Medical Properties Trust, Inc. (MPW)

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Medical Properties Trust, Inc. (MPW)

Q4 2011 Earnings Call

January 31, 2012 4:30 p.m. ET

Executives

Edward K. Aldag, Jr. – Chairman, President and Chief Executive Officer

R. Steven Hamner – Executive Vice President & Chief Financial Officer

Emmett E. McLean – Executive Vice President & Chief Operating Officer

Charles Lambert – Finance Director

Rosa Hooper – Director of Underwriting and Asset Management

Thomas W. Schultz – Director of Healthcare Policy

Presentation

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2011 Medical Properties Trust Earnings Conference Call. My name is [Carez], and I will be your coordinator for today. At this time, all participants are in a listen-only mode and will remain muted for the duration of the call. (Operator Instructions) As a reminder, this call is being recorded for replay purposes.

And I would now like to hand the call over to your host for the day Mr. Charles Lambert, Director of Finance. Please proceed sir.

Charles Lambert

Thank you. Good afternoon and welcome to the Medical Properties Trust conference call to discuss our fourth quarter 2011 financial results. With me today are Edward K. Aldag, Jr., Chairman, President and CEO of the company; and Steven Hamner, Executive Vice President and Chief Financial Officer.

Our press release was distributed this afternoon will be 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’re 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 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 the Federal Securities Laws, the company does not undertake a duty to update such information.

In addition, during the course of this 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.

As you may have seen we also issued a press release this afternoon announcing our expected acquisition of assets from and related transactions with (inaudible) Inc, which we will discuss separately on this call.

As a result for announcing the acquisition and applicable security law considerations we will not be able to respond to questions from participants on today's call as we normally do. And we appreciate your understanding.

I will now turn the call over to our Chief Financial Officer Steve Hamner.

R. Steven Hamner

Thank you Charles and good afternoon everyone. Ed will be describing a major transaction momentarily, so I’ll briefly run through an abbreviated summary of our fourth quarter 2011 financial results, then turn the call over to Ed.

For the fourth quarter 2011 we reported normalized FFO of approximately $20.5 million and AFFO of approximately $21.2 million or $0.19 per diluted share, for both measures. As of the end of last quarter, we had estimated on a quarterly basis our in-place normalized FFO run rate at $0.19 to $0.20 per share, so this quarter’s result is well in-line with our run rate estimate.

As a reminder we make certain adjustments to normalized FFO and in the fourth quarter these included approximately $1 million in cost incurred to make acquisitions and about $2.5 million in straight line rent write-off related to two property transactions. These transactions are more fully described in the press release.

Net income for the quarter ended December 31 was $12.7 million, about a $0.11 per share compared with net income of $10.6 million, or $0.09 per diluted share, for the year ago period. Capitalization metrics and other operating and financial metrics represented in our earning supplement that was posted to our website this afternoon.

We have previously described the fourth quarter acquisition of our Hoboken investments and the development agreements we entered into with Emerus. For 2011, we completed the acquisition of approximately $311 million of hospital real estate assets.

In order to provide an apples-to-apples comparison of expected run-rate normalized FFO per share, with and without the Ernest transactions, we believe the portfolio existing on the December 31 with our existing capital structure would generate annualized, normalized FFO of between $0.69 and $0.73 per share. And by the way that does not include about $0.03 per share that we expect on an annualized basis from our Florence development.

As we will discuss in more depth shortly, we expect that completion of the Ernest transactions will add approximately $0.19 per share or impressive accretion of 26%. These estimates do not include the effects, if any of cost and litigation related to discontinued operations, debt refinancing cost, real estate operating cost, interest rate swaps, write-offs of straight-line rent, or other non-recurring or unplanned transactions. They also do not include any earrings from RIDEA-type investments and operations. And they do not include any revenue from releasing our River Oaks property.

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