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): May 6, 2014
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)) |
| Item 2.02. | Results of Operations and Financial Condition. |
On May 6, 2014, Medical Properties Trust, Inc. issued a press release announcing its financial results for the quarter ended March 31, 2014. 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, 2014: 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 $7.2 million, or $0.04 per diluted share for the quarter ended March 31, 2014 compared to $26.2 million, or $0.18 per diluted share for the quarter ended March 31, 2013. In the attached press release, the Company disclosed Funds from operations of $20.7 million for the quarter ended March 31, 2014, and Normalized funds from operations of $42.7 million for quarter ended March 31, 2014. Adjusted funds from operations were disclosed in the press release as $40.8 million for the quarter ended March 31, 2014.
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 May 6, 2014 reporting financial results for the quarter ended March 31, 2014 | |
| 99.2 | Medical Properties Trust, Inc. 1st Quarter 2014 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: May 6, 2014
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INDEX TO EXHIBITS
| Exhibit Number | Description | |
| 99.1 | Press release dated May 6, 2014 reporting financial results for the three months ended March 31, 2014 | |
| 99.2 | Medical Properties Trust, Inc. 1st Quarter 2014 Supplemental Information | |
4
Exhibit 99.1
| Contact: Tim Berryman Director – Investor Relations Medical Properties Trust, Inc. (205) 397-8589 tberryman@medicalpropertiestrust.com |
MEDICAL PROPERTIES TRUST, INC. CONTINUES STRONG GROWTH AND REPORTS NORMALIZED FFO OF $0.26 PER SHARE IN FIRST QUARTER 2014
Completes Acquisition of New Jersey Hospital for $115 Million;
Development Commitments Executed for Additional $205 Million of Acute Hospitals
Birmingham, AL – May 6, 2014 – Medical Properties Trust, Inc. (the “Company”) (NYSE: MPW) today announced financial and operating results for the first quarter ended March 31, 2014.
FIRST QUARTER AND RECENT FINANCIAL HIGHLIGHTS
| • | Achieved first quarter Normalized Funds from Operations (“FFO”) per diluted share of $0.26, up 4% compared with $0.25 per diluted share reported in the first quarter of 2013 |
| • | Issued 9.9 million shares of common stock in first quarter for net proceeds of approximately $128.3 million to fund identified acquisition and development transactions |
| • | Further strengthened balance sheet with public offering of $300 million of Senior Notes in April with an annual coupon of 5.5% |
“We are very pleased to start a relationship with LHP Hospital Group through the acquisition and leaseback of Hackensack University Medical Center Mountainside in Montclair, New Jersey,” said Edward K. Aldag, Jr., Chairman, President and CEO of Medical Properties Trust. “We believe this transaction with a joint venture of LHP and its not-for-profit partner at Mountainside further demonstrates our market leadership and the strong opportunity for us to support forward-looking hospitals in future acquisitions. It signals that we are clearly the preferred provider for hospital operators and their private equity owners as well as not-for-profit health systems. We are well on our way to reaching our $500 million acquisitions target for 2014.”
1
FIRST QUARTER AND RECENT OPERATIONAL HIGHLIGHTS
| • | Acquired acute care hospital in Montclair, New Jersey for approximately $115 million and leased back to a joint venture of LHP Hospital Group, Inc. and Hackensack University Medical Center Mountainside |
| • | Opened two free-standing emergency room hospital facilities pursuant to the previously announced development agreement with First Choice ER, LLC |
| • | Closed on nine First Choice emergency room hospital facilities in the first quarter for an aggregate expected development and construction cost of approximately $51.9 million |
| • | Negotiated letter of intent with a third party regarding the sale of Monroe Hospital in Bloomington, Indiana |
Included in the financial tables accompanying this press release is information about the Company’s assets and liabilities, net income and reconciliations of net income to FFO and Adjusted Funds from Operations (AFFO), all on a comparable basis to 2013 periods.
“MPT’s business model for financing provides hospital operators with a unique opportunity to unlock the value of their underlying real estate to fund facility improvements, technology upgrades, staff additions and new construction through long-term net leases of real estate assets all while retaining control of their most important assets,” commented Aldag. “We will continue to execute our hospital investment strategy, and are focused on completing acquisitions that are immediately accretive to our Normalized FFO and that further diversify our portfolio by geography and operator.”
ADDITIONAL OPERATING RESULTS
First quarter 2014 total revenues increased 27% to $73.1 million compared with $57.6 million for the first quarter of 2013. Normalized FFO for the quarter increased 23% to $42.7 million compared with $34.8 million in the first quarter of 2013. Per share Normalized FFO increased 4% to $0.26 per diluted share in the 2014 first quarter compared with $0.25 per diluted share in the first quarter of 2013.
Excluded from Normalized FFO was the effect of a previously disclosed $20.5 million impairment (or $0.12 per diluted share) related to the loan and advances to the operator of Monroe Hospital in Bloomington, Indiana. As a result, net income for the first quarter of 2014 was $7.2 million (or $0.04 per diluted share) compared with net income of $26.2 million (or $0.18 per diluted share) in the first quarter of 2013.
2
PORTFOLIO UPDATE AND OUTLOOK
The Company also remains in negotiations with an operator regarding a sale and leaseback transaction valued at approximately $180 million for an acute care hospital in the United States. There is no assurance that the negotiations will result in a completed transaction.
As previously disclosed, the Company has entered into a non-binding letter of intent with a current operator for the development of an additional acute care facility in the United States. The proposed transaction, which is valued at approximately $55 million, is structured initially as a construction loan from the Company for the development of the facility. Upon completion of the facility, there will be an immediately accretive sale and leaseback to the operator with a 15-year initial term, up to 15 years of extension options and consumer price-indexed annual rent increases.
Additionally, the Company has entered into a non-binding letter of intent with an affiliate of another of its current operators for the development of emergency room facilities, as well as the development or acquisition of acute care hospitals in the United States. The estimated aggregate funding commitment for the Company and its affiliates is approximately $150 million. Each of the facilities, when completed, will be leased to the operator or its affiliates under a master lease with immediately accretive lease rates providing for a 15-year initial term, up to 15 years of extension options and consumer price-indexed annual rent increases.
At March 31, 2014, the Company had total real estate and related investments of approximately $3.0 billion comprised of 117 healthcare properties in 25 states and in Germany. The properties are leased to or mortgaged by 28 hospital operating companies. Based solely on this portfolio and approximately $180 million of future acquisitions, the annual run rate for Normalized FFO per share is expected to range from $1.10 to $1.14. Actual 2014 Normalized FFO may differ from this range and the Company will provide periodic updates as acquisitions are finalized.
The annualized run-rate guidance estimate does not include the effects, if any, of real estate operating costs, litigation costs, debt refinancing costs, acquisition costs, interest rate hedging activities, write-offs of straight-line rent or other non-recurring or unplanned transactions. These estimates will change if the Company acquires assets totaling more or less than its expectations, the timing of acquisitions varies from expectations, capitalization rates vary from expectations, market interest rates change, debt is refinanced, new shares are issued, additional debt is incurred, assets are sold, other operating expenses vary, income from investments in tenant operations vary from expectations, or existing leases do not perform in accordance with their terms.
3
CONFERENCE CALL AND WEBCAST
The Company has scheduled a conference call and webcast for Tuesday, May 6, 2014 at 11:00 a.m. Eastern Time to present the Company’s financial and operating results for the quarter ended March 31, 2014. The dial-in telephone numbers for the conference call are 877-546-5021 (U.S.) and 857-244-7553 (international); both numbers require passcode 30659793. The conference call will also be available via webcast in the Investor Relations’ section of the Company’s website, www.medicalpropertiestrust.com.
A telephone and webcast replay of the call will be available beginning shortly after the call’s completion through May 20, 2014. Dial-in numbers for the replay are 888-286-8010 and 617-801-6888 for U.S. and International callers, respectively. The replay passcode for both U.S. and international callers is 22551229.
The Company’s supplemental information package for the current period will also be available on the Company’s website under the “Investor Relations” section.
About Medical Properties Trust, Inc.
Medical Properties Trust, Inc. is a Birmingham, Alabama based self-advised real estate investment trust formed to capitalize on the changing trends in healthcare delivery by acquiring and developing net-leased healthcare facilities. MPT’s financing model allows hospitals and other healthcare facilities to unlock the value of their underlying real estate in order to fund facility improvements, technology upgrades, staff additions and new construction. Facilities include acute care hospitals, inpatient rehabilitation hospitals, long-term acute care hospitals, and other medical and surgical facilities. For more information, please visit the Company’s website at www.medicalpropertiestrust.com.
The statements in this press release that are forward looking are based on current expectations and actual results or future events may differ materially. Words such as “expects,” “believes,” “anticipates,” “intends,” “will,” “should” and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results of the Company or future events to differ materially from those expressed in or underlying such forward-looking statements, including without limitation: the capacity of the Company’s tenants to meet the terms of their agreements; Normalized FFO per share; expected payout ratio, the amount of acquisitions of healthcare real estate, if any; capital markets conditions, the repayment of debt arrangements; statements concerning the additional income to the Company as a result of ownership interests in certain hospital operations and the timing of such income; the restructuring of the Company’s investments in Monroe Hospital; the payment of future dividends, if any; completion of additional debt arrangement, and additional investments; national and economic, business, real estate and other market conditions; the competitive environment in which the Company operates; the execution of the Company’s business plan; financing risks; the Company’s ability to maintain its status as a REIT for federal income tax purposes; acquisition and development risks; potential environmental and other liabilities; and other factors affecting the real estate industry generally or healthcare real estate in particular.
4
For further discussion of the factors that could affect outcomes, please refer to the “Risk factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, and as updated by the Company’s subsequently filed Quarterly Reports on Form 10-Q and other SEC filings. Except as otherwise required by the federal securities laws, the Company undertakes no obligation to update the information in this press release.
# # #
5
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
| March 31, 2014 | December 31, 2013 | |||||||
| (Unaudited) | (A) | |||||||
| Assets |
||||||||
| Real estate assets |
||||||||
| Land, buildings and improvements, and intangible lease assets |
$ | 1,964,466,055 | $ | 1,823,683,129 | ||||
| Construction in progress and other |
43,956,015 | 41,771,499 | ||||||
| Net investment in direct financing leases |
432,657,330 | 431,024,228 | ||||||
| Mortgage loans |
388,650,000 | 388,650,000 | ||||||
|
|
|
|
|
|||||
| Gross investment in real estate assets |
2,829,729,400 | 2,685,128,856 | ||||||
| Accumulated depreciation and amortization |
(173,474,957 | ) | (159,776,091 | ) | ||||
|
|
|
|
|
|||||
| Net investment in real estate assets |
2,656,254,443 | 2,525,352,765 | ||||||
| Cash and cash equivalents |
50,309,266 | 45,979,648 | ||||||
| Interest and rent receivables |
63,173,762 | 58,499,609 | ||||||
| Straight-line rent receivables |
48,022,702 | 45,828,697 | ||||||
| Other assets |
208,832,307 | 228,909,650 | ||||||
|
|
|
|
|
|||||
| Total Assets |
$ | 3,026,592,480 | $ | 2,904,570,369 | ||||
|
|
|
|
|
|||||
| Liabilities and Equity |
||||||||
| Liabilities |
||||||||
| Debt, net |
$ | 1,472,045,474 | $ | 1,421,680,749 | ||||
| Accounts payable and accrued expenses |
74,183,992 | 94,311,177 | ||||||
| Deferred revenue |
25,418,580 | 23,786,819 | ||||||
| Lease deposits and other obligations to tenants |
23,963,665 | 20,583,283 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
1,595,611,711 | 1,560,362,028 | ||||||
| Equity |
||||||||
| Preferred stock, $0.001 par value. Authorized 10,000,000 shares; no shares outstanding |
— | — | ||||||
| Common stock, $0.001 par value. Authorized 250,000,000 shares; issued and outstanding — 170,212,741 shares at March 31, 2014 and 161,309,725 shares at December 31, 2013 |
170,213 | 161,310 | ||||||
| Additional paid in capital |
1,732,915,820 | 1,618,054,133 | ||||||
| Distributions in excess of net income |
(293,595,304 | ) | (264,804,113 | ) | ||||
| Accumulated other comprehensive income (loss) |
(8,247,617 | ) | (8,940,646 | ) | ||||
| Treasury shares, at cost |
(262,343 | ) | (262,343 | ) | ||||
|
|
|
|
|
|||||
| Total Equity |
1,430,980,769 | 1,344,208,341 | ||||||
|
|
|
|
|
|||||
| Total Liabilities and Equity |
$ | 3,026,592,480 | $ | 2,904,570,369 | ||||
|
|
|
|
|
|||||
| (A) | Financials have been derived from the prior year audited financials. |
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
| For the Three Months Ended | ||||||||
| March 31, 2014 | March 31, 2013 | |||||||
| (A) | ||||||||
| Revenues |
||||||||
| Rent billed |
$ | 42,956,745 | $ | 31,498,931 | ||||
| Straight-line rent |
2,148,220 | 2,651,453 | ||||||
| Income from direct financing leases |
12,215,388 | 8,756,471 | ||||||
| Interest and fee income |
15,768,301 | 14,706,897 | ||||||
|
|
|
|
|
|||||
| Total revenues |
73,088,654 | 57,613,752 | ||||||
| Expenses |
||||||||
| Real estate depreciation and amortization |
13,689,602 | 8,469,200 | ||||||
| Loan impairment charge |
20,496,463 | — | ||||||
| Property-related |
738,305 | 408,887 | ||||||
| Acquisition expenses |
512,016 | 190,549 | ||||||
| General and administrative |
8,958,790 | 7,765,949 | ||||||
|
|
|
|
|
|||||
| Total operating expenses |
44,395,176 | 16,834,585 | ||||||
|
|
|
|
|
|||||
| Operating income |
28,693,478 | 40,779,167 | ||||||
| Interest and other income (expense) |
(21,442,535 | ) | (15,157,366 | ) | ||||
| Income tax (expense) benefit |
57,324 | (52,247 | ) | |||||
|
|
|
|
|
|||||
| Income from continuing operations |
7,308,267 | 25,569,554 | ||||||
| Income (loss) from discontinued operations |
(1,500 | ) | 640,571 | |||||
|
|
|
|
|
|||||
| Net income |
7,306,767 | 26,210,125 | ||||||
| Net income attributable to non-controlling interests |
(65,473 | ) | (53,633 | ) | ||||
|
|
|
|
|
|||||
| Net income attributable to MPT common stockholders |
$ | 7,241,294 | $ | 26,156,492 | ||||
|
|
|
|
|
|||||
| Earnings per common share — basic: |
||||||||
| Income from continuing operations |
$ | 0.04 | $ | 0.18 | ||||
| Income from discontinued operations |
— | 0.01 | ||||||
|
|
|
|
|
|||||
| Net income attributable to MPT common stockholders |
$ | 0.04 | $ | 0.19 | ||||
|
|
|
|
|
|||||
| Earnings per common share — diluted: |
||||||||
| Income from continuing operations |
$ | 0.04 | $ | 0.18 | ||||
| Income from discontinued operations |
— | — | ||||||
|
|
|
|
|
|||||
| Net income attributable to MPT common stockholders |
$ | 0.04 | $ | 0.18 | ||||
|
|
|
|
|
|||||
| Dividends declared per common share |
$ | 0.21 | $ | 0.20 | ||||
| Weighted average shares outstanding — basic |
163,973,178 | 140,346,579 | ||||||
| Weighted average shares outstanding — diluted |
164,548,581 | 141,526,311 | ||||||
| (A) | Financials have been restated to reclass the operating results of certain properties sold after the 2013 first quarter to discontinued operations. |
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Reconciliation of Net Income to Funds From Operations
(Unaudited)
| For the Three Months Ended | ||||||||
| March 31, 2014 | March 31, 2013 | |||||||
| (A) | ||||||||
| FFO information: |
||||||||
| Net income attributable to MPT common stockholders |
$ | 7,241,294 | $ | 26,156,492 | ||||
| Participating securities’ share in earnings |
(209,370 | ) | (193,062 | ) | ||||
|
|
|
|
|
|||||
| Net income, less participating securities’ share in earnings |
$ | 7,031,924 | $ | 25,963,430 | ||||
| Depreciation and amortization: |
||||||||
| Continuing operations |
13,689,602 | 8,469,200 | ||||||
| Discontinued operations |
— | 177,950 | ||||||
|
|
|
|
|
|||||
| Funds from operations |
$ | 20,721,526 | $ | 34,610,580 | ||||
| Write-off of straight line rent |
950,338 | — | ||||||
| Loan impairment charge |
20,496,463 | — | ||||||
| Acquisition costs |
512,016 | 190,549 | ||||||
|
|
|
|
|
|||||
| Normalized funds from operations |
$ | 42,680,343 | $ | 34,801,129 | ||||
| Share-based compensation |
2,043,410 | 1,918,855 | ||||||
| Debt costs amortization |
1,048,722 | 896,732 | ||||||
| Additional rent received in advance (B) |
(300,000 | ) | (300,000 | ) | ||||
| Straight-line rent revenue and other |
(4,702,867 | ) | (3,892,628 | ) | ||||
|
|
|
|
|
|||||
| Adjusted funds from operations |
$ | 40,769,608 | $ | 33,424,088 | ||||
|
|
|
|
|
|||||
| Per diluted share data: |
||||||||
| Net income, less participating securities’ share in earnings |
$ | 0.04 | $ | 0.18 | ||||
| Depreciation and amortization: |
||||||||
| Continuing operations |
0.09 | 0.06 | ||||||
| Discontinued operations |
— | — | ||||||
|
|
|
|
|
|||||
| Funds from operations |
$ | 0.13 | $ | 0.24 | ||||
| Write-off of straight line rent |
0.01 | — | ||||||
| Loan impairment charge |
0.12 | — | ||||||
| Acquisition costs |
— | 0.01 | ||||||
|
|
|
|
|
|||||
| Normalized funds from operations |
$ | 0.26 | $ | 0.25 | ||||
| Share-based compensation |
0.01 | 0.01 | ||||||
| Debt costs amortization |
0.01 | 0.01 | ||||||
| Additional rent received in advance (B) |
— | — | ||||||
| Straight-line rent revenue and other |
(0.03 | ) | (0.03 | ) | ||||
|
|
|
|
|
|||||
| Adjusted funds from operations |
$ | 0.25 | $ | 0.24 | ||||
|
|
|
|
|
|||||
| (A) | Financials have been restated to reclass the operating results of certain properties sold after the 2013 first quarter to discontinued operations. |
| (B) | Represents additional rent from one tenant in advance of when we can recognize as revenue for accounting purposes. This additional rent is being recorded to revenue on a straight-line basis over the lease life. |
Investors and analysts following the real estate industry utilize funds from operations, or FFO, as a supplemental performance measure. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets, which assumes that the value of real estate diminishes predictably over time. We compute FFO in accordance with the definition provided by the National Association of Real Estate Investment Trusts, or NAREIT, which represents net income (loss) (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairment charges on real estate assets, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures.
In addition to presenting FFO in accordance with the NAREIT definition, we also disclose normalized FFO, which adjusts FFO for items that relate to unanticipated or non-core events or activities or accounting changes that, if not noted, would make comparison to prior period results and market expectations less meaningful to investors and analysts. We believe that the use of FFO, combined with the required GAAP presentations, improves the understanding of our operating results among investors and the use of normalized FFO makes comparisons of our operating results with prior periods and other companies more meaningful. While FFO and normalized FFO are relevant and widely used supplemental measures of operating and financial performance of REITs, they should not be viewed as a substitute measure of our operating performance since the measures do not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which can be significant economic costs that could materially impact our results of operations. FFO and normalized FFO should not be considered an alternative to net income (loss) (computed in accordance with GAAP) as indicators of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.
We calculate adjusted funds from operations, or AFFO, by subtracting from or adding to normalized FFO (i) unbilled rent revenue, (ii) non-cash share-based compensation expense, and (iii) amortization of deferred financing costs. AFFO is an operating measurement that we use to analyze our results of operations based on the receipt, rather than the accrual, of our rental revenue and on certain other adjustments. We believe that this is an important measurement because our leases generally have significant contractual escalations of base rents and therefore result in recognition of rental income that is not collected until future periods, and costs that are deferred or are non-cash charges. Our calculation of AFFO may not be comparable to AFFO or similarly titled measures reported by other REITs. AFFO should not be considered as an alternative to net income (calculated pursuant to GAAP) as an indicator of our results of operations or to cash flow from operating activities (calculated pursuant to GAAP) as an indicator of our liquidity.
Exhibit 99.2
InvestIng In the future of healthcare.
FIRST QUARTER 2014
SUPPLEMENTAL INFORMATION
Table of Contents
| Company Information |
|
1 |
| |
| Reconciliation of Net Income to Funds from Operations |
|
2 |
| |
| Investment and Revenue by Asset Type, Operator, Country and 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 Tim Berryman, Director—Investor Relations at (205) 397-8589
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
Frank R. Williams, Senior Vice President, Senior Managing Director—Acquisitions
Investor Relations: Medical Properties Trust, Inc. 1000 Urban Center Drive, Suite 501 Birmingham, AL 35242 Attn: Tim Berryman (205) 397-8589
tberryman@medicalpropertiestrust.
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Reconciliation of Net Income to Funds From Operations
(Unaudited)
For the Three Months Ended March 31, 2014 March 31, 2013 (A) FFO information: Net income attributable to MPT common stockholders $ 7,241,294 $ 26,156,492 Participating securities’ share in earnings (209,370) (193,062) Net income, less participating securities’ share in earnings $ 7,031,924 $ 25,963,430 Depreciation and amortization: Continuing operations 13,689,602 8,469,200 Discontinued operations - 177,950 Funds from operations $ 20,721,526 $ 34,610,580 Write-off of straight line rent 950,338 - Loan impairment charge 20,496,463 - Acquisition costs 512,016 190,549 Normalized funds from operations $ 42,680,343 $ 34,801,129 Share-based compensation 2,043,410 1,918,855 Debt costs amortization 1,048,722 896,732 Additional rent received in advance (B) (300,000) (300,000) Straight-line rent revenue and other (4,702,867) (3,892,628) Adjusted funds from operations $ 40,769,608 $ 33,424,088 Per diluted share data: Net income, less participating securities’ share in earnings $ 0.04 $ 0.18 Depreciation and amortization: Continuing operations 0.09 0.06 Discontinued operations - - Funds from operations $ 0.13 $ 0.24 Write-off of straight line rent 0.01 - Loan impairment charge 0.12 - Acquisition costs - 0.01 Normalized funds from operations $ 0.26 $ 0.25 Share-based compensation 0.01 0.01 Debt costs amortization 0.01 0.01 Additional rent received in advance (B) - - Straight-line rent revenue and other (0.03) (0.03) Adjusted funds from operations $ 0.25 $ 0.24
(A) Financials have been restated to reclass the operating results of certain properties sold after the 2013 first quarter to discontinued operations.
(B) Represents additional rent from one tenant in advance of when we can recognize as revenue for accounting purposes. This additional rent is being recorded to revenue on a straight-line basis over the lease life.
Investors and analysts following the real estate industry utilize funds from operations, or FFO, as a supplemental performance measure. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets, which assumes that the value of real estate diminishes predictably over time. We compute FFO in accordance with the definition provided by the National Association of Real Estate Investment Trusts, or NAREIT, which represents net income (loss) (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairment charges on real estate assets, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures.
In addition to presenting FFO in accordance with the NAREIT definition, we also disclose normalized FFO,which adjusts FFO for items that relate to unanticipated or non-core events or activities or accounting changes that, if not noted, would make comparison to prior period results and market expectations less meaningful to investors and analysts. We believe that the use of FFO, combined with the required GAAP presentations, improves the understanding of our operating results among investors and the use of normalized FFO makes comparisons of our operating results with prior periods and other companies more meaningful. While FFO and normalized FFO are relevant and widely used supplemental measures of operating and financial performance of REITs, they should not be viewed as a substitute measure of our operating performance since the measures do not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which can be significant economic costs that could materially impact our results of operations. FFO and normalized FFO should not be considered an alternative to net income (loss) (computed in accordance with GAAP) as indicators of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.
We calculate adjusted funds from operations, or AFFO, by subtracting from or adding to normalized FFO (i) unbilled rent revenue, (ii) non-cash share-based compensation expense, and (iii) amortization of deferred financing costs. AFFO is an operating measurement that we use to analyze our results of operations based on the receipt, rather than the accrual, of our rental revenue and on certain other adjustments. We believe that this is an important measurement because our leases generally have significant contractual escalations of base rents and therefore result in recognition of rental income that is not collected until future periods, and costs that are deferred or are non-cash charges. Our calculation of AFFO may not be comparable to AFFO or similarly titled measures reported by other REITs. AFFO should not be considered as an alternative to net income (calculated pursuant to GAAP) as an indicator of our results of operations or to cash flow from operating activities (calculated pursuant to GAAP) as an indicator of our liquidity.
INVESTMENT AND REVENUE BY ASSET TYPE, OPERATOR, COUNTRY AND STATE
Investments and Revenue by Asset Type—As of March 31, 2014
Total Assets
Percentage of Gross Assets
Total Revenue
Percentage of Total Revenue
General Acute Care Hospitals A $1,831,995,556 57.3% $41,387,839 56.6% Rehabilitation Hospitals 663,008,286 20.7% 17,528,056 24.0% Long-Term Acute Care Hospitals 460,653,144 14.4% 13,757,420 18.8% Wellness Centers 15,624,817 0.5% 415,339 0.6% Other assets 228,785,634 7.1% — — Total gross assets 3,200,067,437 100.0% Accumulated depreciation and amortization (173,474,957) Total $3,026,592,480 $73,088,654 100.0%
Investments and Revenue by Operator—As of March 31, 2014
Total Assets
Percentage of Gross Assets
Total Revenue
Percentage of Total Revenue
Prime Healthcare $710,960,240 22.2% $21,292,094 29.1% Ernest Health, Inc. 479,273,281 15.0% 14,285,650 19.5% IASIS Healthcare 347,611,962 10.9% 6,837,750 9.4% RHM 240,957,499 7.5% 5,470,459 7.5% IJKG/HUMC 125,398,498 3.9% 3,860,221 5.3% 23 other operators 1,067,080,323 33.4% 21,342,480 29.2% Other assets 228,785,634 7.1% — — Total gross assets 3,200,067,437 100.0% Accumulated depreciation and amortization (173,474,957) Total $3,026,592,480 $73,088,654 100.0%
Investment and Revenue by Country and State—As of March 31, 2014
Total Assets Percentage of Gross Assets Total Revenue Percentage of Total Revenue
United States Texas $681,565,565 21.3% $17,382,436 23.8% California 542,826,939 17.0% 16,335,799 22.4% New Jersey 240,398,498 7.5% 3,860,221 5.3% Arizona 200,844,185 6.3% 1,668,852 2.3% Louisiana 137,780,879 4.3% 5,415,143 7.4% 20 other states 926,908,238 29.0% 22,955,744 31.3% Other assets 228,785,634 7.1% — — United States Total 2,959,109,938 92.5% 67,618,195 92.5% International Germany 240,957,499 7.5% 5,470,459 7.5% International Total 240,957,499 7.5% Total gross assets 3,200,067,437 100.0% Accumulated depreciation and amortization (173,474,957) Total $3,026,592,480 $73,088,654 100.0% A Includes two medical office buildings and free-standing emergency rooms.
LEASE MATURITY SCHEDULE—AS OF MARCH 31, 2014
| Total portfolio (1) |
|
Total |
|
|
Base rent |
(2) |
|
Percent |
| |||
| 2014 |
|
1 |
|
$ |
2,122,416 |
|
|
0.9 |
% | |||
| 2015 |
|
2 |
|
|
4,155,412 |
|
|
1.8 |
% | |||
| 2016 |
|
1 |
|
|
2,250,000 |
|
|
1.0 |
% | |||
| 2017 |
|
— |
|
|
— |
|
|
0.0 |
% | |||
| 2018 |
|
1 |
|
|
2,019,936 |
|
|
0.9 |
% | |||
| 2019 |
|
8 |
|
|
6,547,245 |
|
|
2.8 |
% | |||
| 2020 |
|
1 |
|
|
1,060,512 |
|
|
0.4 |
% | |||
| 2021 |
|
4 |
|
|
15,522,785 |
|
|
6.8 |
% | |||
| 2022 |
|
12 |
|
|
39,298,052 |
|
|
17.2 |
% | |||
| 2023 |
|
4 |
|
|
12,029,276 |
|
|
5.3 |
% | |||
| 2024 |
|
1 |
|
|
2,478,388 |
|
|
1.1 |
% | |||
| 2025 |
|
3 |
|
|
7,499,572 |
|
|
3.3 |
% | |||
| Thereafter |
|
56 |
|
|
133,859,546 |
|
|
58.3 |
% | |||
|
|
94 |
|
$ |
228,843,140 |
|
|
100.0 |
% |
| (1) |
Excludes 14 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) |
Represents base rent on an annualized basis but does not include tenant recoveries, additional rents and other lease-related adjustments to revenue (i.e., straight-line rents and deferred revenues). |
DEBT SUMMARY AS OF MARCH 31, 2014
| Instrument |
|
Rate |
|
|
Balance |
|
|
2014 |
|
|
2015 |
|
|
2016 |
|
|
2017 |
|
|
2018 |
|
|
Thereafter |
|
||||||||||||
| 6.875% Notes Due 2021 |
|
Fixed |
|
|
6.88 |
% |
$ |
450,000,000 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
450,000,000 |
| |||||||||
| 6.375% Notes Due 2022 |
|
Fixed |
|
|
6.38 |
% |
|
350,000,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
350,000,000 |
| |||||||||
| 2015 Credit Facility Revolver |
|
Variable |
|
|
3.02 |
%(1) |
|
155,000,000 |
|
|
— |
|
|
155,000,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| |||||||||
| 2016 Term Loan |
|
Variable |
|
|
2.43 |
% |
|
100,000,000 |
|
|
— |
|
|
— |
|
|
100,000,000 |
|
|
— |
|
|
— |
|
|
— |
| |||||||||
| 2016 Unsecured Notes |
|
Fixed |
|
|
5.59 |
%(2) |
|
125,000,000 |
|
|
— |
|
|
— |
|
|
125,000,000 |
|
|
— |
|
|
— |
|
|
— |
| |||||||||
| 2020 Notes (Euro) |
|
Fixed |
|
|
5.75 |
%(3) |
|
275,380,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
275,380,000 |
| |||||||||
| Northland—Mortgage Capital Term Loan |
|
Fixed |
|
|
6.20 |
% |
|
13,880,315 |
|
|
197,739 |
|
|
282,701 |
|
|
298,582 |
|
|
320,312 |
|
|
12,780,982 |
|
|
— |
| |||||||||
| $ |
1,469,260,315 |
|
$ |
197,739 |
|
$ |
155,282,701 |
|
$ |
225,298,582 |
|
$ |
320,312 |
|
|
12,780,982 |
|
$ |
1,075,380,000 |
| ||||||||||||||||
| Debt Premium |
$ |
2,785,159 |
|
|||||||||||||||||||||||||||||||||
| $ |
1,472,045,474 |
|
| (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, 2014 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 milllion of the Notes and effective October 31, 2011, the Company is paying 5.675% on $60 million of Notes.
| (3) |
|
Represents 200,000,000 of bonds issued in EUR and converted to USD at March 31, 2014. |
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
For the Three Months Ended March 31, 2014 March 31, 2013 (A) Revenues Rent billed $ 42,956,745 $ 31,498,931 Straight-line rent 2,148,220 2,651,453 Income from direct financing leases 12,215,388 8,756,471 Interest and fee income 15,768,301 14,706,897 Total revenues 73,088,654 57,613,752 Expenses Real estate depreciation and amortization 13,689,602 8,469,200 Loan impairment charge 20,496,463 - Property-related 738,305 408,887 Acquisition expenses 512,016 190,549 General and administrative 8,958,790 7,765,949 Total operating expenses 44,395,176 16,834,585 Operating income 28,693,478 40,779,167 Interest and other income (expense) (21,442,535) (15,157,366) Income tax (expense) benefit 57,324 (52,247) Income from continuing operations 7,308,267 25,569,554 Income (loss) from discontinued operations (1,500) 640,571 Net income 7,306,767 26,210,125 Net income attributable to non-controlling interests (65,473) (53,633) Net income attributable to MPT common stockholders $ 7,241,294 $ 26,156,492 Earnings per common share - basic : Income from continuing operations $ 0.04 $ 0.18 Income from discontinued operations - 0.01 Net income attributable to MPT common stockholders $ 0.04 $ 0.19 Earnings per common share - diluted: Income from continuing operations $ 0.04 $ 0.18 Income from discontinued operations - - Net income attributable to MPT common stockholders $ 0.04 $ 0.18 Dividends declared per common share $ 0.21 $ 0.20 . Weighted average shares outstanding - basic 163,973,178 140,346,579 Weighted average shares outstanding - diluted 164,548,581 141,526,311
(A) Financials have been restated to reclass the operating results of certain properties sold after the
2013 first quarter to discontinued operations.
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 2014 December 31, 2013 Assets (Unaudited) (A) Real estate assets Land, buildings and improvements, and intangible lease assets $ 1,964,466,055 $ 1,823,683,129 Construction in progress and other 43,956,015 41,771,499 Net investment in direct financing leases 432,657,330 431,024,228 Mortgage loans 388,650,000 388,650,000 Gross investment in real estate assets 2,829,729,400 2,685,128,856 Accumulated depreciation and amortization (173,474,957) (159,776,091) Net investment in real estate assets 2,656,254,443 2,525,352,765 Cash and cash equivalents 50,309,266 45,979,648 Interest and rent receivables 63,173,762 58,499,609 Straight-line rent receivables 48,022,702 45,828,697 Other assets 208,832,307 228,909,650 Total Assets $ 3,026,592,480 $ 2,904,570,369 Liabilities and Equity Liabilities Debt, net $ 1,472,045,474 $ 1,421,680,749 Accounts payable and accrued expenses 74,183,992 94,311,177 Deferred revenue 25,418,580 23,786,819 Lease deposits and other obligations to tenants 23,963,665 20,583,283 Total liabilities 1,595,611,711 1,560,362,028 Equity Preferred stock, $0.001 par value. Authorized 10,000,000 shares; no shares outstanding - - Common stock, $0.001 par value. Authorized 250,000,000 shares; issued and outstanding - 170,212,741 shares at March 31, 2014 and 161,309,725 shares at December 31, 2013 170,213 161,310 Additional paid in capital 1,732,915,820 1,618,054,133 Distributions in excess of net income (293,595,304) (264,804,113) Accumulated other comprehensive income (loss) (8,247,617) (8,940,646) Treasury shares, at cost (262,343) (262,343) Total Equity 1,430,980,769 1,344,208,341 Total Liabilities and Equity $ 3,026,592,480 $ 2,904,570,369
(A) Financials have been derived from the prior year audited financials.
ACQUISITIONS FOR THE THREE MONTHS ENDED MARCH 31, 2014
Name Location Property Type Acquisition / Development Investment/Commitment Legacy Health Partners Montclair, NJ Acute Care Hospital Acquisition $115,000,000 Total Investments / Commitments $115,000,000
SUMMARY OF DEVELOPMENT PROJECTS AS OF MARCH 31, 2014
Property Location Property Type Operator Commitment Costs Incurred as of 3/31/14 Percent Leased Estimated Completion Date First Choice ER- Brodie Austin, TX Acute Care Hospital First Choice ER, LLC $5,465,968 $2,828,828 100% 2Q 2014 First Choice ER- Briar Forest Houston, TX Acute Care Hospital First Choice ER, LLC 5,844,432 1,595,261 100% 3Q 2014 First Choice ER- Cedar Hill Cedar Hill, TX Acute Care Hospital First Choice ER, LLC 5,768,924 1,709,617 100% 3Q 2014 First Choice ER- Firestone Firestone, CO Acute Care Hospital First Choice ER, LLC 5,172,522 1,699,280 100% 3Q 2014 Oakleaf Surgical Hospital Altoona, WI Acute Care Hospital National Surgical Hospitals 33,500,000 22,780,236 100% 3Q 2014 First Choice ER—Allen Allen, TX Acute Care Hospital First Choice ER, LLC 6,186,769 2,041,774 100% 3Q 2014 First Choice ER—Frisco Frisco, TX Acute Care Hospital First Choice ER, LLC 5,893,196 2,060,459 100% 3Q 2014 First Choice ER—Broomfield Broomfield, CO Acute Care Hospital First Choice ER, LLC 5,238,100 1,117,705 100% 3Q 2014 Frist Choice ER—Spring Spring, TX Acute Care Hospital First Choice ER, LLC 5,803,500 1,804,404 100% 3Q 2014 Frist Choice ER—North Gate Colorado Springs, CO Acute Care Hospital First Choice ER, LLC 5,248,745 895,699 100% 3Q 2014 First Choice ER—Fountain Fountain, CO Acute Care Hospital First Choice ER, LLC 6,194,181 1,557,714 100% 3Q 2014 First Choice ER—Missouri City (Sienna) Houston, TX Acute Care Hospital First Choice ER, LLC 5,393,656 1,062,244 100% 3Q 2014 First Choice ER—Pearland Pearland, TX Acute Care Hospital First Choice ER, LLC 5,691,295 1,402,569 100% 4Q 2014 First Choice ER—Thornton Thornton, CO Acute Care Hospital First Choice ER, LLC 6,029,465 1,400,225 100% 4Q 2014 First Choice Emergency Rooms Various Acute Care Hospital First Choice ER, LLC 10,615,106 — $118,045,859 $43,956,015
DETAIL OF OTHER ASSETS AS OF MARCH 31, 2014
| Operator InvestmentInterest Rate Annual (4) Ridea Income YTD Security / Credit Enhancements |
| Non-Operating Loans |
| Vibra Healthcare acquisition loan (1) $11,367,502 10.25% Secured and cross-defaulted with real estate, other agreements and guaranteed by Parent |
| Vibra Healthcare working capital 5,232,500 9.50% Secured and cross-defaulted with real estate, other agreements and guaranteed by Parent |
| Post Acute Medical working capital 8,188,689 11.10% Secured and cross-defaulted with real estate; certain loans are cross-defaulted with other loans |
| and real estate |
| Monroe Hospital (2) 1,372,573 |
| IKJG/HUMC working capital 14,046,667 10.40% Secured and cross-defaulted with real estate and guaranteed by Parent |
| Ernest Health 4,583,333 9.38% Secured and cross-defaulted with real estate and guaranteed by Parent |
| Other 209,307 |
| 45,000,571 |
| Operating Loans |
| Ernest Health, Inc. (3) 93,200,000 15.00% 4,230,259 Secured and cross-defaulted with real estate and guaranteed by Parent |
| IKJG/HUMC convertible loan 3,351,832 53,629 Secured and cross-defaulted with real estate and guaranteed by Parent |
| 96,551,832 4,283,888 |
| Equity investments 13,171,086 219,846 |
| Deferred debt financing costs 26,230,500 Not applicable |
| Lease and cash collateral 5,565,303 Not applicable |
| Other assets (5) 22,313,015 Not applicable |
| Total $208,832,307 $4,503,734 |
| (1) |
Original amortizing acquistion loan was $41 million; loan matures in 2019 |
| (2) |
Ceased accruing interest in 2010 and rent in 2013; net of $32 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. |
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 or Tim Berryman, Director—Investor Relations (205) 397-8589 or tberryman@medicalpropertiestrust.com