Completes $861 Million of Acquisitions in
the Fourth Quarter and Commences 2020 Growth with Additional $1.9
Billion in Accretive Investments
Fourth Quarter Per Share Net Income of $0.26
and Normalized FFO of $0.35
Medical Properties Trust, Inc. (the “Company” or “MPT”) (NYSE:
MPW) today announced financial and operating results for the fourth
quarter and year ended December 31, 2019 and recent highlights.
“2019 was a year of incomparable growth and achievement for
MPT,” said Edward K. Aldag, Jr., MPT’s Chairman, President and
Chief Executive Officer. “We delivered a market leading 39% return
to our shareholders and have now doubled our market capitalization
to $11.8 billion to become one of the 30 largest REITs in the
market. Since our IPO in 2005 we have delivered a total return of
more than 554% to our shareholders comprised of cash dividends and
increases in share value exceeding $6.6 billion – we created more
than 40% of that value in 2019 alone, capping off a five year
period during which, just like the IPO to date period, our total
returns to shareholders led the Healthcare and Broad REIT indices
at almost 115%,” continued Aldag.
In the fourth quarter alone, continuing the performance of the
first nine months of 2019, MPT completed approximately $861 million
in hospital acquisitions, including immediately accretive
investments in the United States, Spain and Portugal, further
improving the Company’s already diversified geographic footprint
and creating strong relationships with key global operators. With
more than $4.5 billion of acquisitions completed in 2019, MPT
achieved 64% growth in assets year over year and now has an
enterprise value exceeding $19 billion, up more than 90% over 2018.
The blended GAAP capitalization rate for the $4.5 billion in 2019
acquisitions approximates 8.0%.
Aldag added, “While we are not prepared to predict 64% growth
again, MPT has already started 2020 with completed acquisitions
exceeding $1.9 billion and we are actively working a vibrant
pipeline that exceeds $3.0 billion. We believe we are in the early
stages of a rapidly developing market for hospital real estate
transactions and MPT is the unquestioned global leader in these
markets.” At the same time, MPT’s access to capital has continued
to expand both in improved global pricing and expanded sources of
debt and equity. “Our most recent transactions have resulted in
initial cash investment spreads of between 3.0% and 4.0% - results
that we do not see in other investment sectors.”
FOURTH QUARTER AND RECENT HIGHLIGHTS
- Per share net income of $0.26 and Normalized Funds from
Operations (“NFFO”) of $0.35 in the fourth quarter, both on a per
diluted share basis;
- Completed the acquisition of 10 acute care hospitals operated
by LifePoint Health, Inc. in six U.S. states for an aggregate
purchase price of approximately $700 million; a $31.0 million
(€28.2 million) majority real estate interest in a hospital in
Viseu, Portugal; substantial interest in joint ventures that own
two premier Madrid hospitals for an aggregate investment of $130.0
million (€117.3 million); and commenced development of a $27.5
million unique behavioral hospital in the Houston, Texas area;
- Completed the highly profitable sale of two acute care
hospitals, exiting a market and tenant relationship;
- Completed an inaugural Sterling bond issue with staggered
maturities in December, raising £1.0 billion to provide financing
for 2019 UK acquisitions and to pre-fund the January acquisition of
30 British hospitals; completed remaining purchase price funding in
January with a £700 million unsecured term loan for a blended
financing cost of less than 3.0%;
- Filed a $1.0 billion at-the-market equity program; and
- Issued 57.5 million shares of common stock for net proceeds of
approximately $1.0 billion.
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 NFFO, all on a basis
comparable to 2018 results, and a reconciliation of pro forma total
gross assets to total assets.
PORTFOLIO UPDATE
After completion of the most recent investments, Medical
Properties Trust further extends its position as the global leader
of hospital real estate investors. The Company has pro forma total
gross assets of approximately $16.5 billion, including $13.5
billion in general acute care hospitals, $1.8 billion in inpatient
rehabilitation hospitals, and $0.4 billion in long-term acute care
hospitals. The pro forma portfolio includes 389 properties
representing more than 41,000 licensed beds in 34 states and in
Germany, the United Kingdom, Switzerland, Italy, Spain, Portugal
and Australia. The properties are leased to or mortgaged by 41
hospital operating companies which include the following new
relationships that were established in the fourth quarter.
In December, MPT made a 45% equity investment of approximately
$130 million in the real estate of two high-quality acute care
hospitals in Madrid. The hospitals are operated by HM Hospitales
(“HM”), the third largest private operator in Spain, and the
investment represents 301 licensed beds. It includes HM Hospital
Sanchinarro, a 203-bed hospital facility that is ranked the #3
private hospital in Spain. The two hospitals are net-leased to HM
with a 25-year initial term and annual escalators based on Spanish
CPI, establishing a new relationship with a top operator in Spain’s
consolidating hospital market.
In November, MPT acquired a newly-constructed 37-bed acute care
hospital operated by Grupo José de Mello (“JDM”) in Viseu,
Portugal, an affluent city in northern Portugal. JDM is Portugal’s
largest private operator with 20 hospitals representing 1,570
licensed beds. The property was acquired subject to an in-place
lease with 17 years remaining on its initial term, including annual
rent escalations based on Portugal CPI. This transaction presents a
unique opportunity to enter the attractive Portuguese healthcare
market with a leading, growth-oriented hospital operator and
provides MPT a platform for future growth.
In October, MPT agreed to provide a funding commitment of $27.5
million to NeuroPsychiatric Hospitals (“NPH”) for the development
of a 92-bed facility in Clear Lake, Texas. NPH is headquartered in
South Bend, Indiana and regarded as the largest neuropsychiatric
care organization in the U.S. providing best-in-class care for
patients with acute, complex medical and psychiatric conditions.
NPH currently operates four facilities with 187 beds in the Greater
Chicago/Northwest Indiana and Indianapolis markets and is
well-positioned for near-term growth.
OPERATING RESULTS AND OUTLOOK
Net income for the fourth quarter and year ended December 31,
2019 was $130 million ($0.26 per diluted share), and $375 million
($0.87 per diluted share), respectively compared to $78 million
($0.21 per diluted share) and $1.02 billion ($2.76 per diluted
share) in the year earlier periods.
NFFO for the fourth quarter and year ended December 31, 2019 was
$171 million ($0.35 per diluted share), and $557 million ($1.30 per
diluted share), respectively compared to $112 million ($0.31 per
diluted share) and $501 million ($1.37 per diluted share) in the
year earlier periods. The year earlier period included gains on
sales approximating $671 million.
The Company reaffirms an annual run rate of $1.24 to $1.27 per
diluted share for net income and $1.65 to $1.68 per diluted share
for NFFO based on all announced transactions and an assumed capital
structure that results in a net debt to EBITDA ratio of
approximately 5.5 times.
These estimates do not include the effects, if any, of
unexpected real estate operating costs, changes in accounting
pronouncements, litigation costs, debt refinancing costs,
acquisition costs, currency exchange rate movements, interest rate
hedging activities, write-offs of straight-line rent or other
non-recurring or unplanned transactions. These estimates may change
if the Company acquires or sells assets in amounts that are
different from estimates, market interest rates change, debt is
refinanced, new shares are issued, additional debt is incurred,
other operating expenses vary, income from our equity investments
vary from expectations, or existing leases do not perform in
accordance with their terms.
Aldag concluded by announcing the promotion of a long-time MPT
employee. “I would like to take this opportunity to announce that
Luke Savage has been added to the executive team. Luke has recently
been appointed Vice President. Luke has been with the company for
12 years and has led our international efforts since 2016. Luke is
the senior officer in our Luxembourg office.”
CONFERENCE CALL AND WEBCAST
The Company has scheduled a conference call and webcast for
Thursday, February 6, 2020 at 11:00 a.m. Eastern Time to present
the Company’s financial and operating results for the quarter ended
December 31, 2019. The dial-in numbers for the conference call are
844-535-3969 (U.S. and Canada) and 409-937-8903 (International);
both numbers require passcode 7760789. 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 February 20,
2020. Dial-in numbers for the replay are 855-859-2056 and
404-537-3406 for U.S./Canada and International callers,
respectively. The replay passcode for all callers is 7760789.
The Company’s supplemental information package for the current
period will also be available on the Company’s website in the
Investor Relations section.
About Medical Properties Trust, Inc.
Medical Properties Trust, Inc. is a self-advised real estate
investment trust formed in 2003 to acquire and develop net-leased
hospital facilities. From its inception in Birmingham, Alabama, the
Company has grown to become one of the world’s largest owners of
hospitals with 389 facilities and more than 41,000 licensed beds in
eight countries and across three continents. MPT’s financing model
facilitates acquisitions and recapitalizations and allows operators
of hospitals to unlock the value of their real estate assets to
fund facility improvements, technology upgrades and other
investments in operations. 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
satisfaction of all conditions, and the timely closing (if at all)
of the transactions described above; annual run-rate net income and
NFFO per share; the amount of acquisitions of healthcare real
estate, if any; results from potential sales and joint venture
arrangements, if any; capital markets conditions; estimated
leverage metrics; the repayment of debt arrangements; statements
concerning the additional income to the Company as a result of
ownership interests in equity investments and the timing of such
income; the payment of future dividends, if any; completion of
additional debt arrangements, and additional investments; national
and international economic, business, real estate and other market
conditions; the competitive environment in which the Company
operates; the execution of the Company's business plan; financing
risks; the Company's ability to maintain its status as a REIT for
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, 2018 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.
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Amounts in thousands, except for
per share data) December 31, 2019 December 31, 2018
Assets (Unaudited) (A) Real estate assets
Land, buildings and improvements, intangible lease assets, and
other
$
8,102,754
$
5,268,459
Mortgage loans
1,275,022
1,213,322
Investment in financing leases
2,060,302
684,053
Gross investment in real estate assets
11,438,078
7,165,834
Accumulated depreciation and amortization
(570,042
)
(464,984
)
Net investment in real estate assets
10,868,036
6,700,850
Cash and cash equivalents
1,462,286
820,868
Interest and rent receivables
31,357
25,855
Straight-line rent receivables
334,231
220,848
Equity investments
926,990
520,058
Other loans
544,832
373,198
Other assets
299,599
181,966
Total Assets
$
14,467,331
$
8,843,643
Liabilities and Equity Liabilities Debt, net
$
7,023,679
$
4,037,389
Accounts payable and accrued expenses
291,489
204,325
Deferred revenue
16,098
13,467
Obligations to tenants and other lease liabilities
107,911
27,524
Total Liabilities
7,439,177
4,282,705
Equity Preferred stock, $0.001 par value. Authorized
10,000 shares; no shares outstanding
-
-
Common stock, $0.001 par value. Authorized 750,000 shares; issued
and outstanding - 517,522 shares at December 31, 2019 and 370,637
shares at December 31, 2018
518
371
Additional paid-in capital
7,008,199
4,442,948
Retained earnings
83,012
162,768
Accumulated other comprehensive loss
(62,905
)
(58,202
)
Treasury shares, at cost
(777
)
(777
)
Total Medical Properties Trust, Inc. Stockholders' Equity
7,028,047
4,547,108
Non-controlling interests
107
13,830
Total Equity
7,028,154
4,560,938
Total Liabilities and Equity
$
14,467,331
$
8,843,643
(A) Financials have been derived from the prior year
audited financial statements.
MEDICAL PROPERTIES
TRUST, INC. AND SUBSIDIARIES Consolidated Statements of
Income (Unaudited)
(Amounts in thousands, except for per
share data) For the Three Months Ended For the Twelve Months
Ended December 31, 2019 December 31, 2018 December 31, 2019
December 31, 2018
Revenues Rent billed
$
130,310
$
104,267
$
474,151
$
473,343
Straight-line rent
33,643
25,584
110,456
74,741
Income from financing leases
52,364
18,370
119,617
73,983
Interest and other income
40,121
32,357
149,973
162,455
Total revenues
256,438
180,578
854,197
784,522
Expenses Interest
70,434
50,910
237,830
223,274
Real estate depreciation and amortization
44,152
32,866
152,313
133,083
Property-related (A)
8,598
2,414
23,992
9,237
General and administrative
27,402
21,734
96,411
81,003
Total expenses
150,586
107,924
510,546
446,597
Other income (expense) Gain (loss) on sale of real
estate and other, net
20,467
(1,437
)
20,529
671,385
Earnings from equity interests
4,416
3,623
16,051
14,165
Unutilized financing fees
(1,233
)
-
(6,106
)
-
Other
1,152
226
(345
)
(4,071
)
Total other income
24,802
2,412
30,129
681,479
Income before income tax
130,654
75,066
373,780
1,019,404
Income tax (expense) benefit
(731
)
3,875
2,621
(927
)
Net income
129,923
78,941
376,401
1,018,477
Net income attributable to non-controlling interests
(285
)
(458
)
(1,717
)
(1,792
)
Net income attributable to MPT common stockholders
$
129,638
$
78,483
$
374,684
$
1,016,685
Earnings per common share - basic: Net
income attributable to MPT common stockholders
$
0.26
$
0.21
$
0.87
$
2.77
Earnings per common share - diluted: Net income
attributable to MPT common stockholders
$
0.26
$
0.21
$
0.87
$
2.76
Weighted average shares outstanding - basic
493,593
366,655
427,075
365,364
Weighted average shares outstanding - diluted
494,893
367,732
428,299
366,271
Dividends declared per common share
$
0.26
$
0.25
$
1.02
$
1.00
(A) Includes $3.4 million and $14.8 million of ground
lease and other expenses (such as property taxes and insurance)
paid directly by us and reimbursed by our tenants for the three and
twelve months ended December 31, 2019, respectively. These costs
are required to be presented on a gross basis (with offset included
in Interest and other income), following our adoption of the new
lease accounting standard on January 1, 2019. We presented similar
items in the prior year on a net basis.
MEDICAL
PROPERTIES TRUST, INC. AND SUBSIDIARIES Reconciliation of
Net Income to Funds From Operations (Unaudited)
(Amounts in thousands, except for per share data) For the
Three Months Ended For the Twelve Months Ended December 31, 2019
December 31, 2018 December 31, 2019 December 31, 2018
FFO
information: Net income attributable to MPT common stockholders
$
129,638
$
78,483
$
374,684
$
1,016,685
Participating securities' share in earnings
(954
)
(2,877
)
(2,308
)
(3,685
)
Net income, less participating securities' share in earnings
$
128,684
$
75,606
$
372,376
$
1,013,000
Depreciation and amortization
53,497
39,406
183,921
143,720
(Gain) loss on sale of real estate and other, net
(20,467
)
1,437
(20,529
)
(671,385
)
Funds from operations
$
161,714
$
116,449
$
535,768
$
485,335
Write-off of straight-line rent and other, net of tax
benefit
8,307
387
15,539
18,002
Unutilized financing fees
1,233
-
6,106
-
Release of income tax valuation allowance
-
(4,405
)
-
(4,405
)
Acquisition costs, net of tax benefit
-
-
-
2,072
Normalized funds from operations
$
171,254
$
112,431
$
557,413
$
501,004
Share-based compensation
10,069
4,810
32,188
16,505
Debt costs amortization
2,761
1,991
9,675
7,534
Straight-line rent revenue and other
(48,836
)
(30,528
)
(145,598
)
(105,072
)
Adjusted funds from operations
$
135,248
$
88,704
$
453,678
$
419,971
Per diluted share data: Net income,
less participating securities' share in earnings
$
0.26
$
0.21
$
0.87
$
2.76
Depreciation and amortization
0.11
0.11
0.43
0.39
(Gain) loss on sale of real estate and other, net
(0.04
)
-
(0.05
)
(1.83
)
Funds from operations
$
0.33
$
0.32
$
1.25
$
1.32
Write-off of straight-line rent and other, net of tax
benefit
0.02
-
0.04
0.05
Unutilized financing fees
-
-
0.01
-
Release of income tax valuation allowance
-
(0.01
)
-
(0.01
)
Acquisition costs, net of tax benefit
-
-
-
0.01
Normalized funds from operations
$
0.35
$
0.31
$
1.30
$
1.37
Share-based compensation
0.02
0.01
0.08
0.05
Debt costs amortization
0.01
0.01
0.02
0.02
Straight-line rent revenue and other
(0.11
)
(0.09
)
(0.34
)
(0.29
)
Adjusted funds from operations
$
0.27
$
0.24
$
1.06
$
1.15
Notes:
(A) Certain line items above (such as real
estate depreciation) include our share of such income/expense from
unconsolidated joint ventures. These amounts are included with the
activity of all of our equity interests in the "Earnings from
equity interests" line on the consolidated statements of
income.
(B) 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) non-cash 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.
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES Annual
Run-Rate Guidance Reconciliation (Unaudited)
Annual Run-Rate Guidance - Per Share(1) Low High Net
income attributable to MPT common stockholders
$
1.24
$
1.27
Participating securities' share in earnings
-
-
Net income, less participating securities' share in earnings
$
1.24
$
1.27
Depreciation and amortization
0.41
0.41
Funds from operations
$
1.65
$
1.68
Other adjustments
-
-
Normalized funds from operations
$
1.65
$
1.68
(1) The guidance is based on current expectations
and actual results or future events may differ materially from
those expressed in this table, which is a forward-looking
statement within the meaning of
the federal securities laws. Please refer to the forward-looking
statement included in this press release and our filings with the
Securities and Exchange Commission for a discussion of risk factors
that affect our performance.
Pro Forma Total Gross Assets (Unaudited)
(Amounts in thousands) December 31, 2019 Total Assets
$
14,467,331
Add: Binding real estate commitments on new investments(2)
1,988,550
Unfunded amounts on development deals and commenced capital
improvement projects(3)
163,370
Accumulated depreciation and amortization
570,042
Incremental gross assets of our joint ventures(4)
563,911
Proceeds from new £700 million 5-year term loan effective January
6, 2020
927,990
Less: Cash used for funding the transactions above(including
proceeds from the £700 million term loan)
(2,151,920
)
Pro Forma Total Gross Assets(5)
$
16,529,274
(2) Reflects the acquisition of 30
facilities in the United Kingdom on January 8, 2020.
(3) Includes $41.7 million unfunded
amounts on ongoing development projects and $121.7 million unfunded
amounts on capital improvement projects and development projects
that have commenced rent.
(4) Adjustment to reflect our share of our
joint ventures' gross assets.
(5) Pro
forma total gross assets is total assets before accumulated
depreciation/amortization and assumes all real estate binding
commitments on new investments and unfunded amounts on development
deals and commenced capital improvement projects are fully funded
using cash on hand. We believe pro forma total gross assets is
useful to investors as it provides a more current view of our
portfolio and allows for a better understanding of our
concentration levels as our binding commitments close and our other
commitments are fully funded.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200206005527/en/
Tim Berryman Director – Investor Relations Medical Properties
Trust, Inc. (205) 969-3755 tberryman@medicalpropertiestrust.com
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