Medical Properties Trust, Inc. (MPW)

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Medical Properties Trust, Inc. (MPW)

Q4 2013 Earnings Conference Call

February 6, 2014 11:00 ET

Executives

Charles Lambert - Managing Director

Edward Aldag, Jr. - Chairman, President and Chief Executive Officer

Steven Hamner - Executive Vice President and Chief Financial Officer

Analysts

Tayo Okusanya - Jefferies

Karin Ford - KeyBanc Capital Markets

Daniel Bernstein - Stifel

Caitlin Burrows - Goldman Sachs

Michael Mueller - JPMorgan

Michael Carroll - RBC Capital Markets

Juan Sanabria - Bank of America Merrill Lynch

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Q4 2013 Medical Properties Trust Earnings Conference Call. My name is Bryon and I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Charles Lambert, Managing Director. Please proceed.

Charles Lambert - Managing Director

Thank you. Good morning and welcome to the Medical Properties Trust conference call to discuss our fourth quarter and year end 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 maybe 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 reports filed with the Securities and Exchange Commission for a 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 the 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. - Chairman, President and Chief Executive Officer

Thank you, Charles and thank all of you for joining us today for our fourth quarter year end 2013 Medical Properties Trust earnings call. For 2011, our normalized FFO was $0.71 per share. For 2012, it was $0.90 per share. And for 2013, our normalized FFO per share was $0.96 that is a 35% increase in normalized FFO per share over a two-year period. And more importantly, we ended 2013 with an FFO run rate for 2014 of $1.10 per share using the midpoint of our range. This amount represents a 55% increase over two years.

Remember that we do not have to do any new acquisitions to achieve the $1.10 FFO per share for 2014. The $1.10 is based on all the acquisitions in place at 12/31/13 and produces a run rate FFO payout of 76%. And remember, the $1.10 FFO run rate that we announced this morning is not guidance for 2014. This $1.10 is what we said it was a 12/31/13 in place FFO run rate. This does not include any acquisition activity for 2014, which we have guided this morning to be $500 million for 2014. We expect every acquisition we make in 2014 to be immediately accretive.

We achieved this remarkable growth through a steady and strategically accomplished acquisitions plan over the past two years, which allowed us to increase our revenue by 79% since 2011. During the same period, our total shareholder return for MPT shareholders was 43%. In 2012, we made $800 million in investments. In 2013, we made approximately $700 million in investments. Prior to 2011, our average annual investments had been $280 million per year. We feel very good about our growth prospects for 2014. Over the last few years we have consistently said that we expect to make at least $400 million in annual investments. The past two years we have greatly exceeded that amount.

Given our recent history and what we are currently working on in our acquisitions pipeline, we are going to increase our minimum target this year to $500 million in investments. The vast majority of these investments should be in general acute care hospitals with the majority being with tenants new to MPT. In fact while there is no assurance that we can complete any particular acquisition, some of our pipeline opportunities are of a size and nature and are at a negotiating stage that it is possible that we could complete agreements for a significant portion of our estimate in the relatively near-term. We expect to continue to lead the industry in acute care hospital investments, our management team has vast experience in hospital operations gives us an edge in underwriting relationships with hospital operators.

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