Medical Properties Trust, Inc. (MPW)

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Medical Properties Trust Inc. (MPW)

Q3 2013 Earnings Conference Call

November 5, 2013 11:00 AM ET

Executives

Edward Aldag, Jr. - Chairman, President and CEO

Steven Hamner - EVP and CFO

Charles Lambert - Managing Director

Analysts

Tayo Okusanya - Jefferies

Michael Mueller - JPMorgan

Rob Mains - Stifel Nicolaus

Presentation

Operator

Good day ladies and gentlemen. And welcome to the Quarter Three 2013 Medical Properties Trust Earnings Conference Call. My name is Mathew and I’ll be your operator for today.

At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions). As a reminder, this call is being recorded for replay purposes.

And now I would like to turn [Technical Difficulty] Lambert, Managing Director. Please proceed sir.

Charles Lambert

Good morning. Welcome to the Medical Properties Trust conference call to discuss our third quarter 2013 financial results. With me today are Edward K. Aldag, Jr., Chairman, President and Chief Executive Officer of the company; and Steven Hamner, Executive Vice President and Chief Financial Officer.

Our press release was distributed this morning and furnished on Form 8-K with the Securities and Exchange Commission. If you did not receive a copy, it is available on our website at 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, 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 report filed with the Securities and Exchange Commission for discussion of the factors that could cause the company’s actual results or future events to differ materially from those expressed in this call.

The information being provided today is as of this date only and except as required by Federal Securities Laws, the company does not undertake a duty to update any such information.

In addition, during the course of the conference call we will describe certain non-GAAP financial measures, which should be considered in addition to and not in lieu of comparable GAAP financial measures.

Please note that in our press release, Medical Properties Trust has reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. You can also refer to our website at www.medicalpropertiestrust.com for the most directly comparable financial measures and related reconciliations.

I will now turn the call over to our Chief Executive Officer, Ed Aldag.

Edward Aldag, Jr.

Thank you Charles and thank all of you for joining us today for the Medical Properties Trust third quarter earnings call. Once again we are now seeing a tremendous quarter for our investors. During this quarter we either announced definitive documents signed or the actual closing or more than $500 million of high quality hospitals across the U.S. and in Germany.

This amount when added to what we have previously done totals approximately $650 million in acquisitions for the year. This is a 162% of our original guidance at the beginning of the year. Our two largest investments during the third quarter were two portfolio transactions. Three IASIS hospitals and 11 RHM facilities in Germany. The three IASIS facilities have solid historical financial performance, they are located in Mesa Arizona, West Monroe, Louisiana and Port Arthur, Texas. All three facilities entered into our portfolio with the strong EBITDAR coverage’s and very good physical real estate assets.

This portfolio was marketed through a highly competitive process. Our teams in that knowledge of a hospital market played an important role in our winning this bid. The high degree of interest from others in these hospitals continues to show the unrecognized value in the overall MPT portfolio.

The 11 rehabilitation facilities in Germany are operated by the German operator RHM. RHM is an experienced operator with the long positive track record. The rehab market in Germany is currently very fragmented with RHM being the 11th largest operators. We expect that MPT will be a part of RHMs further growth in Germany.

This particular acquisition helps to diversify the MPT portfolio and further strengthen in already strong portfolio. Like IASIS transaction the RHM transaction was heavily marketed and received broad interest. Again our experience and focus were factors here. RHM wondered a partner that understood healthcare.

On the acquisitions pipeline front, we continue to have good prospects in both the U.S. and in Western Europe. As we previously announced, we expected our future acquisition will be heavily weighted towards the U.S. acute care hospital markets.

We will provide 2014 guidance either late in the fourth quarter of this year or early in the first quarter of next year. In addition to the two facilities, which start to construction this year are Ernest Health acquired an up and running hospital in Corpus Christie using MPT financing. To-date, three of our first choice ERs have begun construction and are expected to be operational in 2014. It is possible that we will have a couple of more acquisition closings this year, but most likely they will be in the first quarter of 2014.

Turning to our existing portfolio, the acute care hospitals continue to perform on a whole very well. The EBITDAR lease coverage for the trailing 12 month period ending August 31, 2013 compared to the same 12 month last year increased about 35 basis points to almost 5.5 times. This calculation includes all hospitals that have been in our portfolio for at least 12 months.

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