MPW - Earnings call transcript Q3 2017 | Medical Properties Trust, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and welcome to the Q3 2017 Medical Properties Trust Earnings Conference Call. [Operator Instructions].

As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Charles Lambert.

Charles Lambert

morning. Good Medical financial call results. the third discuss Trust XXXX quarter Properties to to conference our Welcome and Vice With Chairman, Executive company; President today and Hamner, me are Chief Officer Edward of Financial and Chief President Aldag, Jr., Steven Officer. Executive the

was release and morning the this X-K furnished Commission. and Exchange distributed Form with press Our on Securities

If our in www.medicalpropertiestrust.com Relations section. website not the a it copy, receive did at you is on available Investor

section. can a hosting today's webcast access in live same you we're Additionally, call, that of which

a company Exchange filed reports results events company's the from the During to call, may and company's and considered this meaning the this These certain differ other could Litigation by forward-looking those or for to with information the the forward-looking uncertainties to date projections only, materially unknown risks, course actual required future of being differ as will call. materially security Securities make XXXX. and duty the update Securities undertake known not this federal information. of underlying that we within provided Act Private from and laws, as statements those be of subject of statements except expressed may The a Reform factors forward-looking and that in today that and cause you the expressed Commission discussion to does the the statements events of financial refer such future statements. We is, and/or to factors any are results such other cause our

of GAAP Trust to release, our considered the measures not financial Reg that GAAP note the accordance certain in measures financial comparable measures, with be directly financial all measures. conference requirements. should has press during in call, comparable of Please G lieu non-GAAP we non-GAAP In and Properties addition, addition in most to Medical reconciled describe the which course in will

related measures reconciliations. refer the turn I directly Chief the call our comparable at our will over Aldag. and for website most You Ed can www.medicalpropertiestrust.com to now to also financial Officer, Executive

Edward Aldag

and you Charles, all today. you, of joining for us thank Thank

from everything seen planned, MPT. that rarer We the this it morning, exactly you have works you quarter through let is record you've know first, hit As release things will with even some was out quarter of at But our that seldom quarter as another but planned. press work minutes. you some a Steve for than the a all had better the of third few go highlights. in specifics me

had a able over on virtually have conjunction we transaction a $XXX successful than lower projected know, redeemed we We already rate issue you completed projected. to our cost. very were million us interest in with the X million dilutive at original interest soon bond X/X% As issue, billion $X.X close eliminating thereafter, $X.X bond Steward-IASIS a coupon, costs in carrying saving of year the per we guidance. with bond we In the

are provisions. our on to I cross want coverages coverages. lease master Moving and structure reiterate our enhanced greatly lease through that default to our portfolio

have guarantees often of corporate we enhancements Additionally, letters credit and through credit.

supplement, cross-defaulted our than reporting, them master XX% parent either are same-store or of on will As greater Xx. leased, remaining the The note you coverages have guarantees. facilities X% have of

Numerous for health at erosion was portfolio flat over coverage, in and reported essentially the performance declining EBITDAR QX XXXX. financial same-store For operators QX, X.Xx. volume care have

last and negative changes Our over operators their saw a slight quarter. the to mix operations and positive

peers. opposed been last coverage, historically EBITDARM we we of quarter, an reported by our as EBITDAR many have conservatively As coverage reported as reporting to

we X.Xx. decline and the important property properties. U.S. from sure X.Xx By we apples-to-apples So out comparison, very type, to think quarter coverage, EBITDARM our be X, have had a an same-store X to quarter European to it's just over break slight

coverage acute X.Xx was care same-store a again, for last on our the general EBITDARM for Xx in versus U.S., First, basis facilities quarter. the

acute in versus the a Xx almost was we quarter. decline here U.K., versus our seasonal is for X.Xx first the have in U.K. one where Germany, primarily the X.Xx And care for The first coverage was the For the X.Xx EBITDARM quarter. coverage EBITDARM X the facilities small hospital, for

Our and LTACH slightly from not We in LTACH to than same-store patient X.Xx The of effects of than represent stabilized total coverage to Europe. LTACHs X% X.X% any X.Xx. less EBITDARM the appears represents now total criteria increased coverage more LTACHs LTACHs no rules. have the X the our The from portfolio, do quarter-over-quarter of portfolio. have

portfolio of and IRF EBITDARM IRF Our strong in total U.S. was only X.X% portfolio coverage The in the The about portfolio. a U.S. well X.Xx. Europe. our continues U.S. represents perform to same-store

from Our perform suffered the resulted nursing well, the higher German rise to revenue. German continue labor has This rehab costs, have shortage. in offsetting but in facilities

MPT. Germany believes Our situation will The XXXX. same-store in X.Xx. is emerged operator to early loss from EBITDARM no this improve In in bankruptcy IRF resulting in Adeptus coverage October,

have X which currently well. We continue named of by an time explained process, on the along perform other Surgery with facilities our structure. in Adeptus X Adeptus Partners, MPT and our operated at MPT the Capital, to the operator hospitals and states. surgical of Surgery strong October, full. exceptionally Adeptus Healthcare, our day, the issues, no would X were bankruptcy resulting secured, our with Surgical testament issues. of deal enterprise rent Prime's be of news, of Partners, there end we hospitals, that a to when strength acquisition which owns, and was In completed one announced to XXX which markets is facilities tenants, National their of collection loss the the from was the investment the in U.S. throughout XX and across to Importantly, to their all paid Bain Last of scenario underwriting The created

of for News top the facilities Germany. rankings XXXX-XXXX MEDIAN & best Hospital X Kliniken's in placed World facilities List. Report XX High-Performing quality in

Association. German in Insurance rehabilitation One facilities Pension according of their cardiology ranked Germany to in #X facilities the

replacements. and caused on acute our interruptions to every community and throughout care some high-quality very We in we system investments. we and of primarily health health or America temporary positive European on plus look remained of over our disruption additional bullish markets our Likewise, be to exposure the Hospitals the European these to critical by to market. expand the past world. hospitals for and continue care to the continue believe quarters, X potential ACA very investments debates total to seek care be XX component percent have the in Clearly, these minus U.S. We seen remain bring out portfolio. our there a

the Department. have increased Asset Department in Underwriting Management Acquisitions and We our recently staffing

poised continued well are XXXX. for We growth in

detailed to results. Steve? the financial Steve Now I'll ask go over

Steven Hamner

are to financing reported the diluted real per million the Included of in for related that morning, and quarter majority Ed. we normalized of acquisition. costs are $X.X German FFO million, you, costs normalized FFO of Steward third the Thank $X.XX about costs of This acquisition share XXXX. estate taxes same closing of to the related $X.X transfer which and $X.X acquisition, billion of

affirmed redemption billion X% replaced annual highly cost, XXXX of than XX% increase proceeds since the years. we $XX estimate closed we recent this X rate about we XXXX immediately in estate adjusted Even $X.X We $XXX and notes we hospital compound borrowings Looking announcement, accretive in we expect of to XX%, to because is the this our year-to-date total borrowings. the from early with billion, the bringing approximately another every acquisition an real period continuing and normalized related during our fees offering. plus redemption ahead $X during million the X/X% guidance modestly year-end our has our have strongly redeemed With into quarter, XXXX over made course, that growth million estimate. with on with FFO. more our been financing to quarter, September accretive this fourth morning's And unsecured notes XXXX issue

the the share and billion result closer our $X.XX FFO range of XXXX our range XXXX expectations increasing unsecured in fall $X.XX are we full $X.XX. per acquisition. closing expect and as will $X.X by the between Accordingly, in September $X.X We notes normalized Steward between issuance that year of alignment billion of now a a of

of $X.XX XXXX X.XX expect FFO to per and continue share. between We normalized in

acquisitions As let me initiated last you. type XXXX dispositions, estimate JV quarter include estimate, possible not our we asset including any those update briefly so or described when possible we do sales,

that to use operating assets we the as we goals lease reduce that process venture is range investors. also interest single our to that and to certain underway Health, institutional well the sell Steward drive you, to EBITDA. X.Xx borrowings proceeds of described portfolios joint of assets to largest previously normalized hospitals leverage of first, long-term remind and less are selling. sales To some than to these in operator, the other have These there We our our follows, are are assets include and considering

to lower serve comparing independently X.Xx, peers; than We already to investors; care As finally, long-term cost this next, of particular to access be to develop report less to the we today, our our operator. of that are attractively long-term this believe to concentration will health will Negotiations year. exposure of assets to also REIT value have at capital. our demonstrate something with sophisticated we very any to continue institutional parties, are to reduce optimistic certain and progressing and we during

from the with future of and to which cost, the changes the we bankruptcy of sale certain go reinvestment any from I sell of in interest additional through simply obligations the of these than expense its the and proceeds. for that rental in FFO assumption them of with set reduction XXX% investment of just and details do to future. the normalized facilities possible course, income will the provides Our remind capital transactions, re-lease quarter, income court [indiscernible] of include for reorganization or that result include will again, you not estimates agreed yet other MPT. that confirmed lease along possible may, Late to impact the have Adeptus plan other not master

not that material will believe We to such transactions impact us. continue on any have

item important. this but and is small a very Finally, monetarily

even portfolio, the the be And the now only we'll provides our secured flexibility balance XXX% we is financial questions. prepaid debt on with unencumbered, which in so take to During that, quarter, our future. happy greater sheet Operator?

Operator

Instructions]. [Operator

Babin comes Drew Baird. with Robert from W. question first Your

Andrew Babin

operators I hope cost next ask, your year. turning maybe I items, been in conversations few be isolate next there operators the key happening could a business, was point year, you hoping that but some into sentiment obviously, there's might gives controls a your hoping with was on that point your hospital at going or in positive negative issues whether hospital side anything to it's that's some

Edward Aldag

Certainly.

our of were last of look the quarters. most operators the you interesting, over at portfolio, actually If up couple very across their revenues

fairly had shortages volumes the mixed of across mentioned industry in the as nursing can. labor was There in a some so additional information I quarter they prepared that So We had. portfolio, that some portfolio. exposure we our and the has behind as softening much report get the been entire remarks, we obviously shortages expense from the have that but possibly as

actually are look of seen utilization most operators at month in the If November, going into of an you our November. them increased where have

did have for think we optimistic I But they prepared a being the maybe where operators of most Now harsh than being. maybe about our last are year. flu see all more season XXXX we part,

Andrew Babin

operators assets And among in rural trends any portfolio? the look across and among urban and noticed terms your in geographic versus you those as of you are portfolio, the have

Edward Aldag

been categories. you can to no those the portfolio, things It's equally No. pretty X versus specific across mixed with tie

Andrew Babin

any of question. update or that Okay. terms the Obviously, operator that portfolio. that some And assets be last may there to in then large of Adeptus use capture overall space alternate that those? But relative just any aggressively more trying Is it's transition likely those kind expand might not released? it's at pie that's there whether in The MPW. to one

Steven Hamner

Yes.

But home-based expect sold. the those. majority released, and we a - them partners of market be that be with negotiations already orphan, a operator, will that most attract as kind identified necessarily truly and be those will can not will great There likely will that in So have released. to of handful they're characterized are potential in in fact, the be for underway

Operator

Your from Capital next RBC comes Carroll with Markets. question Michael

Michael Carroll

us provide to starting now? trends issues an reported Are or on those that the Steve, collection last quarter? Ed update guys you can Prime stabilize

Edward Aldag

They have stabilized.

We to we process, haven't their those, best last the further them of seen those. is greatly are on a as that fixing news what and seem in there good were no they increase handle and have deterioration stabilized. issues They quarter, reported saw but have the of we yet, certainly

Michael Carroll

coverage the gave Okay. ratio Can to you quarter? similar us update what on the last us ratio is, you

Edward Aldag

you But the like look Sure. just basis, don't this. give about unless you Mike, And Prime's the as special circumstances know, different cash for we there generally collections, are different EBITDARM out on cash if is operators coverages X.Xx. pure

Michael Carroll

then from it's and going that Okay, Ernest LTACH that to right ultimate seeing what's on plan how its and great. is the the now, space, for assets? impact And with those regard

Edward Aldag

of greatly you improved actually the look over they if quarters. So last couple

current on which If portfolio has continues time you conservative is that it next you - basis have not again, purely that continues the - to generate total portfolio quarter, an look portfolio we've we improved. exceptionally on basis. their what their total X over Their previous Xx numbers. at IRF LTACH in which is at alone, Their a discussed collections cash an hopefully, they their overall, just operate period, is that But cash, negative a to portfolio we'll that. well. method, to just on EBITDARM have overly based look or only announce if the a solution LTACH to believe able We in that solution quarters is. be And LTACH

Michael Carroll

with Okay. be a then it those or to is going property - type? regard will different transition going to LTACHs, LTACHs, to to able you And are keep those those to Ernest be have to

Edward Aldag

Yes.

I last quarters the repositioned. over X it's just we've one be will discussed think that the that

Michael Carroll

And field some rest us you comments that the on remind or us not portfolio? keep - Adeptus then give to can Steve, why your of Okay, great. maybe elected

Steven Hamner

to facilities that agreed we've sever? The

Michael Carroll

Correct.

Steven Hamner

Yes.

really of the with Dallas in being all orphans, don't minutes a of those are Adeptus I and market So markets they in those that virtually, fit or, and X that outliers Austin, few best. was that structure felt San Houston either the kind markets, ago, are the Antonio term used

part for to of those back because had most termed expect as we on that again, agreed, felt we orphans, as those, sell. I few we take early So earlier, to those we like I've alternatives, for and mentioned

Edward Aldag

the some with first the and type their to make somewhat and best you'll position third the they when their from we them we their plan to to acute tranche freestanding model formations as rooms was a emergency and industry, to as with Adeptus, second affiliations - re remember changed of our other the tranche with most original they that of to Mike, did have ask to tranche had back of - hospitals, those care of could. go part original and which

be to have they other - they agreed today, back, So that venture just getting they ones where pointed the operators again, joint it's The didn't. want is Steve as which to model their facilities. out, it's have we essentially, take that to a have those that with we home for

Operator

with Your KeyBanc Sadler next from comes question Capital Markets. Jordan

Jordan Sadler

here asset what little Can you terms in give transaction of and in the appetite in the side insight of care U.S. And the what market us in is? acute your curious also terms of I'm terms terms on a of today, just you're what in seeing of seeing bit you're pricing.

Edward Aldag

and U.S. in reporting So most X little which we've the out our it's opportunities been Europe. care where our targets acquisitions that of U.S. to we to acquisitions in be acute whack a bit good based in got same recent the hospital of We've on all both Europe distribution in and that continents in providers. is the in summer, between Jordan, the be done that We're been the like we've U.S. of would the most continue the

portfolio we very some U.S. early we're most be continue of the Europe, probably in will good part the opportunities XXXX in So of looking of focus at here in but have that properties the to

from this little seen the the the bit a summer, of should talking Steve I not remainder year. of less what to. I pressure whole difference in maybe The earlier, pricing. Oh, or lot don't pricing the that any we've for pricing, material on expect from a as better out we say, acquisitions and think, pointed of pricing, people we're

Jordan Sadler

Okay, And then maybe helpful. that's for Steve.

or the bond You've kind the as recently. individual as the had are regarding bond success tenant of in thoughts operator from curious investors exposure. some market agencies I'm well what

versus and may work more they the are, less. of terms down or a these exposures sensitivities geographic the maximum? you then they're what are on And if where want of thoughts Europe with diversification in the So U.S., comfortable that stand to thresholds on some to

Steven Hamner

XXXX Jordan. beginning, take Germany, first agencies our and the meant the did those going we in reverse had both investors Germany. supportive €XXX the when and So of I'll in to million diversification order, From been deal back our what has that very in

very to drive very want that, a we saw So the up while that's that level to for where long. positive. the a be issues, we been been to year, we With in concentration haven't overall respect Steward transaction concentration would when in corporate don't and earlier we clearly, range announced

not We than property continue or and being X%. any on to market, particular that internally less remains exposed to focus

to with of the of However, little as and I Steward one down reduce bit piece we it's concentration. prepared mentioned to Steward just selling XX%, of last at my we we're that's something absolutely goals earlier to year as And key and remarks, that a we'll roughly go that be reason that in to couple road announce a this to of reiterate, have have XXXX, said during the hopeful, can something still over quarters, able we've as again, think the do. we

high So to also come from goal next growing course see continue Steward, of over that the as a years, grow. to low exposure down trajectory to to the and that coming away with our is, by XXs of of couple mid-XXs, selling and down the virtue from keep into the concentration we

Jordan Sadler

Okay.

see sales something domestic or in that of is we terms may any expect we see in fair? initially, may So weeks or months venture joint coming the

Steven Hamner

race there And first. could that one with handicap active line which happens as be Steward very in kind both because I finish the wouldn't No. we're way a of targets. to to the it and Europe

Operator

from Next Okusanya Tayo question with comes Jefferies.

Omotayo Okusanya

of some the them. gets do you of things gave impacting over Do those was and the coverages risk about that thinking of guess I'm about Ed, abate in of bounce near-term? of see that coverages you're back? coverages curious kind just kind and all color, think out the of kind playing think worse? about it I factors kind Or do of you you how the impacted what those factors. of how some kind appreciate I you XQ, when these

Edward Aldag

is look a where the And Sure. flat. statistics the at positive flu into month relatively been that are was better and first the will we're basis, that presented in where we you going XXXX a subsided. as it's from if quarter-over-quarter at that today, XXXX. somewhat strong for you not optimistic then seeing clearly, basis, when slightly we had are The Again, we coverages if over look quarter November, Well, us know are the year-over-year that but as at will season they of exactly what volumes. downturns it thing second we that the don't be bring, the we look the

that and in will everybody the month that the take remember third Europe takes period has the Now August, off. an quarter the U.S. time lot include awful of positions in of which off

So curve the the about been it's But now. right flatness feel of softer we of good quarters. the always one overall,

Omotayo Okusanya

is the cap any JV Okay, higher that's But earnings? being very Steve creates helpful. that that. isn't there and And able at assuming I accretion. a gave up line you're that, of going I potential end reinvest this of color cap Again, any there risk of appreciate mean, and then actually proceeds to correct? lower kind rates I'm is that to at could second rate just risk being But necessarily of thinking that all, do transaction it curious, to dilutive the the transaction JV. the some around

Edward Aldag

Tayo, those is be overnight. Yes. of going reinvestment initially not because happen the proceeds will are Clearly, it it dilutive, to -

will some of So you're much be obviously, it. selling of when there the initial dilution portfolio, that

Omotayo Okusanya

the Adeptus the close there anything that up? then before while first and sold actually of were is will have be come a And to that that? be helpful. out are you removed Or there's that's bankruptcy me. holding that. lastly in market talk Okay, Adeptus, doing the in for I of Did you kind execute could execute going to that think to for from assets off, lease master been

Edward Aldag

No, through on bankruptcy that get We before absolutely is forward had to could correct. move that. we

Operator

with question next Your from Bank comes Sanabria Juan America. of

Unidentified Analyst

said And still issue? update This is integrity Kevin to the around I back I key had Prime. question, lawsuit? the the there agreement DOJ any just then also, a I kind [indiscernible] guess, corporate on on you is for of issue going guess, is Juan. there,

Edward Aldag

the very privy I'm moving the exact to position pursuing date. If certainly not their settlement not potential entities, issue between now positive and X parties they continue a probably familiar have negotiations a both other not about in any and are trial to with of with discovery, right reached until is their and feels to comfortable than trial Prime minds. it's certainly - XXXX. sometime go just won't happens some the with We late a that through exposure, in our be big agreements. dollar

Unidentified Analyst

has funding your Okay. of way U.S.? or And you're or capital in tax guess, changed secondly, U.S. then back regarding the reform. way that I around the acquisitions to in repatriating thinking the Europe

Steven Hamner

even a REIT, then regime. have and U.S. we could doesn't. impact No, same no under really today. our along as we're as by back those earnings Because covered would been back, bring as there always the tax the which today's treated we that be our are, European deduction, earnings, dividend And it so earnings

Operator

[Operator Instructions].

from comes question Rudnytsky Bank. next Vlad Your Deutsche from

Vlad Rudnytsky

coverage. two on I questions have just

quarter care So do expect same-store acute a since at pool any are the the you doesn't changed. lag X And to hurricanes quarter? metrics look on next from coming basis, these general has impact reported then

So in specifically the coverage year-over-year to maybe what talk can you drove decline X.X?

Steven Hamner

hurricanes. minimum We effects from the had very hurricanes. First, the on

make the the the take I sure going to I'm So names that hurricane. Harvey get Irma; one, right. It's Texas was first

Hurricane actually any learned the They of closed the facilities. lessons day. to back it We had opened up day next that the hurricane, significant at years from no While all ago. have Corpus X we the facility one in had Christi their seemed of X Ike floodings or

just in don't Irma They but the the mixed Florida, expect next in results facilities one, we very very, there. damage the might be well I'm that, had some any did second we were there. of roof one sorry, the we we again, a part the literally the care. had significant any. issues patient X down path was of question? or literally, X damage, some expect matter X to minimum that don't Hurricane disruption, days so facilities, in from minimum that minor of the Vlad, affected. some in what only And The But There And

Vlad Rudnytsky

I mean, of on the a about basically, in talk pool look specifics changed general coverage. declines acute year-over-year Doesn't has the the like care the same-store basis?

Edward Aldag

Sure. The in declines most that we've in more an even expense side reduction seen overall in volumes. same saw the But on that the revenue over time the had tenants period. the reduction of been with slight increase and their volumes, slightly our

even of getting most the as we we some the third are coming side. look to expense where positive a the the it is and and - of as maybe like preliminary looks what going from some quarter again, in look be But as results the our we're fourth are So at indications decline to slightly to going uptick here, into stabilized facilities. we quarter

quite of are with stable we seen are we've hopeful comfortable the and the So of decline the aspects worst it. that

Operator

at I'm back to like turn Ed showing the Aldag. I would no further time. conference to now questions this

Edward Aldag

Again, We appreciate in your greatly you all listening appreciate Operator. Thank questions. of we you, today.

forward us. you we If November. to to And additional questions, hesitate look call in at seeing you of NAREIT have don't many any please

very you thank So much.

Operator

wonderful have a and and Thank Ladies for today's participation, gentlemen, day. concludes your this conference. you

all You may disconnect.

Medical Properties Trust (MPW) 2 Nov 172017 Q3 Earnings call transcript