Medical Properties Trust, Inc. Q2 2010 Earnings Call Transcript

Medical Properties Trust, Inc. Q2 2010 Earnings Call Transcript
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Medical Properties Trust, Inc. (MPW)

Q2 2010 Earnings Conference Call

August 5, 2010 11:00 AM ET

Executives

Sandy Dowd – Assistant General Counsel

Edward Aldag – Chairman, President and CEO

Steven Hamner – EVP and CFO

Analysts

Jerry Doctrow – Stifel, Nicolaus & Co., Inc.

Ralph Davies – JPMorgan

Tayo Okusanya – Jefferies and Company

Todd Stender – Wells Fargo Securities

Austin Wurschmidt – KeyBanc Capital Markets

Presentation

Operator

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Previous Statements by MPW
» Medical Properties Trust, Inc. Q1 2010 Earnings Call Transcript
» Medical Properties Trust, Inc. Q4 2009 Earnings Call Transcript
» Medical Properties Trust, Inc. Q3 2009 Earnings Call Transcript

(Operator Instructions) I would now like to turn the conference over to your host for today, Sandy Dowd (ph), Assistant General Counsel. Please proceed.

Sandy Dowd

Good morning. Welcome to the Medical Properties Trust Conference Call to discuss our second quarter 2010 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.

A press release was distributed this morning and will be 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 risk, 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 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 measure 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 reconciliation.

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

Edward Aldag

Thank you, Sandy.

The second quarter of 2010 was a watershed quarter for Medical Properties Trust. After very prudently safeguarding the company’s strong financial position throughout the recent world credit crisis. We were not forced as many other companies were to recapitalize our balance sheet. In contrast, our sound financial position enabled us to wait until the markets returned to a more normalize level and we were ready to begin our acquisition growth mode.

In the second quarter, we completed a very successful equity race and entered into a new and expanded and credit facility, both of which Steve will go through in more detail momentarily. Through these actions, we greatly reduced our debt, eliminated all of near-term debt maturity worries and provided MPT with more than half a billion of liquidity to restart our acquisitions activity. We took advantage of that liquidity right way. As we’ve been saying for quite sometime, the opportunities available to us in quality acquisitions are bonded.

During the second quarter, we acquired three properties for an aggregate investment of approximately $74 million. Each of these properties is an in-patient physical rehabilitation hospital leased to affiliates of Reliant hospital partners. They are located in Houston, Dallas and also in Texas. They each have 50 to 60 rehab beds and one has 25 skilled beds in addition to the rehab beds. The facilities opened in January ‘09, January ‘08, and June ‘08, respectively.

The trailing 12-mont EBITDA released covered ratios at the time of acquisitions average above two times. The going in cash cap rate only is existing in well-performing properties was 9.7%. The leases have approximately 23 years remaining on their terms.

We also invested an additional $5 million in the Prime Desert Valley Hospital as part of a previously announced total $20 million expansion. The expansion will add 65 private patient rooms to the current 83-bed campus. The expansion will consist of 53 medical and surgical beds, a 12-bed coronary critical care unit and all-inclusive cardiac surgical unit and two new cardiac CAT (ph) labs.

We are currently negotiating with several of their operators that are not currently tenants of MPT for other hospitals all across the country. We hope to be able to report some more acquisitions in the near future.

We still feel very confident about our ability to put our liquidity to work in a timely fashion.

With the addition of the Reliant Hospitals and the disposition of the Prime Centinela Hospital announced during our last call, our exposure to our largest tenant has now been reduced to 27.5% of our total assets. And as you’ve heard me say over and over, one of the most important measures of diversity for any REIT is the total exposure on a property by property basis and in that regard; our largest exposure is now 6.5% of our total assets. The next largest facility is 4.9% of our total assets.

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