Medical Properties Trust's CEO Presents At Bank Of America Merrill Lynch 2012 Health Care Conference (Transcript)

Medical Properties Trust, Inc. (MPW)

Bank of America Merrill Lynch 2012 Health Care Conference Call

May 16, 2012 4:40 pm ET

Executives

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

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

Analysts

Armando Lopez – Bank of America/Merrill Lynch

Presentation

Armando Lopez – Bank of America/Merrill Lynch

I am Armando Lopez; I am with Bank of America Merrill Lynch. And it’s my pleasure today to introduce Medical Properties Trust. Today, for Medical Properties Trust we have Chairman, President and Chief Executive Officer, Mr. Ed Aldag. With him today, we also have the companies Chief Financial Officer, Steve Hamner, and the Finance Director and Head of Investor Relations, Charles Lambert.

Before I turn the floor over to Ed, I would like to provide a brief background Ed has served as Chairman and President and Chief Executive Officer of Medical Properties Trust since it was founded in August of 2003, prior to that he spent 15 years at Guilford Capital Corporation and Guilford Medical Properties. Mr. Aldag, was the President and a member of the Board of Directors of Guilford Capital from 1990 to 2001, serving as Executive Vice President, Chief Operating Officer and a member of the Board of Directors. He also served as President and a member of the Board of Directors of Guilford Medical Properties from its inception until selling his interest in the company in 2001. He received a Bachelors Degree in Commerce and Business from the University of Alabama and it’s my pleasure to welcome Mr. Ed Aldag. Ed?

Edward K. Aldag Jr.

Thank you, very much and thank all of you for being here today, your interest in Medical Properties Trust. Let me start off by go over with you what I would like to accomplish today. When you listen to the program, you listen to my presentation the things that I want you to take away from it.

We’ve got a strong covered dividend, I’ll go through that in more detail with you in a moment. It’s from a portfolio properties that are extremely well performing and they have a history of being extremely well performing. And very importantly it’s in an industry that is very stable. The hospital industry have and what you work through all of the headline news is actually very stable industry and I’ll get through that in just a few moment.

Also with the very low leverage that we have and a large pipeline that we have, we positioned ourselves very well to grow the company dramatically over the upcoming years. If you look at our operational results and you look at our FFO, from the inception of the company, we’ve had good FFO growth. If you look at the chart here, you’ll notice that we had a small dip from 2008 and 2009, and in the rest of the time period we’ve had good growth. Now those were the strategic decision by the company.

We actually sold a small portfolio of properties in 2008, going into 2009 to further diversify away from our then largest tenant. From time-to-time we’ll do things like that in order to keep our tenant concentration, geographic concentration and our property mix where we want them to be. But it’s important as you go through this presentation with me today, you keep this graph and these charts in mind and see the history of why we’ve proven our track record to be with our FFO.

Also if you look down at the bottom left hand corner here, you see that our EBITDA, our lease coverage ratios. These are organic growths rates from our existing properties in our portfolio. You see in 2006, our EBITDA, our lease coverage ratio was approximately 3.5 times. Today, on a portfolio-wide basis, that EBITDA or lease coverage ratio is over 5.5 times. I’ll show you what it is broken out on an each segment there in just a few moments.

Last week in our earnings call we gave updated guidance. Our updated guidance for the first time we actually gave guidance for calendar year 2012. We also gave a run rate for 12/31/2012. In that run rate, we assume that we made an additional $300 million in acquisitions. We have about $100 million of debt that we could see that’s very imminent, that we expect to close very shortly within this quarter.

With the other $200 million, we’re excited to close by the fourth quarter. Now with that we were projecting that we will have a $1.6 FFO per share. And with our dividend rate of $0.80 per share, that puts us below an 80% pay out ratio. And that’s very important because those of you that follow us know that that’s been one of our goals. We’ve had some strategic opportunities here that we’ve taken advantage of. We’ve raised some equity to take advantage of those acquisitions. And so we’ve had some dilutions, so we’ve been above the 80% threshold. With the 80% threshold, that’s where we want to be before we start raising the dividend, we expect to be there again by the end of the year.

Now even if we don’t do the $200 million in acquisitions that we’ve scheduled for the fourth quarter, we’re still going to be above $1 per share in FFO, given it’s still greater than an 80% - less than an pay out ratio.

Read the rest of this transcript for free on seekingalpha.com

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