| Exhibit 99.1
|
Exhibit 99.1
Investor Presentation
November 2014
|
|
Safe Harbor
This presentation includes “forward-looking statements” within the meaning of securities laws of applicable jurisdictions. Forward-looking statements can generally be identified by the use of forward-looking words such as “may”, “will”, “would”, “could”, “expect”, “intend”, “plan”, “aim”, “estimate”, “target”, “anticipate”, “believe”, “continue”, “objectives”, “outlook”, “guidance” or other similar words, and include statements regarding MPT’s plans, strategies, objectives, targets, future expansion and development activities and expected financial performance. 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 satisfaction of all conditions to, and the timely closing (if at all) of the Median acquisition and sale-leaseback transactions; the Company’s financing of the transactions described herein; Median’s expected rent coverage; the capacity of Median and the Company’s other 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 payment of future dividends, if any; completion of additional debt arrangement, and additional investments; national and international 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; and the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain equity or debt financing secured by our properties or on an unsecured basis, and the factors referenced under the section captioned “Item 1.A Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2013. Actual results, performance or achievements may vary materially from any projections and forward looking statements and the assumptions on which those statements are based. Readers are cautioned not to place undue reliance on forward-looking statements, and MPT disclaims any responsibility to update such information.
| 2 |
|
|
|
Table of Contents
MEDIAN Kliniken 4 German Rehabilitation 9 MPT Opportunities 15 Appendix 25
|
|
MEDIAN Overview
MEDIAN Kliniken is the leading private provider of post-acute and acute rehabilitation in Germany
Strongly capitalized with private equity backing
Focus on neurology, orthopedics, and traditional post-acute – fastest growing and most profitable sectors of German rehab
MEDIAN Kliniken currently has 43 facilities and approximately 9,400 beds
41 clinics are owned and 2 are leased
| 2 |
|
additional acute care facilities will be acquired prior to closing (1 owned and 1 leased) |
Well-conceived plan to grow EBITDA by identified opportunities for margin improvement and continued consolidation of the German rehab market
Well diversified across clinical indications
Geographically dispersed throughout 12 states
Weserklinik Bad Gottleuba Berggießhübel
| 4 |
|
|
|
Key Elements of MEDIAN Deal
Median Deal Summary € $
Purchase Price (mm) €705 $900
Lease Rate(1) 9.3% 9.3%
Incremental EBITDA (mm) €65.6 $83.7
27 year Master Lease provides strongest credit protection
Cash lease payments increase every year by 70% of German CPI – no ceiling; 1% floor
Strong going-in coverage exceeds 1.7x with expectations of 2.0x in near term
Highly marketed, sophisticated process with strong competition including U.S. REITs
Note: Throughout the presentation, the Company is using the EUR/USD exchange rate as of October 17 of 1.276
(1) Based on Purchase Price plus up to €30mm in costs that are required to be capitalized under GAAP convention and 1.0% minimum annual escalation of rent
Adelsberg
Berggießhübel
Bad Sülze
| 5 |
|
|
|
Effect of MEDIAN Acquisitions
Summary MPT Profile at 9/30/14 and PF for MEDIAN
9/30/14 PF 9/30/141
Total Assets $3.4bn $4.5bn
Properties 123 169
LQA EBITDA $292mm $389mm
Total Enterprise Value2 $3.7bn $4.8bn
Largest property % of total 3.4% 2.6%
Medicare % of total 38% 32%
Portfolio with no ceiling on annual escalator3 43% 55%
Weighted average lease term4 12.9 years 16.1 years
Run-rate Normalized FFO / share estimate $1.10—$1.14 $1.19—$1.26
(1) Pro Forma figures include the MEDIAN acquisition and $155mm of additional acquisitions disclosed on October 20, 2014; also assumes development commitments are fully funded (2) Total Enterprise Value is equity market cap + book value of debt (3) Based on investment value (4) Based on annual base rent; does not include mortgage loans
Flachsheide Wismar Bad Gottleuba Kaiserberg-Klinik
| 6 |
|
|
|
MPT’s Expanding German Footprint
2013
Hamburg
Berlin
Cologne Dresden
Frankfurt
Stuttgart
Munich
PF 1Q 2015
Hamburg
Berlin
Cologne Dresden
Frankfurt
Stuttgart
Munich
11 Rehabilitation Hospitals across five German states
1,834 Hospital Beds added to MPT’s portfolio
RHM hospitals purchased from and leased back to RHM Klinik, one of Germany’s most respected hospital operators.
52 Rehabilitation Hospitals across 12 German states
| 2 |
|
Acute Care Hospitals in two German states |
11,279 German hospital beds in MPT’s portfolio (by 1Q 2015)
RHM & Median hospitals purchased from and leased back to two of Germany’s leading healthcare providers.
*MPT will own 54 facilities in the RHM and MEDIAN portfolios. Three MEDIAN facilities are leased.
| 7 |
|
|
|
Table of Contents
MEDIAN Kliniken 4
German Rehabilitation 9
MPT Opportunities 15
Appendix 25
| 8 |
|
|
|
German Healthcare System
German law guarantees healthcare access, coverage, and a high
standard of care for everyone
Legal
Regulation German citizens have a right to rehabilitation
Germany has a broader definition of rehabilitation than the United
States – includes prevention of disabilities and avoidance of physical
Rehabilitation and mental restrictions
Goal to maximize functional abilities to prevent early retirement or
long-term care
Primarily covered by public sources
Insurance Most important payors –
Coverage for German public pension funds (DRV) ~40%
Rehabilitation
Statutory Health Insurance (SHI) ~30%
9
|
|
Favorable Environment for Rehabilitation
Germany has a strong economic position in term of GDP per capita
Economy Germany’s healthcare spending compares favorably to other European countries
Aging population
Decline in average length of stay in acute care hospitals results in increasing
Demographics conversions and revenue for rehab hospitals
Increase in number of single households
Rehab spending increasing at more than 2.7% annually
Public payors continue to operate with surplus funds
Funding
Rehabilitation is a small share of total healthcare expenditures, and therefore not
a focus point
Decrease in number of rehabilitation facilities
Market consolidation
Market Positive supply / demand adjustment
Increasing quality and outcomes demanded by payors is driving smaller,
less capitalized operators to sell to consolidators such as MEDIAN
10
|
|
German Rehabilitation
The most important payors for rehabilitation are public pension funds and Statutory Health Insurance
€bn Inpatient rehabilitation expenditure by payor, 2006–12
Public pension funds SHI Others¹
€ 7.4
€ 2.6
€ 2.4
€ 2.3
€ 2.2
€ 2.6
€ 2.6 € 2.6 €8.0 €8.2 €8.7
+2.7%p.a.
€ 2.5
€ 3.3 € 3.5
€ 2.8 € 3.1
2006 2008 2010 2012
Public pension funds
Covers employed individuals
Goal is for employed person to continue work or regain ability to work Intent is to get employed person back into workforce and contributing into pension plan
Statutory Health Insurance (SHI)
Covers retirees, housewives/husbands, children Goal is to avoid hospital stay or long-term care
| (1) |
|
Includes private insurance, employers insurance for civil servants, accident insurance, self pay and other |
11
|
|
Germany Comparison – Financial Result and Healthcare Expenditure
Germany vs. Other Developed Countries
Public Healthcare 10.0 €5.4 ¹
€2.4
Payors’ Financial N/A
Result (€bn) 0.0
(€1.0)
(10.0) (€5.9)
(20.0)
(30.0)
(€27.9)²
Germany UK Italy France US Spain
Healthcare 3.0% 2.6% 2.4%
Expenditure 1.9%
Growth (% Real 2.0%
Terms)3 1.3%
1.0%
0.1%
0.0%
(1.0)% (0.7%)
Germany US France UK Spain Italy
German public healthcare payors with €5.4bn excess result
More beneficial cost dynamics than in other countries, allowing for more favorable growth expectations
Source: OECD Reports
| (1) |
|
Statutory Health Insurance, German Pension Funds with €5.1bn in 2012 (2) Only Medicare |
(3) Average annual growth rates in healthcare expenditures in real terms; years considered are 2008-2011 (2012 if available)
12
|
|
Favorable Trends for Rehabilitation
Post-Acute Cases, Thousands
1,000 +4% p.a.
734 751
635
468
500
0
Average Length of Stay in Inpatient Rehab, Days
27 26 26 (0%) p.a. 25 25
18
9
0
Average Length of Stay in Acute Hospitals, Days
15
10 9
10 8 8
| 5 |
|
0
2000 2005 2010 2011
Source: Federal Statistical Office
Share of Single Households
Shorter length of stay in acute hospitals leads to higher volume of patients released into post-acute rehab, and trend is expected to continue
Average length of stay in inpatient rehab almost constant, leading in total to an increase of patient days in post-acute rehab
13
|
|
Table of Contents
MEDIAN Kliniken 4
German Rehabilitation 9
MPT Opportunities 15
Appendix 25
14
|
|
MPT’s Demonstrated Success
33% Compound Annual Growth Rate Since End of Global Financial Crisis
Total Revenue(1)
$500 ($ in millions)
$423
$400
$323
$300
$243
$201
$200
$136
$100
$0
2011 2012 2013 LQA PF LQA
9/30/14 9/30/14
Total Assets(2)
$5,000 ($ in millions)
$4,452
$4,000
$3,360
$3,064
$3,000
$2,306
$2,000 $1,715
$1,425
$1,000
$0
2010 2011 2012 2013 9/30/14 PF
9/30/14
Adjusted EBITDA
$500 ($ in millions)
$400 $389
$292
$300
$217
$200 $180
$124
$100
$0
2011 2012 2013 LQA PF LQA
9/30/14 9/30/14
Moselschleife Burg Landshut Lobenstein Klinik am Burggraben
(1) Total revenue figures not adjusted to reflect discontinued operations
(2) Total assets is defined as undepreciated book value and for pro forma 9/30/14, assumes development commitments are fully funded
15
|
|
Key MPT Events
2011:
Raise capital to restart acquisition activity Investments of $331mm
Ratings upgraded; debut unsecured bond issuance of $450 million
2012:
Investments of $800mm
$400mm Ernest acquisition in unique RIDEA structure Ratings upgraded
2013:
Investments exceeding $700mm
Significant private equity activity following Ernest success Highly successful $240mm RHM transaction in Germany
2014:
Investments approximating $1.4bn
Successful competition for $900mm MEDIAN acquisition Entry into UK market with $49.9mm CircleBath hospital
Wismar
Hoppegarten
Burg Landshut
16
|
|
Key Market Events Since 2010
Post-crisis, hospital operators accessing sale/leaseback funding Private equity Not-for-profits IPO candidates Knowledgeable analysts and investors understand low risk of hospital reimbursement New entrants into market Non-traded REITs Large and smaller public REITs Sovereign wealth Fund managers Current returns continue to be highest of any real estate class Development of new trends in healthcare delivery Affordable Care Act Efficiency and reimbursement stability of post-acute care validated New physical plant including free-standing Emergency Rooms Aggressive conversion of not-for-profit facilities to for-profit ownership
Adelsberg
Berggießhübel
Bad Sülze
17
|
|
2014 Acquisitions YTD
Closed: $394mm To be closed: $971mm
($ in Millions)
$900
$1,375
$81
$9 $25 $40
$50 $5 $150
$115
Legacy CircleBath Ernest Adeptus UAB Medical Alecto— Alecto— RHM Median Total YTD
Health Health Health West Fairmont, Sherman,
Partners WV Texas
Date 1Q 3Q 3Q 3Q 3Q 3Q 3Q 4Q 4Q
Property type Acute Acute Inpatient Acute Acute Acute Acute Inpatient Inpatient
Care Care Rehab Care Care Care Care Rehab Rehab
Existing relationship
New relationship
International
18
|
|
International diversification
Geographic Diversification(1)
Germany
27%
UK
1%
U.S.
72%
Investment Criteria
Economic strength Rule of Law Scale Level of health care quality trends and historical expectation
Demographic trends
Similarities to U.S. system
Note: Weighted by total investment
| (1) |
|
Pro Forma. Assumes completion of development projects |
19
|
|
International Diversification in Attractive
Healthcare Markets
U.S.
Very stable
Government Democratic process to elect political leaders
314M Total2
Under 65
Demographics 87% 13%
65+
Laws Affordable Care Act – movement towards universal care
Continued opportunities for growth primarily through acquisition and
Opportunities development of private and for-profit hospitals
for Growth
Western Europe1
Very stable
Democratic process to elect political leaders
413M Total2
81% 19%
Universal healthcare and reimbursement mandated by law
Increasing opportunities for growth as private for-profit hospital operators
recognize the benefits of sale/leaseback financing model to fund facility
improvements, technology upgrades, staff additions and new construction
Medicare – Federal government sponsored
Medicaid – State and Federal government sponsored
Payors Commercial insurance—Private
Coverage depends on individual’s ability to pay and/or plan benefits
Coverage Insurance primarily offered through employers and government
Combination of private practice and employment model
Physicians Rate determined by government and negotiated health plans
Private For-profit 20%
Hospital
Private Not-for-profit 59%
Ownership
Germany
Public Not-for-profit 21%
Statutory Health Insurance (SHI)
Pension Funds – National and
Regional funds that pay for rehabilitation services
Private Health Insurance – limited to higher earners German law mandates universal access and coverage; SHI covers 90% of German population
German physicians are employed doctors
Public Not-for-profit 21%
UK
National Health Service (NHS)- Single payor government system
Private Health Insurance
In the UK, defined healthcare benefits are free to all residents of the UK regardless of wealth through the NHS
UK clinicians/consultants are government (NHS) employees
17% 8%
33% 0%
50% 92%
(1) Countries constituting Western Europe from UCLA Center for European and Eurasian Studies—web.international.ucla.edu/euro/countries/westeurope
| (2) |
|
2012 population estimates from The World Bank—data.worldbank.org/indicator/SP.POP.TOTL |
20
|
|
|
|
Normalized FFO Reconciliation
Normalized FFO Reconciliation
For the Twelve Months Ended
($ in millions) 2011 2012 2013 YTD 2014
Net Income attributable to MPT Operating Partnership, L.P. $ 26.5 $ 89.9 $ 97.0 $ 35.6
Participating securities’ share in earnings (1.1) (0.9) (0.7) (0.6)
Net Income $ 25.4 $ 89.0 $ 96.3 $ 35.0
Depreciation and amortization
Continuing operations 30.9 32.8 37.0 39.5
Discontinued operations 3.8 2.0 0.7 -
Loss (gain) on sale of real estate (5.4) (16.3) (7.7) -
Real estate impairment charge 0.6 — — 6.0
Funds from operations $ 55.3 $ 107.5 $ 126.3 $ 80.5
Write-off of straight line rent 2.5 6.5 1.5 1.0
Acquisition costs 4.2 5.4 19.4 7.9
Debt refinancing costs 14.2 — — 0.3
Loan and other impairment charges — — — 44.1
Write-off of other receivables 1.8 — — -
Normalized funds from operations $ 78.0 $ 119.4 $ 147.2 $ 133.8
Normalized FFO is a non-GAAP measure that is reconciled to net income at www.medicalpropertiestrust.com.
22
|
|
Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation
For the Twelve Months Ended
($ in millions) 2011 2012 2013 YTD 2014 3Q 2014
Net income $ 26.7 $ 90.1 $ 97.2 $ 35.7 $ 28.7
Interest expense 57.9 58.3 66.8 71.7 25.5
Taxes 0.1 0.0 0.7 0.2 0.2
Depreciation and amortization 35.5 35.6 38.8 40.4 13.7
EBITDA $ 120.2 $ 184.0 $ 203.5 $ 148.0 $ 68.1
Gains on asset sales (5.4) (16.3) (7.7) — -
Impariment charges 0.6 — — 50.1 -
Write-off of straight-line rent 2.5 6.5 1.5 1.0 -
Write-off of other receivables 1.8 — — — -
Acquisition costs 4.2 5.4 19.4 7.9 4.9
Adjusted EBITDA $ 123.8 $ 179.6 $ 216.7 $ 207.0 $ 73.0
Plus: EBITDA from announced acquistions $ 24.3
Total Pro Forma Adjusted EBITDA $ 97.3
23