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Section 1: 8-K (8-K)

mrt-8k_20180510.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): May 10, 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 May 10, 2018, MedEquities Realty Trust, Inc. (the “Company”) issued a press release announcing its financial position as of March 31, 2018, results of operations for the three months ended March 31, 2018 and other related information. Also on May 10, 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 March 31, 2018, results of operations for the three months ended March 31, 2018 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 May 10, 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

 

First quarter earnings press release, dated May 10, 2018

 

 

 

99.2

 

First quarter 2018 supplemental package

 

 

 

99.3

 

Investor presentation, dated Q2 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: May 10, 2018

 

By:

/s/ Jeffery C. Walraven

 

 

 

Jeffery C. Walraven

 

 

 

Executive Vice President and Chief Financial Officer

 

 

 

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Section 2: EX-99.1 (EX-99.1)

mrt-ex991_8.htm

Exhibit 99.1

MEDEQUITIES REALTY TRUST REPORTS FIRST QUARTER 2018 RESULTS

 

NASHVILLE, Tenn., May 10, 2018 – MedEquities Realty Trust, Inc. (NYSE: MRT) (the “Company”) today announced its consolidated financial results for the quarter ended March 31, 2018 and other recent developments.

 

Highlights – First Quarter and Year to Date

 

Reported results attributable to common stockholders for the first quarter of 2018 of net income of $0.16 per diluted share, Funds from Operations (“FFO”) of $0.29 per diluted share and Adjusted FFO (“AFFO”) of $0.30 per diluted share.

 

Invested or committed to invest $29.4 million (up to $73 million if Company purchase options are exercised) in an inpatient psychiatric hospital, an inpatient rehabilitation hospital and a mezzanine loan on an existing skilled nursing/assisted living facility as well as additional fundings on existing investments.

 

Increased 2018 per share guidance for net income attributable to common stockholders of $0.64 to $0.66 and reaffirmed 2018 per share guidance for 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 first quarter of 2018.

 

John W. McRoberts, the Company’s Chief Executive Officer and Chairman, noted, “We continued our investment activities at a measured pace while working closely with certain operators to improve their overall profitability and performance. Our investment pipeline is focused on the acute care, behavioral health, post-acute and integrated medical facilities. We have seen strong demand of late from operators in these sectors for mortgage investments that can ultimately be converted into future ownership of the facilities on attractive terms for us, and we will continue to actively pursue the opportunities that present the best use of our capital.”

 

Financial Results for the First Quarter of 2018

Net income attributable to common stockholders for the quarter ended March 31, 2018 was $5.2 million, or $0.16 per diluted common share, compared with $4.5 million, or $0.14 per diluted common share, for the same period in 2017. Consolidated total revenues for the quarter ended March 31, 2018 were $16.7 million, compared with $14.3 million for the same period in 2017. Total revenues for the quarter ended March 31, 2018 increased approximately $2.4 million as a result of the Company’s real estate investment activities during and subsequent to the three months ended March 31, 2017 and increases in rents under existing leases.

 

FFO for the quarter ended March 31, 2018 was $9.3 million, or $0.29 per diluted common share, compared with $8.1 million, or $0.26 per diluted common share, for the same period in 2017. The $1.2 million increase is primarily the result of higher total revenues of $2.4 million, partially offset by an increase in interest expense of $1.0 million and general and administrative expenses of approximately $0.2 million.

 

AFFO for the quarter ended March 31, 2018 increased to $9.3 million, or $0.30 per diluted common share, compared with $8.6 million, or $0.27 per diluted share, for the same period in 2017, primarily from an increase in total revenues, excluding the effects of straight-line rent, of $2.0 million, partially offset by higher in cash interest expense of $1.1 million.

 

Investment Activity

As of March 31, 2018, the Company had gross real estate investments totaling approximately $605.6 million, which was comprised of $563.8 million in 32 healthcare facilities and $41.8 million in six mortgage notes receivable collateralized


 

by existing healthcare facilities and redevelopment of healthcare facilities. In addition to these mortgage notes receivable, the Company had approximately $23.3 million of funding commitments and construction mortgage notes as of March 31, 2018 that have yet to be disbursed.

 

The significant transactions in the first quarter of 2018 are as follows:

 

 

On January 8, 2018, the Company agreed to provide a loan of up to $19.0 million at an annual 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 loan, of which $7.9 million was outstanding at March 31, 2018, 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 annual cash interest rate of 8.5% to Cobalt Medical Development to partially fund the construction of a 42-bed, 57,275-square-foot inpatient rehabilitation hospital to be operated by Cobalt Rehabilitation Hospitals in Clarksville, Indiana, a suburb of Louisville, Kentucky. The three-year loan was fully funded at closing and has an annual accrued interest rate of 9.5%, which has a claw-back feature that would equate to a 15.0% annual interest 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%.

 

On March 29, 2018, the Company originated a $5.0 million mortgage note receivable with a subsidiary real estate entity of GruenePointe Holdings, LLC, which is secured by a second lien on a skilled nursing and assisted living facility (Adora Midtown Park) and a first lien on an additional parcel of land in Dallas, Texas. The loan has a two-year term and accrues interest at an annual interest rate of 10.0% that is payable on the maturity date of March 29, 2020. The Company has an existing purchase option on Adora Midtown Park for a gross purchase price not to exceed approximately $28.0 million, plus an earnout based on the facility’s earnings before interest, taxes, depreciation, amortization and rent expense (“EBITDAR”) during the three years following the closing date of the acquisition.

 

Quarterly Distributions to Common Stockholders

On May 8, 2018, the Company’s Board of Directors declared a cash dividend of $0.21 per share for the first quarter of 2018, or an annualized rate of $0.84 per share. The dividend will be paid on June 5, 2018 to stockholders of record as of May 22, 2018.

 

Guidance for 2018

For the year ending December 31, 2018, the Company updated its guidance for net income attributable to common stockholders to $0.64 to $0.66 per diluted common share and reaffirmed guidance for FFO of $1.17 to $1.21 per diluted common share and AFFO of $1.18 to $1.22 per diluted common share.  While the FFO and AFFO guidance ranges did not change, guidance for net income attributable to common stockholders and certain other reconciling items changed based on the amount and nature of known investment activities to date.

 

 

 


 

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

 

$

0.64

 

 

$

0.66

 

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

 

0.53

 

 

0.55

 

FFO attributable to common stockholders

 

1.17

 

 

1.21

 

Stock-based compensation expense

 

0.11

 

 

0.11

 

Deferred financing costs amortization

 

0.04

 

 

0.04

 

Straight-line rental income, net of noncontrolling interest

 

(0.16)

 

 

(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 $45 million to $125 million ($45 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 $45 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 $11.6 million to $13.4 million, including approximately $1.2 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 December 31, 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 stabilization in SNF facility rent coverage, an improvement in hospital rent coverage and a decline in both stabilized, single-tenanted and SNF portfolio occupancy when compared with the twelve months ended September 30, 2017.

 

For the reporting period ended December 31, 2017, the results of the tenant (the “Texas Ten Tenant”) for the Company’s ten skilled nursing facilities in Texas were consistent with the Company’s expectations that coverage results would continue to decline throughout 2017, after which no further substantial decreases are expected. The Texas Ten Tenant reported that the rent and fixed charge coverage ratios were 0.73x and 0.66x, respectively, for the reporting period ended December 31, 2017. Rent coverage on an EBITDARM basis (which adds back to EBITDAR the management fees that are contractually subordinated to rent payments) for the same reporting period was 1.00x. While the Texas Ten Tenant has continued to make payments of monthly base rent, the Company expects the Texas Ten Tenant to remain out of compliance with its coverage covenants throughout 2018.

 

 


 

 


 

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 9:00 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 May 17, 2018 by dialing (412) 317-0088 and entering the replay access code, 10119109.

 

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 Texas Ten 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 from time to time. 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.

 

 

Contacts:

 

 

Jeff Walraven

 

Tripp Sullivan

EVP & Chief Financial Officer

 

SCR Partners

(615) 627-4712

 

(615) 760-1104

IR@medequities.com

 


 

 


 

MedEquities Realty Trust, Inc.

 

Consolidated Balance Sheets

 

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2018

 

 

December 31, 2017

 

Assets

 

(unaudited)

 

 

 

 

 

Real estate properties

 

 

 

 

 

 

 

 

Land

 

$

43,181

 

 

$

43,180

 

Building and improvements

 

 

505,699

 

 

 

505,623

 

Intangible lease assets

 

 

11,387

 

 

 

11,387

 

Furniture, fixtures, and equipment

 

 

3,538

 

 

 

3,538

 

Less accumulated depreciation and amortization

 

 

(46,286

)

 

 

(41,984

)

Total real estate properties, net

 

 

517,519

 

 

 

521,744

 

 

 

 

 

 

 

 

 

 

Mortgage notes receivable, net

 

 

41,513

 

 

 

18,557

 

Cash and cash equivalents

 

 

5,917

 

 

 

12,640

 

Other assets, net

 

 

32,729

 

 

 

28,662

 

Total Assets

 

$

597,678

 

 

$

581,603

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Debt, net

 

$

232,065

 

 

$

215,523

 

Accounts payable and accrued liabilities

 

 

6,204

 

 

 

6,605

 

Deferred revenue

 

 

1,587

 

 

 

2,722

 

Total liabilities

 

 

239,856

 

 

 

224,850

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Common stock, $0.01 par value. Authorized 400,000 shares; 31,887 and 31,836

   issued and outstanding at March 31, 2018 and December 31, 2017,

   respectively

 

 

314

 

 

 

314

 

Additional paid in capital

 

 

376,702

 

 

 

375,690

 

Dividends declared

 

 

(74,525

)

 

 

(67,691

)

Retained earnings

 

 

49,365

 

 

 

44,196

 

Accumulated other comprehensive income

 

 

3,034

 

 

 

1,247

 

Total MedEquities Realty Trust, Inc. stockholders' equity

 

 

354,890

 

 

 

353,756

 

Noncontrolling interest

 

 

2,932

 

 

 

2,997

 

Total equity

 

 

357,822

 

 

 

356,753

 

Total Liabilities and Equity

 

$

597,678

 

 

$

581,603

 

 


 

 


 

MedEquities Realty Trust, Inc.

Consolidated Statements of Income

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31,

 

 

 

 

2018

 

 

2017

 

 

 

 

(unaudited)

 

 

(unaudited)

 

 

Revenues

 

 

 

 

 

 

 

 

 

Rental income

 

$

15,929

 

 

$

13,839

 

 

Interest on mortgage notes receivable

 

 

787

 

 

 

433

 

 

Interest on notes receivable

 

 

-

 

 

 

10

 

 

Total revenues

 

 

16,716

 

 

 

14,282

 

 

Expenses

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

4,194

 

 

 

3,618

 

 

Property related

 

 

322

 

 

 

352

 

 

Acquisition related

 

 

108

 

 

 

66

 

 

Franchise, excise and other taxes

 

 

71

 

 

 

86

 

 

General and administrative

 

 

3,316

 

 

 

3,171

 

 

Total operating expenses

 

 

8,011

 

 

 

7,293

 

 

Operating income

 

 

8,705

 

 

 

6,989

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

7

 

 

 

1

 

 

Interest expense

 

 

(2,558

)

 

 

(1,515

)

 

 

 

 

(2,551

)

 

 

(1,514

)

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

6,154

 

 

$

5,475

 

 

Less: Net income attributable to noncontrolling interest

 

 

(985

)

 

 

(944

)

 

Net income attributable to common stockholders

 

$

5,169

 

 

$

4,531

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders per share

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

0.16

 

 

$

0.14

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

Basic

 

 

31,550

 

 

 

31,415

 

 

Diluted

 

 

31,610

 

 

 

31,415

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.21

 

 

$

0.21

 

 

 


 

 


 

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 March 31,

 

 

 

 

2018

 

 

2017

 

 

Net income attributable to common stockholders

 

$

5,169

 

 

$

4,531

 

 

Real estate depreciation and amortization, net of noncontrolling interest

 

 

4,112

 

 

 

3,536

 

 

FFO attributable to common stockholders

 

 

9,281

 

 

 

8,067

 

 

Stock-based compensation expense

 

 

1,056

 

 

 

956

 

 

Deferred financing costs amortization

 

 

258

 

 

 

322

 

 

Non-real estate depreciation and amortization

 

 

133

 

 

 

152

 

 

Straight-line rent expense

 

 

38

 

 

 

40

 

 

Straight-line rent revenue, net of noncontrolling interest

 

 

(1,429

)

 

 

(969

)

 

AFFO attributable to common stockholders

 

$

9,337

 

 

$

8,568

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding-

   earnings per share

 

 

 

 

 

 

 

 

 

Basic

 

 

31,550

 

 

 

31,415

 

 

Diluted

 

 

31,610

 

 

 

31,415

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common

   stockholders per share

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

0.16

 

 

$

0.14

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares

   outstanding- FFO and AFFO

 

 

 

 

 

 

 

 

 

Basic

 

 

31,550

 

 

 

31,415

 

 

Diluted

 

 

31,610

 

 

 

31,566

 

 

 

 

 

 

 

 

 

 

 

 

FFO per common share

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

0.29

 

 

$

0.26

 

 

 

 

 

 

 

 

 

 

 

 

AFFO per common share

 

 

 

 

 

 

 

 

 

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0.30

 

 

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0.27

 

 

 

 

 

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Section 3: EX-99.2 (EX-99.2)

mrt-ex992_7.pptx.htm

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Exhibit 99.2

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1Q 2018- Supplemental MedEquities Realty Trust, Inc.Table of ContentsIntroductionManagement, Board of Directors & Investor Contacts2Executive Summary3Capitalization Analysis & Research Coverage42018 Guidance5Financial InformationConsolidated Balance Sheets6Consolidated Statements of Income - GAAP7Funds from Operations (FFO) & Adjusted Funds from Operations (AFFO)8EBITDA, EBITDAre & Adjusted EBITDAre9Debt 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 from time to time. 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 December 31, 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; Desert Hope Outpatient Center, Las Vegas, NV; 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.

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1Q 2018- 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 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

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1Q 2018- 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 03/31/18Select Portfolio Statistics Number of Properties32 Licensed Beds (1)2,632 Facility-Level Occupancy (2)78.2%Weighted Average Lease Term Remaining (3)13.0TTM Portfolio EBITDARM/Rent Coverage (4)2.25xBalance Sheet ($ in thousands)Cash$5,917Gross Assets (5)$643,964Total Debt (6)$232,700Net Debt (Total Debt less Cash)$226,783Net Debt / Gross Assets35.2%Net Debt to Adjusted EBITDAre, annualized4.0x(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 December 31, 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 $635,000 of net deferred financing costs reported as a component of the debt balance in the Company's consolidated financial statements.

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1Q 2018- Supplemental MedEquities Realty Trust, Inc.Capitalization Analysis & Research CoverageUnaudited (in thousands except for per-share data and percentages)Three Months Ended3/31/201812/31/20179/30/20176/30/20173/31/2017Common Stock Data Weighted-Average Shares Outstanding - Basic31,550 31,499 31,467 31,404 31,415 Weighted-Average Shares Outstanding - Diluted31,610 31,549 31,506 31,487 31,566 High Closing Price $11.32 $11.94 $12.79 $12.76 $11.61 Low Closing Price $9.67 $10.37 $11.37 $11.30 $10.75 Average Closing Price $10.62 $11.33 $11.86 $11.97 $11.16 Closing Price (as of period end) $10.51 $11.22 $11.75 $12.62 $11.21 Dividends / Share (annualized) (1) $0.84 $0.84 $0.84 $0.84 $0.84 Dividend Yield (annualized) (2)8.0%7.5%7.1%6.7%7.5% Common Shares Outstanding (2)31,887 31,836 31,756 31,775 31,775 Market Value of Common Shares (2) $335,132 $357,200 $373,133 $401,001 $356,198 Total Market Capitalization (2)(3) $567,832 $589,900 $605,833 $633,701 $356,198 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 May 10, 2018 at 9:00 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 May 17, 2018 by dialing (412) 317-0088 and entering the replay access code, 10119109."(1) Based on first quarter 2018 dividend of $0.21 that was declared in May 2018 and will be paid in June 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.

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1Q 2018- Supplemental MedEquities Realty Trust, Inc.2018 GuidanceUnauditedFull Year 2018 RangePer shareLowHighNet income attributable to common stockholders $0.64 $0.66 Real estate depreciation & amortization, net of noncontrolling interest 0.53 0.55 FFO attributable to common stockholders $1.17 $1.21 Stock-based compensation expense 0.11 0.11 Deferred financing costs amortization 0.04 0.04 Straight-line rental income, net of noncontrolling interest (0.16) (0.16)Other adjustments (1) 0.02 0.02 AFFO attributable to common stockholders $1.18 $1.22 AssumptionslTotal investment volume of $45 million to $125 million ($45 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 $45 million of previously announced transactions of 8.0% to 9.0%lCash general and administrative expenses of approximately $9.0 millionlInterest expense of approximately $11.6 million to $13.4 million, including approximately $1.2 million to $1.3 million in amortization of deferred financing costslWeighted average diluted share count of 31.7 million

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1Q 2018- Supplemental MedEquities Realty Trust, Inc. Consolidated Balance Sheets(in thousands)3/31/201812/31/20179/30/20176/30/20173/31/2017Assets:(unaudited)(unaudited)(unaudited)(unaudited)Real estate properties:Land $43,181 $43,180 $42,250 $40,090 $39,584 Building and improvements 505,699 505,623 489,334 451,306 441,100 Intangible lease assets 11,387 11,387 11,387 11,387 11,387 Furniture, fixtures and equipment 3,538 3,538 2,981 2,981 2,976 Less accumulated depreciation and amortization (46,286) (41,984) (37,547) (33,509) (29,777)Total real estate properties, net $517,519 $521,744 $508,405 $472,255 $465,270 Mortgage notes receivable, net 41,513 18,557 29,120 22,418 22,417 Cash and cash equivalents 5,917 12,640 7,264 8,240 7,806 Other assets, net 32,729 28,662 26,044 33,665 33,202 Total assets $597,678 $581,603 $570,833 $536,578 $528,695 Liabilities:Debt, net $232,065 $215,523 $206,782 $163,741 $155,699 Accounts payable and accrued liabilities 6,204 6,605 6,376 14,870 14,414 Deferred revenue 1,587 2,722 2,040 2,066 1,365 Total liabilities $239,856 $224,850 $215,198 $180,677 $171,478 Equity:Common stock $314 $314 $314 $314 $314 Additional paid in capital 376,702 375,690 374,994 374,436 373,518 Dividends declared (74,525) (67,691) (60,935) (54,513) (47,719)Retained earnings 49,365 44,196 38,426 33,101 28,305 Accumulated other comprehensive income (loss) 3,034 1,247 (8) (123) 370 Total MedEquities Realty Trust, Inc. stockholders' equity 354,890 353,756 352,791 353,215 354,788 Noncontrolling interest 2,932 2,997 2,844 2,686 2,429 Total equity $357,822 $356,753 $355,635 $355,901 $357,217 Total liabilities and equity $597,678 $581,603 $570,833 $536,578 $528,695

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1Q 2018- Supplemental MedEquities Realty Trust, Inc.Consolidated Statements of Income - GAAP(in thousands, except per-share amounts)Three Months Ended(Unaudited)3/31/201812/31/20179/30/20176/30/20173/31/2017Revenues:Rental income $15,929 $15,673 $15,114 $14,287 $13,839 Interest on mortgage notes receivable 787 551 644 529 433 Interest on notes receivable - 8 8 9 10 Total revenues $16,716 $16,232 $15,766 $14,825 $14,282 Operating expenses:Depreciation and amortization 4,194 4,328 3,931 3,627 3,618 Property related 322 327 326 477 352 Acquisition related 108 95 33 263 66 Franchise, excise and other taxes 71 65 50 (60) 86 General and administrative 3,316 2,481 3,046 2,979 3,171 Total operating expenses $8,011 $7,296 $7,386 $7,286 $7,293 Operating income $8,705 $8,936 $8,380 $7,539 $6,989 Other income (expense):Interest and other income 7 4 3 1 1 Interest expense (2,558) (2,261) (2,117) (1,808) (1,515)Total other income (expense) $(2,551) $(2,257) $(2,114) $(1,807) $(1,514)Net income $6,154 $6,679 $6,266 $5,732 $5,475 Less: Net income attributable to noncontrolling interest (985) (909) (941) (936) (944)Net income attributable to common stockholders $5,169 $5,770 $5,325 $4,796 $4,531 Net income attributable to common stockholders per share - basic and diluted $0.16 $0.18 $0.17 $0.15 $0.14 Weighted-average shares outstanding - basic31,550 31,499 31,467 31,404 31,415 Weighted-average shares outstanding - diluted31,610 31,549 31,506 31,487 31,415 Dividends declared per common share $0.21 (1) $0.21 (2) $0.21 (3) $0.21 (4) $0.21 (5) (1) Dividend for the first quarter of 2018 of $0.21 per share was declared in May 2018 and will be paid in June 2018.(2) Dividend for the fourth quarter of 2017 of $0.21 per share was declared in February 2018 and was paid in March 2018.(3) Dividend for the third quarter of 2017 of $0.21 per share was declared and paid in November 2017.(4) Dividend for the second quarter of 2017 of $0.21 per share was declared and paid in August 2017.(5) Dividend for the first quarter of 2017 of $0.21 per share was declared and paid in May 2017.

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1Q 2018- Supplemental MedEquities Realty Trust, Inc.Funds from Operations (FFO) & Adjusted Funds from Operations (AFFO)Unaudited (in thousands, except per-share amounts)Three Months Ended3/31/201812/31/20179/30/20176/30/20173/31/2017Net income attributable to common stockholders $5,169 $5,770 $5,325 $4,796 $4,531 Real estate depreciation and amortization, net of noncontrolling interest 4,112 4,248 3,849 3,544 3,536 FFO attributable to common stockholders $9,281 $10,018 $9,174 $8,340 $8,067 Stock-based compensation expense 1,056 714 783 934 956 Deferred financing costs amortization 258 248 241 240 322 Non-real estate depreciation and amortization 133 138 136 134 152 Straight-line rent expense 38 39 39 39 40 Straight-line rent revenue, net of noncontrolling interest (1,429) (1,326) (1,348) (1,179) (969)AFFO attributable to common stockholders $9,337 $9,831 $9,025 $8,508 $8,568 Weighted-average shares outstanding - earnings per shareBasic 31,550 31,499 31,467 31,404 31,415 Diluted 31,610 31,549 31,506 31,487 31,415 Net income attributable to common stockholders per share - basic and diluted $0.16 $0.18 $0.17 $0.15 $0.14 Weighted-average shares outstanding - FFO and AFFOBasic 31,550 31,499 31,467 31,404 31,415 Diluted 31,610 31,549 31,506 31,487 31,566 FFO per common shareBasic $0.29 $0.32 $0.29 $0.27 $0.26 Diluted $0.29 $0.32 $0.29 $0.26 $0.26 AFFO per common shareBasic $0.30 $0.31 $0.29 $0.27 $0.27 Diluted $0.30 $0.31 $0.29 $0.27 $0.27

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1Q 2018- Supplemental MedEquities Realty Trust, Inc.EBITDA, EBITDAre & Adjusted EBITDAreUnaudited (in thousands)Three Months Ended3/31/201812/31/20179/30/20176/30/20173/31/2017Net income $6,154 $6,679 $6,266 $5,732 $5,475 Interest expense 2,558 2,261 2,117 1,808 1,515 Franchise, excise, and other tax expense 71 65 50 (60) 86 Depreciation and amortization 4,453 4,593 4,192 3,886 3,895 EBITDA $13,236 $13,598 $12,625 $11,366 $10,971 Gains or losses on dispositions of depreciated property - - - - - Impairment write-downs of depreciated property - - - - - Adjustments to reflect Company's share of EBITDAre of unconsolidated affiliates - - - - - EBITDAre $13,236 $13,598 $12,625 $11,366 $10,971 Stock-based compensation expense 1,056 714 783 934 956 Adjusted EBITDAre $14,292 $14,312 $13,408 $12,300 $11,927

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1Q 2018- Supplemental MedEquities Realty Trust, Inc.Debt OverviewUnaudited ($ in thousands) at 3/31/2018 Debt Instrument - Secured Bank FacilityMaturityRateRate TypeBalance % of Total Debt $300 Million Revolving Credit FacilityFebruary-213.69% (1)Floating $107,700 46.3% $125 Million Term LoanFebruary-223.84% (2)Fixed 125,000 53.7% $232,700 100.0% Balance Sheet ($ in thousands) at 3/31/2018 Cash $5,917 Gross Assets (3) $643,964 Total Debt $232,700 Net Debt $226,783 Debt Ratios at 3/31/2018 Net Debt to Gross Assets Ratio35.2% Net Debt to Total Market Capitalization39.9% Net Debt to Adjusted EBITDAre, annualized4.0x(1) Weighted-average interest rate outstanding at March 31, 2018 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.

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1Q 2018- Supplemental MedEquities Realty Trust, Inc.Operator Overview & Lease CoverageUnaudited ($ in thousands) at 3/31/18 Gross Number of Operator States Property Type Investment GLA/Square FeetLicensed 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 86,080 211,280 431 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 17,549 23,619 4 Multi-tenantedTX MOB 15,634 67,682 - Total - All Properties $563,805 1,470,847 2,632 Stabilized Facility & Guarantor Lease CoverageUnaudited TTM rent coverage EBITDARM Rent CoverageFacilityGuarantor (5) Twelve Months EndedSkilled (2)Hospital (3)Total (4)Skilled (2)Hospital (3)Behavioral (4)Total December 31, 20171.22x2.41x1.56x2.05x1.76x6.50x2.25x September 30, 20171.22x1.69x1.34x2.22x1.83x-2.12x June 30, 20171.41x1.63x1.47x2.21x1.83x-2.11x March 31, 20171.52x1.63x1.55x2.30x1.84x-2.18x December 31, 20161.62x1.60x1.62x2.32x1.83x-2.19xEBITDAR Rent CoverageFacilityGuarantor (5) Twelve Months EndedSkilled (2)Hospital (3)Total (4)Skilled (2)Hospital (3)Behavioral (4)Total December 31, 20171.02x2.12x1.33x1.73x1.63x6.50x1.99x September 30, 20171.02x1.49x1.14x1.81x1.70x-1.78x June 30, 20171.20x1.43x1.26x1.89x1.70x-1.84x March 31, 20171.32x1.43x1.35x1.98x1.72x-1.91x December 31, 20161.42x1.40x1.41x2.01x1.72x-1.93x(1) Excludes 166 beds in the AAC sober living facilities that are not licensed for treatment.(2) Includes SNF and ALF connected to a SNF.(3) Includes LTACH, IRF and ACH.(4) Includes BH on guarantor coverage only.(5) Guarantor coverage does not include ACH.

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1Q 2018- Supplemental MedEquities Realty Trust, Inc.Market SummaryUnaudited ($ in thousands) (at 3/31/2018) (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 $92,605 $- $11,479 $19,399 $15,634 $300,259 53.3% California 96,696 - 58,030 - - - 154,726 27.4% Nevada - 30,070 20,010 13,568 - - 63,648 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 $122,675 $78,040 $25,047 $19,399 $15,634 $563,805 100.0%% OF TOTAL GROSS INVESTMENT54%22%14%4%3%3%RENTAL INCOME (Twelve months ended March 31, 2018) OperatorSNF/ALFACHLTACHBHIRFMOBTotal% of Total OnPointe $14,386 $- $- $- $- $- $14,386 23.6% Life Generations 8,618 - - - - - 8,618 14.1% Fundamental Healthcare 3,558 4,231 1,974 - - - 9,763 16.0% Vibra Healthcare - - 5,346 - 1,595 - 6,941 11.4% Baylor Scott & White Health - 15,166 - - - - 15,166 24.9% AAC Holdings - - - 1,574 - - 1,574 2.6% Advanced Diagnostics Hospital - 780 - - - - 780 1.3% Magnolia Health Systems 1,032 - - - - - 1,032 1.7% Prospect Medical 748 - - - - - 748 1.2% Medical office building - - - - - 1,995 1,995 3.2% Total $28,342 $20,177 $7,320 $1,574 $1,595 $1,995 $61,003 100.0%% OF RENTAL INCOME46%33%12%3%3%3%BASE RENT (3) (Twelve months ended March 31, 2018) OperatorSNF/ALFACHLTACHBHIRFMOBTotal% of Total OnPointe $12,739 $- $- $- $- $- $12,739 23.4% Life Generations 8,312 - - - - - 8,312 15.3% Fundamental Healthcare 3,332 3,337 1,856 - - - 8,525 15.6% Vibra Healthcare - - 5,354 - 1,775 - 7,129 13.1% Baylor Scott & White Health - 12,750 - - - - 12,750 23.4% AAC Holdings - - - 1,411 - - 1,411 2.6% Advanced Diagnostics Hospital - 667 - - - - 667 1.2% Magnolia Health Systems 904 - - - - - 904 1.7% Prospect Medical 678 - - - - - 678 1.2% Medical office building - - - - - 1,387 1,387 2.5% Total $25,965 $16,754 $7,210 $1,411 $1,775 $1,387 $54,502 100.0%% OF BASE RENT48%31%13%3%3%2%(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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1Q 2018- Supplemental MedEquities Realty Trust, Inc.Annualized Rental Income Expiration ScheduleUnaudited ($ in thousands) (at 3/31/2018)YearLicensed Beds (1)Expiring Annualized Rental Income (ARI) (2)(3)% of ARI Expiring (2)2018-2028 - $- - 2029 392 5,086 8.0%2030 1,741 24,424 38.7%2031 166 20,464 32.4%2032 333 13,220 20.9%Total 2,632 $63,194 100.0%(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 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 March 31, 2018, multiplied by twelve.

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1Q 2018- Supplemental MedEquities Realty Trust, Inc. Payor Mix by Revenue & Facility-Level OccupancyUnauditedTwelve Months Ended December 31, 2017Stabilized, Single-Tenanted PortfolioSNF Portfolio (1) OperatorMedicareMedicaidCommercialOtherFacility-Level OccupancyMedicareMedicaidCommercialOtherQ-MixFacility-Level Occupancy Life Generations35%27%29%9%89.9%35%27%29%9%73.0%89.9% OnPointe31%48%10%12%79.4%31%48%10%12%52.3%79.4% Fundamental32%23%41%4%81.6%33%39%21%6%60.5%82.0% Vibra46%0%51%3%66.3%------ AAC Holdings0%0%99%1%52.2%------ Advanced Diagnostics4%0%9%87%------- Magnolia Health Systems15%63%1%21%47.7%15%63%1%21%37.2%47.7% Prospect Medical29%44%6%21%94.5%29%44%6%21%56.3%94.5% Total Portfolio30%25%29%15%78.2%32%40%17%12%60.2%80.8% Stabilized, Single-Tenanted PortfolioSNF Portfolio (1) Twelve Months EndedMedicareMedicaidCommercialOtherFacility-Level OccupancyMedicareMedicaidCommercialOtherQ-MixFacility-Level Occupancy December 31, 201730%25%29%15%78.2%32%40%17%12%60.2%80.8% 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%(1) Includes one assisted living facility (ALF) connected to a skilled nursing facility (SNF).

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1Q 2018- Supplemental MedEquities Realty Trust, Inc.Transaction ActivityUnaudited ($ in thousands) (at 3/31/2018) 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 FundedLocation3/29/20181Adora Midtown ParkSNF/ALF $5,000 Dallas, TX1/31/20181Cobalt Medical DevelopmentIRF 5,414 Clarksville, IN8/1/20171Medistar CorporationMOB 9,700 Webster, TX8/1/20141Vibra HealthcareLTACH 10,000 Springfield, MA Total - Mortgage Investments $30,114 Funding Commitments and Construction Mortgage NotesOrigination Date# of PropertiesOperatorProperty TypeTotal CommitmentTotal OutstandingLocation1/8/20181Haven Behavioral HealthcareBH $19,000 $7,853 (5) Boise, ID10/10/20171Sequel Youth and Family ServicesBH 6,000 3,804 (6) Andersonville, TN3/20/20171Fundamental Healthcare (7)ACH 11,000 1,089 Las Vegas, NV Total - Funding Commitments $36,000 $12,746 (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) The outstanding balance as of May 9, 2018 was $7,917. (6) The outstanding balance as of May 9, 2018 was $4,311.(7) Pursuant to the amended master lease with Fundamental, rents increase at a rate of 9.4% on incremental draws on the funding commitment for the Mountain's Edge Hospital expansion project.

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1Q 2018- 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 EBITDAre: Adjusted EBITDAre represents EBITDAre, 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. Adjusted EBITDAre is a relevant non-GAAP measure 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 calculation of Adjusted EBITDAre may differ from the methodologies used by other companies and, accordingly, our Adjusted EBITDAre may not be comparable to amounts reported by other companies. Adjusted EBITDAre 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.""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 the National Association of Real Estate Investment Trusts' (""Nareit"") 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."EBITDA: calculated as net income (computed in accordance with GAAP) plus interest expense, taxes, and depreciation and amortization. Our calculation of EBITDA may differ from the methodologies used by other companies and, accordingly, our EBITDA may not be comparable to amounts reported by other companies. 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.""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."EBITDAre: is calculated as EBITDA plus or minor losses and gains on the disposition of depreciated property, including losses or gains on change of control, plus impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, plus or minus adjustments to reflect the Company's share of EBITDAre of unconsolidated affiliates. Management believes EBITDAre is useful to investors in evaluating and facilitating comparisons of our operating performance between periods and between other REITs. We calculate EBITDAre in accordance with Nareit's definition, which may differ from the methodology for calculating, EBITDAre, or similarly titled measures, used by other companies. As a result, our calculation of EBITDAre may not be comparable to measures calculated by other companies that do not use the Nareit definition of EBITDAre. EBITDAre 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."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 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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1Q 2018- 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 December 31, 2017, our stabilized, single-tenanted portfolio includes only our 20 stabilized skilled nursing facilities, our four stabilized behavioral health 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), our one stabilized inpatient rehabilitation facility and our one stabilized acute care hospital. Our non-stabilized, single-tenanted property as of December 31, 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, with the exception of Advanced Diagnostics Hospital East which is included in the operating metrics.

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Section 4: EX-99.3 (EX-99.3)

mrt-ex993_169.pptx.htm

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Investor Presentation Q2 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 from time to time. 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 December 31, 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 23-26. 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 March 31, 2018. 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 $609 million invested in newly originated assets1 1.99x guarantor-level EBITDAR coverage3 Selectively pursue acquisition pipeline Aa32 hospital operator 13.0 year weighted average lease term1 1 As of March 31, 2018. Excludes the medical office building in Brownsville, TX. 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 12/31/2017. 4 Based on first quarter 2018 dividend annualized. 5 Based on 5/09/2018 closing price. 6 As of May 10, 2018, we had $37.0 million of additional available borrowing capacity under the revolver based on current borrowing base assets. 8.0% 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 35.2%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 March 31, 2018, 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, $1.2 million of interest for the Medistar Gemini mortgage loan, $0.5 million of interest for the Cobalt mezzanine loan and $0.3 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 (50% of ARI1) Headquarters SNF2 LTACH MOB ACH IRF El Paso California (22% of ARI1) South Carolina (4% of ARI1) Nevada (14% of ARI1) San Francisco Las Vegas San Diego Amarillo Nashville Spartanburg San Antonio Dallas 32 owned properties $609 million gross acquisitions $62.4 million annualized rental and interest income1 2,798 beds3 Asset type breakdown Total ARI1 = $62.4 million Los Angeles Houston Connecticut (2% of ARI1) BH Indiana (2% 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 March 31, 2018, 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, $1.2 million of interest for the Medistar Gemini mortgage loan, $0.5 million of interest for the Cobalt mezzanine loan and $0.1 million of interest for the Sequel construction mortgage note. Annualized Rental and Interest Income by Operator1 Total ARI1 = $62.4 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 in 2016 34 facilities in 17 states 5 Leading national provider of diversified behavioral health programs for children, adolescents and adults 6 facilities across 5 states Provides inpatient psychiatric stabilization and treatment to adults 48 hospitals 1 $9.1 billion FY 2017 total operating revenue 1 Parent Aa3 rated credit, $11.1 billion total assets Largest not-for-profit​ health care system in Texas and one of the largest in the U.S. 97 facilities in 10 states $789 million in total operating revenue One of the largest privately owned post-acute operators 43 facilities in 17 states $827 million in total operating revenue Experienced LTACH and IRF operator Largest privately owned LTACH operator 19 facilities in Texas and New Mexico 2 $80 million in total operating revenue 3 Founded by former CEO and COO of Paramount Healthcare 27 facilities with over 3,000 beds $298 million in total operating revenue Award winning operator with an average CMS rating of 4.6 stars 4 33 facilities in 8 states with over 1,300 beds $318 million in total operating revenue Leading provider of addiction treatment services in the behavioral health sector (NYSE: AAC) Source: Company information as of December 2017 with operator financial information provided for fiscal year 2017, unless otherwise noted. 1 According to Baylor Scott and White website. 2 As of May 2018, includes 11 facilities leased by Texas 11 Holding, which are managed by OnPointe, and 8 additional facilities operated by OnPointe. 3 Represents revenue from Texas 11 Holding, formerly known as GruenePointe Holdings. 4 Average star rating reflects those facilities owned by the Company. 5 As of May 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 March 2018) 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 December 31, 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. Skilled includes SNF and ALF. Hospital includes LTACH, IRF and ACH. Behavioral includes BH. 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 10.00% 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) Adjusted EBITDAre1 ($ 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 EBITDAre 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 $107.7 million and term loan balance of $125.0 million at March 31, 2018 Revolver matures 2021 or 2022 if the one-year extension option is exercised Term loan matures 2022 No Near-Term Maturities 1 As of May 10, 2018, we had $37.0 million of additional available borrowing capacity under the revolver based on current borrowing base assets.

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Common shares outstanding 31,887 Market price per common share as of 5/9/2018 $10.50 Market capitalization of common stock $334,814 Total Debt $232,700 Total Market Capitalization $567,514 Strong Balance Sheet and Positioned for Growth Total Debt $232,700 Less: Cash ($5,917) Net Debt $226,783 Gross Assets1 $643,964 Net Debt/Gross Assets 35.2% Net Debt/Total Market Capitalization2 40.0% Net Debt/Adjusted EBITDAre3, annualized 4.0x Market Capitalization at 3/31/2018 Conservative leverage Ample available liquidity; $300 million revolver with balance of $107.7 million at March 31, 20184 Leverage Metrics at 3/31/2018 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 EBITDAre for first quarter of 2018 annualized. See page 19 in the Appendix for a reconciliation of adjusted EBITDAre to net income attributable to common stockholders. 4 As of May 10, 2018, we had $37.0 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, TX SNF Portfolio Occupancy, Quarterly1 Average CMS Quality Star Rating for TX SNF Portfolio Preliminary Q1 2018 Data TX SNF Portfolio Q-Mix, Quarterly Preliminary Q1 2018 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.

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TX 11 Holding Ownership, Management, & Guarantee Structure TX 11 Holding Tenant of TX SNF Portfolio3 Principals of OnPointe Health MRT Lessor OnPointe Health2 Own 100% of TX 11 Holding $6.0mm in personal guarantees from Owners of TX 11 Holding $2.1mm lease deposit $6.0mm pledge of equity in working capital and capex cash reserve holding company TX 11 Holding 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 TX 11 Holding Ownership & Management Structure Management Agreement 1 An affiliate of OnPointe Health has guaranteed the lease payment up to an amount of the trailing twelve month management fee, which was approximately $2.1mm as of 12/31/2017. 2 OnPointe Management Company (an affiliate of OnPointe Health) manages the TX 11 Holding portfolio and has common ownership with OnPointe Health. 3 TX 11 Holding is the tenant of 11 stabilized facilities, 10 of which MRT owns, and one that is owned by an unrelated third party.

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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 EBITDAre: Adjusted EBITDAre represents EBITDAre, 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 EBITDAre and Adjusted EBITDAre 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 EBITDAre and Adjusted EBITDAre may differ from the methodologies used by other companies and, accordingly, our EBITDAre and Adjusted EBITDAre may not be comparable to amounts reported by other companies.  EBITDAre and Adjusted EBITDAre 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. 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 the National Association of Real Estate Investment Trusts’ (“Nareit”) 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.

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Glossary EBITDA: calculated as net income (computed in accordance with GAAP) plus interest expense, taxes, and depreciation and amortization. Our calculation of EBITDA may differ from the methodologies used by other companies and, accordingly, our EBITDA may not be comparable to amounts reported by other companies. 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. 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. EBITDAre: is calculated as EBITDA plus or minus losses and gains on the disposition of depreciated property, including losses or gains on change of control, plus impairment write‐downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, plus or minus adjustments to reflect the Company's share of EBITDAre of unconsolidated affiliates. Management believes EBITDAre is useful to investors in evaluating and facilitating comparisons of our operating performance between periods and between other REITs. We calculate EBITDAre in accordance with Nareit's definition, which may differ from the methodology for calculating, EBITDAre, or similarly titled measures, used by other companies. As a result, our calculation of EBITDAre may not be comparable to measures calculated by other companies that do not use the Nareit definition of EBITDAre. EBITDAre 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. 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.

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Glossary 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 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. 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.

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Glossary 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 December 31, 2017, our stabilized, single-tenanted portfolio includes only our 20 stabilized skilled nursing facilities, our four stabilized behavioral health 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) our one stabilized inpatient rehabilitation facility and our one stabilized acute care hospital. Our non-stabilized, single-tenanted property as of December 31, 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, with the exception of Advanced Diagnostics Hospital East which is included in the operating metrics.

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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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