EX-99.1 2 d723217dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

 

  

Contact: Tim Berryman

Director – Investor Relations

Medical Properties Trust, Inc.

(205) 397-8589

tberryman@medicalpropertiestrust.com

MEDICAL PROPERTIES TRUST, INC. CONTINUES STRONG GROWTH AND REPORTS NORMALIZED FFO OF $0.26 PER SHARE IN FIRST QUARTER 2014

Completes Acquisition of New Jersey Hospital for $115 Million;

Development Commitments Executed for Additional $205 Million of Acute Hospitals

Birmingham, AL – May 6, 2014 – Medical Properties Trust, Inc. (the “Company”) (NYSE: MPW) today announced financial and operating results for the first quarter ended March 31, 2014.

FIRST QUARTER AND RECENT FINANCIAL HIGHLIGHTS

 

    Achieved first quarter Normalized Funds from Operations (“FFO”) per diluted share of $0.26, up 4% compared with $0.25 per diluted share reported in the first quarter of 2013

 

    Issued 9.9 million shares of common stock in first quarter for net proceeds of approximately $128.3 million to fund identified acquisition and development transactions

 

    Further strengthened balance sheet with public offering of $300 million of Senior Notes in April with an annual coupon of 5.5%

“We are very pleased to start a relationship with LHP Hospital Group through the acquisition and leaseback of Hackensack University Medical Center Mountainside in Montclair, New Jersey,” said Edward K. Aldag, Jr., Chairman, President and CEO of Medical Properties Trust. “We believe this transaction with a joint venture of LHP and its not-for-profit partner at Mountainside further demonstrates our market leadership and the strong opportunity for us to support forward-looking hospitals in future acquisitions. It signals that we are clearly the preferred provider for hospital operators and their private equity owners as well as not-for-profit health systems. We are well on our way to reaching our $500 million acquisitions target for 2014.”

 

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FIRST QUARTER AND RECENT OPERATIONAL HIGHLIGHTS

 

    Acquired acute care hospital in Montclair, New Jersey for approximately $115 million and leased back to a joint venture of LHP Hospital Group, Inc. and Hackensack University Medical Center Mountainside

 

    Opened two free-standing emergency room hospital facilities pursuant to the previously announced development agreement with First Choice ER, LLC

 

    Closed on nine First Choice emergency room hospital facilities in the first quarter for an aggregate expected development and construction cost of approximately $51.9 million

 

    Negotiated letter of intent with a third party regarding the sale of Monroe Hospital in Bloomington, Indiana

Included in the financial tables accompanying this press release is information about the Company’s assets and liabilities, net income and reconciliations of net income to FFO and Adjusted Funds from Operations (AFFO), all on a comparable basis to 2013 periods.

“MPT’s business model for financing provides hospital operators with a unique opportunity to unlock the value of their underlying real estate to fund facility improvements, technology upgrades, staff additions and new construction through long-term net leases of real estate assets all while retaining control of their most important assets,” commented Aldag. “We will continue to execute our hospital investment strategy, and are focused on completing acquisitions that are immediately accretive to our Normalized FFO and that further diversify our portfolio by geography and operator.”

ADDITIONAL OPERATING RESULTS

First quarter 2014 total revenues increased 27% to $73.1 million compared with $57.6 million for the first quarter of 2013. Normalized FFO for the quarter increased 23% to $42.7 million compared with $34.8 million in the first quarter of 2013. Per share Normalized FFO increased 4% to $0.26 per diluted share in the 2014 first quarter compared with $0.25 per diluted share in the first quarter of 2013.

Excluded from Normalized FFO was the effect of a previously disclosed $20.5 million impairment (or $0.12 per diluted share) related to the loan and advances to the operator of Monroe Hospital in Bloomington, Indiana. As a result, net income for the first quarter of 2014 was $7.2 million (or $0.04 per diluted share) compared with net income of $26.2 million (or $0.18 per diluted share) in the first quarter of 2013.

 

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PORTFOLIO UPDATE AND OUTLOOK

The Company also remains in negotiations with an operator regarding a sale and leaseback transaction valued at approximately $180 million for an acute care hospital in the United States. There is no assurance that the negotiations will result in a completed transaction.

As previously disclosed, the Company has entered into a non-binding letter of intent with a current operator for the development of an additional acute care facility in the United States. The proposed transaction, which is valued at approximately $55 million, is structured initially as a construction loan from the Company for the development of the facility. Upon completion of the facility, there will be an immediately accretive sale and leaseback to the operator with a 15-year initial term, up to 15 years of extension options and consumer price-indexed annual rent increases.

Additionally, the Company has entered into a non-binding letter of intent with an affiliate of another of its current operators for the development of emergency room facilities, as well as the development or acquisition of acute care hospitals in the United States. The estimated aggregate funding commitment for the Company and its affiliates is approximately $150 million. Each of the facilities, when completed, will be leased to the operator or its affiliates under a master lease with immediately accretive lease rates providing for a 15-year initial term, up to 15 years of extension options and consumer price-indexed annual rent increases.

At March 31, 2014, the Company had total real estate and related investments of approximately $3.0 billion comprised of 117 healthcare properties in 25 states and in Germany. The properties are leased to or mortgaged by 28 hospital operating companies. Based solely on this portfolio and approximately $180 million of future acquisitions, the annual run rate for Normalized FFO per share is expected to range from $1.10 to $1.14. Actual 2014 Normalized FFO may differ from this range and the Company will provide periodic updates as acquisitions are finalized.

The annualized run-rate guidance estimate does not include the effects, if any, of real estate operating costs, litigation costs, debt refinancing costs, acquisition costs, interest rate hedging activities, write-offs of straight-line rent or other non-recurring or unplanned transactions. These estimates will change if the Company acquires assets totaling more or less than its expectations, the timing of acquisitions varies from expectations, capitalization rates vary from expectations, market interest rates change, debt is refinanced, new shares are issued, additional debt is incurred, assets are sold, other operating expenses vary, income from investments in tenant operations vary from expectations, or existing leases do not perform in accordance with their terms.

 

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CONFERENCE CALL AND WEBCAST

The Company has scheduled a conference call and webcast for Tuesday, May 6, 2014 at 11:00 a.m. Eastern Time to present the Company’s financial and operating results for the quarter ended March 31, 2014. The dial-in telephone numbers for the conference call are 877-546-5021 (U.S.) and 857-244-7553 (international); both numbers require passcode 30659793. The conference call will also be available via webcast in the Investor Relations’ section of the Company’s website, www.medicalpropertiestrust.com.

A telephone and webcast replay of the call will be available beginning shortly after the call’s completion through May 20, 2014. Dial-in numbers for the replay are 888-286-8010 and 617-801-6888 for U.S. and International callers, respectively. The replay passcode for both U.S. and international callers is 22551229.

The Company’s supplemental information package for the current period will also be available on the Company’s website under the “Investor Relations” section.

About Medical Properties Trust, Inc.

Medical Properties Trust, Inc. is a Birmingham, Alabama based self-advised real estate investment trust formed to capitalize on the changing trends in healthcare delivery by acquiring and developing net-leased healthcare facilities. MPT’s financing model allows hospitals and other healthcare facilities to unlock the value of their underlying real estate in order to fund facility improvements, technology upgrades, staff additions and new construction. Facilities include acute care hospitals, inpatient rehabilitation hospitals, long-term acute care hospitals, and other medical and surgical facilities. For more information, please visit the Company’s website at www.medicalpropertiestrust.com.

The statements in this press release that are forward looking are based on current expectations and actual results or future events may differ materially. Words such as “expects,” “believes,” “anticipates,” “intends,” “will,” “should” and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results of the Company or future events to differ materially from those expressed in or underlying such forward-looking statements, including without limitation: the capacity of the Company’s tenants to meet the terms of their agreements; Normalized FFO per share; expected payout ratio, the amount of acquisitions of healthcare real estate, if any; capital markets conditions, the repayment of debt arrangements; statements concerning the additional income to the Company as a result of ownership interests in certain hospital operations and the timing of such income; the restructuring of the Company’s investments in Monroe Hospital; the payment of future dividends, if any; completion of additional debt arrangement, and additional investments; national and economic, business, real estate and other market conditions; the competitive environment in which the Company operates; the execution of the Company’s business plan; financing risks; the Company’s ability to maintain its status as a REIT for federal income tax purposes; acquisition and development risks; potential environmental and other liabilities; and other factors affecting the real estate industry generally or healthcare real estate in particular.

 

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For further discussion of the factors that could affect outcomes, please refer to the “Risk factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, and as updated by the Company’s subsequently filed Quarterly Reports on Form 10-Q and other SEC filings. Except as otherwise required by the federal securities laws, the Company undertakes no obligation to update the information in this press release.

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MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

 

     March 31, 2014     December 31, 2013  
     (Unaudited)     (A)  

Assets

    

Real estate assets

    

Land, buildings and improvements, and intangible lease assets

   $ 1,964,466,055      $ 1,823,683,129   

Construction in progress and other

     43,956,015        41,771,499   

Net investment in direct financing leases

     432,657,330        431,024,228   

Mortgage loans

     388,650,000        388,650,000   
  

 

 

   

 

 

 

Gross investment in real estate assets

     2,829,729,400        2,685,128,856   

Accumulated depreciation and amortization

     (173,474,957     (159,776,091
  

 

 

   

 

 

 

Net investment in real estate assets

     2,656,254,443        2,525,352,765   

Cash and cash equivalents

     50,309,266        45,979,648   

Interest and rent receivables

     63,173,762        58,499,609   

Straight-line rent receivables

     48,022,702        45,828,697   

Other assets

     208,832,307        228,909,650   
  

 

 

   

 

 

 

Total Assets

   $ 3,026,592,480      $ 2,904,570,369   
  

 

 

   

 

 

 

Liabilities and Equity

    

Liabilities

    

Debt, net

   $ 1,472,045,474      $ 1,421,680,749   

Accounts payable and accrued expenses

     74,183,992        94,311,177   

Deferred revenue

     25,418,580        23,786,819   

Lease deposits and other obligations to tenants

     23,963,665        20,583,283   
  

 

 

   

 

 

 

Total liabilities

     1,595,611,711        1,560,362,028   

Equity

    

Preferred stock, $0.001 par value. Authorized 10,000,000 shares; no shares outstanding

     —          —     

Common stock, $0.001 par value. Authorized 250,000,000 shares; issued and outstanding — 170,212,741 shares at March 31, 2014 and 161,309,725 shares at December 31, 2013

     170,213        161,310   

Additional paid in capital

     1,732,915,820        1,618,054,133   

Distributions in excess of net income

     (293,595,304     (264,804,113

Accumulated other comprehensive income (loss)

     (8,247,617     (8,940,646

Treasury shares, at cost

     (262,343     (262,343
  

 

 

   

 

 

 

Total Equity

     1,430,980,769        1,344,208,341   
  

 

 

   

 

 

 

Total Liabilities and Equity

   $ 3,026,592,480      $ 2,904,570,369   
  

 

 

   

 

 

 

 

(A) Financials have been derived from the prior year audited financials.


MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

 

     For the Three Months Ended  
     March 31, 2014     March 31, 2013  
           (A)  

Revenues

    

Rent billed

   $ 42,956,745      $ 31,498,931   

Straight-line rent

     2,148,220        2,651,453   

Income from direct financing leases

     12,215,388        8,756,471   

Interest and fee income

     15,768,301        14,706,897   
  

 

 

   

 

 

 

Total revenues

     73,088,654        57,613,752   

Expenses

    

Real estate depreciation and amortization

     13,689,602        8,469,200   

Loan impairment charge

     20,496,463        —     

Property-related

     738,305        408,887   

Acquisition expenses

     512,016        190,549   

General and administrative

     8,958,790        7,765,949   
  

 

 

   

 

 

 

Total operating expenses

     44,395,176        16,834,585   
  

 

 

   

 

 

 

Operating income

     28,693,478        40,779,167   

Interest and other income (expense)

     (21,442,535     (15,157,366

Income tax (expense) benefit

     57,324        (52,247
  

 

 

   

 

 

 

Income from continuing operations

     7,308,267        25,569,554   

Income (loss) from discontinued operations

     (1,500     640,571   
  

 

 

   

 

 

 

Net income

     7,306,767        26,210,125   

Net income attributable to non-controlling interests

     (65,473     (53,633
  

 

 

   

 

 

 

Net income attributable to MPT common stockholders

   $ 7,241,294      $ 26,156,492   
  

 

 

   

 

 

 

Earnings per common share — basic:

    

Income from continuing operations

   $ 0.04      $ 0.18   

Income from discontinued operations

     —          0.01   
  

 

 

   

 

 

 

Net income attributable to MPT common stockholders

   $ 0.04      $ 0.19   
  

 

 

   

 

 

 

Earnings per common share — diluted:

    

Income from continuing operations

   $ 0.04      $ 0.18   

Income from discontinued operations

     —          —     
  

 

 

   

 

 

 

Net income attributable to MPT common stockholders

   $ 0.04      $ 0.18   
  

 

 

   

 

 

 

Dividends declared per common share

   $ 0.21      $ 0.20   

Weighted average shares outstanding — basic

     163,973,178        140,346,579   

Weighted average shares outstanding — diluted

     164,548,581        141,526,311   

 

(A) Financials have been restated to reclass the operating results of certain properties sold after the 2013 first quarter to discontinued operations.


MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Reconciliation of Net Income to Funds From Operations

(Unaudited)

 

     For the Three Months Ended  
     March 31, 2014     March 31, 2013  
           (A)  

FFO information:

    

Net income attributable to MPT common stockholders

   $ 7,241,294      $ 26,156,492   

Participating securities’ share in earnings

     (209,370     (193,062
  

 

 

   

 

 

 

Net income, less participating securities’ share in earnings

   $ 7,031,924      $ 25,963,430   

Depreciation and amortization:

    

Continuing operations

     13,689,602        8,469,200   

Discontinued operations

     —          177,950   
  

 

 

   

 

 

 

Funds from operations

   $ 20,721,526      $ 34,610,580   

Write-off of straight line rent

     950,338        —     

Loan impairment charge

     20,496,463        —     

Acquisition costs

     512,016        190,549   
  

 

 

   

 

 

 

Normalized funds from operations

   $ 42,680,343      $ 34,801,129   

Share-based compensation

     2,043,410        1,918,855   

Debt costs amortization

     1,048,722        896,732   

Additional rent received in advance (B)

     (300,000     (300,000

Straight-line rent revenue and other

     (4,702,867     (3,892,628
  

 

 

   

 

 

 

Adjusted funds from operations

   $ 40,769,608      $ 33,424,088   
  

 

 

   

 

 

 

Per diluted share data:

    

Net income, less participating securities’ share in earnings

   $ 0.04      $ 0.18   

Depreciation and amortization:

    

Continuing operations

     0.09        0.06   

Discontinued operations

     —          —     
  

 

 

   

 

 

 

Funds from operations

   $ 0.13      $ 0.24   

Write-off of straight line rent

     0.01        —     

Loan impairment charge

     0.12        —     

Acquisition costs

     —          0.01   
  

 

 

   

 

 

 

Normalized funds from operations

   $ 0.26      $ 0.25   

Share-based compensation

     0.01        0.01   

Debt costs amortization

     0.01        0.01   

Additional rent received in advance (B)

     —          —     

Straight-line rent revenue and other

     (0.03     (0.03
  

 

 

   

 

 

 

Adjusted funds from operations

   $ 0.25      $ 0.24   
  

 

 

   

 

 

 

 

(A) Financials have been restated to reclass the operating results of certain properties sold after the 2013 first quarter to discontinued operations.

 

(B) Represents additional rent from one tenant in advance of when we can recognize as revenue for accounting purposes. This additional rent is being recorded to revenue on a straight-line basis over the lease life.

Investors and analysts following the real estate industry utilize funds from operations, or FFO, as a supplemental performance measure. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets, which assumes that the value of real estate diminishes predictably over time. We compute FFO in accordance with the definition provided by the National Association of Real Estate Investment Trusts, or NAREIT, which represents net income (loss) (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairment charges on real estate assets, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures.

In addition to presenting FFO in accordance with the NAREIT definition, we also disclose normalized FFO, which adjusts FFO for items that relate to unanticipated or non-core events or activities or accounting changes that, if not noted, would make comparison to prior period results and market expectations less meaningful to investors and analysts. We believe that the use of FFO, combined with the required GAAP presentations, improves the understanding of our operating results among investors and the use of normalized FFO makes comparisons of our operating results with prior periods and other companies more meaningful. While FFO and normalized FFO are relevant and widely used supplemental measures of operating and financial performance of REITs, they should not be viewed as a substitute measure of our operating performance since the measures do not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which can be significant economic costs that could materially impact our results of operations. FFO and normalized FFO should not be considered an alternative to net income (loss) (computed in accordance with GAAP) as indicators of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.

We calculate adjusted funds from operations, or AFFO, by subtracting from or adding to normalized FFO (i) unbilled rent revenue, (ii) non-cash share-based compensation expense, and (iii) amortization of deferred financing costs. AFFO is an operating measurement that we use to analyze our results of operations based on the receipt, rather than the accrual, of our rental revenue and on certain other adjustments. We believe that this is an important measurement because our leases generally have significant contractual escalations of base rents and therefore result in recognition of rental income that is not collected until future periods, and costs that are deferred or are non-cash charges. Our calculation of AFFO may not be comparable to AFFO or similarly titled measures reported by other REITs. AFFO should not be considered as an alternative to net income (calculated pursuant to GAAP) as an indicator of our results of operations or to cash flow from operating activities (calculated pursuant to GAAP) as an indicator of our liquidity.