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MedEquities Realty Trust, Inc. (NYSE:MRT)
Q3 2018 Earnings Conference Call
Nov. 12, 2018 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the MedEquities third-quarter conference call and webcast. [Operator instructions] Please note, this event is being recorded.  I would now like to turn the conference over to Mr. Tripp Sullivan of Investor Relations. Please go ahead.

Tripp Sullivan -- Investor Relations

Thank you. Good morning. Welcome to the MedEquities Realty Trust conference call to review the company's results for the third-quarter 2018. On the call today will be John McRoberts, chairman and chief executive officer; and Jeff Walraven, executive vice president and chief financial officer.

Our earnings press release and supplemental package furnished with the SEC on Form 8-K and our Form 10-Q can be found on the Investor Relations section of our website. A replay of this call will be available shortly after the conclusion of the call through November 19, 2018. The numbers to access the replay are provided in the earnings press release. For those who listen to the replay of this call, we remind you that the remarks made herein are as of today, November 12, 2018, and will not be updated subsequent to this call.

During this call, certain comments or statements we make may be deemed forward-looking statements within the meaning prescribed by the securities laws, including statements related to our 2018 guidance and related assumptions, the future performance of our portfolio and our operators, the retenanting of the Texas Ten Portfolio, our future acquisitions and investment activity, financing activities, and the timing and amount of anticipated cash distributions to our stockholders in the future. All forward-looking statements represent MedEquities judgment as of the date of this conference call and are subject to risk and uncertainties that can cause actual results to differ materially from our current expectations. Investors are urged to carefully review various disclosures made by the company, including the risk and other information disclosed in the company's filings with the SEC. We will also discuss certain non-GAAP measures, including but not limited to FFO, AFFO, and adjusted EBITDAre.

Definitions of these non-GAAP measures and reconciliations to the comparable GAAP measures are included in our earnings press release, which is available at ir.medequities.com. I'll now turn the call over to John McRoberts. Please go ahead.

John McRoberts -- Chairman and Chief Executive Officer

Thanks, Tripp. Good morning, everyone, and welcome to the call. We released our earnings, the 10-Q, and supplemental data late Friday and announced the agreement to retenant the Texas Ten Portfolio on Saturday. I know many of you were attending the NAREIT conference and are returning home, so I hope you had time to digest our results and disclosures over the weekend.

This morning, I'd like to spend some time on the retenanting of the Texas Ten portfolio and its impact on meeting our amended credit facility requirements, which will be specifically addressed by Jeff later in our comments section. Additionally, we will cover the impact of Texas Ten on our guidance for the remainder of 2018, discuss the rest for our portfolio, and the board's decision to delay any action to dividend as well as our priorities with the capital we have available. In our call in August, we indicated that we were prepared to retenant or sell all or a portion of the Texas Ten Portfolio. In the weeks since then, we've been extremely focused on those efforts and are pleased to have this retenanting agreement announced and look forward to working further with Creative Solutions in healthcare.

As part of this process, we've remained in close communication with the current tenant, OnPointe, and anticipate a smooth transition to completion as targeted for the start of 2019. Creative Solutions has a long history of success in the State of Texas. The two founders, Gary Blake and Melissa Blake Dean, formed Creative in 2000 and are well known in the industry. With over 60 skilled nursing and assisted living facilities, we believe they have the second-largest SNF platform in Texas with a reputation for quality patient care.

They know these markets well and are familiar with the specifics facilities in the Texas Ten Portfolio. The new 15-year lease provides for $7.7 million in annual base rent. The structure of the lease provides us with pro forma EBITDA rent coverage of 1.32 based on OnPointe's trailing 12-month results through June 30 and assuming a 5% management fee. We also have a guarantee of the management company and the personal guarantees of the co-founders serving as additional support for the lease.

We believe retenanting this portfolio with a new experienced tenant like Creative is the best long-term decision for the company. With regard to the portfolio, which again Jeff will cover in more detail, coverages were higher for the non-SNF operators and slightly down for the other skilled operators. Now turning to our Fundamental portfolio. You will recall that in August, we discussed our plans to defer a portion of the rent on Mountain's Edge Hospital until March 2019 to allow time for the expansion of the hospital to be completed.

In early October, we finalized the agreement that deferred a total of $2.4 million in rent from May 2018 to March 2019. All of the terms of that deferment are consistent with what we outlined in August. The expansion at the Mountain's Edge Hospital is ongoing and on target for completion in late first quarter 2019. We continue to fund that expansion and have approximately $7 million remaining to be disbursed out of the original four -- $11 million that we committed to fund.

With the new ORs, we believe Fundamental will be able to offer a broad range of surgical services, which should positively impact patient volumes and operating results. On October 9, we entered into an amendment to our credit agreement that was necessary primarily because of the ongoing operational and financial difficulties of the Texas Ten Portfolio, and secondarily, due to partial rent deferral for Fundamental. The Texas Ten Portfolio was a single component of our borrowing base supporting our existing outstanding indebtedness, and Jeff will discuss this amendment in more detail. The board delayed making any decision on the dividend until the Texas Ten rent payments commence.

We believe this to be a prudent decision. As disclosed at Saturday's release, the tenant transition still must receive some regulatory approvals, over which we have no control, but all signs currently indicate this process can be finished by the start of the year. Similarly, for the credit facility and our access to capital, the most important thing for us to do is to get the Texas Ten retenanting done and lease payments commence. The credit agreement amendment does provide the necessary capital for us to fund our outstanding obligations for the seven -- Haven psychiatric hospital in Idaho, which is currently under construction and the Mountain's Edge expansion.

Now going forward, our primary focus is on completing and funding the amendments we have, getting the transaction done at the Texas Ten Portfolio, and commencement of rent with Creative Solutions, which is a major positive event for us. Now let me turn the call over to Jeff, who will address our third-quarter financial results and the revised outlook for 2018.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Thanks, John. The company reported a net loss attributable to common stockholders for the third quarter of 2018 of $2.1 million or a loss of $0.07 per share. Adjusted funds from operations for the third quarter was $7.1 million or $0.22 per share. This result is a decrease of $0.08 per share from last quarter.

These lower results are directly attributable to converting the existing tenant for the Texas Ten Portfolio to the cash basis of revenue recognition effective at the start of the third quarter. Net cash applied to rent this quarter from the Texas Ten Portfolio tenant was approximately $500,000, representing a reduction of AFFO of $2.7 million for the quarter. We also wrote off $4.8 million in a noncash straight-line rent receivable related to the lease for the Texas Ten Portfolio during the third quarter. This amount was recorded against revenues recognized.

This item only affected GAAP operating results and FFO. There were some additional items within the operating results this quarter as compared to second-quarter 2018 that I will address in a little more detail. First, the acquisition in late June of the rehabilitation hospital in Southern Indiana contributed approximately $600,000 of additional revenues. Second, general and administrative expenses decreased approximately $2.8 million.

Included in this number is the effect of the $2 million in transaction costs incurred last quarter that did not recur this quarter. I would note that these same transaction costs were not included in the determination of AFFO. Additionally, as a result of the company's recent performance, expected bonuses to be paid for 2018 to the company's executive management team have been eliminated, creating a reduction of $1.1 million. Of this $1.1 million, approximately $700,000 represents the cumulative expenses recognized in the first half of 2018, thus providing a one-time benefit to the reported results for the third quarter that will not recur in the fourth quarter.

And lastly, cash interest expense was approximately $400,000 higher as a result of both a higher weighted average balance outstanding and interest rate as LIBOR continues to increase. Now I'll spend a few minutes on our credit facility. As announced, we entered into an amendment on our credit agreement on October 9. This amendment was necessary, principally because of two matters.

First, the ongoing operating and financial difficulties experienced by the tenant of the Texas Ten Portfolio; and second, the deferral of a portion of the rent under the Fundamental master lease. The amendment temporarily increased the advance rates on all borrowing base properties other than the Texas Ten Portfolio until December 31, 2018. The Texas Ten Portfolio remains in the borrowing base at a reduced availability through that date, after which time the borrowing base eligibility and availability criteria revert to their original terms under the credit agreement subject to certain conditions. As announced, we have executed definitive agreements with Creative Solutions in healthcare to transition the Texas Ten Portfolio.

So, we are confident that we are on schedule to satisfy all the conditions for this portfolio to remain borrowing base eligible as stipulated in the amendment that must occur by December 31. Currently, our total borrowing base is approximately $288 million. We project that we will have sufficient liquidity to keep our borrowings within the borrowing base availability after any adjustments to the Texas Ten Portfolio as of January 1, 2019, and to fund remaining amounts under the Haven construction mortgage loan and Mountain's Edge expansion project. The company's LIBOR spread increased by 75 basis points on borrowings outstanding effective with the start of the fourth quarter.

The weighted average interest rate on borrowings was 4.1% for the third quarter. Assuming no other changes to LIBOR during the fourth quarter, we would expect cash interest expense for the fourth quarter to increase by approximately $500,000 compared to Q3. Despite all of the activity with our credit facility and the impact of the Texas Ten Portfolio, we have maintained a conservative debt profile. At September 30, 2018, the ratio of net debt to gross assets was 38.8% compared to 38.4% at June 30, 2018.

Net debt to consolidated adjusted EBITDAre annualized for Q3 2018 was 5.4 times. I would highlight that this metric was materially affected by the nonpayment of rent by a Texas Ten tenant during the quarter. On a pro forma basis, using the expected rents for the new tenant, net debt to pro forma consolidated adjusted EBITDAre annualized for Q3 would have been 4.7 times. Following up on John's comment on portfolio performance.

The quarterly supplemental information report contains more detailed rent coverage on our property portfolio. Starting this quarter, while we complete the retenant process, we have removed Texas Ten from our stabilized portfolio, and all of the coverage metrics reported for our SNF properties reflect this change. On an aggregate basis, the stabilized portfolio for the trailing 12 months June 30, 2018, had EBITDARM coverage of 2.85 times at the guarantor level and 1.92 times at the facility level. EBITDAR coverage of 2.54 times at the guarantor level and 1.65 times at the facility level.

These coverage metrics are all just slightly below last quarter's results but still well above results from the prior year. While much attention has rightly been focused on the performance of the Texas Ten Portfolio, we believe these coverage metrics demonstrate the relative strength and resiliency of the rest of the portfolio and the quality of the operators of our stabilized properties. I will now provide an update on 2018 guidance that has been provided in both the earnings press release and the quarterly supplemental information report. All guidance update reflect the adjustments for the following: first, no revenue recognition for the Texas Ten Portfolio in the fourth quarter as no further rent is assumed to be collected; rent from the new lease with Creative Solutions, subject to the expected regulatory approval, would act -- add approximately $0.06 to $0.07 per share to our quarterly operating metrics beginning first-quarter 2019; second, no additional significant investments activities throughout the remainder of this year, which would have only impacted the high end of our guidance range as our investing activities through Q3 2018 were already within our expected range; third, the expected higher interest expense from the credit agreement amendment pricing adjustments; and lastly, lower expected cash G&A expenses.

I will highlight the net income and FFO guidance updates also reflect the noncash write-off of straight-line rent associated with the Texas Ten Portfolio in the third quarter. In closing, we focused our efforts and resources this quarter on retenanting the Texas Ten Portfolio as quickly and prudently as possible. Now that a new tenant is under contract, the smooth transition of operations remains our priority, which we believe will restore some net asset value to the company's portfolio. Operator, we're now ready for questions. 

Questions and Answers:

Operator

[Operator instructions] The first question comes from Jordan Sadler of KeyBanc. Please go ahead.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

Thanks and good morning. I wanted to spend a minute on Creative Solutions. I know you guys provided a little bit more detail in the presentation that accompanied the press release on Saturday, but can you just describe what their net worth or the overall net worth of that entity is? Or maybe give us some color around how much of their real estate that they own versus -- is leased from a third-party.

John McRoberts -- Chairman and Chief Executive Officer

I think the bulk of their SNFs are leased. They do own some of their assisted living facilities.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Yes, they've got relationships, Jordan, with a number of people as far as the operating assets that they operate. So prior to our agreement with them, they had 55 SNFs and seven assisted living. Four of those assisted living, they do own themselves. As a corporate entity, the -- each of the entities are separate, but they're all owned exactly 50-50 by the two owners.

So effectively the owners are the holding company. The -- when it comes to -- there's a couple -- there's one public nontraded REIT that has five or six assets. There's another public REIT within our "peer group" that has a couple of assets. And then the rest are generally owned by, I'll call it, private investors and family offices that are their lessors.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

OK. Is there any color you can give us around the underwriting of this tenant versus OnPointe or any other prospective tenants you were considering the pipeline that sort of differentiated them and gives you comfort or can give us comfort that this is a good opportunity for shareholders?

John McRoberts -- Chairman and Chief Executive Officer

Well, this company has a longer history. So it's easier to look back and see kind of what they've done over a long period of time. And before they founded this company, they were in this industry. So they've got state experience throughout the industry.

So that's one differentiating factor. They're -- due to their size, they have a good bit of scale in the Texas market, and these assets just enhance that scale. They have steep history dealing with managed care providers, the state, even in the political arena. So there's just a marked difference between this operator and OnPointe.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Gary Blake, the prime principal, is definitely very heavy into the advancement of the SNF industry within the State of Texas. They're focused in the state of Texas. They've been very deep into the efforts in working to reset the Medicaid rates and get the state recognize what they need to do in that particular state. So I mean, we dived in depth into their historical history, and the one thing we would point out is through the 20 years, they've had their ups and the downs and that they've been able to weather through those and build through those.

One of their -- even one of their statements throughout the process that they had made to us is that in their 22-year or 20-year history, they've never missed a rent payment to any of their landlords, and we have -- I will say over the process that we've been going through in retenanting and just looking at all of the different options as far as them and their operations, we had only had heard good things among from other operators and other sources.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

OK, that's helpful. And then just lastly on the dividend, can you speak to whether or not it'll be -- I mean, so is it being suspended? Maybe what are the [Inaudible] under the credit agreement, recognizing they had been restricted in 2019. But maybe just a little color there.

John McRoberts -- Chairman and Chief Executive Officer

Well, our board meeting was October 31, I believe.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Yes.

John McRoberts -- Chairman and Chief Executive Officer

And at that time, we were kind of in advanced discussions with a couple of parties who were very interested in the entire portfolio. And so we were working with both of those parties, but neither one have been signed up yet. So at that time, the board, given the whole lay of the land at that point in time, the board decided just to delay any decision on the third-quarter dividend until some of these things kind of fell together and then at which time, and I think that means after their regulatory hurdles were cleared and they actually commenced rent, they will -- the board will decide at that time what to do. So that's how it kind of played out.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

And just to credit facility impacts on the dividend, the way that it was is that should we not have a resolution to the Texas Ten, the credit facility had included in the amendment that beginning in 2019, if we did not meet the Texas Ten reevaluation criteria, which we are well along the process of having met that and have -- and expect to have that definitely fully completed before the end of the year. But if we had not, the credit facility at that point was then taking the stance that to the extent that we declared that the board wanted to declare a dividends they wanted to input on to that particular part. That was in 2019 and subject to us not completing the Texas Ten resolution.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

So is the $0.21 per share dividend suspended until further review? Or is it going to remain in place and the board will decide going forward what ultimately happens with that dividend?

John McRoberts -- Chairman and Chief Executive Officer

Well, the board didn't make any forward prediction. It just simply delayed any action on the dividend until all these things become settled that down and were in place and functioning. So I can't predict at this point in time exactly what will happen, but the board will gather together and figure out where they want to take that after the first of the year. In the meantime, those dollars are not being spent in other areas.

They're still within the company. So it's not like we're getting those monies and diverting them to other uses.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

No, I get it. I'm just trying to figure out -- so when ordinarily would that dividend have been paid, third-quarter dividend?

John McRoberts -- Chairman and Chief Executive Officer

Normally December sometime.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Well, the dividend that was delayed would have normally on past practice at that part had been declared on October 31 and paid last week of November, first week of December.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

And right now, that's not happening?

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Right now it has not yet been declared. And the board is -- go ahead, Jordan.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

So can you speak to or whether or not you would have an expectation as to whether or not a dividend would be declared this year or to be paid this year? Or is that just out of your hands at this point?

John McRoberts -- Chairman and Chief Executive Officer

Well, I don't think it'll be declared or paid in this year because based on the board's decision at the last board meeting, it was a function of getting these transactions related to Texas Ten completed and in place and operative, and that won't happen till January 1. So it would be after the beginning of the year whatever decision made. And I will say had we paid it and -- declared and paid it in 2018, for what it's worth, it would have been 100% a return on capital.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

All right. Thanks, guys. I'll yield the floor. Right now there are a lot of people who want to ask questions.

John McRoberts -- Chairman and Chief Executive Officer

Thanks, Jordan.

Operator

The next question comes from Smedes Rose of Citi. Please go ahead.

Smedes Rose -- Citi -- Analyst

Hi. Thanks. Could you just talk about specifically what conditions are necessary to close this lease with Creative Healthcare? And then also can you maybe discuss a little more the guarantees that you talked about, the personal guarantees and the management company's guarantees? What is kind of the balance sheet like backing those and what are the limits on the personal guarantee? If there were some sort of defaults on the rents, what kind of recourse do you have?

John McRoberts -- Chairman and Chief Executive Officer

So the first question was -- what was what?

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

What's the approval?

Smedes Rose -- Citi -- Analyst

What are the specific conditions to close this lease?

John McRoberts -- Chairman and Chief Executive Officer

Yes, it's regulatory. I mean, the lease has been signed. The guarantees have been signed, and the only thing that has to happen is the state has to approve the transfer of the operations, which there is an operating transfer agreement that is in place between the old tenant and the new tenant,but that has all been signed. And so it's all regulatory at this point.

Now there's a lot of heavy lifting to do to transfer at the end of the -- to efficiently transfer operations. There are a lot of employees that got to go from one company to the other and contracts and things like that, but that's standard operating procedure in these kinds of situations. But all the documents have been signed, and it's just regulatory approval that would be the only gating item.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

And that's another part with this particular operator. They've transitioned and acquired, taken over and become the operator of a number of facilities over a number of years. They are well-versed in the process. They know how to work with the state regulatory agencies and everything is -- you always do it in a manner to minimize cash flow interruptions that can occur in the first couple months relative to Medicare or Medicaid billings so that you don't create cash strains.

And all of that, basically the next 50 days are being spent in full cooperation between OnPointe and Creative so that on January 1, it's a smooth flip of the switch, which will include -- and so the only -- which we consider the regulatory aspect to be well manageable and no negative results of that. It happens all the time, and we would expect it to -- they'll file their channels, and those channels to take 30 days to approve or technically, the state has 30 days to approve them, and they will do that and should be done. Now when you speak to the balance sheet, that's where from an entity perspective, I want to -- I was trying to make sure from a technical basis, when you look at them, some companies have holding companies, others don't. The holding company is the two individual and the fact that they own 100% of now 72 operating entities plus management company equally in a 50-50 basis from -- what we show is that from an EBITDAR coverage and pro forma coverage, we pointed out in the slide deck the trailing 12 at June 30 for our 10 is at 1.32 times.

The trailing 12 on the aggregate for all of it will be right at 1.37, 1.38 times for -- with the other assets that they have that they're operating currently. So there's a strong and reasonable EBITDAR coverage. When it does come to the personal guarantees and the corporate -- or just the corporate guarantees, it was limited to 30 months' rent, and that's really a continual recalculation. On day 1, that's approximately $19.5 million of guarantee on the -- both the personal guarantee and the management company guarantees combined.

Smedes Rose -- Citi -- Analyst

OK. And then on the dividend, you talked a little bit about it. But I mean, is it a reasonable assumption that given the lower rents now going forward, that you would look to kind of reset this dividend as a percent of the payout? And then can you talk about what your targeted goal is as a payout ratio?

John McRoberts -- Chairman and Chief Executive Officer

Well, again I can't predict exactly what the board will end up doing with the dividend. I could say that -- I can say that if we held onto the $0.21 going forward, we'd probably be in the 85% payout ratio.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Mid-80s.

John McRoberts -- Chairman and Chief Executive Officer

Mid-80s. So still acceptable. I mean, we like to keep our payout ratio lower just because it's a little more conservative as we think over the long run, you get a better value for your equity if you do that on a consistent basis. But should we stay with a 21% -- $0.21, we would still be well within any acceptable payout ratios.

Michael Bilerman -- Citi -- Analyst

Hey, John. It's Michael Bilerman. So you said the board met in October when they decided to delay or suspend the fourth-quarter dividend. I would assume the board has been in active discussions with the management team in approving the transfer of the new lease.

So why wouldn't the board have come to a decision to be able to put everything behind them and have an updated dividend that can be communicated to the market? It seems kind of strange not to have that done.

John McRoberts -- Chairman and Chief Executive Officer

So what the board delayed any action on was actually the third-quarter dividend. Fourth-quarter dividend would normally be discussed at our --

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

February.

John McRoberts -- Chairman and Chief Executive Officer

Board meeting in early February. So again, I think the board wants to see this transaction not only signed up but in effect and the cash actually in our hands before making a final decision.

Michael Bilerman -- Citi -- Analyst

But that would make it seem that there's some risk, and you just responded the fact that there's lease is signed, the guarantees are in place, and the only thing that needs to happen is there needs to be a transition from a government approval perspective. So why wouldn't the board, knowing when the cash is coming in, be able to tell the market, "Look, our intent is we're going to skip our third-quarter dividend based on the fact that our tenant that comprises 25% of our rent stopped paying us cash, but we have a new lease in place that the tenant is getting pay $7.7 million of cash income. And for all intents and purposes, they're going to pay it. By the way, if they back out of this lease, there's a bigger problem." So why wouldn't the board, which I assume they've been in close contact in approving this because it's such a major transaction, why wouldn't they simply state what the dividend policy would be for 2019?

John McRoberts -- Chairman and Chief Executive Officer

Well, I can say we have been in close contact with the board as we've gone down the path of identifying an appropriate new tenant, but the focus has been on getting all of the documents in place and executed. And we have not met as a board since we have chosen who we're going to work with going forward. And I can't tell you that we won't have something that comes up before the next board meeting, but it has not been scheduled. So it hasn't been discussed.

Michael Bilerman -- Citi -- Analyst

But I mean, most companies will -- would be able to convene their board on a call on a moment's notice to be able to approve a major decision. So, I don't know why you have to wait until February. That seems like a long time to have uncertainty in the marketplace when the market likes certainty. Anyways -- all right.

We'll requeue. Thank you.

John McRoberts -- Chairman and Chief Executive Officer

Thank you, Michael.

Operator

The next question comes from Bryan Maher of FBR. Please go ahead.

Bryan Maher -- B. Riley FBR, Inc. -- Analyst

Yes, first, I'd like to concur with Citi on that. I think a dividend, some type of decision should have been announced if not Saturday, then this morning because yes, the market does like certainty, especially with -- when it comes to dividend. But shifting gears, as it relates to OnPointe, what can you tell us about your ability to recoup any of the back rents? What type of assets or guarantees were there with OnPointe? And how can they be so incompetent to have done what they did with this portfolio and only pay you $500,000 in the third quarter?

John McRoberts -- Chairman and Chief Executive Officer

Well, the primary issue with interrupting the cash flow and carving out some for ourselves has been in their line of credit. Their lender, who was midcap, has a single line of credit secured by receivables of both our portfolio and of the other assets that OnPointe operates. There are eight other assets. So we do have a second-lien on receivables but those receivables are pledged behind the OnPointe line, and OnPointe will continue -- I mean, behind the midcap line.

And midcap will continue to operate and control its line of credit post this trends -- post this transition for the other eight until their transition to somebody else. So until midcap is paid in full, we can't take any action to marshall the equity and the receivables. Now we do have a strategy that I'm not prepared to discuss in this forum to capture some of the equity in the receivables related to these assets, the Ten. And we will be attempting to put that in place in anticipation of this transition.

So we've got a plan. I just can't discuss it with you.

Bryan Maher -- B. Riley FBR, Inc. -- Analyst

So OnPointe, though, is going to continue to operate these assets throughout the fourth quarter until January 1st. But again, you're not expecting to receive any money from them in the fourth quarter. Is that correct?

John McRoberts -- Chairman and Chief Executive Officer

We're not.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

We're not forecasting it.

John McRoberts -- Chairman and Chief Executive Officer

Yes, we're not forecasting it. We may be able to collect some, but we're not going to forecast it.

Bryan Maher -- B. Riley FBR, Inc. -- Analyst

And then can you just give us a little background on how the retenanting versus sale of the Texas Ten discussion and kind of thought process was as opposed to just selling the assets versus retenanting?

John McRoberts -- Chairman and Chief Executive Officer

Well, we were talking to, roughly, I don't know, 20? 20 different operators. Some are Texas-based. Some are regional-based. And there was not that much interest in buying the assets.

There was a lot of interest in leasing the assets. And so going through that process and narrowing down who the real contenders were, who could get it done quickly, and who could actually get it done, it came down to two primary companies that provided us with a whole portfolio solution. We had some that wanted parts of the portfolio but not other parts. And then would be left with trying to parcel out the other ones as well.

But this whole portfolio of solution that we came up with really provides us with a better kind of overall solution, in our mind, and there just weren't a lot of interest in buying the assets.

Bryan Maher -- B. Riley FBR, Inc. -- Analyst

And then just last for me. Other than what's going on with Texas Ten and Fundamental, are there any other tenants within your portfolio that you have any concerns about their ability to pay rent or else?

John McRoberts -- Chairman and Chief Executive Officer

No.

Bryan Maher -- B. Riley FBR, Inc. -- Analyst

Thank you.

Operator

The next question comes from Daniel Bernstein of Capital One. Please go ahead.

Daniel Bernstein -- Capital One Securities -- Analyst

Hi. Good morning. I'm going to try to look forward instead of backwards. So I want to understand at this point, if you could just -- we could go back to what your liquidity is today and what your liquidity -- what you expect your liquidity to be once you satisfy all the bank amendment issues related to Fundamental and the Texas Ten? Just trying to understand what your capital capability will be next year.

John McRoberts -- Chairman and Chief Executive Officer

Well, if you look through the rest of the year, we're really focused on making sure that this transition takes place efficiently and timely and gets off from the right foot. And we've got some assets, some -- the Mountain's Edge and the Haven facilities that we're still funding construction on, and we hope to get those kind of finished on time and converted to -- back to operating assets after the construction is completed. So we've got plenty of capital to do that. We expect at the end of the year, once the transition is completed that we will sit down with the banks and we'll kind of recast our line of credit after the dust settles.

So we do have some capacity to do smaller deals, but we really -- and they understand we need to sit down and redo the line of credit and -- but we all want to wait until all of the dust is settled with this transition before we undertake that. Jeff, you may have some other comments?

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Go ahead, Dan, what you were going to follow on.

Daniel Bernstein -- Capital One Securities -- Analyst

No, I was just going to say -- no, no, don't know if you wanted to add on to that. I was just trying to get more of a sense do you have the capability at some point, once all the dust settles that you start reworking on your pipeline kind of what's your what -- what would then be the capacity for next year, but that sounds like that's still a little up in the air until you recast the line.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Well, and recast the line is really one of the variables. There's multiple variables as we would look to the next steps, right? So we need to -- we get to the credit facility. It goes back to the previously borrowing base assets. We put out the money for Havens and Mountain's Edge.

There's other receivables and mortgage notes out there that we then recollected, and there's a number of other variables that kind of I would say purely from a debt perspective, if that's the only source we're looking at for capital, yes, there's a few small deals that we could do in there under that assumption only. But as we continue forward and we continue to bring resolution to all of the different matters, there will be what we would expect is that additional capital options will be available, and we'll continue to pursue those, identify those in Ten to try to make the right decisions as to how to unlock those sources outside of just straight credit facility bank debt.

Daniel Bernstein -- Capital One Securities -- Analyst

OK. OK. No, that's helpful. The other question I had back to the dividend, is just under the current rate rules, I mean, even if you don't declare this quarter and you're still figuring what to do for the fourth quarter, you probably would have -- you probably have to declare some level of dividends, a catch-up dividend of some kind.

Would that be right? I just want to make sure I understand. I think somebody was asking the 21 is just gone or whether [Inaudible].

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

For 2018, on a -- basically on a REIT basis you've got to distribute 90% of your taxable income to be within the REIT rules. Generally, you distribute at least 100% of your taxable income. At this point, based on our current taxable income calculations, we would not have to declare and pay any additional dividend in 2018 to have fully absorbed our taxable income projections for 2018. So to the extent we declared and paid still within this year, it would increase the return of capital portion of this year's dividend allocation.

The board just fully felt that it was prudent to wait and see the results, and it wasn't prepared to set a level at this time. But let this all settle itself out and make that decision. Now as to 2019, clearly no, we could not stay in a suspended dividend and meet the REIT rules in 2019. And so that -- and we really haven't been using the term suspension.

It has been delayed in the board's decision as we complete the resolution.

Daniel Bernstein -- Capital One Securities -- Analyst

OK. OK. And then one last question. I just want to understand the skilled nursing coverage ex the Texas Ten decreased a little bit.

Is that just all Mira Vista? I think you alluded to earlier in the call that we really don't have any other issues with tenants, but I just want to make sure I understood what was going on there in that coverage if it was just that one property or if there's something more broad.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Yes, in general, it would have been more Mira Vista -- mostly Mira Vista as far as the 1.39 to 1.32.

Daniel Bernstein -- Capital One Securities -- Analyst

Can you talk about what Fundamental has done to kind of remedy that or what actions they've taken, and then I'll hop off the line for others.

John McRoberts -- Chairman and Chief Executive Officer

Well, they've gone through several different administrators there, which is it's good to try to identify new people because this local administrator in these facilities is extremely important, but they've not found the right one for that facility in that market. And, unfortunately, they've gone through a few of those over the last two years, and that's -- it's good that they're trying, but it's bad for -- to have that kind of turnover in your leadership. So they still believe that, that is a good facility, that it should be doing a lot better than it is, and they're still searching for the right person to lead that facility. We've talked to them about would they be interested in having somebody else take that out, and they've kind of insisted that they want that facility.

They think it's a good facility and they -- it's correctable. So it's finding the right leadership in that market, but they're still committed to it.

Daniel Bernstein -- Capital One Securities -- Analyst

OK. OK. OK. Appreciate it.

That is all I had. Thank you for taking the questions.

Operator

And our next question comes from Michael Carroll of RBC Capital Markets. Please go ahead.  

Michael Carroll -- RBC Capital Markets -- Analyst

Yes. Thanks. Can you guys talk a little bit about the current operating trends of the Texas Ten Portfolio? I know last quarter, you highlighted that they had trouble collecting receivables. Are they collecting those receivables now? And where has occupancy gone throughout the third quarter so far in skill mix, given the expected transition? Has that changed over the last quarter or so?

John McRoberts -- Chairman and Chief Executive Officer

Well, with respect to the receivables, what they were having trouble collecting is receivables that had aged quite a bit. So they're having minimal success in collecting those very old receivables. I think they're collecting their current receivables on a normal basis. So what was the --

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

On occupancy trends. The occupancy of third quarter over second quarter has been an uptick. So the second quarter was less than the first but third quarter is greater than second on occupancy.

Michael Carroll -- RBC Capital Markets -- Analyst

OK. How do you think is that going to trend as you move into the fourth quarter given that the tenant is expected to vacate? I mean, are they still interested in improving operations at that asset? Or should we expect a decline going to the fourth quarter? And has Creative Solutions underwritten that decline?

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

I would actually say that from, look, I'll call it the character of our current tenant is that the -- especially the management there that is in the day-to-day, their character there is not one to just OK, I'm going to check out in these last 50 days and let clinical quality fall and ignore that. They understand the necessity of a smooth transition and the value of that transition to all parties at play. And so I would not be predicting that our tenant -- our current tenant in the last 50 days is just going to throw up its hands and not do anything. They've already -- Creative had already absorbed one OnPointe facility earlier this year that wasn't owned by us.

That was owned by another party in one of same markets and has successfully transitioned that. And like I said, we don't -- I don't expect a negative behavior out of OnPointe during this transition period. We have worked with them, they're going to work with us.

John McRoberts -- Chairman and Chief Executive Officer

I would say in the field in the individual markets, they're probably very excited about this transition.

Michael Carroll -- RBC Capital Markets -- Analyst

OK. And then what actually happened in the third quarter that drove the missed rent payments? Was there something at the OnPoint corporate level that didn't pay those? Did their credit facility lender basically they've tripped the covenant and they didn't allow them to make those payments? What actually happened this quarter?

John McRoberts -- Chairman and Chief Executive Officer

Well, midcap has -- think we discussed in the past, the midcap line of credit has gone from a high of $18 million or so down to -- what is it today?

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Combined $12 million

John McRoberts -- Chairman and Chief Executive Officer

Combined $12 million. So you've got $6 million in shrinkage there. A lot of that had to do with some of these old receivables that aged out and got out. We're not borrowing based eligible under their line of credit.

So midcap is -- midcap has taken the cash, and the only cash that has been available to OnPointe has been the bank, its payroll, keep the vendor somewhat happy and continuing to lend, and so that's what's happened.

Michael Carroll -- RBC Capital Markets -- Analyst

OK. Then last question off of what Dan was saying about related to Fundamental, did you say that they don't have the right leadership yet to stabilize the Mountain's Edge property? And how are they going to find that? So, I guess, that's not on solid footing yet?

John McRoberts -- Chairman and Chief Executive Officer

Well, no, they've gone through two or three different administrators over the last --

Unidentified speaker

Mira Vista now.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Dan was talking about Mira Vista.

John McRoberts -- Chairman and Chief Executive Officer

Right.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Mike talked about Mountain's Edge. But I think, Mike, you were [Inaudible] confusing Dan's question. So -- and John's discussion of the leadership changes was specific to the Fort Worth, Texas, Mira Vista property with Fundamental, not the Mountain's Edge, Las Vegas property.

Michael Carroll -- RBC Capital Markets -- Analyst

OK. And then how was the Mountain's Edge property doing?

John McRoberts -- Chairman and Chief Executive Officer

Well, currently it's not performing as it should be, but they're undergoing an expansion to add five operating rooms, and the expansion consumed and shut down two procedure rooms. So it's not doing what it normally would be doing, but these five ORs once they're complete, they've got a group of orthopedic surgeons who are ready and waiting to start doing a lot of procedures there. So we're -- it's on schedule to be completed. We think it will be completed before the end of the first quarter, and it'll start ramping up from there.

And we've met with these doctors on a number of occasions, and they're still anxious to have this project completed.

Michael Carroll -- RBC Capital Markets -- Analyst

OK. Great. Thank you.

Operator

Our next question comes from Mike Mueller of JPMorgan. Please go ahead.

Mike Mueller -- J.P. Morgan Chase & Co. -- Analyst

Hi. A couple of questions here. First of all, going back to the dividend for a second, in the slide deck, it specifically said that achieving one of the primary Performance Hurdles under the agreement is basically restoring some of the borrowing capacity and lowering the borrowing costs. It doesn't mention anything about the dividend.

So can you just remind us is once this is signed, are the lenders going to have any say whatsoever in terms of what you do with the dividend?

John McRoberts -- Chairman and Chief Executive Officer

No. I mean, their positioning was you've lost a good bit of cash flow out of this tenant and we want to see that restored. And if it's not restored, we certainly want to have some say so in terms of cash leaving the company in the form of a dividend.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

And I mean, outside of that, the only place we have a distributions covenant that's always been there that's 95% of bank-defined AFFO. But that's not a "Mother, may I?" type thing. That's just a distribution limitation as defined within the credit agreement. That's a financial covenant that we have to honor.

John McRoberts -- Chairman and Chief Executive Officer

And we've always had that.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Yes, it's always been..

Mike Mueller -- J.P. Morgan Chase & Co. -- Analyst

OK. Yes, I mean, I just bring it up because the press release explicitly said that and then the slide deck it basically says that this new lease remedies only one of them not the other. So that's why I was asking. And I guess, second question is purely looking at that Texas Ten Portfolio, is the EBITDA of it expected to go back to where you originally underwrote it? Or is it permanently impaired running down at that level? Can you just give some color about expectations there?

John McRoberts -- Chairman and Chief Executive Officer

Well, we're not forecasting significant increases to it although with this operator and the scale they have and the things they can bring to bear with their existing relationships with the payers and insurance companies and their ability to put more of these facilities in the [Inaudible] program, we expect that, that will increase, but we're not making any forecasts to that effect right now.

Mike Mueller -- J.P. Morgan Chase & Co. -- Analyst

OK. And last part of the question, the renewal options on the lease, I know it's out 15 years, but is that a market level reset? So let's say because if EBITDA is running really low right now, and they do get it right and it takes it back to where it was before, you get a chance to reset the lease based on market coverage at that point in time?

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

It is not a market-value renewal. It's a continuation that took 2% bumps from that particular point.

Mike Mueller -- J.P. Morgan Chase & Co. -- Analyst

OK. OK. That was it. Thank you.

Operator

And we have a follow-up from Smedes Rose of Citi. Please go ahead.

Michael Bilerman -- Citi -- Analyst

Hey. It's Michael Bilerman again. So during the quarter, Goldman had filed a 13D, and within that, they said they were having discussions with the management regarding transactions. Where they at all involved as one of the 20 bidders you talked about relating to this portfolio or is it something completely different?

John McRoberts -- Chairman and Chief Executive Officer

Well, they were not one of the bidders for the portfolio. With respect to any other conversations we have with them, we can't comment on that.

Michael Bilerman -- Citi -- Analyst

So what exactly would they be evaluating in their engagement in a transaction with MedEquities in terms of having those discussions? And what would it be? What would a normal course of actions be in that regard?

John McRoberts -- Chairman and Chief Executive Officer

Well, we obviously can't comment on that. So you -- I doubt they would either, but you can try.

Michael Bilerman -- Citi -- Analyst

And then can you help us understand, I guess, what sort of process or processes are you running outside of retenanting OnPointe? Do you have a strategic alternatives process being done? Are you looking to sell the company at all?

John McRoberts -- Chairman and Chief Executive Officer

We're always cognizant of opportunities that may be out in the marketplace to enhance the value to our shareholders. We have not hired anybody to run a process though. So -- but we listen to people.

Michael Bilerman -- Citi -- Analyst

So you haven't hired any bank to advise you?

John McRoberts -- Chairman and Chief Executive Officer

We've not hired anybody to run a process for us.

Michael Bilerman -- Citi -- Analyst

Right. How should we think about typically when there's some form of activism, companies have both investment banking and legal expenses. And sometimes, those are capitalized and sometimes, those are expensed. You, obviously, had an expense last quarter of some fee, which you still haven't disclosed what that was regarding to.

Should we expect that if you're engaging with investment banks even if they're not running a process but acting in somewhat of a defense, right, it's not normal for shareholder to go and start being active with you, have those costs are currently being capitalized or would you be expensing them?

John McRoberts -- Chairman and Chief Executive Officer

Well, it depends on the nature. If you just -- I mean, the accounting rules are pretty --

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Pretty cut and dry on this one.

John McRoberts -- Chairman and Chief Executive Officer

Yes.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

The transactional expenses related to an M&A type transaction would all be expensed. Unless you're doing an asset acquisition are you able to capitalize those expenses and then put those expenses into a closed acquisition. Now, what many in real estate might consider an asset acquisition can also be determined to be a business combination for accounting purposes, and those expenses will be expensed. Those costs will be expensed on an as-incurred basis.

And so I mean, that's -- when you cut it down, it's -- anything that is a business combination whether even if it's just acquiring an asset, those are expensed and M&A costs would be expensed.

Michael Bilerman -- Citi -- Analyst

So what was the $2 million last quarter then?

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

As we disclosed, it was a transactional cost.

Michael Bilerman -- Citi -- Analyst

Related to what?

John McRoberts -- Chairman and Chief Executive Officer

We can't comment on that, Michael.

Michael Bilerman -- Citi -- Analyst

Are those activities continuing or those have stopped?

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Well, in my prepared remarks, I had said those were -- we didn't recur. Those expenses were to the second quarter and they did not recur in the third quarter.

Michael Bilerman -- Citi -- Analyst

Activism cost it appears that company have leeway. We've seen company's expenses as they go. We've also seen companies come out nine months after the fact after they've been billed expensed them. So that's why I was trying to better understand if you have your -- one of your larger shareholders engaging in discussions with you whether you have legal and bank advise that you are currently capitalizing in that regard.

I assume you're not entering any of these discussions without having any representation.

John McRoberts -- Chairman and Chief Executive Officer

Well, we -- anything that would come up that would involve any kind of combination, M&A, activism, whatever, we would have legal representation. I can tell you that there's nothing that we're engaged in right now that could be construed as an activist situation.

Michael Bilerman -- Citi -- Analyst

And then just coming back in the dividend, I guess, are you going to try to provide some certainty and get the board together prior to February to --

John McRoberts -- Chairman and Chief Executive Officer

I'm sure we will have discussions with our board on an informal sense. Whether that translates to a formal meeting and a formal action on it, I can't tell you right now.

Michael Bilerman -- Citi -- Analyst

OK. Thank you.

Operator

And we have a follow-up from Jordan Sadler of KeyBanc. Please go ahead.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

Hi. Thank you. So first of all, I had just a follow-up on the transaction cost. I think there's another $600,000 this quarter.

Is that right, Jeff?

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

There was $600,000 of costs that we had that were previously capitalized for asset-related acquisitions that were expensed this quarter for transactions that have now been formally abandoned at this point.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

So that'd be different than the $2 million from last quarter?

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Right. As I described, asset acquisitions in the real estate world for a long time have crossed on to both sides depending of certain factors, circumstances some are treated as business combinations, and some are treated as asset acquisitions. And to the extent that they are -- that they meet the asset acquisition side, they're capitalized while incurred and capitalized if completed or expensed when no longer considered probable. And that -- the $600,000 this quarter were transactions that were definitely classified as asset acquisitions.

And as of this quarter, we're determined to not be probable in their core expense.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

Okay. And so, I guess, moving on to -- and looking out, looking forward a little bit for the company, what's next, John? I mean, for [Inaudible]. I mean, is there -- are you pursuing the process? I think last quarter, I know you haven't engaged anybody to shop the company per se, but I think you said there are lots of options on the table here. And I'm just curious, given sort of the most recent discussions with the board, what is the strategic thought process of the company going forward?

John McRoberts -- Chairman and Chief Executive Officer

Well, I think if we go into 2019 and beyond, we've got to address our overhead situation. I mean, the company's overhead was built to be a bigger company, and we all thought we'd get there sooner. So we would certainly make some decisions there. And I think we've got to get in.

We've got to deal with the banks and get our bank credit facility kind of recalibrated based on where we are today. So we would do that. We would look at our overhead and then move forward but, at the same time, we're not -- I mean, we're looking for other -- we are listening to other alternatives and we -- again, we get those allowed. We have bankers, investment bankers talking to us.

We have some unsolicited inbound calls, especially since the Bloomberg article went out there and said we had hired somebody to represent us, which was an error assumption but, nevertheless, we do get some -- but we've got an ear to the rail, and we're open.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

OK. But for now, it's more of a listening rather -- a process you guys are personally driving?

John McRoberts -- Chairman and Chief Executive Officer

We were actively talking with somebody. You know we couldn't comment on it anyway. So I mean, we can't comment on it.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

Okay. And then I have two other business questions. Is sort of Baylor-Memorial Hermann merger. Any thoughts on how that impacts your hospital, is there as a credit or maybe their decision to exercise the option?

John McRoberts -- Chairman and Chief Executive Officer

They've not indicated to us any inclination to exercise the option. It doesn't mean they won't, but they're just not prepared to tell us anything about it right now. I think the reason is they've got so much going on not only in the Austin market but across Texas that that may be a little priority for them. And if you'll remember, the reason that option is in there is in case they needed to meaningfully expand that campus, they didn't want to be bound by our kind of -- by the REIT world's returns given their capital in general.

So they needed to get a way out of it. So absent that need in the short run is, to me, is just a priority of all the things they've got going across the State of Texas whether they could or would consider spending $200 million just to buy the hospital. I don't know. Can't comment on it because they can't comment on it or won't comment on it.

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

And we do feel that the combination that they're going to go -- that they're looking to close themselves and Memorial Hermann is a credit expanding and credit enhancement to the overall entity. It's not a detriment to the Baylor credit quality.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

OK. And then one more as it related to OnPointe. The midcap line of credit, you said there's $12 million currently outstanding on that working capital loan?

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Approximately, yes. It fluctuates. I mean, it fluctuates on a regular basis.

John McRoberts -- Chairman and Chief Executive Officer

$10 million to $12 million generally.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

OK, in that range. And because, I guess, if just looking at their EBITDAR coverage based on the new rent that you guys have in place, it seems that there would be a couple $3 million of excess cash flow above and beyond even the new rent. So -- but, obviously, they're looking at their EBITDAR. I mean it seems significant enough that there should be room to pay something.

Am I thinking about this correctly?

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

There are definitely things came in to third quarter. There are certain annual things like insurance renewals that take place. I know in their part to take place in the July, August time frame. The -- for them specifically, with the New Mexico portion of their operations, etc., on a cash, etc., their part, they had a major insurance renewal that you can't -- there are certain needs to be able to and payments that would have to be made for them to be able to keep quality client patient service going.

And that being critical, some of those items definitely took up certain pieces of cash flow during the third quarter.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

OK. What was that?

John McRoberts -- Chairman and Chief Executive Officer

So we would think there should be some money there to pay us based on the exact analysis you're going through, but there are other sort of things that have to be made to keep the doors open and keep the company from imploding. And then midcap is -- they're controlling the cash basically.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

OK. And then just lastly, on the portfolio, sorry to jump around a bit here, but with this portfolio or is there anything -- you talked about maybe scaling or rescaling the G&A, the overhead to reflect the company's size that, I guess, one could argue that the company size and scale that you guys are kind of in a box due to the overall size of the company or being a public company. Are there any assets that makes sense to monetize opportunistically at this point that are fairly priced in the private market, maybe appear to not be appropriately reflected in the stock price today?

John McRoberts -- Chairman and Chief Executive Officer

Well, I think before we can go down that road, we have to stabilize the portfolio on getting Texas Ten transition done because until that time, everybody you talk to just assumes you're in a bad spot, have to sell, and the kind of numbers you might be talking about are just not really acceptable. So you get yourselves in a stabilized situation and then you can deal on a fair basis with people. But yes, that's part of what we will be looking at in 2019.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

Thank you very much.

Operator

And we have a follow-up from Daniel Bernstein of Capital One. Please go ahead.

Daniel Bernstein -- Capital One Securities -- Analyst

I'll keep it short since most of the questions were answered. Did you guys say what the corporate coverage was for the Creative Solutions lease, not just the facility level, but the corporate?

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Yes. So I think we said like 1.37, 1.38.

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

OK. OK. I have missed that and I just -- OK. That was it.

That's it. Thanks.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to John McRoberts, chief executive officer, for any closing remarks.

John McRoberts -- Chairman and Chief Executive Officer

Well, thanks, everybody, for participating on the call. And as always, we're available for follow-up calls should you want to talk to us further. So just reach out to us if you want to do that. Thanks.

Operator

[Operator signoff]

Duration: 76 minutes

Call Participants:

Tripp Sullivan -- Investor Relations

John McRoberts -- Chairman and Chief Executive Officer

Jeffery Walraven -- Executive Vice President and Chief Financial Officer

Jordan Sadler -- KeyBanc Capital Markets, Inc. -- Analyst

Smedes Rose -- Citi -- Analyst

Michael Bilerman -- Citi -- Analyst

Bryan Maher -- B. Riley FBR, Inc. -- Analyst

Daniel Bernstein -- Capital One Securities -- Analyst

Michael Carroll -- RBC Capital Markets -- Analyst

Mike Mueller -- J.P. Morgan Chase & Co. -- Analyst

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