make full payment as it relates to the Massachusetts partnership portfolio, about $14 million in the second quarter, representing MPT share.
Subsequent to quarter end, Steward has paid for the month of July, approximately $10 million in consolidated rent and $9.5 million of consolidated rent, of which our share is 50%. With regard to G&A, the increase from the first quarter is due to the timing of stock award grants resulting in only a partial quarter of expense in Q1, excluding stock compensation expense, G&A is flat with the quarter and lower than the 2023 second quarter quarter.
I will point out that the majority of this noncash share-based compensation expense is related to performance-based awards that will not pay out unless our share price appreciates substantially from the price on the date of the award and as of today. In April, we formed a new joint venture with a leading investment firm involving our 8 hospitals in the Salt Lake City area operated by CommonSpirit. We hold an equity investment of approximately $100 million, representing our 25% share of the JV.
I will also point out that we will record our share of the JV earnings on a quarterly lag basis. With the first quarter of reporting being the third quarter of 2024. Approximately $550 million in noncash impairment charges were recorded in the quarter, primarily related to the full impairment of our equity stake in the Massachusetts partnership with Macquarie. These charges were estimated and recorded pursuant to U.S. GAAP accounting rules and reflect conservative assumptions regarding potential recovery.
We currently have approximately $440 million of secured non-real estate investments in Steward and $2.3 billion in real estate that is expected to be re-leased or sold as part of the ongoing bankruptcy process. We believe these investments are fully recoverable at this time. However, no assurances can be given that we will not have any additional impairments in future periods.
I will note a couple of other adjustments to normalized FFO. First, we adjusted downward by approximately $163 million the book value of our investment in PHP Holdings based on the latest third-party independent appraisal. It is important to note, however, that this adjustment does not necessarily reflect the ultimate sales price that prospects expects to obtain from any prospective purchasers.
Second, we recorded a small favorable adjustment related to the fair value of marketable securities such as our shares of [indiscernible]
With that, I will turn it over to Steve for a discussion of liquidity and our overall capital allocation strategy. Steve?
Thank you, Kevin. On our last quarterly update call, we expressed our belief that we would exceed our $2 billion full year monetization target. And as Ed just pointed out, we have now executed more than $2.5 billion in year-to-date transactions. Very importantly, virtually all of these, a total of roughly 50 hospital facilities in 5 major transactions have been executed at very attractive valuations, whether that's based on capitalization rate, IRRs to us, real estate replacement cost, our initial investment and almost any other valuation metric, particularly in light of the diminished values that other real estate categories have suffered during the same period.
These transactions have provided liquidity that we have used to pay down $1.5 billion of debt in the second quarter, enabling us to fully pay all 2024 maturities and address all of our 2025 scheduled maturities. As a result of our success executing this liquidity strategy, we received overwhelming support from our bank lenders to adjust our revolving credit agreement to provide a long runway in covenant cushion as Steward continues to pursue the sale and retenanting of its hospital operations.
There is long-term value in the majority of our hospital real estate currently leased to Steward, and we expect to retain that value as we replace Steward with new tenants or sell assets to quality operators through the court supervised restructuring process.
We appreciate our lenders' recognition that we do not control the timing of this process, and the additional flexibility afforded by this covenant cushion during the restructuring process. We filed an 8-K this morning that describes key provisions of the amendment, so I will only briefly summarize a few points.
First, on last quarter's call, we discussed the temporary waiver of the loan provision that limited the value of certain assets leased to tenants in bankruptcy to 10% of total unencumbered assets. At that time, the waiver was effective through the end of this current quarter -- third quarter. This limitation has now been weighed for 14 months through September 30, 2025. This generally means that our real estate lease to Steward will remain in that calculation until then. And our expectation is that virtually all assets leased to Steward will have been sold or transitioned to other operators within that period. And although there are no assurances, we certainly expect that will happen sooner rather than later in the period.
Second, given our current priorities and the liquidity generated from asset sales and financing transactions already executed and available in the future, we further reduced our revolving credit commitment to $1.28 billion, we just do not need the multibillion-dollar facility that was available to us during the years of rapid and significant growth.
Third, the amendments also provide headroom all the way through next September of 2025 for certain financial covenants. These modifications will preclude the need to continually evaluate and adjust for the effects of the Steward transitions, including sale prices, lease terms, any rent deferrals, et cetera. Again, these are described in this morning's 8-K. I will highlight that the consolidated net worth covenant has been permanently adjusted to $5 billion and that can be compared to the $6.2 billion of GAAP net worth we reported as of the end of the second quarter.
Other changes that are effective through September 30, 2025, are to increase the allowed total leverage to 65%, increase allowed unsecured leverage to 70% and reduce the required unsecured interest coverage to 1.45x. We believe that each of these covenants gives us cushion that anticipates the Steward retenanting selling outcomes. And as of June 30, which is the effective date of the amendments, we are well within each of them.
Finally, we agreed also that unless we elect to terminate the amendment provisions ahead of next September 30, we will limit to $0.08 per share per quarter, the amount of cash included in our quarterly dividend payments. Based on this morning's reported quarterly results and recent market share prices, this would represent a normalized FFO payout ratio of about 35% and a dividend yield of about 7%.
If our retaxable income requires a payout in excess of the $0.08 per quarter, our Board will determine which additional dividend alternatives are most appropriate at the time. These amendments, again, are generally effective through the end of the third quarter of 2025. That is certainly not a prediction that it will take more than a year to transition our Steward leased assets but is an indication of the assessed strength of our business, especially that of the non-Steward portion of our assets.
For our fixed income investors and shareholders, the key takeaway from this amendment should be that we have repeatedly proven, especially to our lenders. Over the last couple of years that our hospital real estate portfolio is strong and liquid and readily available to strategically monetize in the event we elect to do so, and looking through calendar 2025 into 2026, our expectation is that we will have a stable portfolio of hospital real estate leased to key operators in their respective markets with no exposure to Steward.
We expect to have multiple options to satisfy maturing loans, including refinancing, additional monetization of high-value real estate and other strategies.
And with that, I will turn it back over to the operator for questions.
[Operator Instructions] And the first question will be from Austin Wurschmidt from KeyBanc Capital Markets.
Ed -- can you expand on your comments about expecting positive results in the Steward from re-leasing the Steward assets? And just give us a sense how those negotiations are going, comparing kind of the in-place contractual rent today with Steward versus what you expect to achieve and then also share what percent of the facilities leased to Steward currently have an operator lined up to take over operations at the appropriate time.
So Austin, I absolutely would love to, but we're under a court confidentially -- confidential order as are all of the other participants in this bankruptcy process. And other than my prepared remarks, that's all I can say at the moment.
Is there anything that you're able to share about percent of assets that you would expect to sell out of the $2.3 billion of total real estate investments?
All I can say is that there will be a combination of sales and retenanting.
Okay. Got it. And then how should we think about what the quarterly cash rent and interest payment from Steward should be for the third quarter?
Austin, Steve here. Again, it's something that is moving rapidly, literally day-to-day in the bankruptcy procedures, and we simply don't have the visibility into the evolution of either assets sold or retenanted and if retenanted what the cash lease rate will be, if there's any deferral, if there's any ramp-up. So we simply don't have the confidence to give any precision to a prediction.
And our next question is from Joshua Dennerlein from Bank of America.
I guess just thinking through like the the lease rejection in Steward Mass portfolio. Just like how do we get comfortable that, that wouldn't happen across the rest of the Steward assets or maybe just even the broader portfolio, if there are other [indiscernible] just seems like it might be like 1 of the easier parts of the capital structure you could like adjust or kind of wape out if you can't flex. I'm assuming it's hard to flex labor cost for hospitals. So just kind of how can we get comfortable that, that might not happen?
So I'll just point out, Josh, and thanks for the question, that Massachusetts is different than everything else just by virtue of its structure, including it's a joint venture that we have with Macquarie. You all know that. And very importantly, they're secured nonrecourse financing on those assets and that limits, of course, the true equity value is not necessarily nearly as much as the gross value of the assets.
And then finally, again, within the constraints that Ed just described about confidentiality and mediation and so forth. We did believe there were alternatives to closing certain hospitals, and we just weren't able to work through the regulatory constraints to achieve what we thought was probably higher value.
Okay. And then on the -- Ed, you mentioned mass situation is causing some like noise with like potential buyers. What is it that like maybe [ scoop down ] and like what are they waiting for to kind of maybe come back and look at -- relook at some of the assets.
Josh, maybe you misunderstood me, but that was only in regard to Massachusetts.
Okay. Okay. That's fair.
And the next question will be from Vikram Malhotra from Mizuho.
I guess you've talked -- you've given us some thoughts around Steward. The rest of the portfolio, given sort of where I guess, coming close to an election, there may be more changes on the regulatory front towards hospitals, payments. I'm just wondering, are you able to sort of maybe give us some color on any of the other tenants that may be sort of close to kind of onetimes or anything that you may be monitoring from a watch list perspective, just as we model kind of the second half into '25?
So Vikram, it really only remains the one tenant that we talked about in the last quarter, which represents around 1% of our total portfolio. From our standpoint, the properties that we have with them continue to perform okay. They have some properties that are not associated with MPT, that they're in the process of selling. And other than that, there really aren't any issues in the portfolio.
Okay. That makes sense. And then just on the CapEx side, I think it was about $100 million. I'm just wondering and maybe that was also development. I'm just wondering like on a go-forward basis, second half and maybe if you can give some color or thoughts into '25, how do you anticipate that CapEx, both maintenance as well as development CapEx trending into next year?
So the vast majority of that continues to be the 2 facilities that we have under development related to Steward, one in Norwood and one in Texas in Texarkana. You may have seen in Massachusetts that the Supreme Court ruled favorably on the definition of the storm damage there in Massachusetts. So we expect to have additional insurance relief there. We continue to have good interest in both of those facilities on a go-forward basis and believe that that they will be completed and released to someone other than Steward.
And the next question is from Michael Carroll from RBC.
Just following up on your last comment regarding the Norwood Hospital, Ed. I guess those insurance proceeds, I know it's been kind of stuck in court for some time now. I mean do you need to go through the appeal process? I guess what's the timing of that happening? And is there a potential of a settlement occurring where you can get those proceeds sooner?
So you're right, we do have to go back to the lower court. The Supreme Court ruled in our favor on the definition of the storm damage, and I am not going to try to make a guess on what the next timing will be. It was a very favorable ruling for us.
Okay. Great. And then just wanted to touch on the credit facility amendment. In the 8-K, you mentioned that MPW is required to repay outstanding amounts from certain proceeds from asset sales and debt transactions. I mean, what does that mean? I mean if you have a big asset sale, does 100% of those proceeds need to go pay down that credit facility? And can you pull on that credit facility right now? Is there any limitations on you pulling additional funds from the available -- from the availability under the facility.
No. We have access to the facility. And what -- your initial question, a certain percentage. And I think it's public in the document we'll file is 50% of net cash proceeds from certain future asset sales initially, you're targeted to pay down. You may recall, we have a sterling-based term loan that's due in January. So that will be prepaid with any additional property sale cash proceeds. .
But you don't lose the capacity once you pay down the availability?
On the line, that's correct. Yes. The -- just to be clear, paying down the Sterling term loan, that's permanent because that matures in January '25. But paying down on the line, we have full access to redraw under the line.
And the next question is from Mike Mueller from JPMorgan.
Since it seems like you can't talk about the go-forward mix of sales versus releasing for Steward, can you remind us, like at the beginning of this, what was the total investment when Steward filed? What have you addressed of that investment amount so far? And what you have definitively locked up? And I guess, including the givebacks as well?
Well, Mike, the only thing that's definitively complete as you point, and it is not even definitively complete. We do expect that we'll relinquish our interest in Massachusetts, but even that is not subject to definitive agreement yet.
Okay. Got it. So it's basically that. And then second question, any update you can give us on, I guess, with prospect, the Yale sale back and forth? And anything on the monetization timing for the managed care business?
So on the Connecticut Yale sell, we don't have any update, not going to make any guesses. I think it was roughly a year ago this time that I quit trying to guess what the timing of that situation was going to be. On the PHP sales, I believe they are expecting final bids this month, and then we'll pick a winner and move forward to closing.
And the next question is from Michael Lewis with Truist Securities.
Ed and Steve, you both talked about the options available to you for refinancing debt or adjusting debt over the next several years. I see about $3 billion total in '25 and '26 at 2.8% interest rate. Should we assume that most of that will be addressed through property sales? Or what are kind of those other options that you've been exploring or that you alluded to?
Well, the options are existing liquidity. We've talked about that, further asset sales if necessary, although we have nothing to discuss or announce at this point. At some point, we do expect to be able to refinance, and the normal conventional refinancing replacement as we get through the uncertainty of the Steward situation.
Do you think property level debt or maybe it's too early. You don't know what the public market...
We have no further plans for that. We certainly have capacity. You saw what we were able to achieve on the Circle assets, a sub-7% fixed 10-year nonamortizing loan at more of that is available but that's not our #1 or #2 or probably even #3 priority. We'd like to come out of this after resolving Steward, remaining an unsecured borrower. But those values certainly are available. I guess that's the point I would reiterate. We have a number of levers that we've already pulled exceeding ours and, frankly, anybody's expectations in frankly, 6 months, more of those levers are available. But we also believe that we'll be able to address '26 and beyond maturities with more conventional means.
Okay. Understood. And then my second question, just on the liquidity transactions you've already done, the $2.5 billion plus. What -- is the quality and the yield of those assets kind of representative of the rest of the portfolio? And I'm thinking a little about if the sales are strengthening or weakening the overall risk and growth profile of the portfolio.
No, I don't think so. And I think if you look back across -- going all the way back into early 2023, which would include the Australian transaction. We've sold assets across the globe, across our property type spectrum, across the operator type and gotten a very, very good sample of the overall portfolio.
And as I pointed out earlier, in every situation in every one of those transactions, we've achieved very, very strong valuation. And I don't think, in fact, I feel confident that we haven't diminished the overall quality of the remaining portfolio. That was really the point of my comment that if we need to, if strategically, we decide to sell more. We think we have a very, very strong portfolio that would achieve similar valuation. I think that was the point of your question.
And the next question is from Omotayo Okusanya from Deutsche Bank. .
I just wanted to clarify on the dividend. Is the way it's going to work going forward is it's going to be $0.08 per quarter cash and that's going to be the number, unless, of course, you need to meet your norm dividend requirements. And then if there's any increment that has to get paid out then that gets paid out in some of the alternative forms such as stock or something of that nature. Is that the way we should be thinking about it?
No, I don't think so, Tayo, because the dividend -- the next dividend hasn't been set, it will be said in the ordinary course. All we're saying is, obviously, we have to pay a dividend. We will maintain our REIT status. I think that goes without tag. And of that of that dividend, whatever and whenever it may be determined only up to $0.08 a share per quarter can be in cash.
For clarification. And then one other question I wanted to ask is just in regards to Steward and assets that may be transitioned to other operators. How does it work or could you just walk us through how exactly would it work if Steward again, reject the lease between that period of them rejecting the lease and when you get a new operator in there. So I think you might be going through that at North Shore ready in Florida?
So Tayo, let me remind everyone that the remaining properties are all under 1 master lease. So for the first Steward to reject that lease, they would have to reject them all. These are very valuable properties, not just for us but for Steward as well.
And ladies and gentlemen, this concludes today's question-and-answer session. I would like to turn the conference back over to Ed Aldag for any closing remarks.
Thank you, Chad. And again, I appreciate everyone being on today's call. I wish we could have given you more detailed information on the Steward bankruptcy. But I do want you to listen to what I said in my prepared remarks, we feel very good about where we are and look forward to getting this resolved sooner rather than later.
Thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.