UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): February 7, 2013

 

 

MEDICAL PROPERTIES TRUST, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

Commission File Number 001-32559

 

Maryland		20-0191742
(State or other jurisdiction of incorporation or organization)		(I. R. S. Employer Identification No.)
1000 Urban Center Drive, Suite 501 Birmingham, AL		35242
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code

(205) 969-3755

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02. Results of Operations and Financial Condition.

On February 7, 2013, Medical Properties Trust, Inc. issued a press release announcing its financial results for the quarter and year ended December 31, 2012. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The information in this Current Report on Form 8-K, including the information set forth in Exhibit 99.1 and Exhibit 99.2 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. In addition, this information shall not be deemed incorporated by reference in any filing of Medical Properties Trust, Inc. with the Securities and Exchange Commission, except as expressly set forth by specific reference in any such filing.

The Company disclosed three non-GAAP financial measures in the attached press release for the quarter and year ended December 31, 2012: Funds from operations, Normalized funds from operations and Adjusted funds from operations. The most directly comparable GAAP financial measure to each of these non-GAAP financial measures is net income, which was $28.6 million, or $0.21 per diluted share for the quarter ended December 31, 2012 compared to $12.7 million, or $0.11 per diluted share for the quarter ended December 31, 2011. For the year ended December 31, 2012, net income was $89.9 million, or $0.67 per diluted share compared to $26.5 million, or $0.23 per diluted share for the year ended December 31, 2011. In the attached press release, the Company disclosed Funds from operations of $27.7 million and $107.5 million for the quarter and year ended December 31, 2012, respectively, and Normalized funds from operations of $33.9 million and $119.4 million for the quarter and year ended December 31, 2012, respectively. Adjusted funds from operations were disclosed in the press release as $32.7 million and $117.6 million for the quarter and year ended December 31, 2012, respectively.

A reconciliation of the non-GAAP financial measures to net income as well as a statement disclosing the reasons why the Company’s management believes that presentation of these non-GAAP financial measures provides useful information to investors regarding the Company’s financial condition and results of operations are included in Exhibits 99.1 and 99.2.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit Number		Description
99.1		Press release dated February 7, 2013 reporting financial results for the quarter and year ended December 31, 2012
99.2		Medical Properties Trust, Inc. 4th Quarter 2012 Supplemental Information

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: February 7, 2013

 

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INDEX TO EXHIBITS

 

Exhibit Number		Description
99.1		Press release dated February 7, 2013 reporting financial results for quarter and year ended December 31, 2012
99.2		Medical Properties Trust, Inc. 4th Quarter 2012 Supplemental Information

 

4

Exhibit 99.1

 

 

				Contact: Charles Lambert Managing Director – Capital Markets Medical Properties Trust, Inc. (205) 397-8897 clambert@medicalpropertiestrust.com

MEDICAL PROPERTIES TRUST, INC. REPORTS

27% INCREASE IN NORMALIZED FFO PER SHARE DURING 2012

2013 Guidance Increased to $1.10 Normalized FFO Per Share

Birmingham, AL – February 7, 2013 – Medical Properties Trust, Inc. (the “Company”) (NYSE: MPW) today announced financial and operating results for the fourth quarter and year ended December 31, 2012.

FOURTH QUARTER AND RECENT HIGHLIGHTS

 

•

Achieved fourth quarter Normalized Funds from Operations (“FFO”) per diluted share of $0.25, an increase of 32% over 2011’s $0.19 per diluted share;

 

•

For the full-year 2012, the Company’s $0.90 Normalized FFO per share represented a 27% increase over the $0.71 per share in 2011;

 

•

Exceeded $800 million in investments and commitments during 2012, including more than $168 million in the fourth quarter of 2012;

 

•

Sold two properties in the fourth quarter, realizing gains of more than $9.0 million and reflecting an unlevered internal rate of return of 15%;

 

•

Paid 2012 fourth quarter cash dividend of $0.20 per share, resulting in a dividend payout ratio of a very well-covered 80% of Normalized FFO;

 

•

Based on expected opportunities to acquire new assets at cash returns that are immediately accretive, the Company has estimated that Normalized FFO per share in 2013 will be $1.10.

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 AFFO, all on a comparable basis to 2011 periods.

“In 2012 we achieved a number of important milestones, increasing assets beyond the $2 billion mark, driving revenue to more than $200 million and increasing Normalized FFO per share by 27% through immediately accretive acquisitions,” said Edward K. Aldag, Jr., Chairman, President and CEO of Medical Properties Trust. “We achieved these accomplishments with our

 

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strongest acquisition year in history with more than $800 million in investment and commitments, which yield an average first-year return of 10.3%. With a strong acquisition pipeline and favorable capital markets conditions, we expect to make additional accretive acquisitions to drive further increases in Normalized FFO per share in 2013.”

OPERATING RESULTS

Fourth quarter 2012 total revenues increased 67% to $57.4 million compared with $34.4 million for the fourth quarter of 2011. Normalized FFO for the quarter increased 65% to $33.9 million compared with $20.5 million in the fourth quarter of 2011. Per share Normalized FFO increased 32% to $0.25 per diluted share during the 2012 fourth quarter, compared with $0.19 per diluted share in the fourth quarter of 2011.

For the twelve months ended December 31, 2012, Normalized FFO was $119.4 million (or $0.90 per diluted share) compared with $78.0 million (or $0.71 per diluted share) in 2011. Revenue for the twelve months ended December 31, 2012, was $201.4 million compared to $135.5 million in 2011.

Net income for the fourth quarter of 2012 was $28.6 million (or $0.21 per diluted share) compared with net income of $12.7 million (or $0.11 per diluted share) in the fourth quarter of 2011. For the full year 2012, net income was $89.9 million (or $0.67 per diluted share) compared to $26.5 million (or $0.23 per diluted share).

PORTFOLIO UPDATE AND FUTURE OUTLOOK

Since September 30, 2012, the Company has made a $17 million investment in a long-term acute care hospital in Hammond, LA and committed to build a replacement hospital in Altoona, WI for $33.5 million for National Surgical Hospitals. As previously announced, the Company also committed to fund a $100 million investment with First Choice ER, LCC to provide sale / leaseback financing for up to 25 freestanding emergency room facilities and fund the $17.8 million construction of a rehabilitation hospital in Spartanburg, SC.

At December 31, 2012, the Company had total real estate and related investments of approximately $2.1 billion comprised of 82 healthcare properties in 25 states leased to 22 hospital operating companies. Based on this portfolio, continued double-digit yields on anticipated acquisitions of $400 million in 2013 and current capital markets conditions, the Company has increased its estimate of 2013 Normalized FFO per share to $1.10, which would represent an increase of 22% over the impressive 2012 results. “Because we are able to invest in hospital real estate that generates these high yields, every dollar invested is immediately accretive to 2013’s per share FFO and dividend coverage,” said Aldag.

Guidance estimates do not include the effects, if any, of real estate operating costs, litigation costs, debt refinancing costs, acquisition costs, interest rate hedging activities, write-offs

 

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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 $400 million, acquisition 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.

CONFERENCE CALL AND WEBCAST

The Company has scheduled a conference call and webcast for Thursday, February 7, 2013; at 11:00 a.m. Eastern Time to present the Company’s financial and operating results for the quarter and year ended December 31, 2012. The dial-in telephone numbers for the conference call 866-356-4281 (U.S.) and 617-597-5395 (International); using passcode 17469285. 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 from shortly after the completion of the call through February 21, 2013. Telephone numbers for the replay are 888-286-8010 and 617-801-6888 for U.S. and International callers, respectively. The replay passcode is 40589810.

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. These facilities include inpatient rehabilitation hospitals, long-term acute care hospitals, regional acute care hospitals, ambulatory surgery centers and other single-discipline healthcare 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 non-revenue producing properties; the payment of future dividends, if any; completion of additional debt arrangement, and additional

 

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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. 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, 2011, as amended, 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

 

		December 31, 2012				December 31, 2011
		(Unaudited)				(A)
Assets
Real estate assets
Land, buildings and improvements, and intangible lease assets		$	1,242,375,982			$	1,174,153,751
Construction in progress and other			38,338,985				30,902,348
Real estate held for sale			—				59,793,225
Net investment in direct financing leases			314,411,549				—
Mortgage loans			368,650,000				165,000,000
Gross investment in real estate assets			1,963,776,516				1,429,849,324
Accumulated depreciation and amortization			(126,733,639	)			(93,188,257	)
Net investment in real estate assets			1,837,042,877				1,336,661,067
Cash and cash equivalents			37,311,207				102,725,906
Interest and rent receivable			47,586,709				29,862,106
Straight-line rent receivable			35,859,703				33,993,032
Other assets			221,085,156				118,631,608
Total Assets		$	2,178,885,652			$	1,621,873,719
Liabilities and Equity
Liabilities
Debt, net		$	1,025,159,854			$	689,848,981
Accounts payable and accrued expenses			65,960,792				51,124,723
Deferred revenue			20,609,467				23,307,074
Lease deposits and other obligations to tenants			17,341,694				28,777,787
Total liabilities			1,129,071,807				793,058,565
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 - 136,335,427 shares at December 31, 2012 and 110,786,183 shares at December 31, 2011			136,336				110,786
Additional paid in capital			1,295,916,192				1,055,255,776
Distributions in excess of net income			(233,494,130	)			(214,058,258	)
Accumulated other comprehensive income (loss)			(12,482,210	)			(12,230,807	)
Treasury shares, at cost			(262,343	)			(262,343	)
Total Equity			1,049,813,845				828,815,154
Total Liabilities and Equity		$	2,178,885,652			$	1,621,873,719

 

(A)	Financials have been derived from the prior year audited financials; however, we have reclassed the real estate (including accumulated depreciation) of certain properties sold in 2012 to Real Estate Held for Sale.

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MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

 

		For the Three Months Ended								For the Twelve Months Ended
		December 31, 2012				December 31, 2011				December 31, 2012				December 31, 2011
						(A)								(A)
Revenues
Rent billed		$	30,982,990			$	28,640,262			$	123,079,976			$	108,735,374
Straight-line rent			2,553,270				120,344				7,982,068				5,378,698
Income from direct financing leases			8,748,999				—				21,728,141				—
Interest and fee income			15,121,630				5,656,844				48,607,233				21,370,228
Total revenues			57,406,889				34,417,450				201,397,418				135,484,300
Expenses
Real estate depreciation and amortization			8,390,401				8,624,094				33,545,383				30,895,697
Property-related			455,322				395,499				1,495,448				737,847
Acquisition expenses			1,305,731				998,530				5,420,427				4,184,463
General and administrative			7,240,167				6,790,296				28,581,455				27,219,301
Total operating expenses			17,391,621				16,808,419				69,042,713				63,037,308
Operating income			40,015,268				17,609,031				132,354,705				72,446,992
Interest and other income (expense)			(16,120,991	)			(11,312,500	)			(56,961,855	)			(57,927,977	)
Income (loss) from continuing operations			23,894,277				6,296,531				75,392,850				14,519,015
Income from discontinued operations			4,709,113				6,443,222				14,684,097				12,195,089
Net income			28,603,390				12,739,753				90,076,947				26,714,104
Net income attributable to non-controlling interests			(47,430	)			(47,676	)			(177,252	)			(178,212	)
Net income attributable to MPT common stockholders		$	28,555,960			$	12,692,077			$	89,899,695			$	26,535,892
Earnings per common share - basic and diluted:
Income (loss) from continuing operations		$	0.18			$	0.05			$	0.56			$	0.12
Income from discontinued operations			0.03				0.06				0.11				0.11
Net income attributable to MPT common stockholders		$	0.21			$	0.11			$	0.67			$	0.23
Dividends declared per common share		$	0.20			$	0.20			$	0.80			$	0.80
Weighted average shares outstanding - basic			134,922,510				110,788,423				132,331,091				110,622,820
Weighted average shares outstanding - diluted			134,930,189				110,788,423				132,333,157				110,628,944

 

(A)	Financials have been restated to reclass the operating results of certain properties sold in 2012 to discontinued operations.

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MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Reconciliation of Net Income to Funds From Operations

(Unaudited)

 

		For the Three Months Ended								For the Twelve Months Ended
		December 31, 2012				December 31, 2011				December 31, 2012				December 31, 2011
						(A)								(A)
FFO information:
Net income attributable to MPT common stockholders		$	28,555,960			$	12,692,077			$	89,899,695			$	26,535,892
Participating securities’ share in earnings			(171,473	)			(229,415	)			(886,374	)			(1,089,841	)
Net income, less participating securities’ share in earnings		$	28,384,487			$	12,462,662			$	89,013,321			$	25,446,051
Depreciation and amortization:
Continuing operations			8,390,401				8,624,094				33,545,383				30,895,697
Discontinued operations			52,190				1,407,158				1,310,302				3,813,587
Loss (gain) on sale of real estate			(9,089,008	)			(5,426,067	)			(16,369,188	)			(5,431,391	)
Real estate impairment charge			—				—				—				564,005
Funds from operations		$	27,738,070			$	17,067,847			$	107,499,818			$	55,287,949
Write-off straight line rent			4,816,433				2,470,436				6,456,272				2,470,436
Acquisition costs			1,305,731				998,530				5,420,427				4,184,463
Debt refinancing costs			—				—				—				14,214,036
Write-off of other receivables			—				—				—				1,845,966
Normalized funds from operations		$	33,860,234			$	20,536,813			$	119,376,517			$	78,002,850
Share-based compensation			2,207,235				1,690,793				7,637,420				6,983,471
Debt costs amortization			880,777				766,608				3,458,797				3,537,876
Additional rent received in advance (B)			(300,000	)			(300,000	)			(1,200,000	)			(1,200,000	)
Straight-line rent revenue and other			(3,907,388	)			(1,536,330	)			(11,696,822	)			(7,353,316	)
Adjusted funds from operations		$	32,740,858			$	21,157,884			$	117,575,912			$	79,970,881
Per diluted share data:
Net income, less participating securities’ share in earnings		$	0.21			$	0.11			$	0.67			$	0.23
Depreciation and amortization:
Continuing operations			0.07				0.08				0.25				0.28
Discontinued operations			—				0.01				0.01				0.04
Loss (gain) on sale of real estate			(0.07	)			(0.05	)			(0.12	)			(0.05	)
Real estate impairment charge			—				—				—				—
Funds from operations		$	0.21			$	0.15			$	0.81			$	0.50
Write-off straight line rent			0.03				0.03				0.05				0.02
Acquisition costs			0.01				0.01				0.04				0.04
Debt refinancing costs			—				—				—				0.13
Write-off of other receivables			—				—				—				0.02
Normalized funds from operations		$	0.25			$	0.19			$	0.90			$	0.71
Share-based compensation			0.02				0.01				0.06				0.06
Debt costs amortization			0.01				0.01				0.03				0.03
Additional rent received in advance (B)			(0.01	)			—				(0.01	)			(0.01	)
Straight-line rent revenue and other			(0.03	)			(0.02	)			(0.09	)			(0.07	)
Adjusted funds from operations		$	0.24			$	0.19			$	0.89			$	0.72

 

(A)	Financials have been restated to reclass the operating results of certain properties sold in 2012 to discontinued operations.

(B)	Represents additional rent from one tenant received 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.

Exhibit 99.2

 

4 Q

Investing In the future of healthcare.

MPT

Medical Properties Trust

FOURTH QUARTER 2012

SUPPLEMENTAL INFORMATION

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		Table of Contents

 

Company Information			1
Reconciliation of Net Income to Funds from Operations			2
Investment and Revenue by Asset Type, Operator and by State			3
Lease Maturity Schedule			4
Debt Summary			5
Consolidated Balance Sheets			6
Acquisitions and Operating Investments and Related Results			7

The information in this supplemental information package should be read in conjunction with the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other information filed with the Securities and Exchange Commission. You can access these documents free of charge at www.sec.gov and from the Company’s website at www.medicalpropertiestrust.com. The information contained on the Company’s website is not incorporated by reference into, and should not be considered a part of, this supplemental package.

For more information, please contact:

Charles Lambert, Managing Director - Capital Markets at (205) 397-8897.

 

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Company Information

Headquarters:

Medical Properties Trust, Inc.

1000 Urban Center Drive, Suite 501

Birmingham, AL 35242

(205) 969-3755

Fax: (205) 969-3756

Website:

www.medicalpropertiestrust.com

Executive Officers:

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

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

Emmett E. McLean, Executive Vice President, Chief Operating Officer, Secretary and Treasurer

Investor Relations:

Medical Properties Trust, Inc.

1000 Urban Center Drive, Suite 501

Birmingham, AL 35242

Attn: Charles Lambert

(205) 397-8897

clambert@medicalpropertiestrust.com

MPW

LISTED

NYSE®

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MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Reconciliation of Net Income to Funds From Operations

(Unaudited)

 

		For the Three Months Ended								For the Twelve Months Ended
		December 31, 2012				December 31, 2011				December 31, 2012				December 31, 2011
						(A)								(A)
FFO information:
Net income attributable to MPT common stockholders		$	28,555,960			$	12,692,077			$	89,899,695			$	26,535,892
Participating securities’ share in earnings			(171,473	)			(229,415	)			(886,374	)			(1,089,841	)
Net income, less participating securities’ share in earnings		$	28,384,487			$	12,462,662			$	89,013,321			$	25,446,051
Depreciation and amortization:
Continuing operations			8,390,401				8,624,094				33,545,383				30,895,697
Discontinued operations			52,190				1,407,158				1,310,302				3,813,587
Loss (gain) on sale of real estate			(9,089,008	)			(5,426,067	)			(16,369,188	)			(5,431,391	)
Real estate impairment charge			—				—				—				564,005
Funds from operations		$	27,738,070			$	17,067,847			$	107,499,818			$	55,287,949
Write-off straight line rent			4,816,433				2,470,436				6,456,272				2,470,436
Acquisition costs			1,305,731				998,530				5,420,427				4,184,463
Debt refinancing costs			—				—				—				14,214,036
Write-off of other receivables			—				—				—				1,845,966
Normalized funds from operations		$	33,860,234			$	20,536,813			$	119,376,517			$	78,002,850
Share-based compensation			2,207,235				1,690,793				7,637,420				6,983,471
Debt costs amortization			880,777				766,608				3,458,797				3,537,876
Additional rent received in advance (B)			(300,000	)			(300,000	)			(1,200,000	)			(1,200,000	)
Straight-line rent revenue and other			(3,907,388	)			(1,536,330	)			(11,696,822	)			(7,353,316	)
Adjusted funds from operations		$	32,740,858			$	21,157,884			$	117,575,912			$	79,970,881
Per diluted share data:
Net income, less participating securities’ share in earnings		$	0.21			$	0.11			$	0.67			$	0.23
Depreciation and amortization:
Continuing operations			0.07				0.08				0.25				0.28
Discontinued operations			—				0.01				0.01				0.04
Loss (gain) on sale of real estate			(0.07	)			(0.05	)			(0.12	)			(0.05	)
Real estate impairment charge			—				—				—				—
Funds from operations		$	0.21			$	0.15			$	0.81			$	0.50
Write-off straight line rent			0.03				0.03				0.05				0.02
Acquisition costs			0.01				0.01				0.04				0.04
Debt refinancing costs			—				—				—				0.13
Write-off of other receivables			—				—				—				0.02
Normalized funds from operations		$	0.25			$	0.19			$	0.90			$	0.71
Share-based compensation			0.02				0.01				0.06				0.06
Debt costs amortization			0.01				0.01				0.03				0.03
Additional rent received in advance (B)			(0.01	)			—				(0.01	)			(0.01	)
Straight-line rent revenue and other			(0.03	)			(0.02	)			(0.09	)			(0.07	)
Adjusted funds from operations		$	0.24			$	0.19			$	0.89			$	0.72

 

(A)	Financials have been restated to reclass the operating results of certain properties sold in 2012 to discontinued operations.

(B)	Represents additional rent from one tenant received 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.

 

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INVESTMENT AND REVENUE BY ASSET TYPE, OPERATOR AND BY STATE

Investments and Revenue by Asset Type - As of December 31, 2012

 

		Total Assets				Percentage of Total Assets				Total Revenue				Percentage of Total Revenue
General Acute Care Hospitals		$	1,216,087,741				52.7	%		$	111,283,677				55.3	%
Long-Term Acute Care Hospitals			482,647,872				20.9	%			50,915,725				25.3	%
Medical Office Buildings			15,795,436				0.7	%			1,889,017				0.9	%
Rehabilitation Hospitals			392,863,857				17.0	%			35,647,641				17.7	%
Wellness Centers			15,624,817				0.7	%			1,661,358				0.8	%
Other assets			182,599,568				8.0	%			—				—
Total gross assets			2,305,619,291				100.0	%
Accumulated depreciation and amortization			(126,733,639	)
Total		$	2,178,885,652							$	201,397,418				100.0	%

Investments and Revenue by Operator - As of December 31, 2012

 

		Total Assets				Percentage of Total Assets				Total Revenue				Percentage of Total Revenue
Prime Healthcare		$	607,919,162				26.4	%		$	55,002,074				27.3	%
Ernest Health, Inc.			414,456,341				18.0	%			37,401,517				18.6	%
IJKG/HUMC			126,401,831				5.5	%			16,196,451				8.0	%
Vibra Healthcare			89,965,519				3.9	%			11,609,175				5.8	%
Kindred Healthcare			83,434,567				3.6	%			8,491,200				4.2	%
17 other operators			800,842,303				34.6	%			72,697,001				36.1	%
Other assets			182,599,568				8.0	%			—				—
Total gross assets			2,305,619,291				100.0	%
Accumulated depreciation and amortization			(126,733,639	)
Total		$	2,178,885,652							$	201,397,418				100.0	%

Investment and Revenue by State - As of December 31, 2012

 

		Total Assets				Percentage of Total Assets				Total Revenue				Percentage of Total Revenue
California		$	522,874,636				22.7	%		$	54,791,794				27.2	%
Texas			534,163,747				23.2	%			49,281,780				24.5	%
New Jersey			126,401,831				5.5	%			16,196,451				8.0	%
Arizona			96,066,056				4.2	%			9,302,669				4.6	%
Idaho			86,101,018				3.7	%			9,554,058				4.7	%
20 other states			757,412,435				32.7	%			62,270,666				31.0	%
Other assets			182,599,568				8.0	%			—				—
Total gross assets			2,305,619,291				100.0	%
Accumulated depreciation and amortization			(126,733,639	)
Total		$	2,178,885,652							$	201,397,418				100.0	%

 

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LEASE MATURITY SCHEDULE - AS OF DECEMBER 31, 2012

 

Total portfolio (1)		Total leases				Base rent (2)				Percent of total base rent
2013			2			$	1,048,044				0.7	%
2014			2				4,811,508				3.2	%
2015			2				4,039,476				2.7	%
2016			1				2,250,000				1.5	%
2017			—				—				0.0	%
2018			1				1,927,452				1.3	%
2019			8				10,151,490				6.7	%
2020			1				1,039,728				0.7	%
2021			4				12,487,514				8.3	%
2022			12				37,800,050				25.0	%
2023			1				1,216,872				0.8	%
2024			1				2,232,504				1.5	%
2025			4				11,009,493				7.3	%
Thereafter			29				60,942,444				40.3	%
			68			$	150,956,575				100.0	%

 

(1)	Excludes six of our properties that are under development. Also, lease expiration is based on the fixed term of the lease and does not factor in potential renewal options provided for in our leases.

(2)	The most recent monthly base rent annualized. Base rent does not include tenant recoveries, additional rents and other lease-related adjustments to revenue (i.e., straight-line rents and deferred revenues).

 

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DEBT SUMMARY AS OF DECEMBER 31, 2012

 

Instrument		Rate Type		Rate				Balance				2013				2014				2015				2016				2017				Thereafter
6.875% Notes Due 2021		Fixed			6.88	%		$	450,000,000			$	—			$	—			$	—			$	—			$	—			$	450,000,000
6.375% Notes Due 2022		Fixed			6.38	%			200,000,000				—				—				—				—				—				200,000,000
2015 Credit Facility Revolver		Variable			3.07	%(1)			125,000,000				—				—				125,000,000				—				—				—
2016 Term Loan		Variable			2.47	%			100,000,000				—				—				—				100,000,000				—				—
2016 Unsecured Notes		Fixed			5.59	%(2)			125,000,000				—				—				—				125,000,000				—				—
2013 Exchangeable Notes		Fixed			9.25	%			11,000,000				11,000,000				—				—				—				—				—
Northland - Mortgage Capital Term Loan		Fixed			6.20	%			14,197,483				249,384				265,521				282,701				298,582				320,312				12,780,983
								$	1,025,197,483			$	11,249,384			$	265,521			$	125,282,701			$	225,298,582			$	320,312			$	662,780,983
Debt Discount									(37,629	)
								$	1,025,159,854

 

(1)	Represents a $400 million unsecured revolving credit facility with spreads over LIBOR ranging from 2.60% to 3.40%.

(2)	Represents the weighted-average rate for four traunches of the Notes at December 31, 2012 factoring in interest rate swaps in effect at that time.

The Company has entered into two swap agreements which began in July and October 2011. Effective July 31, 2011, the Company is paying 5.507% on $65 million of the Notes and effective October 31, 2011, the Company is paying 5.675% on $60 million of Notes.

 

		5

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MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

 

		December 31, 2012				December 31, 2011
		(Unaudited)				(A)
Assets
Real estate assets
Land, buildings and improvements, and intangible lease assets		$	1,242,375,982			$	1,174,153,751
Construction in progress and other			38,338,985				30,902,348
Real estate held for sale			—				59,793,225
Net investment in direct financing leases			314,411,549				—
Mortgage loans			368,650,000				165,000,000
Gross investment in real estate assets			1,963,776,516				1,429,849,324
Accumulated depreciation and amortization			(126,733,639	)			(93,188,257	)
Net investment in real estate assets			1,837,042,877				1,336,661,067
Cash and cash equivalents			37,311,207				102,725,906
Interest and rent receivable			47,586,709				29,862,106
Straight-line rent receivable			35,859,703				33,993,032
Other assets			221,085,156				118,631,608
Total Assets		$	2,178,885,652			$	1,621,873,719
Liabilities and Equity
Liabilities
Debt, net		$	1,025,159,854			$	689,848,981
Accounts payable and accrued expenses			65,960,792				51,124,723
Deferred revenue			20,609,467				23,307,074
Lease deposits and other obligations to tenants			17,341,694				28,777,787
Total liabilities			1,129,071,807				793,058,565
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 - 136,335,427 shares at December 31, 2012 and 110,786,183 shares at December 31, 2011			136,336				110,786
Additional paid in capital			1,295,916,192				1,055,255,776
Distributions in excess of net income			(233,494,130	)			(214,058,258	)
Accumulated other comprehensive income (loss)			(12,482,210	)			(12,230,807	)
Treasury shares, at cost			(262,343	)			(262,343	)
Total Equity			1,049,813,845				828,815,154
Total Liabilities and Equity		$	2,178,885,652			$	1,621,873,719

 

(A)	Financials have been derived from the prior year audited financials; however, we have reclassed the real estate (including accumulated depreciation) of certain properties sold in 2012 to Real Estate Held for Sale.

 

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ACQUISITIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2012

 

Name		Location		Property Type		Acquisition / Development		Investment / Commitment
Ernest Health, Inc.		Nine states		Long-term acute care and inpatient rehabilitation		Acquisition		$	396,500,000
Post Acute Medical		Victoria, TX		Inpatient rehabilitation		Development			9,400,000
Ernest Health, Inc.		Lafayette, IN		Inpatient rehabilitation		Development			16,600,000
Centinela Hospital Medical Center		Inglewood, CA		General acute care		Acquisition			100,000,000
St. Mary’s Regional Medical Center		Reno, NV		General acute care		Acquisition			80,000,000
Roxborough Memorial Hospital		Philadelphia, PA		General acute care		Acquisition			30,000,000
Ernest Health, Inc.		Spartanburg, SC		Inpatient rehabilitation		Development			17,805,000
Post Acute Specialty Hospital of Hammond		Hammond, LA		Long-term acute care		Acquisition			16,990,000
OakLeaf Surgical Hospital		Altoona, WI		General acute care		Development			33,500,000
First Choice Emergency Room		TBD		General acute care		Development			100,000,000
Total Investments / Commitments								$	800,795,000

OPERATING INVESTMENTS AND RELATED RESULTS AS OF AND FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2012

 

Non-Ernest Operating Investments (1)				Operations Revenue				Annualized Return
$	12,167,500			$	4,261,749	(2)			43.1	%
Ernest Health Inc. Operating Investment (3)				Operations Revenue				Annualized Return
$	96,500,000			$	11,688,833	(4)			14.5	%

Note: The Company began reporting earnings from equity and other interests in operations in the second quarter of 2013 one quarter in arrears; we did not report any earnings from equity interests for the three months ended March 31, 2012.

 

(1)	Non-Ernest operating investments includes $2.0 million invested in the operations of a Hammond, LA facility in the fourth quarter of 2013. There is no profit or loss associated with that investment in 2012.

(2)	Includes interest from our convertible note investment.

(3)	The Ernest Health, Inc. transaction closed on February 29, 2012.

(4)	Includes interest from our acquisition note.

 

		7

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MPT

Medical Properties Trust

Medical Properties Trust, Inc. 1000 Urban Center Drive, Suite 501 Birmingham, AL 35242 (205) 969-3755 www.medicalpropertiestrust.com

Contact: Charles Lambert, Managing Director - Capital Markets (205) 397-8897 or clambert@medicalpropertiestrust.com