First Quarter Per Share Net Income of $0.15
and Normalized FFO of $0.37
Completes $2.0 Billion Circle/BMI
Acquisition Marking the Largest Transaction in Company’s
History;
$1.8 Billion in Liquidity with No Near-Term
Debt Maturities; Collected 96% of April Rent
Medical Properties Trust, Inc. (the “Company” or “MPT”) (NYSE:
MPW) today announced financial and operating results for the first
quarter ended March 31, 2020 and recent highlights.
“MPT’s U.S. and international operators are playing crucially
important roles in the global fight against COVID-19, and we are
extraordinarily grateful for the work their employees are doing on
the frontlines to care for patients,” said Edward K. Aldag, Jr.,
MPT’s Chairman, President and Chief Executive Officer. “Our tenants
represent some of the best capitalized and most profitable
operators in the hospital industry – in the U.S. and globally. We
are in constant contact with our largest operators during this
pandemic, and based on the financial information they have provided
us, we and they feel good about our continued receipt of rental
payments. In April we received 96% of total rent and expect that
trend to continue. ”
Mr. Aldag continued, “MPT is in a strong position with
approximately $500 million of cash and an undrawn $1.3 billion
revolving credit facility. We entered the first quarter by
completing our largest single transaction to date, the $2.0 billion
acquisition of 30 UK hospitals in early January. Before the
pandemic, we were working on a tremendous set of opportunities that
we expected to complete in 2020. Today, not only do we continue to
see those opportunities, albeit possibly delayed somewhat, but we
have been presented with a number of additional promising
opportunities. We remain very bullish on both near and longer-term
opportunities for MPT to continue executing its highly accretive
acquisition strategies.”
FIRST QUARTER AND RECENT HIGHLIGHTS
- Per share net income of $0.15 and Normalized Funds from
Operations (“NFFO”) of $0.37 in the first quarter, both on a per
diluted share basis;
- Previously announced completion of the acquisition of 30 acute
care hospitals located throughout the United Kingdom and now
operated by Circle Health (“Circle”) for a purchase price of
approximately $2.0 billion (£1.5 billion);
- Commenced rent on Idaho Falls Community Hospital, an 88-bed
acute care hospital development;
- Entered into agreements with Ernest Health to provide $47.9
million in funding for the development of a 50-bed freestanding
inpatient rehabilitation hospital in Bakersfield, California that
is expected to be fully operational in the third quarter of
2021;
- Previously announced completion of a £700 million unsecured
term loan in early January with proceeds used to partially fund the
Circle/BMI transaction;
- Sold 8.3 million common shares year-to-date through the
Company’s “at-the-market” program at an average price of $19.99 for
net proceeds of approximately $164 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 NFFO, all on a basis
comparable to 2019 results, and a reconciliation of pro forma total
gross assets to total assets.
PORTFOLIO UPDATE
MPT completed the acquisition of the 30-hospital BMI transaction
and commenced recognition of rental income in early January based
on the pre-acquisition lease terms. Upon the U.K.’s Competition and
Markets Authority’s recent approval of the post-acquisition lease
terms, including a higher GAAP lease rate, MPT will begin
recognizing rental income at the new rate; had this higher rate
been effective for the entirety of the first quarter, NFFO would
have been higher by approximately $0.024 per diluted share.
In response to conditions created by the pandemic, MPT has
offered to donate to a local municipality the real estate related
to a general acute care hospital that was closed by the
operator/lessee during 2019. The carrying amount of this real
estate was approximately $9.1 million, which is reflected in first
quarter net income as an impairment charge.
The Company has pro forma total gross assets of approximately
$16.5 billion, including $13.3 billion in general acute care
hospitals, $1.8 billion in inpatient rehabilitation hospitals, and
$0.3 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.
OPERATING RESULTS AND OUTLOOK
Net income for the first quarter of 2020 was $81.0 million (or
$0.15 per diluted share), compared to $75.8 million ($0.20 per
diluted share) in the first quarter of 2019.
NFFO for the first quarter of 2020 was $191.2 million (or $0.37
per diluted share), compared to $117.8 million ($0.31 per diluted
share) in the first quarter of 2019.
The Company reaffirms its estimated annualized NFFO run rate
range including $1.14 to $1.17 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. Moreover, these estimates
do not provide for the impact on MPT or its tenants and borrowers
or on local and national governments worldwide of the ongoing
global COVID-19 pandemic. 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.
CONFERENCE CALL AND WEBCAST
The Company has scheduled a conference call and webcast for
Thursday, April 30, 2020 at 11:00 a.m. Eastern Time to present the
Company’s financial and operating results for the quarter ended
March 31, 2020. 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 7887848. 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 14, 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 7887848.
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.
This press release includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements can generally be identified by
the use of forward-looking words such as “may,” “will,” “would,”
“could,” “expect,” “intend,” “plan,” “estimate,” “target,”
“anticipate,” “believe,” “objectives,” “outlook,” “guidance” or
other similar words, and include statements regarding our
strategies, objectives, future expansion and development
activities, and expected financial performance. Forward-looking
statements involve known and unknown risks and uncertainties that
may cause our actual results or future events to differ materially
from those expressed in or underlying such forward-looking
statements, including, but not limited to: (i) the economic,
political and social impact of, and uncertainty relating to, the
COVID-19 pandemic, including governmental assistance to hospitals
and healthcare providers, including certain of our tenants; (ii)
the ability of our tenants, operators and borrowers to satisfy
their obligations under their respective contractual arrangements
with us, especially as a result of the adverse economic impact of
the COVID-19 pandemic, and government regulation of hospitals and
healthcare providers in connection with same, such as mandatory
deferrals of non-critical surgeries and intake of COVID-19 patients
(as further detailed in our Current Report on Form 8-K filed with
the SEC on April 8, 2020); (iii) our expectations regarding annual
run-rate net income and NFFO per share; (iv) our success in
implementing our business strategy and our ability to identify,
underwrite, finance, consummate and integrate acquisitions and
investments; (v) the nature and extent of our current and future
competition; (vi) macroeconomic conditions, such as a disruption of
or lack of access to the capital markets; (vii) our ability to
obtain debt financing on attractive terms or at all, which may
adversely impact our ability to pursue acquisition and development
opportunities and pay down, refinance, restructure or extend our
indebtedness as it becomes due; (viii) increases in our borrowing
costs as a result of changes in interest rates and other factors,
including the potential phasing out of LIBOR after 2021; (ix)
international, national and local economic, real estate and other
market conditions, which may negatively impact, among other things,
the financial condition of our tenants, lenders and institutions
that hold our cash balances, and may expose us to increased risks
of default by these parties; (x) factors affecting the real estate
industry generally or the healthcare real estate industry in
particular; (xi) our ability to maintain our status as a REIT for
federal and state income tax purposes; (xii) federal and state
healthcare and other regulatory requirements, as well as those in
the foreign jurisdictions where we own properties; (xiii) the value
of our real estate assets, which may limit our ability to dispose
of assets at attractive prices or obtain or maintain equity or debt
financing secured by our properties or on an unsecured basis; (xiv)
the ability of our tenants and operators to comply with applicable
laws, rules and regulations in the operation of the our properties,
to deliver high-quality services, to attract and retain qualified
personnel and to attract residents and patients; and (xv) potential
environmental contingencies and other liabilities.
The risks described above are not exhaustive and additional
factors could adversely affect our business and financial
performance, including the risk factors discussed under the section
captioned “Risk Factors” in our Annual Report on Form 10-K for the
year ended December 31, 2019. Forward-looking statements are
inherently uncertain and actual performance or outcomes may vary
materially from any forward-looking statements and the assumptions
on which those statements are based. Readers are cautioned to not
place undue reliance on forward-looking statements as predictions
of future events. We disclaim any responsibility to update such
forward-looking statements, which speak only as of the date on
which they were made.
MEDICAL PROPERTIES TRUST, INC. AND
SUBSIDIARIES Consolidated Balance Sheets
(Amounts in
thousands, except for per share data)
March 31, 2020
December 31, 2019
Assets
(Unaudited)
(A)
Real estate assets Land, buildings and improvements, intangible
lease assets, and other
$
9,933,444
$
8,102,754
Investment in financing leases
2,068,166
2,060,302
Mortgage loans
1,275,543
1,275,022
Gross investment in real estate assets
13,277,153
11,438,078
Accumulated depreciation and amortization
(627,467
)
(570,042
)
Net investment in real estate assets
12,649,686
10,868,036
Cash and cash equivalents
500,213
1,462,286
Interest and rent receivables
38,768
31,357
Straight-line rent receivables
355,424
334,231
Equity investments
834,430
926,990
Other loans
546,691
544,832
Other assets
312,875
299,599
Total Assets
$
15,238,087
$
14,467,331
Liabilities and Equity Liabilities Debt, net
$
7,684,293
$
7,023,679
Accounts payable and accrued expenses
428,136
291,489
Deferred revenue
24,001
16,098
Obligations to tenants and other lease liabilities
119,147
107,911
Total Liabilities
8,255,577
7,439,177
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 - 522,435 shares at March 31, 2020 and 517,522
shares at December 31, 2019
522
518
Additional paid-in capital
7,079,913
7,008,199
Retained earnings
14,025
83,012
Accumulated other comprehensive loss
(111,280
)
(62,905
)
Treasury shares, at cost
(777
)
(777
)
Total Medical Properties Trust, Inc. Stockholders' Equity
6,982,403
7,028,047
Non-controlling interests
107
107
Total Equity
6,982,510
7,028,154
Total Liabilities and Equity
$
15,238,087
$
14,467,331
(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
March 31, 2020
March 31, 2019
Revenues Rent billed
$
171,767
$
108,598
Straight-line rent
31,421
20,651
Income from financing leases
52,436
17,280
Interest and other income
38,508
33,925
Total revenues
294,132
180,454
Expenses Interest
80,899
50,551
Real estate depreciation and amortization
60,921
33,352
Property-related
5,572
3,066
General and administrative
33,385
23,451
Total expenses
180,777
110,420
Other income (expense) Gain on sale of real estate
1,325
-
Real estate impairment charges
(19,006
)
-
Earnings from equity interests
4,079
3,720
Unutilized financing fees
(611
)
-
Other (including mark-to-market adjustments on equity securities)
(13,975
)
204
Total other (expense) income
(28,188
)
3,924
Income before income tax
85,167
73,958
Income tax (expense) benefit
(4,010
)
2,333
Net income
81,157
76,291
Net income attributable to non-controlling interests
(165
)
(469
)
Net income attributable to MPT common stockholders
$
80,992
$
75,822
Earnings per common share - basic and diluted:
Net income attributable to MPT common stockholders
$
0.15
$
0.20
Weighted average shares outstanding - basic
521,076
380,551
Weighted average shares outstanding - diluted
522,179
381,675
Dividends declared per common share
$
0.27
$
0.25
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
March 31, 2020
March 31, 2019
FFO information: Net income attributable to MPT
common stockholders
$
80,992
$
75,822
Participating securities' share in earnings
(464
)
(476
)
Net income, less participating securities' share in earnings
$
80,528
$
75,346
Depreciation and amortization
70,502
39,854
Gain on sale of real estate
(1,325
)
-
Real estate impairment charges
19,006
-
Funds from operations
$
168,711
$
115,200
Write-off of straight-line rent and other, net of tax
7,717
2,596
Non-cash fair value adjustments
14,195
-
Unutilized financing fees
611
-
Normalized funds from operations
$
191,234
$
117,796
Share-based compensation
10,036
6,715
Debt costs amortization
3,409
2,067
Straight-line rent revenue and other
(49,614
)
(28,050
)
Adjusted funds from operations
$
155,065
$
98,528
Per diluted share data: Net income,
less participating securities' share in earnings
$
0.15
$
0.20
Depreciation and amortization
0.13
0.10
Gain on sale of real estate
-
-
Real estate impairment charges
0.04
-
Funds from operations
$
0.32
$
0.30
Write-off of straight-line rent and other, net of tax
0.02
0.01
Non-cash fair value adjustments
0.03
-
Unutilized financing fees
-
-
Normalized funds from operations
$
0.37
$
0.31
Share-based compensation
0.02
0.02
Debt costs amortization
-
0.01
Straight-line rent revenue and other
(0.09
)
(0.08
)
Adjusted funds from operations
$
0.30
$
0.26
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 results of operations 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
$
1.14
$
1.17
Participating securities' share in earnings
-
-
Net income, less participating securities' share in earnings
$
1.14
$
1.17
Depreciation and amortization
0.51
0.51
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)
March 31, 2020
Total Assets
$
15,238,087
Add: Unfunded amounts on development deals and commenced capital
improvement projects(2)
134,373
Accumulated depreciation and amortization
627,467
Incremental gross assets of our joint ventures(3)
633,926
Less: Cash used for funding the transactions above
(134,373
)
Pro Forma Total Gross Assets(4)
$
16,499,480
(2) Includes $20.6
million unfunded amounts on ongoing development projects and $113.8
million unfunded amounts on capital improvement projects and
development projects that have commenced rent.
(3) Adjustment to reflect our share of our joint ventures' gross
assets.
(4) 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/20200429005948/en/
Tim Berryman Director – Investor Relations Medical Properties
Trust, Inc. (205) 969-3755 tberryman@medicalpropertiestrust.com
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