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Section 1: 8-K (8-K)

mrt-8k_20180221.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 21, 2018

 

MEDEQUITIES REALTY TRUST, INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

Maryland

001-37887

46-5477146

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

 

3100 West End Avenue, Suite 1000

Nashville, TN

 

37203

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (615) 627-4710

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



Item 2.02.  Results of Operations and Financial Condition.

On February 21, 2018, MedEquities Realty Trust, Inc. (the “Company”) issued a press release announcing its financial position as of December 31, 2017, results of operations for the three months ended December 31, 2017 and other related information. Also on February 21, 2018, the Company made available on its website (www.medequities.com) a supplemental package, which contains information concerning the Company’s financial position as of December 31, 2017, results of operations for the three months ended December 31, 2017 and other related information. Copies of such press release and supplemental package are furnished as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.

Item 7.01.  Regulation FD Disclosure.

The disclosure contained in Item 2.02 is incorporated herein by reference.

Beginning on February 21, 2018, the Company will use the presentation materials that are included as Exhibit 99.3 to this Current Report on Form 8-K in meetings with investors. A copy of the presentation materials will also be available on the Company’s website, www.medequities.com.

In accordance with General Instructions B.2 and B.6 of Form 8-K, the information included in this Current Report on Form 8-K, including Exhibits 99.1, 99.2 and 99.3 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01.  Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

Number

 

Description

 

 

 

99.1

 

Fourth quarter earnings press release, dated February 21, 2018

 

 

 

99.2

 

Fourth quarter 2017 supplemental package

 

 

 

99.3

 

Investor presentation, dated Q1 2018

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

MedEquities Realty Trust, Inc.

 

 

 

 

Date: February 21, 2018

 

By:

/s/ Jeffery C. Walraven

 

 

 

Jeffery C. Walraven

 

 

 

Executive Vice President and Chief Financial Officer

 

 

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

mrt-ex991_7.htm

Exhibit 99.1

Contacts:

 

 

Jeff Walraven

 

Tripp Sullivan

EVP & Chief Financial Officer

 

SCR Partners

(615) 627-4712

 

(615) 760-1104

IR@medequities.com

 

MEDEQUITIES REALTY TRUST REPORTS FOURTH QUARTER 2017 RESULTS

 

NASHVILLE, Tenn., February 21, 2018 – MedEquities Realty Trust, Inc. (NYSE: MRT) (the “Company”) today announced its consolidated financial results for the quarter ended December 31, 2017 and other recent developments.

 

Highlights – Fourth Quarter and Year to Date

 

Reported results attributable to common stockholders for the fourth quarter of 2017 of net income of $0.18 per diluted share, Funds from Operations (“FFO”) of $0.32 per diluted share and Adjusted FFO (“AFFO”) of $0.31 per diluted share.

 

Closed on the acquisition of one acute care surgical hospital, which previously served as collateral for a mortgage loan, and a commitment to fund construction of a residential treatment facility for an incremental investment of $11 million during the fourth quarter of 2017.

 

Originated a construction mortgage note receivable with a total funding commitment of $19.0 million in January 2018 secured by a behavioral health facility under development and originated a $5.4 million mezzanine loan to fund the development of an inpatient rehabilitation hospital.

 

Issued 2018 per share guidance attributable to common stockholders of net income of $0.63, FFO of $1.17 to $1.21 and AFFO of $1.18 to $1.22.

 

Declared a regular cash dividend of $0.21 per share for the fourth quarter of 2017.

 

Highlights – Full Year 2017

 

Announced $91.2 million of investments at a weighted average initial yield of 9.1%, including sale leasebacks and funding commitments.

 

Added three new states and five new tenant relationships, including an expansion into the behavioral health sector with leading operators.

 

Reported results attributable to common stockholders for 2017 of net income of $0.64, FFO of $1.13 and AFFO of $1.14.

 

Provided substantial flexibility to the capital structure and enhanced the ability to fund future growth with a new $425 million secured credit facility, comprised of a $300 million revolving credit facility and a $125 million term loan, in February 2017.

 

John W. McRoberts, the Company’s Chief Executive Officer and Chairman, noted, “We finished 2017 solidly within our guidance issued at the beginning of last year. We were also able to improve the diversification of the portfolio by adding five new client relationships and expanding into the behavioral health segment of healthcare with two leading operators.  I am excited about the momentum we have coming into 2018, and our balance sheet is well positioned to support our continued growth during the year.”

 

Financial Results for the Fourth Quarter of 2017

Net income attributable to common stockholders for the quarter ended December 31, 2017 was $5.8 million, or $0.18 per diluted common share, compared with a net loss attributable to common stockholders of $1.9 million, or $(0.06) per diluted common share, for the same period in 2016.  The fourth quarter of 2016 reflected the effects of the redemption of all outstanding preferred stock, including a $6.3 million redemption premium upon completion of the Company’s initial public offering (“IPO”). Consolidated total

 


 

revenues for the quarter ended December 31, 2017 were $16.2 million, compared with $14.0 million for the same period in 2016. Total revenues for the quarter ended December 31, 2017 increased approximately $2.2 million as a result of the Company’s real estate investment activities during 2017.  Total revenues were also favorably impacted by $0.4 million in additional rental income related to the Fundamental Healthcare lease modifications that occurred in the second quarter of 2017.

 

FFO for the quarter ended December 31, 2017 was $10.0 million, or $0.32 per diluted common share, compared with $1.6 million, or $0.05 per diluted common share, for the same period in 2016. The $8.4 million increase is primarily the result of higher total revenues of $2.2 million, a decrease in interest expense of $0.5 million and the elimination of $6.4 million of preferred stock dividends and redemption premium upon completion of the IPO, partially offset by an increase in general and administrative expenses of $0.4 million.

 

AFFO for the quarter ended December 31, 2017 was $9.8 million, or $0.31 per diluted common share, compared with $8.1 million, or $0.27 per diluted share, for the same period in 2016, primarily as a result of an increase in total revenues, excluding the effects of straight-line rent, of $1.8 million.

 

Investment Activity

As of December 31, 2017, the Company had gross real estate investments totaling approximately $582.3 million, which was comprised of $563.7 million in 32 healthcare facilities and $18.6 million in three mortgage notes receivable collateralized by existing healthcare facilities and redevelopment real estate.

 

During the fourth quarter of 2017, the Company invested or committed to invest $23.5 million in the following transactions:

 

 

On October 10, 2017, the Company provided a commitment of up to $6.0 million at an interest rate of 8.25% to Sequel Youth and Family Services, a leading national provider of diversified behavioral health programs for children, adolescents and adults, to fund construction of a 63-bed, 28,000-square-foot residential treatment facility in Andersonville, Tennessee to replace an existing smaller facility in Norris, Tennessee. The commitment, of which approximately $2.3 million has been drawn to date, is secured by a first mortgage on the new facility and a guarantee from the corporate parent. Construction is expected to be completed in the second half of 2018. Upon completion, the Company has the option to purchase the new facility in a sale-leaseback transaction pursuant to a 15-year triple-net master lease at an initial lease rate of 9.0%. MedEquities also has the exclusive right to make an offer on all future Sequel real estate transactions.

 

On November 10, 2017, the Company acquired a 23,619-square-foot acute care surgical hospital with four operating rooms that previously served as collateral for a $12.5 million interest-only mortgage loan, for a purchase price of approximately $17.5 million.  The purchase price was satisfied by applying the $12.5 million aggregate principal amount outstanding on the mortgage note plus $5.0 million in cash consideration. The Company leased the property to AD Hospital East, LLC pursuant to a 15-year triple net lease with two ten-year renewal options at an initial yield of 9.6%, with annual rent escalators. The lease contains certain operator and personal guarantees, which are subject to future reduction based on maintaining certain minimum financial covenants, and is secured by certain additional assets related to the hospital owned by the guarantor.

 

Subsequent to the end of the fourth quarter, the Company committed to invest up to $24.4 million (up to $45 million if purchase options are exercised) in the following transactions:

 

 

On January 8, 2018, the Company provided a commitment of up to $19.0 million at an interest rate of 10.0% to Haven Behavioral Healthcare, an operator of inpatient psychiatric hospitals in five states, for a three-year term to fund the purchase and conversion of an existing long-term acute care hospital to a 72-bed, 60,029-square-foot inpatient psychiatric hospital in Boise, Idaho. The commitment, of which $7.7 million has been drawn to date, is secured by a first mortgage on the property. Upon completion, the Company has the exclusive right to purchase the facility for a purchase price equal to the outstanding loan balance in a sale-leaseback transaction with a 15-year triple-net lease at an initial lease rate of 9.3%.

 

On January 31, 2018, the Company provided a mezzanine loan of $5.4 million at an interest rate of 8.5% to Hicks Ventures and Cobalt Rehabilitation Hospitals to partially fund the construction of a 42-bed, 57,275-square-foot inpatient rehabilitation hospital in Clarksville, Indiana, a suburb of Louisville, Kentucky. The three-year loan was fully funded at closing and has an annual interest rate of 9.5%, which has a claw-back feature that would equate to a 15.0% rate from the

 

 


 

 

inception of the loan should the Company elect not to exercise its option to purchase the new facility upon completion for approximately $26.0 million pursuant to a 20-year triple-net lease at an initial lease rate of 9.0%.

 

Quarterly Distributions to Common Stockholders

On February 7, 2018, the Company’s Board of Directors declared a cash dividend of $0.21 per share for the fourth quarter of 2017, resulting in $0.84 per share of dividends declared for 2017. The dividend will be paid on March 5, 2018 to stockholders of record as of February 19, 2018.

 

Guidance for 2018

For the year ending December 31, 2018, the Company is providing guidance for net income attributable to common stockholders of $0.63 per diluted common share, FFO of $1.17 to $1.21 per diluted common share and AFFO of $1.18 to $1.22 per diluted common share.

A reconciliation of projected net income attributable to common stockholders per diluted share to projected FFO and AFFO per diluted share is provided as follows:

 

 

Full Year

 

 

2018 Range

 

 

Low

 

High

Net income attributable to common stockholders

 

$

0.63

 

 

$

0.63

 

Add: Real estate depreciation & amortization, net of noncontrolling interest

 

0.54

 

 

0.58

 

FFO attributable to common stockholders

 

1.17

 

 

1.21

 

Stock-based compensation expense

 

0.11

 

 

0.11

 

Deferred financing costs amortization

 

0.03

 

 

0.04

 

Straight-line rental income, net of noncontrolling interest

 

(0.15)

 

 

(0.16)

 

Other adjustments (1)

 

0.02

 

 

0.02

 

AFFO attributable to common stockholders

 

$

1.18

 

 

$

1.22

 

______________________________

(1) Includes adjustments for non-real estate depreciation and straight-line rent expense.

The Company’s guidance for net income attributable to common stockholders, FFO and AFFO for 2018 is based on the following assumptions:

 

Total investment volume of $35 million to $125 million ($35 million of which reflects transactions that have already been announced and are expected to be funded during 2018)

 

Initial cash yields on additional investments in excess of the $35 million of previously announced transactions of 8.0% to 9.0%

 

Cash general and administrative expenses of approximately $9.0 million

 

Interest expense of approximately $10.7 million to $13.4 million, including approximately $1.0 million to $1.3 million in amortization of deferred financing costs

 

Weighted average diluted share count of 31.7 million

 

Portfolio Update

The Company’s stabilized, single-tenanted portfolio and its skilled nursing facility (SNF) portfolio continued to perform as expected for the twelve months ended September 30, 2017 (the most recent reporting period for which information is available for the Company’s operators). Overall, and as presented in the Company’s Supplemental Data, the portfolio operations experienced a slight decline in SNF facility rent coverage, an improvement in LTACH/IRF facility rent coverage and a slight improvement in both stabilized, single-tenanted and SNF portfolio occupancy when compared with the twelve months ended June 30, 2017. Headwinds in reimbursements and other regulatory changes for SNF operators at the state and federal level, together with the impact from the

 

 


 

previously disclosed operational and financial challenges experienced by GruenePointe Holdings, have led to a sequential decline in the Company’s portfolio coverage that is expected to continue for the twelve months ended December 31, 2017.  

 

Based on information provided by GruenePointe Holdings, the Company offers the following update to previous disclosures made on November 7, 2017 with respect to the ten skilled nursing facilities (the “Texas SNF Portfolio”) leased to wholly owned subsidiaries of GruenePointe Holdings (collectively, the “GruenePointe Tenant”) pursuant to a triple-net master lease:

 

For the GruenePointe Tenant reporting period ended September 30, 2017, rent and fixed charge coverage ratios were 0.80 to 1.0 and 0.73 to 1.0, respectively, on an EBITDAR basis, and rent coverage on an EBITDARM basis was 1.07 to 1.0, all of which is consistent with the Company’s previous expectations that coverage results would continue to decline throughout 2017 after which no further substantial decreases would occur.

 

The Company believes that the efforts of the GruenePointe Tenant management are leading to continued improvement in patient census, quality measures and operating costs that we currently expect will return the Texas SNF portfolio to compliance with its lease coverage covenants in the first half of 2019.

 

The GruenePointe Tenant has continued to make timely rental payments under its master lease.

 

Earnings Conference Call and Webcast

The Company will host a conference call and live audio webcast, both open for the general public to hear, later today at 8:00 a.m. Central Time. The number to call for this interactive teleconference is (412) 542-4116. A replay of the call will be available through February 28, 2018 by dialing (412) 317-0088 and entering the replay access code, 10116328.

 

The live audio webcast of the Company’s quarterly conference call will be available online in the Investor Relations section of the Company’s website at ir.medequities.com. The online replay will be available approximately one hour after the end of the call and archived for approximately twelve months.

 

About MedEquities Realty Trust, Inc.

MedEquities Realty Trust (NYSE: MRT) is a self-managed and self-administered real estate investment trust that invests in a diversified mix of healthcare properties and healthcare-related real estate debt investments. The Company’s management team has extensive industry experience in acquiring, owning, developing, financing, operating, leasing and monetizing many types of healthcare properties and portfolios. MedEquities’ strategy is to become an integral capital partner with high-quality and growth-oriented facility-based providers of healthcare services on a nationwide basis, primarily through net-leased real estate investment. For more information, please visit www.medequities.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements provide our current expectations or forecasts of future events and are not statements of historical fact. These forward-looking statements include information about the Company’s 2018 guidance and related assumptions, strategic plans and objectives, potential property acquisitions and investments, anticipated capital expenditures (and access to capital), amounts of anticipated cash distributions to our stockholders in the future, the ability of the GruenePointe Tenant to improve its operating results and return to compliance with financial covenants under its master lease and other matters. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will” and variations of these words and other similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and/or could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.  Forward-looking statements involve inherent uncertainty and may ultimately prove to be incorrect or false. For a description of factors that may cause the Company’s actual results or performance to differ from its forward-looking statements, see the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” included in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), and other documents filed by the Company with the SEC. You are cautioned to not place undue reliance on forward-looking statements. Except as otherwise may be required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or actual operating results.


 

 


 

MedEquities Realty Trust, Inc.

 

Consolidated Balance Sheets

 

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

December 31, 2016

 

Assets

 

 

 

 

 

 

 

 

Real estate properties

 

 

 

 

 

 

 

 

Land

 

$

43,180

 

 

$

39,584

 

Building and improvements

 

 

505,623

 

 

 

440,927

 

Intangible lease assets

 

 

11,387

 

 

 

11,387

 

Furniture, fixtures, and equipment

 

 

3,538

 

 

 

2,976

 

Less accumulated depreciation and amortization

 

 

(41,984

)

 

 

(26,052

)

Total real estate properties, net

 

 

521,744

 

 

 

468,822

 

 

 

 

 

 

 

 

 

 

Mortgage notes receivable, net

 

 

18,557

 

 

 

9,915

 

Cash and cash equivalents

 

 

12,640

 

 

 

9,509

 

Other assets, net

 

 

28,662

 

 

 

31,507

 

Total Assets

 

$

581,603

 

 

$

519,753

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Debt, net

 

$

215,523

 

 

$

144,000

 

Accounts payable and accrued liabilities

 

 

6,605

 

 

 

15,244

 

Deferred revenue

 

 

2,722

 

 

 

2,251

 

Total liabilities

 

 

224,850

 

 

 

161,495

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Common stock, $0.01 par value. Authorized 400,000 shares; 31,836 and 31,757

   issued and outstanding at December 31, 2017 and December 31, 2016,

   respectively

 

 

314

 

 

 

314

 

Additional paid in capital

 

 

375,690

 

 

 

372,615

 

Dividends declared

 

 

(67,691

)

 

 

(40,951

)

Retained earnings

 

 

44,196

 

 

 

23,774

 

Accumulated other comprehensive income

 

 

1,247

 

 

 

-

 

Total MedEquities Realty Trust, Inc. stockholders' equity

 

 

353,756

 

 

 

355,752

 

Noncontrolling interest

 

 

2,997

 

 

 

2,506

 

Total equity

 

 

356,753

 

 

 

358,258

 

Total Liabilities and Equity

 

$

581,603

 

 

$

519,753

 

 


 

 


 

MedEquities Realty Trust, Inc.

 

Consolidated Statements of Operations

 

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended December 31,

 

 

Year ended December 31,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

15,673

 

 

$

13,769

 

 

$

58,913

 

 

$

48,330

 

Interest on mortgage notes receivable

 

 

551

 

 

 

232

 

 

 

2,157

 

 

 

921

 

Interest on notes receivable

 

 

8

 

 

 

9

 

 

 

35

 

 

 

45

 

Total revenues

 

 

16,232

 

 

 

14,010

 

 

 

61,105

 

 

 

49,296

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

4,328

 

 

 

3,618

 

 

 

15,504

 

 

 

14,323

 

Property related

 

 

327

 

 

 

297

 

 

 

1,482

 

 

 

1,303

 

Acquisition related

 

 

95

 

 

 

-

 

 

 

457

 

 

 

488

 

Franchise, excise and other taxes

 

 

65

 

 

 

144

 

 

 

141

 

 

 

366

 

Bad debt expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

216

 

General and administrative

 

 

2,481

 

 

 

2,836

 

 

 

11,677

 

 

 

10,596

 

Total operating expenses

 

 

7,296

 

 

 

6,895

 

 

 

29,261

 

 

 

27,292

 

Operating income

 

 

8,936

 

 

 

7,115

 

 

 

31,844

 

 

 

22,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

4

 

 

 

1

 

 

 

9

 

 

 

195

 

Interest expense

 

 

(2,261

)

 

 

(1,740

)

 

 

(7,701

)

 

 

(10,883

)

 

 

 

(2,257

)

 

 

(1,739

)

 

 

(7,692

)

 

 

(10,688

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

6,679

 

 

$

5,376

 

 

$

24,152

 

 

$

11,316

 

Less: Preferred stock dividends

 

 

-

 

 

 

(6,366

)

 

 

-

 

 

 

(13,760

)

Less: Net income attributable to noncontrolling interest

 

 

(909

)

 

 

(931

)

 

 

(3,730

)

 

 

(266

)

Net income (loss) attributable to common stockholders

 

$

5,770

 

 

$

(1,921

)

 

$

20,422

 

 

$

(2,710

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common stockholders per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

0.18

 

 

$

(0.06

)

 

$

0.64

 

 

$

(0.18

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

31,499

 

 

 

30,363

 

 

 

31,447

 

 

 

15,838

 

Diluted

 

 

31,549

 

 

 

30,363

 

 

 

31,484

 

 

 

15,838

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.21

 

 

$

-

 

 

$

0.84

 

 

$

0.63

 

 


 

 


 

Non-GAAP Financial Measures

We consider the following non-GAAP financial measures useful to investors as key supplemental measures of our performance: funds from operations attributable to common stockholders (“FFO”) and adjusted fund from operations attributable to common stockholders (“AFFO”).

Funds from Operations

FFO is a non-GAAP measure used by many investors and analysts that follow the real estate industry. FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), represents net income (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairments of real estate assets, plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Noncontrolling interest amounts represent adjustments to reflect only our share of depreciation and amortization. We compute FFO in accordance with NAREIT’s definition, which may differ from the methodology for calculating FFO, or similarly titled measures, used by other companies.

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations. We believe that the presentation of FFO provides useful information to investors regarding our operating performance by excluding the effect of real-estate related depreciation and amortization, gains or losses from sales for real estate, including impairments, extraordinary items and the portion of items related to unconsolidated entities, all of which are based on historical cost accounting, and that FFO can facilitate comparisons of operating performance between periods and between REITs, even though FFO does not represent an amount that accrues directly to common stockholders.

Our calculation of FFO may not be comparable to measures calculated by other companies that do not use the NAREIT definition of FFO or do not calculate FFO per diluted share in accordance with NAREIT guidance. FFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.

Adjusted Funds from Operations

AFFO is a non-GAAP measure used by many investors and analysts to measure a real estate company’s operating performance by removing the effect of items that do not reflect ongoing property operations.  To calculate AFFO, we further adjust FFO for certain items that are not added to net income in NAREIT’s definition of FFO, such as acquisition expenses, non-real estate-related depreciation and amortization (including amortization of lease incentives, tenant allowances, and leasing costs), stock-based compensation expenses, and any other non-comparable or non-operating items, that do not relate to the operating performance of our properties.  To calculate AFFO, we also adjust FFO to remove the effect of straight-line rent revenue, which represents the recognition of net unbilled rental income expected to be collected in future periods of a lease agreement that exceeds the actual contractual rent due periodically from tenants for their use of the leased real estate under each lease. Noncontrolling interest amounts represent adjustments to reflect only our share of straight-line rent revenue.

 

Our calculation of AFFO may differ from the methodology used for calculating AFFO by certain other REITs and, accordingly, our AFFO may not be comparable to AFFO reported by other REITs. AFFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.

 

 

 


 

MedEquities Realty Trust, Inc.

 

Reconciliations of FFO and AFFO

 

(in thousands, except per share amounts)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended December 31,

 

 

Year ended December 31,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income (loss) attributable to common stockholders

 

$

5,770

 

 

$

(1,921

)

 

$

20,422

 

 

$

(2,710

)

Real estate depreciation and amortization, net of noncontrolling interest

 

 

4,248

 

 

 

3,536

 

 

 

15,177

 

 

 

14,123

 

FFO attributable to common stockholders

 

 

10,018

 

 

 

1,615

 

 

 

35,599

 

 

 

11,413

 

Acquisition costs on completed acquisitions

 

 

-

 

 

 

-

 

 

 

-

 

 

 

18

 

Stock-based compensation expense

 

 

714

 

 

 

628

 

 

 

3,387

 

 

 

2,555

 

Deferred financing costs amortization

 

 

248

 

 

 

428

 

 

 

1,051

 

 

 

2,466

 

Non-real estate depreciation and amortization

 

 

138

 

 

 

151

 

 

 

560

 

 

 

307

 

Preferred stock redemption premium paid upon completion of IPO

 

 

-

 

 

 

6,256

 

 

 

-

 

 

 

6,256

 

Surety bond fee

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(188

)

Straight-line rent expense

 

 

39

 

 

 

41

 

 

 

157

 

 

 

165

 

Straight-line rent revenue, net of noncontrolling interest

 

 

(1,326

)

 

 

(982

)

 

 

(4,822

)

 

 

278

 

AFFO attributable to common stockholders

 

$

9,831

 

 

$

8,137

 

 

$

35,932

 

 

$

23,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding-

   earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

31,499

 

 

 

30,363

 

 

 

31,447

 

 

 

15,838

 

Diluted

 

 

31,549

 

 

 

30,363

 

 

 

31,484

 

 

 

15,838

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common

   stockholders per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

0.18

 

 

$

(0.06

)

 

$

0.64

 

 

$

(0.18

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares

   outstanding- FFO and AFFO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

31,499

 

 

 

30,363

 

 

 

31,447

 

 

 

15,838

 

Diluted

 

 

31,549

 

 

 

30,447

 

 

 

31,484

 

 

 

15,926

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.32

 

 

$

0.05

 

 

$

1.13

 

 

$

0.72

 

Diluted

 

$

0.32

 

 

$

0.05

 

 

$

1.13

 

 

$

0.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AFFO per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.31

 

 

$

0.27

 

 

$

1.14

 

 

$

1.47

 

Diluted

 

$

0.31

 

 

$

0.27

 

 

$

1.14

 

 

$

1.46

 

 

 

 

(Back To Top)

Section 3: EX-99.2 (EX-99.2)

mrt-ex992_6.pptx.htm

Slide 0

Exhibit 99.2

Slide 1

4Q 2017- Supplemental MedEquities Realty Trust, Inc.Table of ContentsIntroductionManagement, Board of Directors & Investor Contacts2Executive Summary3Capitalization Analysis & Research Coverage42018 Guidance5Financial InformationConsolidated Balance Sheets6Consolidated Statements of Operations - GAAP7Funds from Operations (FFO) & Adjusted Funds from Operations (AFFO)8Consolidated EBITDA & Consolidated Adjusted EBITDA9Debt Overview10Operational & Portfolio InformationOperator Overview & Lease Coverage11Market Summary12Annualized Rental Income Expiration Schedule13Payor Mix by Revenue & Facility-Level Occupancy14Transaction Activity15Additional InformationGlossary16Forward looking statements: This supplemental package contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements provide our current expectations or forecasts of future events and are not statements of historical fact. These forward-looking statements include information about our 2018 guidance and related assumptions, the strategic plans and objectives, potential property acquisitions and investments, anticipated capital expenditures (and access to capital), amounts of anticipated cash distributions to our stockholders in the future and other matters. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” "will" and variations of these words and other similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and/or could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Forward-looking statements involve inherent uncertainty and may ultimately prove to be incorrect or false. For a description of factors that may cause the Company’s actual results or performance to differ from its forward-looking statements, see the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” included in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) and other documents filed by the Company with the SEC. You are cautioned to not place undue reliance on forward-looking statements. Except as otherwise may be required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or actual operating results.Information regarding our operators, tenants and guarantors: This supplemental package includes information regarding certain of our tenants and guarantors, which are not subject to SEC reporting requirements. The information related to our tenants and guarantors contained in this report was provided to us by such tenants or guarantors, as applicable, or was derived from publicly available information. We have not independently investigated or verified this information. We have no reason to believe that this information is inaccurate in any material respect, but we cannot provide any assurance of its accuracy. We are providing this data for informational purposes only. The most recent completed period for which financial and operating information is available for our tenants and guarantors is the period ended September 30, 2017.Definitions and reconciliations: For definitions of certain terms used throughout this supplemental, including certain non-GAAP financial measures, see the Glossary on pages 16-17. For reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures, see pages 8-9. On the cover: TOP - Vibra Rehabilitation Hospital of Amarillo, Amarillo, TX; Mountain's Edge Hospital, Las Vegas, NV; Castle Manor Nursing and Rehabilitation Center, National City, CA; MIDDLE - The Rio at Mission Trails, San Antonio, TX; Baylor Scott & White Medical Center - Lakeway, Lakeway, TX; Physical Rehabilitation and Wellness Center of Spartanburg, Spartanburg, SC; Horizon Specialty Hospital of Henderson, Las Vegas, NV; BOTTOM - Kemp Care Center, Kemp, TX; Heritage Park Nursing Center, Upland, CA; Mira Vista Court, Fort Worth, TX.

Slide 2

4Q 2017- Supplemental MedEquities Realty Trust, Inc.Management, Board of Directors & Investor ContactsCorporate3100 West End Avenue, Suite 1000Nashville, Tennessee 37203615.627.4710www.medequities.comExecutive and Senior ManagementJohn McRobertsBill HarlanJeff WalravenChairman and ChiefPresident, Chief OperatingExecutive Vice PresidentExecutive OfficerOfficer and Directorand Chief Financial OfficerForrest GardnerMichael HammillDavid TravisSVP of Asset & SVP of Finance & CapitalSVP & Chief Accounting OfficerInvestment ManagementMarketsBoard of DirectorsBoard of DirectorsRandall ChurcheyJohn FoySteven GeringerLead Independent DirectorIndependent DirectorIndependent DirectorStephen GuillardBill HarlanElliott MandelbaumIndependent DirectorPresident & Chief OperatingIndependent DirectorOfficerTodd MansfieldJohn McRobertsStuart McWhorterIndependent DirectorChairman & Chief Executive OfficerIndependent DirectorTransfer AgentAmerican Stock Transfer & Trust Co.59 Maiden LaneNew York, New York 10038800.937.5449Investor RelationsJeff WalravenTripp SullivanExecutive Vice President & Chief Financial OfficerSCR Partners615.627.4710615.760.1104jwalraven@medequities.comIR@medequities.com

Slide 3

4Q 2017- Supplemental MedEquities Realty Trust, Inc.Executive SummaryCompany overview: MedEquities Realty Trust (NYSE: MRT) is a self-managed and self-administered real estate investment trust that invests in a diversified mix of healthcare properties and healthcare-related real estate debt investments. The Company’s management team has extensive industry experience in acquiring, owning, developing, financing, operating, leasing and monetizing many types of healthcare properties and portfolios. MedEquities’ strategy is to become an integral capital partner with high-quality and growth-oriented facility-based providers of healthcare services on a nationwide basis, primarily through net-leased real estate investment. For more information, please visit www.medequities.com.Unaudited As of 12/31/17Select Portfolio Statistics Number of Properties32 Licensed Beds (1)2,632 Facility-Level Occupancy (2)83%Weighted Average Lease Term Remaining (3)13.2TTM Portfolio EBITDARM/Rent Coverage (4)2.1xBalance Sheet ($ in thousands)Cash$12,640Gross Assets (5)$623,587Total Debt (6)$216,200Net Debt (Total Debt less Cash)$203,560Net Debt / Gross Assets32.6%Net Debt to Consolidated Adjusted EBITDA, annualized3.6x(1) Excludes the 166 beds in the AAC sober living facilities that are not licensed for treatment.(2) Reflects the facility-level occupancy of our total stabilized, single-tenanted portfolio. See Glossary for definition of our stabilized portfolio.(3) Excludes the medical office building in Brownsville, TX.(4) Includes guarantor-level coverage for our stabilized, single-tenanted buildings for the trailing 12 months as of September 30, 2017.(5) The carrying amount of total assets plus accumulated depreciation and amortization, as reported in the Company's consolidated financial statements.(6) Excludes approximately $677,000 of net deferred financing costs reported as a component of the debt balance in the Company's consolidated financial statements.

Slide 4

4Q 2017- Supplemental MedEquities Realty Trust, Inc.Capitalization Analysis & Research CoverageUnaudited (in thousands except for per-share data and percentages)Three Months Ended12/31/20179/30/20176/30/20173/31/201712/31/2016Common Stock Data Weighted-Average Shares Outstanding - Basic31,499 31,467 31,404 31,415 30,363 Weighted-Average Shares Outstanding - Diluted31,549 31,506 31,487 31,566 30,447 High Closing Price $11.94 $12.79 $12.76 $11.61 $12.00 Low Closing Price $10.37 $11.37 $11.30 $10.75 $10.48 Average Closing Price $11.33 $11.86 $11.97 $11.16 $11.18 Closing Price (as of period end) $11.22 $11.75 $12.62 $11.21 $11.10 Dividends / Share (annualized) (1) $0.84 $0.84 $0.84 $0.84 $0.84 Dividend Yield (annualized) (2)7.5%7.1%6.7%7.5%7.6% Common Shares Outstanding (2)31,836 31,756 31,775 31,775 31,757 Market Value of Common Shares (2) $357,200 $373,133 $401,001 $356,198 $352,503 Total Market Capitalization (2) (3) $573,400 $589,333 $617,201 $356,198 $496,503 Equity Research Coverage (4)B. Riley FBRJMP SecuritiesRBC Capital MarketsBryan MaherPeter MartinMichael Carroll646.885.5423415.835.8904440.715.2649Cantor Fitzgerald & CompanyJ.P. Morgan SecuritiesJoseph FranceMichael Mueller212.915.1239212.622.6689Capital One SecuritiesKeyBanc Capital MarketsDaniel BernsteinJordan Sadler571.835.7202917.368.2280CitigroupRaymond James & AssociatesSmedes RoseJonathan Hughes212.816.6243727.567.1000"Investor Conference Call and Webcast:The Company will host a conference call and live audio webcast, both open for the general public to hear, on February 21, 2018 at 8:00 a.m. Central Time. The number to call for this interactive teleconference is (412) 542-4116. A replay of the call will be available through February 28, 2018 by dialing (412) 317-0088 and entering the replay access code, 10116328."(1) Based on fourth quarter 2017 dividend of $0.21 that was declared in February 2018 and will be paid in March 2018.(2) Based on closing price and ending shares for the last trading day of the quarter.(3) Market value of shares plus debt as of quarter end.(4) The analysts listed provide research coverage on the Company. Any opinions, estimates or forecasts regarding the Company's performance made by these analysts are theirs alone and do not represent opinions, estimates or forecasts by the Company or its management. The Company does not by reference above imply its endorsement of or concurrence with such information, conclusions or recommendations.

Slide 5

4Q 2017- Supplemental MedEquities Realty Trust, Inc.2018 GuidanceUnauditedFull Year 2018 RangePer shareLowHighNet income attributable to common stockholders $0.63 $0.63 Real estate depreciation & amortization, net of noncontrolling interest 0.54 0.58 FFO attributable to common stockholders $1.17 $1.21 Stock-based compensation expense 0.11 0.11 Deferred financing costs amortization 0.03 0.03 Straight-line rental income, net of noncontrolling interest (0.15) (0.16)Other adjustments (1) 0.02 0.02 AFFO attributable to common stockholders $1.18 $1.22 AssumptionslTotal investment volume of $35 million to $125 million ($35 million of which reflects transactions that have already been announced and are expected to be funded during 2018)lInitial cash yields on additional investments in excess of the $35 million of previously announced transactions of 8.0% to 9.0%lCash general and administrative expenses of approximately $9.0 millionlInterest expense of approximately $10.7 million to $13.4 million, including approximately $1.0 million to $1.3 million in amortization of deferred financing costslWeighted average diluted share count of 31.7 million

Slide 6

4Q 2017- Supplemental MedEquities Realty Trust, Inc.2018 GuidanceUnauditedFull Year 2018 RangePer shareLowHighNet income attributable to common stockholders $0.63 $0.63 Real estate depreciation & amortization, net of noncontrolling interest 0.54 0.58 FFO attributable to common stockholders $1.17 $1.21 Stock-based compensation expense 0.11 0.11 Deferred financing costs amortization 0.03 0.03 Straight-line rental income, net of noncontrolling interest (0.15) (0.16)Other adjustments (1) 0.02 0.02 AFFO attributable to common stockholders $1.18 $1.22 AssumptionslTotal investment volume of $35 million to $125 million ($35 million of which reflects transactions that have already been announced and are expected to be funded during 2018)lInitial cash yields on additional investments in excess of the $35 million of previously announced transactions of 8.0% to 9.0%lCash general and administrative expenses of approximately $9.0 millionlInterest expense of approximately $10.7 million to $13.4 million, including approximately $1.0 million to $1.3 million in amortization of deferred financing costslWeighted average diluted share count of 31.7 million

Slide 7

4Q 2017- Supplemental MedEquities Realty Trust, Inc.Consolidated Statements of Operations - GAAP(in thousands, except per-share amounts)Three Months Ended(Unaudited)12/31/20179/30/20176/30/20173/31/201712/31/2016Revenues:Rental income $15,673 $15,114 $14,287 $13,839 $13,769 Interest on mortgage notes receivable 551 644 529 433 232 Interest on notes receivable 8 8 9 10 9 Total revenues $16,232 $15,766 $14,825 $14,282 $14,010 Operating expenses:Depreciation and amortization 4,328 3,931 3,627 3,618 3,618 Property related 327 326 477 352 297 Acquisition related 95 33 263 66 - Franchise, excise and other taxes 65 50 (60) 86 144 General and administrative 2,481 3,046 2,979 3,171 2,836 Total operating expenses $7,296 $7,386 $7,286 $7,293 $6,895 Operating income $8,936 $8,380 $7,539 $6,989 $7,115 Other income (expense):Interest and other income 4 3 1 1 1 Interest expense (2,261) (2,117) (1,808) (1,515) (1,740)Total other income (expense) $(2,257) $(2,114) $(1,807) $(1,514) $(1,739)Net income $6,679 $6,266 $5,732 $5,475 $5,376 Less: Preferred stock dividends - - - - (6,366)Less: Net income attributable to noncontrolling interest (909) (941) (936) (944) (931)Net income (loss) attributable to common stockholders $5,770 $5,325 $4,796 $4,531 $(1,921)Net income (loss) attributable to common stockholders per share - basic and diluted $0.18 $0.17 $0.15 $0.14 $(0.06)Weighted-average shares outstanding - basic31,499 31,467 31,404 31,415 30,363 Weighted-average shares outstanding - diluted31,549 31,506 31,487 31,415 30,363 Dividends declared per common share $0.21 (1) $0.21 (2) $0.21 (3) $0.21 (4) $- (5) (1) Dividend for the fourth quarter of 2017 of $0.21 per share was declared in February 2018 and will be paid in March 2018.(2) Dividend for the third quarter of 2017 of $0.21 per share was declared and paid in November 2017.(3) Dividend for the second quarter of 2017 of $0.21 per share was declared and paid in August 2017.(4) Dividend for the first quarter of 2017 of $0.21 per share was declared and paid in May 2017.(5) Dividend for the fourth quarter of 2016 of $0.21 per share was declared and paid in January 2017.

Slide 8

4Q 2017- Supplemental MedEquities Realty Trust, Inc.Funds from Operations (FFO) & Adjusted Funds from Operations (AFFO)Unaudited (in thousands, except per-share amounts)Three Months Ended12/31/20179/30/20176/30/20173/31/201712/31/2016Net income (loss) attributable to common stockholders $5,770 $5,325 $4,796 $4,531 $(1,921)Real estate depreciation and amortization, net of noncontrolling interest 4,248 3,849 3,544 3,536 3,536 FFO attributable to common stockholders $10,018 $9,174 $8,340 $8,067 $1,615 Stock-based compensation expense 714 783 934 956 628 Deferred financing costs amortization 248 241 240 322 428 Non-real estate depreciation and amortization 138 136 134 152 151 Preferred stock redemption premium paid upon completion of the IPO - - - - 6,256 Straight-line rent expense 39 39 39 40 41 Straight-line rent revenue, net of noncontrolling interest (1,326) (1,348) (1,179) (969) (982)AFFO attributable to common stockholders $9,831 $9,025 $8,508 $8,568 $8,137 Weighted-average shares outstanding - earnings per shareBasic 31,499 31,467 31,404 31,415 30,363 Diluted 31,549 31,506 31,487 31,415 30,363 Net income (loss) attributable to common stockholders per share - basic and diluted $0.18 $0.17 $0.15 $0.14 $(0.06)Weighted-average shares outstanding - FFO and AFFOBasic 31,499 31,467 31,404 31,415 30,363 Diluted 31,549 31,506 31,487 31,566 30,447 FFO per common shareBasic $0.32 $0.29 $0.27 $0.26 $0.05 Diluted $0.32 $0.29 $0.26 $0.26 $0.05 AFFO per common shareBasic $0.31 $0.29 $0.27 $0.27 $0.27 Diluted $0.31 $0.29 $0.27 $0.27 $0.27

Slide 9

4Q 2017- Supplemental MedEquities Realty Trust, Inc.Consolidated EBITDA & Consolidated Adjusted EBITDAUnaudited (in thousands)Three Months Ended12/31/20179/30/20176/30/20173/31/201712/31/20169/30/2016Net income $6,679 $6,266 $5,732 $5,475 $5,376 $4,734 Interest expense 2,261 2,117 1,808 1,515 1,740 2,792 Franchise, excise, and other tax expense (income) 65 50 (60) 86 144 87 Depreciation and amortization 4,593 4,192 3,886 3,895 3,894 3,868 Consolidated EBITDA $13,598 $12,625 $11,366 $10,971 $11,154 $11,481 Stock-based compensation expense 714 783 934 956 628 633 Consolidated Adjusted EBITDA $14,312 $13,408 $12,300 $11,927 $11,782 $12,114

Slide 10

4Q 2017- Supplemental MedEquities Realty Trust, Inc.Debt OverviewUnaudited ($ in thousands) at 12/31/2017 Debt Instrument - Secured Bank FacilityMaturityRateRate TypeBalance % of Total Debt $300 Million Revolving Credit FacilityFebruary-213.56% (1)Floating $91,200 42.2% $125 Million Term LoanFebruary-223.84% (2)Fixed 125,000 57.8% $216,200 100.0% Balance Sheet ($ in thousands) at 12/31/2017 Cash $12,640 Gross Assets (3) $623,587 Total Debt $216,200 Net Debt $203,560 Debt Ratios at 12/31/2017 Net Debt to Gross Assets Ratio32.6% Net Debt to Total Market Capitalization35.5% Net Debt to Consolidated Adjusted EBITDA, annualized3.6x(1) Weighted-average interest rate outstanding at December 31, 2017 based on LIBOR and a leverage adjustment. The facility pricing grid ranges from 175-300 basis points over LIBOR depending upon leverage. (2) The Company entered into interest rate swap arrangements, effective April 10, 2017, on the full $125 million term loan. The Company's forecasted all-in interest rate under the term loan is composed of a fixed swap rate of 1.84% plus the applicable margin under the credit facility.(3) The carrying amount of total assets plus accumulated depreciation and amortization, as reported in the Company's consolidated financial statements.

Slide 11

4Q 2017- Supplemental MedEquities Realty Trust, Inc.Operator Overview & Lease CoverageUnaudited ($ in thousands) at 12/31/17 Gross Number of Operator States Property Type Investment GLA/Square Feet Licensed Beds (1) OnPointeTX SNF $145,142 339,733 1,138 Life GenerationsCA SNF/ALF 96,696 181,149 559 Fundamental HealthcareNV, SC, TX ACH/LTACH/SNF 86,057 211,280 431 Vibra HealthcareCA, TX LTACH/IRF 77,429 77,925 104 Baylor Scott & White HealthTX ACH 75,056 270,512 106 AAC HoldingsNV, TX BH 25,047 180,307 - Magnolia Health SystemsIN SNF 15,039 52,919 160 Prospect MedicalCT SNF 10,133 65,721 130 Advanced DiagnosticsTX ACH 17,531 23,619 4 Multi-tenantedTX MOB 15,598 67,682 - Total - All Properties $563,728 1,470,847 2,632 Stabilized Facility & Guarantor Lease CoverageUnaudited TTM rent coverage EBITDARM Rent CoverageFacilityGuarantor Twelve Months EndedSNF/ALFLTACH/IRFTotalSNF/ALFLTACH/IRFTotal September 30, 20171.22x1.69x1.34x2.22x1.83x2.12x June 30, 20171.41x1.63x1.47x2.21x1.83x2.11x March 31, 20171.52x1.63x1.55x2.30x1.84x2.18x December 31, 20161.62x1.60x1.62x2.32x1.83x2.19x September 30, 20161.65x1.59x1.63x2.36x1.82x2.22xEBITDAR Rent CoverageFacilityGuarantor Twelve Months EndedSNF/ALFLTACH/IRFTotalSNF/ALFLTACH/IRFTotal September 30, 20171.02x1.49x1.14x1.81x1.70x1.78x June 30, 20171.20x1.43x1.26x1.89x1.70x1.84x March 31, 20171.32x1.43x1.35x1.98x1.72x1.91x December 31, 20161.42x1.40x1.41x2.01x1.72x1.93x September 30, 20161.44x1.37x1.42x2.04x1.70x1.95x(1) Excludes 166 beds in the AAC sober living facilities that are not licensed for treatment.

Slide 12

4Q 2017- Supplemental MedEquities Realty Trust, Inc.Market SummaryUnaudited ($ in thousands) (at 12/31/2017) (1)PROPERTY TYPE Geography SNF/ALF ACH LTACH BH IRF MOB Total % of Total Texas11 2 -2 1 1 17 53.1% California6 -1 ---7 21.9% Nevada-1 1 2 --4 12.5% Indiana2 -----2 6.3% South Carolina1 -----1 3.1% Connecticut1 -----1 3.1% Total21 3 2 4 1 1 32 100.0%% OF TOTAL PROPERTIES66%9%6%13%3%3%DISTRIBUTION OF LICENSED BEDS (2) Geography SNF/ALF ACH LTACH BH IRF MOB Total % of Total Texas 1,280 110 - - 44 - 1,434 54.5% California 559 - 60 - - - 619 23.5% Nevada - 130 39 - - - 169 6.4% Indiana 160 - - - - - 160 6.1% South Carolina 120 - - - - - 120 4.6% Connecticut 130 - - - - - 130 4.9% Total 2,249 240 99 - 44 - 2,632 100.0%% OF TOTAL BEDS85%9%4%0%2%0%GROSS INVESTMENT GeographySNF/ALFACHLTACHBHIRFMOBTotal% of Total Texas $161,142 $92,587 $- $11,480 $19,399 $15,598 $300,206 53.3% California 96,696 - 58,030 - - - 154,726 27.4% Nevada - 30,047 20,010 13,567 - - 63,624 11.3% Indiana 15,039 - - - - - 15,039 2.7% South Carolina 20,000 - - - - - 20,000 3.5% Connecticut 10,133 - - - - - 10,133 1.8% Total $303,010 $122,634 $78,040 $25,047 $19,399 $15,598 $563,728 100.0%% OF TOTAL GROSS INVESTMENT54%22%14%4%3%3%RENTAL INCOME (Twelve months ended December 31, 2017) OperatorSNF/ALFACHLTACHBHIRFMOBTotal% of Total OnPointe $14,369 $- $- $- $- $- $14,369 24.4% Life Generations 8,618 - - - - - 8,618 14.6% Fundamental Healthcare 3,515 3,838 1,890 - - - 9,243 15.7% Vibra Healthcare - - 5,384 - 1,596 - 6,980 11.8% Baylor Scott & White Health - 15,192 - - - - 15,192 25.8% AAC Holdings - - - 964 - - 964 1.6% Advanced Diagnostics Hospital - 285 - - - - 285 0.5% Magnolia Health Systems 647 - - - - - 647 1.1% Prospect Medical 499 - - - - - 499 0.9% Medical office building - - - - - 2,116 2,116 3.6% Total $27,648 $19,315 $7,274 $964 $1,596 $2,116 $58,913 100.0%% OF RENTAL INCOME46%33%12%2%3%4%BASE RENT (3) (Twelve months ended December 31, 2017) OperatorSNF/ALFACHLTACHBHIRFMOBTotal% of Total OnPointe $12,676 $- $- $- $- $- $12,676 24.0% Life Generations 8,312 - - - - - 8,312 15.7% Fundamental Healthcare 3,321 3,267 1,820 - - - 8,408 15.9% Vibra Healthcare - - 5,333 - 1,761 - 7,094 13.4% Baylor Scott & White Health - 12,750 - - - - 12,750 24.2% AAC Holdings - - - 864 - - 864 1.6% Advanced Diagnostics Hospital - 238 - - - - 238 0.5% Magnolia Health Systems 566 - - - - - 566 1.1% Prospect Medical 453 - - - - - 453 0.9% Medical office building - - - - - 1,416 1,416 2.7% Total $25,328 $16,255 $7,153 $864 $1,761 $1,416 $52,777 100.0%% OF BASE RENT48%31%13%2%3%3%(1) Excludes any investment in and income from notes and mortgage notes receivable.(2) Excludes 166 beds in the AAC sober living facilities that are not licensed for treatment.(3) Base rent represents the contractual rent due under the facility lease agreements that is included in rental income and excludes items such as operating expense reimbursements, straight-line rent revenues, amortization of above-market leases and lease incentives, and any late fees.

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4Q 2017- Supplemental MedEquities Realty Trust, Inc.Annualized Rental Income Expiration ScheduleUnaudited ($ in thousands) (at 12/31/2017)YearLicensed Beds (1) Expiring Annualized Rental Income (ARI) (2) (3) % of ARI Expiring (2)2017-2028 - $- - 2029 392 4,479 7.3%2030 1,741 24,425 39.7%2031 166 20,460 33.3%2032 333 12,085 19.7%Total 2,632 $61,449 100.0%(1) Excludes the 166 beds in the AAC sober living facilities that are not licensed for treatment.(2) Excludes the medical office building in Texas and notes and mortgage notes receivable.(3) Annualized rental income is defined as total consolidated rent, including straight-line rent and amortization of lease incentives, and excluding operating expense reimbursements as of December 31, 2017, multiplied by twelve.

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4Q 2017- Supplemental MedEquities Realty Trust, Inc. Payor Mix by Revenue & Facility-Level OccupancyUnauditedTwelve Months Ended September 30, 2017Stabilized, Single-Tenanted PortfolioSNF Portfolio (1) OperatorMedicareMedicaidCommercialOtherFacility-Level OccupancyMedicareMedicaidCommercialOtherQ-MixFacility-Level Occupancy Life Generations36%26%28%10%90.8%36%26%28%10%73.9%90.8% OnPointe31%49%9%11%79.3%31%49%9%11%51.5%79.3% Fundamental33%22%41%4%82.0%34%37%23%6%62.5%82.4% Vibra50%1%47%3%64.2%------ Prospect Medical29%43%7%21%94.0%29%43%7%21%56.9%94.0% Total Portfolio37%28%27%9%82.6%33%39%17%11%61.3%83.7% Stabilized, Single-Tenanted PortfolioSNF Portfolio (1) Twelve Months EndedMedicareMedicaidCommercialOtherFacility-Level OccupancyMedicareMedicaidCommercialOtherQ-MixFacility-Level Occupancy September 30, 201737%28%27%9%82.6%33%39%17%11%61.3%83.7% June 30, 201737%27%28%8%82.5%34%39%18%10%61.4%83.5% March 31, 201737%27%29%8%84.0%34%39%17%10%61.2%85.3% December 31, 201637%27%28%8%84.4%34%39%16%10%60.7%85.8% September 30, 201638%27%27%8%85.1%35%40%15%10%60.2%86.3%(1) Includes one assisted living facility (ALF) connected to a skilled nursing facility (SNF).

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4Q 2017- Supplemental MedEquities Realty Trust, Inc.Transaction ActivityUnaudited ($ in thousands) (at 12/31/2017) AcquisitionsAcquisition Date# of PropertiesOperatorProperty TypePurchase Price (1)Licensed Beds (2)Location11/10/20171Advanced Diagnostics Hospital East (3)ACH $17,500 4 East Houston, TX8/9/20174AAC HoldingsBH 25,000 -NV, TX7/31/20172Magnolia Health SystemsSNF 15,000 160 IN6/30/20171Prospect Medical HoldingsSNF 10,000 130 Tolland, CT10/2/20151OnPointeSNF 11,600 117 Graham, TX10/1/20151Vibra HealthcareIRF 19,400 44 Amarillo, TX10/1/20151Life GenerationsSNF 15,000 98 San Diego, CA7/30/20159OnPointeSNF 133,400 1,021 TX3/31/20151Fundamental HealthcareACH 35,400 130 Las Vegas, NV3/31/20155Life GenerationsSNF/ALF 80,000 461 CA2/20/20151Fundamental HealthcareSNF 16,000 142 Ft. Worth, TX2/3/20151Baylor Scott & White Health (4)ACH 75,000 106 Austin, TX9/19/20141Multi-tenantedMOB 15,100 -Brownsville, TX8/1/20142Fundamental HealthcareLTACH/SNF 40,000 159 NV, SC8/1/20141Vibra HealthcareLTACH 58,000 60 Kentfield, CA Total - Acquisitions $566,400 2,632 Mortgage InvestmentsOrigination Date# of PropertiesOperatorProperty TypeTotal FundedLocation8/1/20171Medistar CorporationMOB $6,700 Webster, TX8/1/20141Vibra HealthcareLTACH 10,000 Springfield, MA Total - Mortgage Investments $16,700 Funding Commitments and Construction Mortgage NotesOrigination Date# of PropertiesOperatorProperty TypeTotal CommitmentTotal FundedLocation10/10/20171Sequel Youth and Family ServicesBH 6,000 1,935 (5) Andersonville, TN3/20/20171Fundamental Healthcare (6)ACH 11,000 1,066 (7) Las Vegas, NV Total - Funding Commitments $17,000 $3,001 (1) Represents cash price paid rather than GAAP cost basis.(2) Excludes the 166 beds in the AAC sober living facilities that are not licensed for treatment.(3) Advanced Diagnostics Hospital East was acquired pursuant to an option that applied the previous $12.5 million mortgage loan outstanding on the property originated in January 2017 plus an additional $5.0 million in cash and leased to the operator pursuant to a 15-year triple net lease.(4) A triple-net master lease commenced on September 1, 2016 with Baylor Scott & White Health upon an operator change.(5) Approximately $352 has been funded subsequent to December 31, 2017 resulting in a balance of $2,287 as of February 20, 2018.(6) Pursuant to the amended master lease with Fundamental, rents increase at a rate of 9.25% on incremental draws on the funding commitment for the Mountain's Edge Hospital expansion project.(7) Approximately $23 has been funded subsequent to December 31, 2017 resulting in a balance of $1,089 as of February 20, 2018.

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4Q 2017- Supplemental MedEquities Realty Trust, Inc.Glossary"Acute: refers to a disease or condition with a rapid onset and short course.""Acute Care Hospital (“ACH”): general medical and surgical hospitals that provide both inpatient and outpatient medical services and are owned and/or operated either by a non-profit or for-profit hospital or hospital system. These facilities often act as feeder hospitals to dedicated specialty facilities.""Adjusted Funds From Operations attributable to common stockholders (“AFFO”): AFFO is a non-GAAP measure used by many investors and analysts to measure a real estate company’s operating performance by removing the effect of items that do not reflect ongoing property operations. To calculate AFFO, we further adjust FFO for certain items that are not added to net income in NAREIT’s definition of FFO, such as acquisition expenses, non-real estate-related depreciation and amortization (including amortization of lease incentives, tenant allowances and leasing costs), stock based compensation expenses, and any other non-comparable or non-operating items that do not relate to the operating performance of our properties. To calculate AFFO, we also adjust FFO to remove the effect of straight-line rent revenue, which represents the recognition of net unbilled rental income expected to be collected in future periods of a lease agreement that exceeds the actual contractual rent due periodically from tenants for their use of the leased real estate under each lease. Noncontrolling interest amounts represent adjustments to reflect only our share of straight line rent revenue. Our calculation of AFFO may differ from the methodology used for calculating AFFO by certain other REITs and, accordingly, our AFFO may not be comparable to AFFO reported by other REITs. AFFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.""Assisted Living Facility (“ALF”): residential care facilities that provide housing, meals, personal care and supportive services to older persons and disabled adults who are unable to live independently. They are intended to be a less costly alternative to more restrictive, institutional settings for individuals who do not require 24-hour nursing supervision."Behavioral Health Facility (“BH”): facilities that provide inpatient and outpatient services for the treatment of behavioral health, mental illness and substance abuse. These can include facilities for intensive outpatient treatment, inpatient residential treatment, sober living rehabilitation and psychiatric care."Consolidated Adjusted EBITDA: Consolidated Adjusted EBITDA represents Consolidated EBITDA, as defined below, adjusted further for the effects of acquisition costs, stock-based compensation expense and non-cash write-offs of straight-line rent and accounts receivable. Both Consolidated EBITDA and Consolidated Adjusted EBITDA are relevant non-GAAP measures broadly used by investors and analysts to evaluate the operating performance of a company and to assess a company’s credit strength, including the ability to service indebtedness. Our calculations of Consolidated EBITDA and Consolidated Adjusted EBITDA may differ from the methodologies used by other companies and, accordingly, our Consolidated EBITDA and Consolidated Adjusted EBITDA may not be comparable to amounts reported by other companies. Consolidated EBITDA and Consolidated Adjusted EBITDA should not be used as a substitute for any GAAP financial measures for the purpose of evaluating our financial performance, financial position or cash flows."Consolidated EBITDA: calculated as net income (computed in accordance with GAAP) plus interest expense, taxes, and depreciation and amortization."EBITDAR: represents earnings from the operator’s financial statements before interest, taxes, depreciation, amortization and rent and may be adjusted for certain non-recurring, infrequent or out-of-period items.""EBITDAR Rent Coverage: represents the operator EBITDAR of our stabilized facilities for the trailing twelve months divided by the contractual lease rent for the same period. For the leases that have been in place for less than 12 months as of the date presented, the annualized base rent under the applicable lease as of such date is used.""EBITDARM: represents earnings from the operator’s financial statements before interest, taxes, depreciation, amortization, rent and management fees and may be adjusted for certain non-recurring, infrequent or out-of-period items.""EBITDARM Rent Coverage: represents the operator EBITDARM of our stabilized facilities for the trailing twelve months divided by the contractual lease rent for the same period. For the leases that have been in place for less than 12 months as of the date presented, the annualized base rent under the applicable lease as of such date is used."Facility-Level Occupancy: Occupancy is calculated by dividing the daily number of beds occupied each day as reported by the operators at their facilities during the period presented by the beds in operations (available) at the facilities for the same period.Funds From Operations attributable to common stockholders (“FFO”): FFO is a non-GAAP measure used by many investors and analysts that follow the real estate industry. FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), represents net income (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairments of real estate assets, plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Noncontrolling interest amounts represent adjustments to reflect only our share of depreciation and amortization. We compute FFO in accordance with NAREIT’s definition, which may differ from the methodology for calculating FFO, or similarly titled measures, used by other companies. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations. We believe that the presentation of FFO provides useful information to investors regarding our operating performance by excluding the effect of real-estate related depreciation and amortization, gains or losses from sales for real estate, including impairments, extraordinary items and the portion of items related to unconsolidated entities, all of which are based on historical cost accounting, and that FFO can facilitate comparisons of operating performance between periods and between REITs, even though FFO does not represent an amount that accrues directly to common stockholders. Our calculation of FFO may not be comparable to measures calculated by other companies that do not use the NAREIT definition of FFO or do not calculate FFO per diluted share in accordance with NAREIT guidance. FFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity."Gross assets: the carrying amount of total assets plus accumulated depreciation and amortization, as reported in the Company’s consolidated financial statements.""Inpatient Rehabilitation Facility (“IRF”): facilities that provide inpatient rehabilitation services for patients recovering from injuries, organ transplants, amputations, cardiovascular surgery, strokes, and complex neurological, orthopedic and other medical conditions following stabilization of their acute medical issues.""Long-Term Acute Care Hospital (“LTACH”): facilities designed for patients with serious medical problems that require intense, special treatment for an extended period of time (typically at least 25 days), offer more individualized and resource-intensive care than a skilled nursing facility, nursing home or acute rehabilitation facility, and patients are typically transferred to a long-term acute care hospital from the intensive care unit of a traditional hospital."

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4Q 2017- Supplemental MedEquities Realty Trust, Inc.Glossary (continued)"Medical Office Building (“MOB”): single-tenant or multi-tenant buildings where doctors, physician practice groups, hospitals, hospital systems or other healthcare providers lease space and are typically located near or adjacent to acute care hospitals or other facilities where healthcare services are rendered. Medical office buildings can include outpatient surgical centers, diagnostic labs, physical therapy providers and physician office space in a single building.""Post-acute: the period of time following acute care, in which the patient continues to require elevated levels of medical treatment.""Q-Mix: Quality mix is presented as non-Medicaid revenue as a percentage of total revenue. ""Skilled Nursing Facility (“SNF”): facilities that usually house elderly patients and provide restorative, rehabilitative and nursing care for patients not requiring more extensive and sophisticated treatment that may be available at acute care hospitals or long-term acute care hospitals. They are distinct from and offer a much higher level of care for older adults compared to senior housing facilities. Patients typically enter skilled nursing facilities after hospitalization."Stabilized Portfolio: as of September 30, 2017, our stabilized, single-tenanted portfolio includes only our 18 stabilized skilled nursing facilities, our two stabilized long-term acute care hospitals, our one stabilized assisted living facility (that is connected to a skilled nursing facility in our portfolio) and our one stabilized inpatient rehabilitation facility. Our non-stabilized, single-tenanted property as of September 30, 2017 was Mountain’s Edge Hospital. We consider a facility to be non-stabilized if it is a newly completed development, is undergoing or has recently undergone a significant addition or renovation, or is being repositioned or transitioned to new operators, but in no event beyond 24 months after the date of classification as non-stabilized. Lakeway Hospital is excluded from all operator metrics as a result of Baylor Scott & White's lack of reporting requirements for facility level financial information. Acquired properties that otherwise meet the definition of a stabilized property are included in operating metrics beginning with the first full quarter of ownership.

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Section 4: EX-99.3 (EX-99.3)

mrt-ex993_8.pptx.htm

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Investor Presentation Q1 2018 Exhibit 99.3

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Disclaimer Forward-looking Statements Various statements in this presentation are “forward-looking statements” within the meaning of the U.S. federal securities laws. Forward-looking statements provide our current expectations or forecasts of future events and are not statements of historical fact. These forward-looking statements include information about our strategic plans and objectives, potential property acquisitions and investments, anticipated capital expenditures (and access to capital), amounts of anticipated cash distributions to our stockholders in the future and other matters. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” "will" and variations of these words and other similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and/or could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Forward-looking statements involve inherent uncertainty and may ultimately prove to be incorrect or false. For a description of factors that may cause the Company’s actual results or performance to differ from its forward-looking statements, see the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” included in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) and other documents filed by the Company with the SEC. You are cautioned to not place undue reliance on forward-looking statements. Except as otherwise may be required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or actual operating results. Information regarding our operators, tenants, and guarantors This presentation includes information regarding certain of our tenants and guarantors, which are not subject to SEC reporting requirements. The information related to our tenants and guarantors contained in this report was provided to us by such tenants or guarantors, as applicable, or was derived from publicly available information. We have not independently investigated or verified this information. We have no reason to believe that this information is inaccurate in any material respect, but we cannot provide any assurance of its accuracy. We are providing this data for informational purposes only. The most recent completed period for which financial and operating information is available for our tenants and guarantors is the period ended September 30, 2017. Definitions and Reconciliations For definitions of certain terms used throughout this presentation, including certain non-GAAP financial measures, see the Glossary included in the Appendix on pages 23-25. For reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures, see pages 18-19 in the Appendix. Unless otherwise noted, information set forth herein is as of December 31, 2017. On the cover: from top to bottom - Baylor Scott & White Medical Center - Lakeway, Lakeway, TX; Horizon Specialty Hospital of Henderson, Las Vegas, NV; Mira Vista Court, Fort Worth, TX; Physical Rehabilitation and Wellness Center of Spartanburg, Spartanburg, SC.

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MedEquities Overview Self-advised healthcare REIT with a growth strategy focused on generating attractive risk-adjusted returns across the continuum of acute, post-acute, and behavioral services where demand is needs-based $586 million invested in newly originated assets1 1.78x guarantor-level EBITDAR coverage3 Selectively pursue acquisition pipeline Aa32 hospital operator 13.0 year weighted average lease term1 1 As of December 31, 2017 2 Lakeway Hospital is operated by a subsidiary of Baylor Scott & White Holdings, a healthcare operator with outstanding bonds rated Aa3 by Moody’s 3 For Stabilized Facilities for the trailing twelve month period ended 9/30/2017. 4 Based on fourth quarter 2017 dividend annualized. 5 Based on 2/16/2018 closing price. 6 As of February 21, 2018, we had $62.7 million of additional available borrowing capacity under the revolver based on current borrowing base assets. 7.8% dividend yield5 Well covered dividend 68% AFFO payout ratio $0.84 dividend4 Conservative leverage; net debt/gross assets of 24.6% Baylor Scott & White Medical Center – Lakeway, Lakeway, TX Mountain’s Edge Hospital Las Vegas, NV Continuum of care Mira Vista Court Fort Worth, TX Kentfield Rehab and Specialty Hospital Kentfield, CA Ample available liquidity; $300mm revolver6 Conservative leverage; net debt/gross assets of 32.6%1

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1 Annualized rental and interest income is total monthly rent, including straight-line rent and amortization of lease incentives, and interest income for leases and loans in place as of December 31, 2017, multiplied by twelve. Annualized rental income excludes certain property operating expenses that are reimbursable by tenants, which are included as rental income. Figures include $9.4 million for Lakeway Hospital, $0.9 million of interest for the Vibra mortgage loan, $0.7 million of interest for the Medistar Gemini mortgage loan, and $0.1 million of interest for the Sequel construction mortgage note; map excludes loan interest secured by Springfield, MA LTACH and Webster, TX MOB, which represent approximately 3% of ARI and interest income. 2 Includes one ALF connected to a SNF. 3 Includes 166 beds in the AAC sober living facilities that are not licensed for treatment. Summary of Healthcare Real Estate Portfolio Texas (53% of ARI1) Headquarters SNF2 LTACH MOB ACH IRF El Paso California (24% of ARI1) South Carolina (3% of ARI1) Nevada (13% of ARI1) San Francisco Las Vegas San Diego Amarillo Nashville Spartanburg San Antonio Dallas 32 owned properties $586 million gross acquisitions $58.7 million annualized rental and interest income1 2,798 beds3 Asset type breakdown Total ARI1 = $58.7 million Los Angeles Houston Connecticut (2% of ARI1) BH Indiana (3% of ARI1) Indianapolis Hartford

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Capital Partner for Experienced, Growth-Minded Operators 1 Annualized rental and interest income is total monthly rent, including straight-line rent and amortization of lease incentives, and interest income for leases and loans in place as of December 31, 2017, multiplied by twelve. Annualized rental income excludes certain property operating expenses that are reimbursable by tenants, which are included as rental income. Figures include $9.4 million for Lakeway Hospital, $0.9 million of interest for the Vibra mortgage loan, $0.7 million of interest for the Medistar Gemini mortgage loan, and $0.1 million of interest for the Sequel construction mortgage note. Annualized Rental and Interest Income by Operator1 Total ARI1 = $58.7 million

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18 facilities in 5 states ~3,100 licensed beds in acute care and behavioral hospitals and senior living facilities 29 facilities (22 SNF, 7 ALF) $102 million total operating revenue 34 facilities in 17 states 5 Leading national provider of diversified behavioral health programs for children, adolescents and adults 6 facilities across 6 states 5 Provides inpatient psychiatric stabilization and treatment to adults 48 hospitals 1 $8.4 billion FY 2017 total operating revenue 1 Parent Aa3 rated credit, $10.8 billion total assets Largest not-for-profit​ health care system in Texas and one of the largest in the U.S. 100 facilities in 10 states $578 million in total operating revenue One of the largest privately owned post-acute operators 43 facilities in 17 states $818 million in total operating revenue Experienced LTACH and IRF operator Largest privately owned LTACH operator 21 facilities in Texas, New Mexico and Colorado 2 $84 million in total operating revenue 3 Founded by former CEO and COO of Paramount Healthcare 20 facilities $253 million in total operating revenue Award winning operator with an average CMS rating of 4.6 stars 4 30 facilities in 8 states with over 1,300 beds $280 million in total operating revenue Leading provider of addiction treatment services in the behavioral health sector (NYSE: AAC) Source: Company information as of December 2016 with operator financial information provided for fiscal year 2016, unless otherwise noted. 1 According to Baylor Scott and White website. 2 Includes 11 facilities owned or leased by GruenePointe, which are managed by OnPointe, and 10 additional facilities operated by OnPointe. 3 Represents revenue from GruenePointe. 4 Average star rating reflects those facilities owned by the Company. 5 As of February 2018 per each company’s public website. Capital Partner for Experienced, Growth-Minded Operators

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Facility and Guarantor Lease Coverage and Lease Expirations EBITDAR rent coverage1 Weighted average lease term of 13.0 years2 (By annualized rental income as of December 2017) Baylor Scott & White Medical Center – Lakeway3 3.6x for the tenant (Scott & White Hospital Round Rock) 17.2x for the guarantor (Baylor University Medical Center) 1 The facility coverage ratios include only our stabilized, single-tenanted facilities. Our non-stabilized property as of September 30, 2017 was Mountain’s Edge Hospital. Lakeway Hospital is excluded from all operator metrics as a result of Baylor Scott & White's lack of reporting requirements for facility level financial information. Guarantor coverage ratios are based on actual guarantor coverage for the operators during the period weighted by MRT rent. For leases that have been in place for less than 12 months, the rental expense included in the ratios above is based on annualized base rent. 2 North Brownsville Medical Plaza medical office building not shown in chart. 3 Coverage reflects revenue less expenses for the twelve months ended June 30, 2016 sourced from IRS form 990 as a multiple of the contractual Lakeway Hospital lease payment.

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Differentiated Investment Strategy Acute Highest acuity Post-Acute LTACH IRF SNF Acute Care Hospital Seniors Housing CCRC Memory Care AL IL Behavioral Behavioral/ Psychiatric Higher Acuity Lower Acuity Increasing interdependence across continuum of care Operators are adapting by narrowing their networks of relationships and forming strategic partnerships with both payors and other providers focused on providing high-quality care MRT’s focus helps drive premium cap rates while mitigating risk Regional operators better suited to quickly adapt to changes in the market Many thriving operators in higher acuity spectrum that are well-positioned to execute business plans, but are underserved by other capital providers Focus on off-market deals and developing long-term relationships

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Acquisition Opportunities $600+ billion of institutional quality healthcare real estate MRT will invest with operators across the continuum of acute and post-acute assets Source: Stifel Nicolaus Medical office buildings / outpatient facilities 43% MRT’s target sectors Pipeline Summary Pipeline of ~$500 million Diversification among operator, geography and facility type Initial cash yields range from approximately 8.00% to 9.00% Sourced off-market and target-marketed Will continue to be selective and pursue assets that create the best long-term value for shareholders

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Accelerating Improvement in Operating Results Total Assets ($ in millions) Consolidated Adjusted EBITDA1 ($ in millions) AFFO/Share Attributable to Common Shareholders Dividend Payout Ratio Based on AFFO/Share 1 See page 19 in the Appendix for a reconciliation of adjusted EBITDA to net income attributable to common stockholders.

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Flexible Debt Capital Comprised of $300 million revolver and $125 million term loan1 Borrowing cost of L + 175 to 300, depending on leverage Accordion feature up to $700 million and ability to fund second term loan Credit Facility Fixed-Rate Term Loan Debt Composition $125 million notional value interest rate swap agreements Interest rate of 1.84% swap rate plus the applicable credit facility spread (currently 200 basis points) Revolver balance of $91.2 million and term loan balance of $125.0 million at December 31, 2017 Revolver matures 2021 or 2022 if the one-year extension option is exercised Term loan matures 2022 No Near-Term Maturities 1 As of February 21, 2018, we had $62.7 million of additional available borrowing capacity under the revolver based on current borrowing base assets.

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Common shares outstanding 31,836 Market price per common share as of 2/16/2018 $10.77 Market capitalization of common stock $342,874 Total Debt $216,200 Total Market Capitalization $559,074 Balance Sheet Positioned for Growth Total Debt $216,200 Less: Cash ($12,640) Net Debt $203,560 Gross Assets1 $623,587 Net Debt/Gross Assets 32.6% Net Debt/Total Market Capitalization2 36.4% Net Debt/Consolidated Adjusted EBITDA3, annualized 3.6x Market Capitalization at 12/31/2017 Conservative leverage Ample available liquidity; $300 million revolver with balance of $91.2 million at December 31, 20174 Leverage Metrics at 12/31/2017 1 The carrying amount of total assets plus accumulated depreciation and amortization, as reported in the Company’s consolidated financial statements. 2 Total debt plus market capitalization of common stock. 3 Adjusted EBITDA for fourth quarter of 2017 annualized. See page 19 in the Appendix for a reconciliation of adjusted EBITDA to net income attributable to common stockholders. 4 As of February 21, 2018, we had $62.7 million of additional available borrowing capacity under the revolver based on current borrowing base assets.

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Opportunities to Increase Shareholder Value Accretive Asset Growth Grow asset base through acquisitions that meet underwriting criteria and return thresholds Portfolio Management Enhance portfolio diversification across tenant, state, and type Actively monitor operator performance and further improve strength of tenant group Balance Sheet Management Target conservative leverage of net debt/gross assets of 35%-45% Achieve longer-term debt maturities and at fixed interest rates Shareholder Return Improve cost of capital Grow FFO & AFFO per share metrics Focus on growing dividend over long-term

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Appendix

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Timeline and Operating Statistics for GPH & Texas SNF Portfolio 2015 2016 2017 7/2015 MRT acquires real estate portfolio for $145mm 11/2016 OnPointe hires new President/COO and CFO 2/2017 OnPointe hires SVP Ops with clinical focus 8/2015 OnPointe begins managing, appoint regional executive to manage portfolio Q1 2017 begin replacing facility admins & DONs 2/2017 OnPointe terminates regional executive Q3 2017 begin to see occupancy improvement Q1 2017 CMS quality metric hits low TX SNF Portfolio Rent Coverage, Quarterly1, 2 TX SNF Portfolio Occupancy, Quarterly1 Average CMS Quality Star Rating for TX SNF Portfolio Preliminary Q4 2017 Data TX SNF Portfolio Q-Mix, Quarterly Preliminary Q4 2017 Data 1 Data shown are on a quarterly basis (not on a trailing twelve month basis as reported elsewhere). Rent coverage metrics shown are for the 10-facility Texas SNF portfolio calculated as EBITDARM, EBITDAR using a management fee of 3.0% of revenues that OnPointe is currently able to be paid, and EBITDAR using a management fee of 5.0% of revenues which is used to calculate the lease covenant metrics divided by the quarterly cash rent payment. 2 Coverage metrics for 2016 and 2017 are lower compared to what was shown in the November 2017 Investor Presentation as a result of additional accounts receivable collection reserves and revenue adjustments.

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GPH Ownership, Management, and Guarantee Structure GPH Tenant of TX SNF Portfolio3 Principals of OnPointe Health GPH Partners MRT Lessor OnPointe Health2 Own 34% of GPH Own 66% of GPH $6.0mm in personal guarantees from Owners of GPH $2.1mm lease deposit $6.0mm pledge of equity secured by newly-developed $24.0mm facility4 GPH unconditional lease guarantee Distributions to owners restricted to pass-through income taxes only $2.1mm guarantee from OnPointe Management Company1 MRT’s Collateral & Guarantees in Excess of $16.2mm GPH Ownership & Management Structure Management Agreement 1 An affiliate of OnPointe Health has guaranteed the lease payment up to an amount of the trialing twelve month management fee, which was approximately $2.1mm as of 9/30/2017. 2 OnPointe Management Company (an affiliate of OnPointe Health) manages the GPH portfolio and has common ownership with OnPointe Health. 3 GPH is the tenant of 11 stabilized facilities, 10 of which MRT owns, and one that is owned by an unrelated third party. 4 GPH also owns one recently developed, but not yet opened facility that has a development cost of approximately $24.0mm and secured debt of approximately $13.0mm.

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Consolidated Balance Sheets

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Consolidated Statements of Operations – GAAP

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Reconciliations of Non-GAAP Measures Figures in thousands except per share amounts

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Reconciliations of Non-GAAP Measures Figures in thousands except per share amounts

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Acute Care Hospitals High portion of spending on hospital care Critical component of healthcare infrastructure ü Gateway to healthcare delivery, discharging patients into lower acuity healthcare settings ü Greater control of healthcare delivery and payments under bundled plans and ACOs ü Strong fundamentals with growing demand and declining supply ü Source: Centers for Medicare and Medicaid Services, 2016 Source: AHA Hospital Statistics Acute care hospitals U.S. number of hospital beds vs. adjusted average daily census1 1 Adjusted average daily census is an estimate of the average number of patients (both inpatients and outpatients) receiving care each day during the reporting period Limited competition for acquisitions ü

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Skilled Nursing Facilities Certified nursing facilities (000’s) Post-acute care discharge destination of Medicare fee-for-service in 2015 Most common destination for post-acute care for hospital discharges requiring continued medical care ü Admission volumes driven by flat and constrained supply coupled with a growing aging population ü Highly fragmented sector with REITs owning limited percentage of total SNF assets allowing for future consolidation ü Source: American Health Care Association (AHCA) Research Department from CMS OSCAR/CASPER survey data (2001-2015) Source: MedPAC data book, Health Care Spending and the Medicare Program, June 2017 Focus on high quality, growing regional operators that are thriving and will continue to serve market ü

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Favorable Demographic Trends are Driving Industry Growth Source: U.S. Department of Health and Human Services Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey, 2015. Median Medical Annual Spending/Person ($) Population Age 65+ (millions) Healthcare Spending Senior population (65+) is projected to nearly double by 2050 Healthcare expenses increase dramatically as people age Individuals age 65+ spend more per person on healthcare than all other age categories combined We believe healthcare expenditures will continue to rise as a disproportionate share of healthcare dollars is spent on older Americans due to increasing requirements for treatment and management of chronic and acute health ailments Patients with complex medical conditions have extensive needs for facility-based care and support Age Source: U.S. Census Bureau, the Statistical Abstract of the United States. Source: U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services.

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Glossary Acute Care Hospital (“ACH”): general medical and surgical hospitals that provide both inpatient and outpatient medical services and are owned and/or operated either by a non-profit or for-profit hospital or hospital system. These facilities often act as feeder hospitals to dedicated specialty facilities. Adjusted Funds From Operations (“AFFO”): AFFO is a non-GAAP measure used by many investors and analysts to measure a real estate company’s operating performance by removing the effect of items that do not reflect ongoing property operations. To calculate AFFO, we further adjust FFO for certain items that are not added to net income in NAREIT’s definition of FFO, such as acquisition expenses, non-real estate-related depreciation and amortization (including amortization of lease incentives and tenant allowances), stock based compensation expenses, and any other non-comparable or non-operating items that do not relate to the operating performance of our properties. To calculate AFFO, we also adjust FFO to remove the effect of straight-line rent revenue, which represents the recognition of net unbilled rental income expected to be collected in future periods of a lease agreement that exceeds the actual contractual rent due periodically from tenants for their use of the leased real estate under each lease. Noncontrolling interest amounts represent adjustments to reflect only our share of straight line rent revenue. Our calculation of AFFO may differ from the methodology used for calculating AFFO by certain other REITs and, accordingly, our AFFO may not be comparable to AFFO reported by other REITs. AFFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity. Assisted Living Facility (“ALF”): residential care facilities that provide housing, meals, personal care and supportive services to older persons and disabled adults who are unable to live independently. They are intended to be a less costly alternative to more restrictive, institutional settings for individuals who do not require 24-hour nursing supervision. Behavioral Health Facility (“BH”): facilities that provide inpatient and outpatient services for the treatment of behavioral health, mental illness and substance abuse. These can include facilities for intensive outpatient treatment, inpatient residential treatment, sober living rehabilitation, and psychiatric care. Consolidated Adjusted EBITDA: Consolidated Adjusted EBITDA represents Consolidated EBITDA, as defined below, adjusted further for the effects of acquisition costs, stock-based compensation expense and non-cash write-offs of straight-line rent and accounts receivable.  Both Consolidated EBITDA and Consolidated Adjusted EBITDA are relevant non-GAAP measures broadly used by investors and analysts to evaluate the operating performance of a company and to assess a company’s credit strength, including the ability to service indebtedness. Our calculations of Consolidated EBITDA and Consolidated Adjusted EBITDA may differ from the methodologies used by other companies and, accordingly, our Consolidated EBITDA and Consolidated Adjusted EBITDA may not be comparable to amounts reported by other companies.  Consolidated EBITDA and Consolidated Adjusted EBITDA should not be used as a substitute for any GAAP financial measures for the purpose of evaluating our financial performance, financial position or cash flows. Consolidated EBITDA: calculated as net income (computed in accordance with GAAP) plus interest expense, taxes, and depreciation and amortization.

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Glossary EBITDAR: represents earnings from the operator’s financial statements adjusted for non-recurring, infrequent or unusual items and before interest, taxes, depreciation, amortization and rent. EBITDAR Rent Coverage: represents the operator EBITDAR of our stabilized facilities for the trailing twelve months divided by the contractual lease rent for the same period. For the leases that have been in place for less than 12 months as of the date presented, the annualized base rent under the applicable lease as of such date is used. EBITDARM: represents earnings from the operator’s financial statements before interest, taxes, depreciation, amortization, rent and management fees and may be adjusted for certain non-recurring, infrequent or out-of-period items. EBITDARM Rent Coverage: represents the operator EBITDARM of our stabilized facilities for the trailing twelve months divided by the contractual lease rent for the same period. For the leases that have been in place for less than 12 months as of the date presented, the annualized base rent under the applicable lease as of such date is used. Funds From Operations (“FFO”): FFO is a non-GAAP measure used by many investors and analysts that follow the real estate industry. FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), represents net income (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairments of real estate assets, plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Noncontrolling interest amounts represent adjustments to reflect only our share of depreciation and amortization. We compute FFO in accordance with NAREIT’s definition, which may differ from the methodology for calculating FFO, or similarly titled measures, used by other companies. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations. We believe that the presentation of FFO provides useful information to investors regarding our operating performance by excluding the effect of real-estate related depreciation and amortization, gains or losses from sales for real estate, including impairments, extraordinary items and the portion of items related to unconsolidated entities, all of which are based on historical cost accounting, and that FFO can facilitate comparisons of operating performance between periods and between REITs, even though FFO does not represent an amount that accrues directly to common stockholders. Our calculation of FFO may not be comparable to measures calculated by other companies that do not use the NAREIT definition of FFO or do not calculate FFO per diluted share in accordance with NAREIT guidance. FFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity. Gross Assets: The carrying amount of total assets plus accumulated depreciation and amortization, as reported in the company’s consolidated financial statements.

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Glossary Inpatient Rehabilitation Facility (“IRF”): facilities that provide inpatient rehabilitation services for patients recovering from injuries, organ transplants, amputations, cardiovascular surgery, strokes, and complex neurological, orthopedic and other medical conditions following stabilization of their acute medical issues. Long-term Acute Care Hospital (“LTACH”): facilities designed for patients with serious medical problems that require intense, special treatment for an extended period of time (typically at least 25 days), offer more individualized and resource-intensive care than a skilled nursing facility, nursing home or acute rehabilitation facility, and patients are typically transferred to a long-term acute care hospital from the intensive care unit of a traditional hospital. Medical Office Building (“MOB”): single-tenant or multi-tenant buildings where doctors, physician practice groups, hospitals, hospital systems or other healthcare providers lease space and are typically located near or adjacent to acute care hospitals or other facilities where healthcare services are rendered. Medical office buildings can include outpatient surgical centers, diagnostic labs, physical therapy providers and physician office space in a single building. Occupancy: occupancy is calculated by dividing the daily number of beds occupied each day during the period presented by the beds in operation (available) for the same period. Post-acute: the period of time following acute care, in which the patient continues to require elevated levels of medical treatment. Q-Mix: quality mix is presented as non-Medicaid revenue as a percentage of total revenue. Skilled Nursing Facility (“SNF”): facilities that usually house elderly patients and provide restorative, rehabilitative and nursing care for patients not requiring more extensive and sophisticated treatment that may be available at acute care hospitals or long-term acute care hospitals. They are distinct from and offer a much higher level of care for older adults compared to senior housing facilities. Patients typically enter skilled nursing facilities after hospitalization. Stabilized Portfolio: as of September 30, 2017, our stabilized, single-tenanted portfolio includes only our 18 stabilized skilled nursing facilities, our two stabilized long-term acute care hospitals, our one stabilized assisted living facility (that is connected to a skilled nursing facility in our portfolio) and our one stabilized inpatient rehabilitation facility. Our non-stabilized, single-tenanted property as of September 30, 2017 was Mountain’s Edge Hospital. We consider a facility to be non-stabilized if it is a newly completed development, is undergoing or has recently undergone a significant addition or renovation, or is being repositioned or transitioned to new operators, but in no event beyond 24 months after the date of classification as non-stabilized. Lakeway Hospital is excluded from all operator metrics as a result of Baylor Scott & White's lack of reporting requirements for facility level financial information. Acquired properties that otherwise meet the definition of a stabilized property are included in operating metrics beginning with the first full quarter of ownership.

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Mission Statement MedEquities Realty Trust provides capital primarily to the acute and post-acute services industry by making disciplined investments in healthcare facilities. We strive to be the capital partner of choice to growth-minded, facility-based healthcare operators led by proven management teams who are focused on providing efficient healthcare delivery and the highest quality outcomes. Mountain’s Edge Hospital Las Vegas, NV The Rio at Mission Trails San Antonio, TX Physical Rehabilitation and Wellness Center of Spartanburg Spartanburg, SC St. Teresa Nursing & Rehabilitation Center El Paso, TX

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