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): April 26, 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 Rule425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On April 26, 2013, Medical Properties Trust, Inc. issued a press release announcing its financial results for the quarter ended March 31, 2013. 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 ended March 31, 2013: 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 $26.2 million, or $0.18 per diluted share for the quarter ended March 31, 2013, compared to $10.6 million, or $0.08 per diluted share for the quarter ended March 31, 2012. In the attached press release, the Company disclosed Funds from operations of $34.6 million for the quarter ended March 31, 2013, and Normalized funds from operations of $34.8 million for the quarter ended March 31, 2013. Adjusted funds from operations were disclosed in the press release as $33.4 million for the quarter ended March 31, 2013.
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 |
Description | |
| 99.1 | Press release dated April 26, 2013 reporting financial results for the quarter ended March 31, 2013 | |
| 99.2 | Medical Properties Trust, Inc. 1st Quarter 2013 Supplemental Information | |
2
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.
| MEDICAL PROPERTIES TRUST, INC. (Registrant) | ||
| By: | /s/ R. Steven Hamner | |
| R. Steven Hamner | ||
| Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | ||
Date: April 26, 2013
3
INDEX TO EXHIBITS
| Exhibit |
Description | |
| 99.1 | Press release dated April 26, 2013 reporting financial results for quarter ended March 31, 2013 | |
| 99.2 | Medical Properties Trust, Inc. 1st Quarter 2013 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
39% INCREASE IN NORMALIZED FFO PER SHARE IN FIRST QUARTER 2013
Net Income Increases 148% Over 2012’s First Quarter
Birmingham, AL – April 26, 2013 – Medical Properties Trust, Inc. (the “Company”) (NYSE: MPW) today announced financial and operating results for the first quarter ended March 31, 2013.
FIRST QUARTER AND RECENT HIGHLIGHTS
| • | Achieved first quarter Normalized Funds from Operations (“FFO”) per diluted share of $0.25, up 39% compared with $0.18 per diluted share reported in the first quarter of 2012; |
| • | Issued 12,650,000 shares of stock for $14.25 per share reflecting an increase of 46% in value over the prior share offering in February 2012; |
| • | Further strengthened balance sheet with nearly $500 million in liquidity for near-term acquisitions; |
| • | Paid 2013 first quarter cash dividend of $0.20 per share, resulting in a dividend payout ratio of a very well-covered 80% of Normalized FFO; and |
| • | Subsequent to the first quarter, sold two long-term acute care hospitals, for an expected gain of approximately $2.1 million. |
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 2012 periods.
“Medical Properties Trust remains the only healthcare REIT focused exclusively on funding hospitals and other related facilities, and our first quarter results demonstrate the power of this strategy,” said Edward K. Aldag, Jr., Chairman, President and CEO of Medical Properties Trust. “Over the past 10 years, we have invested approximately $3.0 billion in 101 transactions with an average first year cap rate of approximately 10%. Recently, we have delivered four consecutive quarters of year-over-year normalized FFO per share growth as well as a strong, stable and well-covered dividend. During the first quarter we raised $173 million through an
1
offering of 12.65 million common shares, which, when combined with our revolving credit facility, provides us with nearly $500 million in immediately available resources to continue to acquire hospital real estate with double digit long-term returns. We are delighted with our results and look forward to continued success.”
OPERATING RESULTS
First quarter 2013 total revenues increased 42% to $58.4 million compared with $41.3 million for the first quarter of 2012. Normalized FFO for the quarter increased 55% to $34.8 million compared with $22.5 million in the first quarter of 2012. Per share Normalized FFO increased 39% to $0.25 per diluted share in the 2013 first quarter, compared with $0.18 per diluted share in the first quarter of 2012.
Net income for the first quarter of 2013 was $26.2 million (or $0.18 per diluted share) compared with net income of $10.6 million (or $0.08 per diluted share) in the first quarter of 2012.
PORTFOLIO UPDATE AND FUTURE OUTLOOK
Since January 1, 2013, the Company has agreed to fund the construction of a rehabilitation hospital in Post Falls, ID for $14.4 million. In addition, in April 2013 the Company sold two long-term acute care hospitals in Arizona and Texas where leases had expired to their operators for total proceeds of $18.5 million. The Company expects to realize a gain on these two sales of approximately $2.1 million in the second quarter of 2013 and estimates that its investment in these two properties generated an unlevered internal rate of return of 10.3%. There are no other lease expirations in 2013.
At March 31, 2013, the Company had total real estate and related investments of approximately $2.1 billion comprised of 83 healthcare properties in 25 states leased or loaned to 24 hospital operating companies. The Company continues to believe that acquisition volume and timing, along with current capital market conditions, will generate Normalized FFO per share in 2013 of $1.10.
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 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.
CONFERENCE CALL AND WEBCAST
The Company has scheduled a conference call and webcast for Friday, April 26, 2013 at 11:00 a.m. Eastern Time to present the Company’s financial and operating results for the quarter
2
ended March 31, 2013. The dial-in telephone numbers for the conference call 866-515-2910 (U.S.) and 617-399-5124 (International); using passcode 53605329. 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 May 10, 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 36151225.
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 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, 2012, 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.
# # #
3
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
| March 31, 2013 | December 31, 2012 | |||||||
| (Unaudited) | (A) | |||||||
| Assets |
||||||||
| Real estate assets |
||||||||
| Land, buildings and improvements, and intangible lease assets |
$ | 1,280,194,338 | $ | 1,242,375,982 | ||||
| Construction in progress and other |
13,719,055 | 38,338,985 | ||||||
| Net investment in direct financing leases |
315,638,905 | 314,411,549 | ||||||
| Mortgage loans |
368,650,000 | 368,650,000 | ||||||
|
|
|
|
|
|||||
| Gross investment in real estate assets |
1,978,202,298 | 1,963,776,516 | ||||||
| Accumulated depreciation and amortization |
(135,380,788 | ) | (126,733,639 | ) | ||||
|
|
|
|
|
|||||
| Net investment in real estate assets |
1,842,821,510 | 1,837,042,877 | ||||||
| Cash and cash equivalents |
75,675,211 | 37,311,207 | ||||||
| Interest and rent receivable |
49,838,480 | 47,586,709 | ||||||
| Straight-line rent receivable |
38,560,795 | 35,859,703 | ||||||
| Other assets |
220,299,834 | 221,085,156 | ||||||
|
|
|
|
|
|||||
| Total Assets |
$ | 2,227,195,830 | $ | 2,178,885,652 | ||||
|
|
|
|
|
|||||
| Liabilities and Equity |
||||||||
| Liabilities |
||||||||
| Debt, net |
$ | 900,133,586 | $ | 1,025,159,854 | ||||
| Accounts payable and accrued expenses |
65,620,577 | 65,960,792 | ||||||
| Deferred revenue |
19,384,238 | 20,609,467 | ||||||
| Lease deposits and other obligations to tenants |
20,487,269 | 17,341,694 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
1,005,625,670 | 1,129,071,807 | ||||||
| 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 - 149,141,049 shares at March 31, 2013 and 136,335,427 shares at December 31, 2012 |
149,141 | 136,336 | ||||||
| Additional paid in capital |
1,470,736,814 | 1,295,916,192 | ||||||
| Distributions in excess of net income |
(237,398,195 | ) | (233,494,130 | ) | ||||
| Accumulated other comprehensive income (loss) |
(11,655,257 | ) | (12,482,210 | ) | ||||
| Treasury shares, at cost |
(262,343 | ) | (262,343 | ) | ||||
|
|
|
|
|
|||||
| Total Equity |
1,221,570,160 | 1,049,813,845 | ||||||
|
|
|
|
|
|||||
| Total Liabilities and Equity |
$ | 2,227,195,830 | $ | 2,178,885,652 | ||||
|
|
|
|
|
|||||
| (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, 2013 | March 31, 2012 | |||||||
| (A) | ||||||||
| Revenues |
||||||||
| Rent billed |
$ | 32,306,305 | $ | 30,151,892 | ||||
| Straight-line rent |
2,660,994 | 1,359,093 | ||||||
| Income from direct financing leases |
8,756,471 | 1,835,161 | ||||||
| Interest and fee income |
14,716,820 | 7,921,420 | ||||||
|
|
|
|
|
|||||
| Total revenues |
58,440,590 | 41,267,566 | ||||||
| Expenses |
||||||||
| Real estate depreciation and amortization |
8,647,150 | 8,293,131 | ||||||
| Property-related |
415,339 | 227,270 | ||||||
| Acquisition expenses |
190,549 | 3,425,012 | ||||||
| General and administrative |
7,818,196 | 7,591,555 | ||||||
|
|
|
|
|
|||||
| Total operating expenses |
17,071,234 | 19,536,968 | ||||||
|
|
|
|
|
|||||
| Operating income |
41,369,356 | 21,730,598 | ||||||
| Interest and other income (expense) |
(15,157,366 | ) | (12,811,119 | ) | ||||
|
|
|
|
|
|||||
| Income from continuing operations |
26,211,990 | 8,919,479 | ||||||
| Income (loss) from discontinued operations |
(1,865 | ) | 1,686,749 | |||||
|
|
|
|
|
|||||
| Net income |
26,210,125 | 10,606,228 | ||||||
| Net income attributable to non-controlling interests |
(53,633 | ) | (42,358 | ) | ||||
|
|
|
|
|
|||||
| Net income attributable to MPT common stockholders |
$ | 26,156,492 | $ | 10,563,870 | ||||
|
|
|
|
|
|||||
| Earnings per common share - basic : |
||||||||
| Income from continuing operations |
$ | 0.19 | $ | 0.07 | ||||
| Income from discontinued operations |
— | 0.01 | ||||||
|
|
|
|
|
|||||
| Net income attributable to MPT common stockholders |
$ | 0.19 | $ | 0.08 | ||||
|
|
|
|
|
|||||
| Earnings per common share - diluted: |
||||||||
| Income from continuing operations |
$ | 0.18 | $ | 0.07 | ||||
| Income from discontinued operations |
— | 0.01 | ||||||
|
|
|
|
|
|||||
| Net income attributable to MPT common stockholders |
$ | 0.18 | $ | 0.08 | ||||
|
|
|
|
|
|||||
| Dividends declared per common share |
$ | 0.20 | $ | 0.20 | ||||
| Weighted average shares outstanding - basic |
140,346,579 | 124,906,358 | ||||||
| Weighted average shares outstanding - diluted |
141,526,311 | 124,906,358 | ||||||
| (A) | Financials have been restated to reclass the operating results of certain properties sold in 2012 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, 2013 | March 31, 2012 | |||||||
| (A) | ||||||||
| FFO information: |
||||||||
| Net income attributable to MPT common stockholders |
$ | 26,156,492 | $ | 10,563,870 | ||||
| Participating securities’ share in earnings |
(193,062 | ) | (251,867 | ) | ||||
|
|
|
|
|
|||||
| Net income, less participating securities’ share in earnings |
$ | 25,963,430 | $ | 10,312,003 | ||||
| Depreciation and amortization: |
||||||||
| Continuing operations |
8,647,150 | 8,293,131 | ||||||
| Discontinued operations |
— | 453,342 | ||||||
|
|
|
|
|
|||||
| Funds from operations |
$ | 34,610,580 | $ | 19,058,476 | ||||
| Acquisition costs |
190,549 | 3,425,012 | ||||||
|
|
|
|
|
|||||
| Normalized funds from operations |
$ | 34,801,129 | $ | 22,483,488 | ||||
| Share-based compensation |
1,918,855 | 1,858,456 | ||||||
| Debt costs amortization |
896,732 | 855,382 | ||||||
| Additional rent received in advance (B) |
(300,000 | ) | (300,000 | ) | ||||
| Straight-line rent revenue and other |
(3,892,628 | ) | (1,733,696 | ) | ||||
|
|
|
|
|
|||||
| Adjusted funds from operations |
$ | 33,424,088 | $ | 23,163,630 | ||||
|
|
|
|
|
|||||
| Per diluted share data: |
||||||||
| Net income, less participating securities’ share in earnings |
$ | 0.18 | $ | 0.08 | ||||
| Depreciation and amortization: |
||||||||
| Continuing operations |
0.06 | 0.07 | ||||||
| Discontinued operations |
— | — | ||||||
|
|
|
|
|
|||||
| Funds from operations |
$ | 0.24 | $ | 0.15 | ||||
| Acquisition costs |
0.01 | 0.03 | ||||||
|
|
|
|
|
|||||
| Normalized funds from operations |
$ | 0.25 | $ | 0.18 | ||||
| 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 | ) | (0.01 | ) | ||||
|
|
|
|
|
|||||
| Adjusted funds from operations |
$ | 0.24 | $ | 0.19 | ||||
|
|
|
|
|
|||||
| (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 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
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 Statements of Income ...………...…………………………………...…….....……. 6 Consolidated Balance Sheets ...………...…………………………………...…….....…….............. 7 Acquisitions and Summary of Development Projects ............…………………….........8 Detail of Other Assets ....................................................................................................9
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.
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
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Reconciliation of Net Income to Funds From Operations
(Unaudited)
| For the Three Months Ended | ||||||||
| March 31, 2013 | March 31, 2012 | |||||||
| (A) | ||||||||
| FFO information: |
||||||||
| Net income attributable to MPT common stockholders |
$ | 26,156,492 | $ | 10,563,870 | ||||
| Participating securities’ share in earnings |
(193,062 | ) | (251,867 | ) | ||||
|
|
|
|
|
|||||
| Net income, less participating securities’ share in earnings |
$ | 25,963,430 | $ | 10,312,003 | ||||
| Depreciation and amortization: |
||||||||
| Continuing operations |
8,647,150 | 8,293,131 | ||||||
| Discontinued operations |
— | 453,342 | ||||||
|
|
|
|
|
|||||
| Funds from operations |
$ | 34,610,580 | $ | 19,058,476 | ||||
| Acquisition costs |
190,549 | 3,425,012 | ||||||
|
|
|
|
|
|||||
| Normalized funds from operations |
$ | 34,801,129 | $ | 22,483,488 | ||||
| Share-based compensation |
1,918,855 | 1,858,456 | ||||||
| Debt costs amortization |
896,732 | 855,382 | ||||||
| Additional rent received in advance (B) |
(300,000 | ) | (300,000 | ) | ||||
| Straight-line rent revenue and other |
(3,892,628 | ) | (1,733,696 | ) | ||||
|
|
|
|
|
|||||
| Adjusted funds from operations |
$ | 33,424,088 | $ | 23,163,630 | ||||
|
|
|
|
|
|||||
| Per diluted share data: |
||||||||
| Net income, less participating securities’ share in earnings |
$ | 0.18 | $ | 0.08 | ||||
| Depreciation and amortization: |
||||||||
| Continuing operations |
0.06 | 0.07 | ||||||
| Discontinued operations |
— | — | ||||||
|
|
|
|
|
|||||
| Funds from operations |
$ | 0.24 | $ | 0.15 | ||||
| Acquisition costs |
0.01 | 0.03 | ||||||
|
|
|
|
|
|||||
| Normalized funds from operations |
$ | 0.25 | $ | 0.18 | ||||
| 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 | ) | (0.01 | ) | ||||
|
|
|
|
|
|||||
| Adjusted funds from operations |
$ | 0.24 | $ | 0.19 | ||||
|
|
|
|
|
|||||
| (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 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.
| 2 |
|
INVESTMENT AND REVENUE BY ASSET TYPE, OPERATOR AND BY STATE
| Investments and Revenue by Asset Type - As of March 31, 2013 |
| |||||||||||||||
| Total Assets | Percentage of Gross Assets |
Total Revenue | Percentage of Total Revenue |
|||||||||||||
| General Acute Care Hospitals |
$ | 1,220,607,557 | 51.7 | % | $ | 33,083,609 | 56.6 | % | ||||||||
| Long-Term Acute Care Hospitals |
481,802,203 | 20.4 | % | 13,935,586 | 23.8 | % | ||||||||||
| Medical Office Buildings |
15,795,436 | 0.7 | % | 499,544 | 0.9 | % | ||||||||||
| Rehabilitation Hospitals |
402,325,364 | 17.0 | % | 10,506,512 | 18.0 | % | ||||||||||
| Wellness Centers |
15,624,817 | 0.6 | % | 415,339 | 0.7 | % | ||||||||||
| Other assets |
226,421,241 | 9.6 | % | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total gross assets |
2,362,576,618 | 100.0 | % | |||||||||||||
| Accumulated depreciation and amortization |
(135,380,788 | ) | ||||||||||||||
|
|
|
|||||||||||||||
| Total |
$ | 2,227,195,830 | $ | 58,440,590 | 100.0 | % | ||||||||||
|
|
|
|
|
|
|
|||||||||||
| Investments and Revenue by Operator - As of March 31, 2013 | ||||||||||||||||
| Total Assets | Percentage of Gross Assets |
Total Revenue | Percentage of Total Revenue |
|||||||||||||
| Prime Healthcare |
$ | 608,292,351 | 25.7 | % | $ | 18,091,268 | 31.0 | % | ||||||||
| Ernest Health, Inc. |
421,977,693 | 17.9 | % | 11,795,266 | 20.2 | % | ||||||||||
| IJKG/HUMC |
126,401,831 | 5.4 | % | 4,272,041 | 7.3 | % | ||||||||||
| Vibra Healthcare |
88,025,391 | 3.7 | % | 2,758,105 | 4.7 | % | ||||||||||
| Kindred Healthcare |
83,434,567 | 3.5 | % | 2,122,805 | 3.6 | % | ||||||||||
| 19 other operators |
808,023,544 | 34.2 | % | 19,401,105 | 33.2 | % | ||||||||||
| Other assets |
226,421,241 | 9.6 | % | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total gross assets |
2,362,576,618 | 100.0 | % | |||||||||||||
| Accumulated depreciation and amortization |
(135,380,788 | ) | ||||||||||||||
|
|
|
|||||||||||||||
| Total |
$ | 2,227,195,830 | $ | 58,440,590 | 100.0 | % | ||||||||||
|
|
|
|
|
|
|
|||||||||||
| Investment and Revenue by State - As of March 31, 2013 | ||||||||||||||||
| Total Assets | Percentage of Gross Assets |
Total Revenue | Percentage of Total Revenue |
|||||||||||||
| California |
$ | 522,874,259 | 22.1 | % | $ | 15,683,593 | 26.8 | % | ||||||||
| Texas |
540,515,520 | 22.9 | % | 13,957,977 | 23.9 | % | ||||||||||
| New Jersey |
126,401,831 | 5.4 | % | 4,272,041 | 7.3 | % | ||||||||||
| Arizona |
95,870,518 | 4.1 | % | 2,717,811 | 4.7 | % | ||||||||||
| Idaho |
87,585,578 | 3.7 | % | 2,598,116 | 4.4 | % | ||||||||||
| 20 other states |
762,907,671 | 32.2 | % | 19,211,052 | 32.9 | % | ||||||||||
| Other assets |
226,421,241 | 9.6 | % | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total gross assets |
2,362,576,618 | 100.0 | % | |||||||||||||
| Accumulated depreciation and amortization |
(135,380,788 | ) | ||||||||||||||
|
|
|
|||||||||||||||
| Total |
$ | 2,227,195,830 | $ | 58,440,590 | 100.0 | % | ||||||||||
|
|
|
|
|
|
|
|||||||||||
| 3 |
|
| LEASE MATURITY SCHEDULE - AS OF MARCH 31, 2013 | ||||||||||||
| Total portfolio (1) |
Total leases | Base rent (2) | Percent of total base rent |
|||||||||
| 2013 |
— | $ | — | — | ||||||||
| 2014 |
2 | 4,853,124 | 3.1 | % | ||||||||
| 2015 |
2 | 4,155,412 | 2.7 | % | ||||||||
| 2016 |
1 | 2,250,000 | 1.4 | % | ||||||||
| 2017 |
— | — | — | |||||||||
| 2018 |
1 | 1,958,196 | 1.3 | % | ||||||||
| 2019 |
8 | 10,358,190 | 6.6 | % | ||||||||
| 2020 |
1 | 1,039,728 | 0.6 | % | ||||||||
| 2021 |
4 | 12,799,716 | 8.2 | % | ||||||||
| 2022 |
12 | 38,548,776 | 24.7 | % | ||||||||
| 2023 |
1 | 1,247,292 | 0.8 | % | ||||||||
| 2024 |
1 | 2,453,856 | 1.6 | % | ||||||||
| 2025 |
4 | 11,133,444 | 7.1 | % | ||||||||
| Thereafter |
32 | 65,383,948 | 41.9 | % | ||||||||
|
|
|
|
|
|
|
|||||||
| 69 | $ | 156,181,682 | 100.0 | % | ||||||||
|
|
|
|
|
|
|
|||||||
| (1) | Excludes our loans, four of our properties that are under development, and leases for two properties that were sold in April 2013. 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). |
| 4 |
|
DEBT SUMMARY AS OF MARCH 31, 2013
|
|
||||||||||||||||||||||||||||||||||
| 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 | N/A | (1) | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| 2016 Term Loan |
Variable | 2.46 | % | 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 | %(3) | 11,000,000 | 11,000,000 | — | — | — | — | — | ||||||||||||||||||||||||
| Northland - Mortgage Capital Term Loan |
Fixed | 6.20 | % | 14,133,586 | 185,487 | 265,521 | 282,701 | 298,582 | 320,312 | 12,780,983 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| $ | 900,133,586 | $ | 11,185,487 | $ | 265,521 | $ | 282,701 | $ | 225,298,582 | $ | 320,312 | $ | 662,780,983 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| (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 March 31, 2013, 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. |
| (3) | The 2013 Exchangeable Notes matured on April 1, 2013. |
| 5 |
|
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited)
| For the Three Months Ended | ||||||||
| March 31, 2013 | March 31, 2012 | |||||||
| (A) | ||||||||
| Revenues |
||||||||
| Rent billed |
$ | 32,306,305 | $ | 30,151,892 | ||||
| Straight-line rent |
2,660,994 | 1,359,093 | ||||||
| Income from direct financing leases |
8,756,471 | 1,835,161 | ||||||
| Interest and fee income |
14,716,820 | 7,921,420 | ||||||
|
|
|
|
|
|||||
| Total revenues |
58,440,590 | 41,267,566 | ||||||
| Expenses |
||||||||
| Real estate depreciation and amortization |
8,647,150 | 8,293,131 | ||||||
| Property-related |
415,339 | 227,270 | ||||||
| Acquisition expenses |
190,549 | 3,425,012 | ||||||
| General and administrative |
7,818,196 | 7,591,555 | ||||||
|
|
|
|
|
|||||
| Total operating expenses |
17,071,234 | 19,536,968 | ||||||
|
|
|
|
|
|||||
| Operating income |
41,369,356 | 21,730,598 | ||||||
| Interest and other income (expense) |
(15,157,366 | ) | (12,811,119 | ) | ||||
|
|
|
|
|
|||||
| Income from continuing operations |
26,211,990 | 8,919,479 | ||||||
| Income (loss) from discontinued operations |
(1,865 | ) | 1,686,749 | |||||
|
|
|
|
|
|||||
| Net income |
26,210,125 | 10,606,228 | ||||||
| Net income attributable to non-controlling interests |
(53,633 | ) | (42,358 | ) | ||||
|
|
|
|
|
|||||
| Net income attributable to MPT common stockholders |
$ | 26,156,492 | $ | 10,563,870 | ||||
|
|
|
|
|
|||||
| Earnings per common share - basic : |
||||||||
| Income from continuing operations |
$ | 0.19 | $ | 0.07 | ||||
| Income from discontinued operations |
— | 0.01 | ||||||
|
|
|
|
|
|||||
| Net income attributable to MPT common stockholders |
$ | 0.19 | $ | 0.08 | ||||
|
|
|
|
|
|||||
| Earnings per common share - diluted: |
||||||||
| Income from continuing operations |
$ | 0.18 | $ | 0.07 | ||||
| Income from discontinued operations |
— | 0.01 | ||||||
|
|
|
|
|
|||||
| Net income attributable to MPT common stockholders |
$ | 0.18 | $ | 0.08 | ||||
|
|
|
|
|
|||||
| Dividends declared per common share |
$ | 0.20 | $ | 0.20 | ||||
| Weighted average shares outstanding - basic |
140,346,579 | 124,906,358 | ||||||
| Weighted average shares outstanding - diluted |
141,526,311 | 124,906,358 | ||||||
| (A) | Financials have been restated to reclass the operating results of certain properties sold in 2012 to discontinued operations. |
| 6 |
|
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
| March 31, 2013 | December 31, 2012 | |||||||
| (Unaudited) | (A) | |||||||
| Assets |
||||||||
| Real estate assets |
||||||||
| Land, buildings and improvements, and intangible lease assets |
$ | 1,280,194,338 | $ | 1,242,375,982 | ||||
| Construction in progress and other |
13,719,055 | 38,338,985 | ||||||
| Net investment in direct financing leases |
315,638,905 | 314,411,549 | ||||||
| Mortgage loans |
368,650,000 | 368,650,000 | ||||||
|
|
|
|
|
|||||
| Gross investment in real estate assets |
1,978,202,298 | 1,963,776,516 | ||||||
| Accumulated depreciation and amortization |
(135,380,788 | ) | (126,733,639 | ) | ||||
|
|
|
|
|
|||||
| Net investment in real estate assets |
1,842,821,510 | 1,837,042,877 | ||||||
| Cash and cash equivalents |
75,675,211 | 37,311,207 | ||||||
| Interest and rent receivable |
49,838,480 | 47,586,709 | ||||||
| Straight-line rent receivable |
38,560,795 | 35,859,703 | ||||||
| Other assets |
220,299,834 | 221,085,156 | ||||||
|
|
|
|
|
|||||
| Total Assets |
$ | 2,227,195,830 | $ | 2,178,885,652 | ||||
|
|
|
|
|
|||||
| Liabilities and Equity |
||||||||
| Liabilities |
||||||||
| Debt, net |
$ | 900,133,586 | $ | 1,025,159,854 | ||||
| Accounts payable and accrued expenses |
65,620,577 | 65,960,792 | ||||||
| Deferred revenue |
19,384,238 | 20,609,467 | ||||||
| Lease deposits and other obligations to tenants |
20,487,269 | 17,341,694 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
1,005,625,670 | 1,129,071,807 | ||||||
| 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 - 149,141,049 shares at March 31, 2013 and 136,335,427 shares at December 31, 2012 |
149,141 | 136,336 | ||||||
| Additional paid in capital |
1,470,736,814 | 1,295,916,192 | ||||||
| Distributions in excess of net income |
(237,398,195 | ) | (233,494,130 | ) | ||||
| Accumulated other comprehensive income (loss) |
(11,655,257 | ) | (12,482,210 | ) | ||||
| Treasury shares, at cost |
(262,343 | ) | (262,343 | ) | ||||
|
|
|
|
|
|||||
| Total Equity |
1,221,570,160 | 1,049,813,845 | ||||||
|
|
|
|
|
|||||
| Total Liabilities and Equity |
$ | 2,227,195,830 | $ | 2,178,885,652 | ||||
|
|
|
|
|
|||||
| (A) | Financials have been derived from the prior year audited financials. |
| 7 |
|
ACQUISITIONS FOR THE THREE MONTHS ENDED MARCH 31, 2013
| Name |
Location | Property Type | Acquisition / Development |
Investment / Commitment |
||||||||||||
| Ernest Health, Inc. |
Post Falls, ID | Inpatient Rehabilitation Hospital | Development | $ | 14,387,000 | |||||||||||
|
|
|
|||||||||||||||
| Total Investments / Commitments |
$ | 14,387,000 | ||||||||||||||
|
|
|
|||||||||||||||
SUMMARY OF DEVELOPMENT PROJECTS AS OF MARCH 31, 2013
| Property |
Location | Property Type | Operator | Commitment | Costs Incurred as of 3/31/13 |
Percent Leased |
Estimated Completion Date |
|||||||||||||||
| Victoria Rehabilitation Hospital |
Victoria, TX | Inpatient Rehabilitation Hospital |
Post Acute Medical |
$ | 9,400,000 | $ | 4,353,198 | 100 | % | 2Q 2013 | ||||||||||||
| Spartanburg Rehabilitation Institute |
Spartanburg, SC |
Inpatient Rehabilitation Hospital |
Ernest Health, Inc. |
17,805,000 | 7,308,632 | 100 | % | 4Q 2013 | ||||||||||||||
| Rehabilitation Hospital of the Northwest |
Post Falls, ID |
Inpatient Rehabilitation Hospital |
Ernest Health, Inc. |
14,387,000 | 1,357,105 | 100 | % | 4Q 2013 | ||||||||||||||
| OakLeaf Surgical Hospital |
Altoona, WI | General Acute Care Hospital |
National Surgical Hospitals |
33,500,000 | 700,120 | 100 | % | 1Q 2014 | ||||||||||||||
| First Choice Emergency Rooms |
Various | General Acute Care Hospital |
First Choice | 100,000,000 | — | 100 | % | Various | ||||||||||||||
|
|
|
|
|
|||||||||||||||||||
| Total | $ | 175,092,000 | $ | 13,719,055 | ||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||
| 8 |
|
DETAIL OF OTHER ASSETS AS OF MARCH 31, 2013
| Operator |
Investment | Annual Interest Rate |
Ridea Income (4) |
Security / Credit Enhancements | ||||||||||
| Non-Operating Loans |
||||||||||||||
| Vibra Healthcare acquisition loan (1) |
$ | 14,120,699 | 10.25 | % | Secured and cross-defaulted with real estate, other agreements and guaranteed by Parent | |||||||||
| Vibra Healthcare working capital |
6,661,491 | 9.71 | % | Secured and cross-defaulted with real estate, other agreements and guaranteed by Parent | ||||||||||
| Post Acute Medical working capital |
7,427,895 | 10.99 | % | Secured and cross-defaulted with real estate; certain loans are cross-defaulted with other loans and real estate | ||||||||||
| Monroe Hospital (2) |
18,141,163 | |||||||||||||
| IKJG/HUMC working capital |
15,050,000 | 10.4 | % | Secured and cross-defaulted with real estate and guaranteed by Parent | ||||||||||
|
|
|
|||||||||||||
| 61,401,248 | ||||||||||||||
| Operating Loans |
||||||||||||||
| Ernest Health, Inc. (3) |
93,200,000 | 15.00 | % | $ | 3,495,000 | Secured and cross-defaulted with real estate and guaranteed by Parent | ||||||||
| IKJG/HUMC convertible loan |
3,351,831 | 476,390 | Secured and cross-defaulted with real estate and guaranteed by Parent | |||||||||||
|
|
|
|
|
|||||||||||
| 96,551,831 | 3,971,390 | |||||||||||||
| Equity investments |
12,801,136 | 491,645 | ||||||||||||
| Deferred debt financing costs |
20,369,761 | Not applicable | ||||||||||||
| Lease and cash collateral |
6,764,409 | Not applicable | ||||||||||||
| Other assets (5) |
22,411,449 | Not applicable | ||||||||||||
|
|
|
|
|
|||||||||||
| Total |
$ | 220,299,834 | $ | 4,463,035 | ||||||||||
|
|
|
|
|
|||||||||||
| (1) | Original amortizing acquisition loan was $41 million; loan matures in 2019. |
| (2) | Ceased accruing interest in 2010; net of $12.0 million reserve. |
| (3) | Cash rate is 7% in 2013 and increases to 10% in 2014. |
| (4) | Income earned on operating loans is reflected in the interest income line of the income statement. |
| (5) | Includes prepaid expenses, office property and equipment and other. |
| 9 |
|
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