Medical Properties Trust, Inc. Reports Second Quarter Results
Successfully Executed More than
Modified Credit Facility Terms and Conditions
Second Quarter Financial Highlights
-
Net loss of (
$0.54 ) and Normalized Funds from Operations (“NFFO”) of$0.23 for the 2024 second quarter on a per share basis; -
Second quarter net loss included approximately
$400 million in real estate gains, offset by approximately$700 million in impairments and negative fair value adjustments.
Corporate Updates During and Subsequent to the Second Quarter
-
Closed on the sale of five previously leased hospitals to
Prime Healthcare for total consideration of$350 million in April; -
Closed on the sale of a 75% interest in five
Utah hospitals leased to CommonSpirit to a new joint venture with an institutional investor in April for total proceeds of$1.1 billion ; -
Completed a £631 million (
~$800 million ) secured financing of 27 U.K. hospitals leased toCircle Health in May; -
Sold for approximately
$160 million seven freestanding emergency department (“FSED”) facilities as well as one general acute hospital inArizona toDignity Health in July; -
Repaid approximately
$1.5 billion in debt, including all 2024 maturities; and -
Paid a regular quarterly dividend of
$0.15 per share.
Included in the financial tables accompanying this press release is information about the Company’s assets and liabilities, operating results, and reconciliations of net loss to NFFO, including per share amounts, all on a basis comparable to 2023 results.
CAPITAL ALLOCATION UPDATE
Subsequent to the end of the quarter, MPT amended its credit facility to reflect recent disposition and financing transactions and better align with the Company’s current capital allocation strategy, as well as to accommodate the expected timing of sales and re-tenanting transactions that Steward Health Care (“Steward”) is pursuing through its court-supervised restructuring process.
The amendment includes the reduction of MPT’s revolver commitment from
PORTFOLIO UPDATE
MPT’s European general acute portfolio continues to benefit from the broadening role of private hospitals in addressing rapidly growing care needs, particularly in the
In the Company’s
As expected, Steward paid May and June cash rent of approximately
Due to unanticipated restrictions imposed by regulators that impacted the process of transitioning ownership of eight hospitals operated by Steward in
During the second quarter of 2024, Prospect paid cash rent of
OPERATING RESULTS
Net loss for the second quarter ended
-
The impairment of MPT’s approximate
$400 million equity stake in theMassachusetts partnership with Macquarie (included on the income statement in earnings from equity interests); and -
A
$163 million negative fair market value adjustment to the Company’s investment in PHP due to changes in third-party valuations and other discounting assumptions.
NFFO for the second quarter ended
A reconciliation of net loss to FFO and NFFO, including per share amounts, can be found in the financial tables accompanying this press release.
CONFERENCE CALL AND WEBCAST
The Company has scheduled a conference call and webcast for
A telephone and webcast replay of the call will be available beginning shortly after the call’s completion. The telephone replay will be available through
The Company’s supplemental information package for the current period will also be available on the Company’s website in the Investor Relations section.
The Company uses, and intends to continue to use, the Investor Relations page of its website, which can be found at www.medicalpropertiestrust.com, as a means of disclosing material nonpublic information and of complying with its disclosure obligations under Regulation FD, including, without limitation, through the posting of investor presentations that may include material nonpublic information. Accordingly, investors should monitor the Investor Relations page, in addition to following our press releases,
About
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can generally be identified by the use of forward-looking words such as “may”, “will”, “would”, “could”, “expect”, “intend”, “plan”, “estimate”, “target”, “anticipate”, “believe”, “objectives”, “outlook”, “guidance” or other similar words, and include statements regarding our strategies, objectives, asset sales and other liquidity transactions (including the use of proceeds thereof), expected returns on investments and financial performance, expected trends and performance across our various markets, and expected outcomes from Steward’s restructuring process. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results or future events to differ materially from those expressed in or underlying such forward-looking statements, including, but not limited to: (i) the risk that the bankruptcy restructuring of Steward, the Company’s largest tenant, does not result in MPT recovering deferred rent or its other investments in Steward at full value, within a reasonable time period or at all; (ii) macroeconomic conditions, including due to geopolitical conditions and instability, which may lead to a disruption of or lack of access to the capital markets, disruptions and instability in the banking and financial services industries, rising inflation and movements in currency exchange rates; (iii) the risk that previously announced or contemplated property sales, loan repayments, and other capital recycling transactions do not occur as anticipated or at all; (iv) the risk that MPT is not able to attain its leverage, liquidity and cost of capital objectives within a reasonable time period or at all; (v) MPT’s ability to obtain debt financing on attractive terms or at all, as a result of changes in interest rates and other factors, which may adversely impact its ability to pay down, refinance, restructure or extend its indebtedness as it becomes due, or pursue acquisition and development opportunities; (vi) the ability of our tenants, operators and borrowers to satisfy their obligations under their respective contractual arrangements with us; (vii) the economic, political and social impact of, and uncertainty relating to, the potential impact from health crises (like COVID-19), which may adversely affect MPT’s and its tenants’ business, financial condition, results of operations and liquidity; (viii) our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate and integrate acquisitions and investments; (ix) the nature and extent of our current and future competition; (x) international, national and local economic, real estate and other market conditions, which may negatively impact, among other things, the financial condition of our tenants, lenders and institutions that hold our cash balances, and may expose us to increased risks of default by these parties; (xi) factors affecting the real estate industry generally or the healthcare real estate industry in particular; (xii) our ability to maintain our status as a REIT for income tax purposes in the
The risks described above are not exhaustive and additional factors could adversely affect our business and financial performance, including the risk factors discussed under the section captioned “Risk Factors” in our most recent Annual Report on Form 10-K and our Form 10-Q, and as may be updated in our other filings with the
| Consolidated Balance Sheets | ||||||||
| (Amounts in thousands, except for per share data) | ||||||||
| Assets | (Unaudited) | (A) | ||||||
| Real estate assets | ||||||||
| Land, buildings and improvements, intangible lease assets, and other |
$ |
11,949,385 |
|
$ |
13,237,187 |
|
||
| Investment in financing leases |
|
1,181,959 |
|
|
1,231,630 |
|
||
| Mortgage loans |
|
399,150 |
|
|
309,315 |
|
||
| Gross investment in real estate assets |
|
13,530,494 |
|
|
14,778,132 |
|
||
| Accumulated depreciation and amortization |
|
(1,417,910 |
) |
|
(1,407,971 |
) |
||
| Net investment in real estate assets |
|
12,112,584 |
|
|
13,370,161 |
|
||
| Cash and cash equivalents |
|
606,550 |
|
|
250,016 |
|
||
| Interest and rent receivables |
|
39,471 |
|
|
45,059 |
|
||
| Straight-line rent receivables |
|
664,271 |
|
|
635,987 |
|
||
| Investments in unconsolidated real estate joint ventures |
|
1,143,231 |
|
|
1,474,455 |
|
||
| Investments in unconsolidated operating entities |
|
635,206 |
|
|
1,778,640 |
|
||
| Other loans |
|
505,942 |
|
|
292,615 |
|
||
| Other assets |
|
487,488 |
|
|
457,911 |
|
||
| Total Assets |
$ |
16,194,743 |
|
$ |
18,304,844 |
|
||
| Liabilities and Equity | ||||||||
| Liabilities | ||||||||
| Debt, net |
$ |
9,369,064 |
|
$ |
10,064,236 |
|
||
| Accounts payable and accrued expenses |
|
446,893 |
|
|
412,178 |
|
||
| Deferred revenue |
|
25,700 |
|
|
37,962 |
|
||
| Obligations to tenants and other lease liabilities |
|
160,009 |
|
|
156,603 |
|
||
| Total Liabilities |
|
10,001,666 |
|
|
10,670,979 |
|
||
| Equity | ||||||||
| Preferred stock, |
|
- |
|
|
- |
|
||
| Common stock, |
|
600 |
|
|
599 |
|
||
| Additional paid-in capital |
|
8,571,662 |
|
|
8,560,309 |
|
||
| Retained deficit |
|
(2,348,170 |
) |
|
(971,809 |
) |
||
| Accumulated other comprehensive (loss) income |
|
(33,910 |
) |
|
42,501 |
|
||
|
|
6,190,182 |
|
|
7,631,600 |
|
|||
| Non-controlling interests |
|
2,895 |
|
|
2,265 |
|
||
| Total Equity |
|
6,193,077 |
|
|
7,633,865 |
|
||
| Total Liabilities and Equity |
$ |
16,194,743 |
|
$ |
18,304,844 |
|
||
| (A) Financials have been derived from the prior year audited financial statements. | ||||||||
| Consolidated Statements of Income | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (Amounts in thousands, except for per share data) | For the Three Months Ended | For the Six Months Ended | ||||||||||||||
| Revenues | ||||||||||||||||
| Rent billed |
$ |
183,764 |
|
$ |
247,491 |
|
$ |
383,063 |
|
$ |
495,648 |
|
||||
| Straight-line rent |
|
38,381 |
|
|
(39,329 |
) |
|
83,117 |
|
|
17,364 |
|
||||
| Income from financing leases |
|
27,641 |
|
|
68,468 |
|
|
44,034 |
|
|
81,663 |
|
||||
| Interest and other income |
|
16,774 |
|
|
60,765 |
|
|
27,662 |
|
|
92,931 |
|
||||
| Total revenues |
|
266,560 |
|
|
337,395 |
|
|
537,876 |
|
|
687,606 |
|
||||
| Expenses | ||||||||||||||||
| Interest |
|
101,430 |
|
|
104,470 |
|
|
210,115 |
|
|
202,124 |
|
||||
| Real estate depreciation and amortization |
|
102,240 |
|
|
364,403 |
|
|
177,826 |
|
|
448,263 |
|
||||
| Property-related (A) |
|
7,663 |
|
|
24,676 |
|
|
12,481 |
|
|
31,786 |
|
||||
| General and administrative |
|
35,327 |
|
|
35,604 |
|
|
68,675 |
|
|
77,328 |
|
||||
| Total expenses |
|
246,660 |
|
|
529,153 |
|
|
469,097 |
|
|
759,501 |
|
||||
| Other (expense) income | ||||||||||||||||
| Gain on sale of real estate |
|
384,824 |
|
|
167 |
|
|
383,401 |
|
|
229 |
|
||||
| Real estate and other impairment charges, net |
|
(137,419 |
) |
|
- |
|
|
(830,507 |
) |
|
(89,538 |
) |
||||
| (Loss) earnings from equity interests |
|
(401,757 |
) |
|
12,224 |
|
|
(391,208 |
) |
|
23,576 |
|
||||
| Debt refinancing and unutilized financing costs |
|
(2,964 |
) |
|
(816 |
) |
|
(2,964 |
) |
|
(816 |
) |
||||
| Other (including fair value adjustments on securities) |
|
(167,686 |
) |
|
(10,512 |
) |
|
(397,031 |
) |
|
(15,678 |
) |
||||
| Total other (expense) income |
|
(325,002 |
) |
|
1,063 |
|
|
(1,238,309 |
) |
|
(82,227 |
) |
||||
| Loss before income tax |
|
(305,102 |
) |
|
(190,695 |
) |
|
(1,169,530 |
) |
|
(154,122 |
) |
||||
| Income tax (expense) benefit |
|
(14,557 |
) |
|
148,262 |
|
|
(25,506 |
) |
|
144,719 |
|
||||
| Net loss |
|
(319,659 |
) |
|
(42,433 |
) |
|
(1,195,036 |
) |
|
(9,403 |
) |
||||
| Net (income) loss attributable to non-controlling interests |
|
(976 |
) |
|
396 |
|
|
(1,224 |
) |
|
160 |
|
||||
| Net loss attributable to MPT common stockholders |
$ |
(320,635 |
) |
$ |
(42,037 |
) |
$ |
(1,196,260 |
) |
$ |
(9,243 |
) |
||||
| Earnings per common share - basic and diluted: | ||||||||||||||||
| Net loss attributable to MPT common stockholders |
$ |
(0.54 |
) |
$ |
(0.07 |
) |
$ |
(1.99 |
) |
$ |
(0.02 |
) |
||||
| Weighted average shares outstanding - basic |
|
600,057 |
|
|
598,344 |
|
|
600,181 |
|
|
598,323 |
|
||||
| Weighted average shares outstanding - diluted |
|
600,057 |
|
|
598,344 |
|
|
600,181 |
|
|
598,323 |
|
||||
| Dividends declared per common share |
$ |
0.30 |
|
$ |
0.29 |
|
$ |
0.30 |
|
$ |
0.58 |
|
||||
| (A) Includes |
||||||||||||||||
| Reconciliation of Net Loss to Funds From Operations | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (Amounts in thousands, except for per share data) | For the Three Months Ended | For the Six Months Ended | ||||||||||||||
| FFO information: | ||||||||||||||||
| Net loss attributable to MPT common stockholders |
$ |
(320,635 |
) |
$ |
(42,037 |
) |
$ |
(1,196,260 |
) |
$ |
(9,243 |
) |
||||
| Participating securities' share in earnings |
|
(654 |
) |
|
(469 |
) |
|
(654 |
) |
|
(984 |
) |
||||
| Net loss, less participating securities' share in earnings |
$ |
(321,289 |
) |
$ |
(42,506 |
) |
$ |
(1,196,914 |
) |
$ |
(10,227 |
) |
||||
| Depreciation and amortization |
|
117,239 |
|
|
382,244 |
|
|
211,482 |
|
|
484,204 |
|
||||
| Gain on sale of real estate |
|
(384,824 |
) |
|
(167 |
) |
|
(383,401 |
) |
|
(229 |
) |
||||
| Real estate impairment charges |
|
499,324 |
|
|
- |
|
|
499,324 |
|
|
52,104 |
|
||||
| Funds from operations |
$ |
(89,550 |
) |
$ |
339,571 |
|
$ |
(869,509 |
) |
$ |
525,852 |
|
||||
| Write-off of billed and unbilled rent and other |
|
1,188 |
|
|
95,642 |
|
|
3,005 |
|
|
135,268 |
|
||||
| Other impairment charges, net |
|
48,885 |
|
|
- |
|
|
741,973 |
|
|
- |
|
||||
| Litigation and other |
|
11,738 |
|
|
2,502 |
|
|
17,608 |
|
|
10,228 |
|
||||
| Share-based compensation adjustments |
|
- |
|
|
(4,363 |
) |
|
- |
|
|
(4,363 |
) |
||||
| Non-cash fair value adjustments |
|
159,247 |
|
|
8,374 |
|
|
380,523 |
|
|
4,253 |
|
||||
| Tax rate changes and other |
|
4,895 |
|
|
(157,230 |
) |
|
4,588 |
|
|
(164,535 |
) |
||||
| Debt refinancing and unutilized financing costs |
|
2,964 |
|
|
816 |
|
|
2,964 |
|
|
816 |
|
||||
| Normalized funds from operations |
$ |
139,367 |
|
$ |
285,312 |
|
$ |
281,152 |
|
$ |
507,519 |
|
||||
| Certain non-cash and related recovery information: | ||||||||||||||||
| Share-based compensation |
$ |
8,521 |
|
$ |
10,800 |
|
$ |
16,154 |
|
$ |
22,629 |
|
||||
| Debt costs amortization |
$ |
4,936 |
|
$ |
5,203 |
|
$ |
9,775 |
|
$ |
10,324 |
|
||||
| Non-cash rent and interest revenue (A) |
$ |
- |
|
$ |
(129,494 |
) |
$ |
- |
|
$ |
(150,357 |
) |
||||
| Cash recoveries of non-cash rent and interest revenue (B) |
$ |
540 |
|
$ |
2,380 |
|
$ |
6,288 |
|
$ |
33,736 |
|
||||
| Straight-line rent revenue from operating and finance leases |
$ |
(40,786 |
) |
$ |
(60,825 |
) |
$ |
(88,032 |
) |
$ |
(123,414 |
) |
||||
| Per diluted share data: | ||||||||||||||||
| Net loss, less participating securities' share in earnings |
$ |
(0.54 |
) |
$ |
(0.07 |
) |
$ |
(1.99 |
) |
$ |
(0.02 |
) |
||||
| Depreciation and amortization |
|
0.20 |
|
|
0.64 |
|
|
0.35 |
|
|
0.81 |
|
||||
| Gain on sale of real estate |
|
(0.64 |
) |
|
- |
|
|
(0.64 |
) |
|
- |
|
||||
| Real estate impairment charges |
|
0.83 |
|
|
- |
|
|
0.83 |
|
|
0.09 |
|
||||
| Funds from operations |
$ |
(0.15 |
) |
$ |
0.57 |
|
$ |
(1.45 |
) |
$ |
0.88 |
|
||||
| Write-off of billed and unbilled rent and other |
|
- |
|
|
0.16 |
|
|
0.01 |
|
|
0.23 |
|
||||
| Other impairment charges, net |
|
0.08 |
|
|
- |
|
|
1.24 |
|
|
- |
|
||||
| Litigation and other |
|
0.02 |
|
|
- |
|
|
0.03 |
|
|
0.01 |
|
||||
| Share-based compensation adjustments |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||||
| Non-cash fair value adjustments |
|
0.27 |
|
|
0.01 |
|
|
0.63 |
|
|
- |
|
||||
| Tax rate changes and other |
|
0.01 |
|
|
(0.26 |
) |
|
0.01 |
|
|
(0.27 |
) |
||||
| Debt refinancing and unutilized financing costs |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||||
| Normalized funds from operations |
$ |
0.23 |
|
$ |
0.48 |
|
$ |
0.47 |
|
$ |
0.85 |
|
||||
| Certain non-cash and related recovery information: | ||||||||||||||||
| Share-based compensation |
$ |
0.01 |
|
$ |
0.02 |
|
$ |
0.03 |
|
$ |
0.04 |
|
||||
| Debt costs amortization |
$ |
0.01 |
|
$ |
0.01 |
|
$ |
0.02 |
|
$ |
0.02 |
|
||||
| Non-cash rent and interest revenue (A) |
$ |
- |
|
$ |
(0.22 |
) |
$ |
- |
|
$ |
(0.25 |
) |
||||
| Cash recoveries of non-cash rent and interest revenue (B) |
$ |
- |
|
$ |
- |
|
$ |
0.01 |
|
$ |
0.06 |
|
||||
| Straight-line rent revenue from operating and finance leases |
$ |
(0.07 |
) |
$ |
(0.10 |
) |
$ |
(0.15 |
) |
$ |
(0.21 |
) |
||||
Notes:
Investors and analysts following the real estate industry utilize funds from operations ("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
In addition to presenting FFO in accordance with the Nareit definition, we 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 (if any not paid by our tenants) 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 results of operations or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.
Certain line items above (such as depreciation and amortization) include our share of such income/expense from unconsolidated joint ventures. These amounts are included with all activity of our equity interests in the "(Loss) earnings from equity interests" line on the consolidated statements of income.
(A) Includes revenue accrued during the period but not received in cash, such as deferred rent, payment-in-kind ("PIK") interest or other accruals.
(B) Includes cash received to satisfy previously accrued non-cash revenue, such as the cash receipt of previously deferred rent or PIK interest.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240807354979/en/
Head of Financial Strategy and Investor Relations
(646) 884-9809
dbabin@medicalpropertiestrust.com
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