Medical Properties Trust, Inc. Q1 2009 Earnings Call Transcript

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Medical Properties Trust, Inc. (MPW)

Q1 2009 Earnings Call

May 7, 2009 11:00 am ET

Executives

Charles Lambert – Finance Director

Mike Stewart – Executive Vice President, General Counsel

Ed Aldag - Chairman, President and Chief Executive Officer

Steve Hamner – Executive Vice President and Chief Financial Officer

Analysts

Jerry Doctrow - Stifel Nicolaus

Steve Swett - KBW

Mike Lewis - J.P. Morgan

[Austin Washerman] – Keybanc Capital Markets

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2009 Medical Properties Trust Incorporated Earnings Conference Call. My name is Francine, and I will be your coordinator for today. (Operator Instructions). I would now like to turn the presentation over to your host for today’s call, Mr. Charles Lambert.

Charles Lambert

Welcome to the Medical Properties Trust conference call to discuss our first quarter 2009 financial results. With us today from senior management are Edward K. Aldag Jr., Chairman, President and Chief Executive Officer, and Steven Hamner, Executive Vice President and Chief Financial Officer.

A press release was distributed this morning May 7th and was furnished on Form 8-K with the SEC. If you did not receive a copy, it is available on our website at www.medicalpropertiestrust.com in the Investor Relations section. Additionally, we are hosting a live webcast of today's call which you can access in that same section.

During the course of this call, we will make projections and certain other statements that may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to known and unknown risks and uncertainties and other factors that may cause our financial results and future events to differ materially from those expressed in or underlying such forward-looking statements. We refer you to the company's reports filed with the Securities and Exchange Commission for a discussion of these factors that could cause the company's actual results or future events to differ materially from those expressed in this call. The information we provided today is of this date only, and except as required by the Federal Securities Laws, the company does not undertake a duty to update any such information.

In addition, during the course of the conference call, we'll describe certain non-GAAP financial measures which should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release Medical Properties Trust has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Regulation G requirements. You can also refer to our website at www.medicalpropertiestrust.com for the most directly comparable financial measures and related reconciliation.

I'd like to turn the call over now to our Chief Executive Officer, Ed Aldag.

Ed Aldag

Good morning everyone and thank you for your interest in Medical Properties Trust. Before I turn the call over to Steve Hamner, Chief Financial Officer, I would like to walk through some highlights of our first quarter operating performance. Our first quarter performance was solid on all fronts including a year over year revenue increase of approximately 39% and FFO and AFFO increases of 14.3% and 11.4% respectively. Our AFFO was on the high end of our forecasted range at $.0.23 per share.

Before going further, I’d like to address the issue of liquidity which is on everyone’s mind right now for the entire REIT sector. In the early part of January, we made the decision to raise equity during the very short window of opportunity that existed then. We’re one of the very first REITs to begin the so-called recapitalization process. Our offering was very well received and provided us a very good cushion of liquidity, generating net proceeds of $67 million.

Moving forward, we’ll continue to explore measures to preserve capital and to further strengthen our financial position in order to address our 2011 and beyond debt maturities and position the company for future growth opportunities. These measures may include pertinent asset sales as well as secured and unsecured financing alternatives among other options. We are monitoring market conditions daily and are taking all of this into account as we continue to have discussions with our lenders and weigh our options carefully.

Having said that, we’ve already made significant progress and are well positioned to continue to weather the current macroeconomic conditions. Given our discussions and what we’ve already accomplished, we believe we’re in a very good situation with respect to these options that I’ve mentioned.

Turning to our portfolio, as you know our primary focus is on acute care, rehabilitation, and long-term acute care hospitals, and as we predicted more than 4 years ago and have continued to report on quarter to quarter, contrary to some observers’ predictions of a decline due to the worldwide economic recession, our hospital portfolio has continued to perform well in this current economy. In addition, as we now know, many of the country’s largest hospital operators have also surprised analysts by reporting better than predicted operating results—all of this during one of the worst economic climates that this country has seen in years, plus a very light flu season compared with 2008.

Specific to our portfolio, our acute care hospital sector remains strong and essentially unchanged with EBITDAR coverage in the first quarter of 2009 of 5.36 times compared with 5.37 times for the first quarter of 2008. Again, this was despite the fact that we have thus far experienced a very light flu season in 2009 compared with 2008. However, we saw a significant sequential increase in the first quarter 2009 compared with the fourth quarter of 2008, rising from 4.3 times to 5.36 times.

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