Edward Aldag, Jr. - Chairman, President and CEO Steven Hamner - EVP and CFO Charles Lambert - Managing Director

Tayo Okusanya - Jefferies Michael Mueller - JPMorgan Rob Mains - Stifel Nicolaus

Good day ladies and gentlemen. And welcome to the Quarter Three 2013 Medical Properties Trust Earnings Conference Call. My name is Mathew and I’ll be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions). As a reminder, this call is being recorded for replay purposes. And now I would like to turn [Technical Difficulty] Lambert, Managing Director. Please proceed sir.

Good morning. Welcome to the Medical Properties Trust conference call to discuss our third quarter 2013 financial results. With me today are Edward K. Aldag, Jr., Chairman, President and Chief Executive Officer of the company; and Steven Hamner, Executive Vice President and Chief Financial Officer. Our press release was distributed this morning and furnished on Form 8-K with the Securities and Exchange Commission. If you did not receive a copy, it is available on our website at www.medicalpropertiestrust.com in the Investor Relations section. Additionally, we are hosting a live webcast of today’s call, which you can access in that same section. During the course of this call we will make projections and certain other statements that may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause our financial results and future events to differ materially from those expressed in or underlying such forward-looking statements. We refer you to the company’s report filed with the Securities and Exchange Commission for discussion of the factors that could cause the company’s actual results or future events to differ materially from those expressed in this call. The information being provided today is as of this date only and except as required by Federal Securities Laws, the company does not undertake a duty to update any such information. In addition, during the course of the conference call we will describe certain non-GAAP financial measures, which should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release, Medical Properties Trust has reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. You can also refer to our website at www.medicalpropertiestrust.com for the most directly comparable financial measures and related reconciliations. I will now turn the call over to our Chief Executive Officer, Ed Aldag. Edward Aldag, Jr.: Thank you Charles and thank all of you for joining us today for the Medical Properties Trust third quarter earnings call. Once again we are now seeing a tremendous quarter for our investors. During this quarter we either announced definitive documents signed or the actual closing or more than $500 million of high quality hospitals across the U.S. and in Germany. This amount when added to what we have previously done totals approximately $650 million in acquisitions for the year. This is a 162% of our original guidance at the beginning of the year. Our two largest investments during the third quarter were two portfolio transactions. Three IASIS hospitals and 11 RHM facilities in Germany. The three IASIS facilities have solid historical financial performance, they are located in Mesa Arizona, West Monroe, Louisiana and Port Arthur, Texas. All three facilities entered into our portfolio with the strong EBITDAR coverage’s and very good physical real estate assets. This portfolio was marketed through a highly competitive process. Our teams in that knowledge of a hospital market played an important role in our winning this bid. The high degree of interest from others in these hospitals continues to show the unrecognized value in the overall MPT portfolio. The 11 rehabilitation facilities in Germany are operated by the German operator RHM. RHM is an experienced operator with the long positive track record. The rehab market in Germany is currently very fragmented with RHM being the 11th largest operators. We expect that MPT will be a part of RHMs further growth in Germany. This particular acquisition helps to diversify the MPT portfolio and further strengthen in already strong portfolio. Like IASIS transaction the RHM transaction was heavily marketed and received broad interest. Again our experience and focus were factors here. RHM wondered a partner that understood healthcare. On the acquisitions pipeline front, we continue to have good prospects in both the U.S. and in Western Europe. As we previously announced, we expected our future acquisition will be heavily weighted towards the U.S. acute care hospital markets. We will provide 2014 guidance either late in the fourth quarter of this year or early in the first quarter of next year. In addition to the two facilities, which start to construction this year are Ernest Health acquired an up and running hospital in Corpus Christie using MPT financing. To-date, three of our first choice ERs have begun construction and are expected to be operational in 2014. It is possible that we will have a couple of more acquisition closings this year, but most likely they will be in the first quarter of 2014. Turning to our existing portfolio, the acute care hospitals continue to perform on a whole very well. The EBITDAR lease coverage for the trailing 12 month period ending August 31, 2013 compared to the same 12 month last year increased about 35 basis points to almost 5.5 times. This calculation includes all hospitals that have been in our portfolio for at least 12 months. Our inpatient rehabilitation hospitals were essentially flat with coverage of almost three times. The OpEx were down slightly to just under two times coverage from just over two times coverage previously. At this time, I'll ask Steve go over the specific financial performance of the quarter. Steve?

Thank you Ed. We filed our press release this morning describing our operating results. So I'm not going to repeat all of that here. But I do want to provide some context as we and our investors consider what our results mean for the longer term. Our normalized FFO at $0.25 per share was right in line with our expectations. And that includes the impact of more than $300 million in debt issuances and equity issuances to fund recent acquisitions in advance of the closing. This new long-term capital funded the three IASIS hospitals that we acquired for $283 million on September 26. We also raised approximately $270 million that will fund the 11 RHM facilities that we have under contract for approximately $248 million. That dollar value is based on total cost of €184 million. And by the way about $12 million of that total represents German transfer taxes, which upon closing will be reflected in accordance with GAAP as an acquisition expense. Our investments in our tenant operators continue to generate strong results. Year-to-date through September 30, we have recognized $10.5 million from our Ernest investment. Now that’s over and above the $26 million we have recognized in rent and mortgage interest. Since our acquisition of Ernest almost two years ago their management team has grown the portfolio from 16 to 19 hospitals and is in the process of opening two additional hospitals. As this growth continues and the new facilities ramp up operations we expect our earnings from Ernest operations to begin to exceed the contractual 15% return that we have been recognizing since the acquisition. And remember that for each new Ernest hospital in addition to the very attractive and long-term rental revenues MPT earned at least 80% of operating income and makes very little most of the time no incremental investment in order to achieve those earnings. In addition to income from our Ernest investments we have reported a little more than $2.5 million from our approximately $10 million in other investments in tenant operations. We think this annualized 30% plus return is a fair guide for at least to next few quarters. : We presently have a significant amount of liquidity due impart to the roughly $270 million in euro denominated seven year bond that we closed in early October. The euro denomination by the way is €200 million translating to about $270 million equivalent. Those funds are now in escrow pending use for the anticipated fourth quarter closing of the RHM transaction in Germany. Pro forma for that closing, we expect our leverage ratio to be less than 45% which is measured as net debt and depreciated assets. Our net debt to EBITDA ratio again pro forma for closing RHM is expected to approximate 5.2 times. Subsequent to that anticipated closing, we would have total liquidity of about $350 million including $315 million available under our $400 million revolving credit facility. So we expect to go into 2014 with a very strong balance sheet with limited near-term maturities and substantial cash and availability to continue our highly accretive growth, while maintain our prudent leverage in credit policies. The press release this morning included our estimate of between $0.98 and $1 per share for all of 2013. The primary differences in our assumptions between now and last quarter’s estimate of a late third quarter closing of our [ACEs], the success in completing the agreements to acquire the German assets and our decision to go ahead and raise euro denominated bonds in advance of closing RHM. The market by the way in Europe was very receptive to the MPT story and credit profile. And that is reflected in the outstanding execution of that offer. As we look into 2014, we expect the current portfolio assuming a fourth quarter closing on RHM will generate a run rate normalized FFO of $1.07 to $1.11 per diluted share. That’s a built in annual increase of approximately 10%. And as a reminder, each acquisition we make generate immediate and significant per share accretion. So we expect those 2014 results to be even better. As usual these estimates do not include the effects if any of debt refinancing cost, real estate operating cost, interest rate swaps, write-offs of straight line rents, property sales, foreign currency gains and losses or other non-recurring or unplanned transactions. In addition this estimate will change if market interest rates change, debt is refinanced, 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. With that we are happy to take any questions and I will turn the call back to the operator.

Thank you. (Operator Instructions). And your first question comes from the line of Tayo Okusanya of Jefferies. Please proceed. Tayo Okusanya - Jefferies: Hi. Good morning, everyone. Edward Aldag, Jr.: Good morning, Tayo. Tayo Okusanya - Jefferies: Yeah. So you guys had an amazing year just when it comes to acquisitions and the run rate looks great kind of heading into ‘14. Steve you made interesting comments early about because your dues are accretive you probably expect ‘14 to end up even better than the run rate. But when I look at ‘13, we kind of started off with $1.10 guidance wise, we’ve had strong deals, the number at the end of the year kind of ended up closer to what $1. What changes in ‘14 that kind of get back earnings trajectory up in ‘14 versus some of what happened in ‘13 where we systematically have to lower the numbers?

Well, the changes in the estimates going through ‘13 as we discussed I think pretty extensively on the last quarter’s call were primarily related almost exclusively. Well, there were three things. There was the timing of the acquisitions which in general although the acquisition volume has been extremely good for us, the timing has been back-end weighted. Obviously the very disruptive capital market conditions particularly started starting early in the summer increased our and everyone’s cost of capital. And then we made some property sales and we discontinued the accrual of the Monroe ramp. So those will make up 80% or 90% of the changes and estimates going into ‘13 versus coming out of ‘13. And certainly there are lots of unforeseen things that can happen in ‘14, I have just been through a long, long re-list of them. But our pipeline is extremely strong. We have several very, very large potential acquisitions that we're working. And so we remained very optimistic about going into 2014. And again remember, the run rate that we just gave you that if we do nothing, that's basically on locked in if we do nothing. We don't need additional capital to generate that run rate we don't need additional acquisitions to generate that run rate. And so we are hopeful that the changes in our estimates going forward would be to recognize acquisitions that we make at very accretive returns. Tayo Okusanya – Jefferies: Got it. That's very helpful. And then from the acquisition perspective kind of you are moving back towards domestic US general acute care, because this a little bit of our cap rate. Is that world also getting very aggressive where cap rates are now in immediate for the market or are we kind of back to [broadly] to see kind of new deals at 9%, 9.5%, 10% cap rates. Edward Aldag, Jr.: Yeah Tayo, we are not moving back, we have always been here. I’ve said over the last few earnings calls, we get out of the whack in our portfolio mix, but going all the way back to the Earnest transaction and then again with some of this German transaction. But we've always wanted to be heavily weighted towards the acute care. So we haven't lost our focus there. And coming back to it, it's just when you look at the pipeline, it is heavily weighted towards the US acute care hospital sector. And I'll point that out, just because we made the recent German acquisition. The cap rates still are a fairly widespread. They are in the mid 8s all the way up to 11. If you look at an average of what the pipeline is right now, it’s in the 9 plus range for general acute care hospitals. Tayo Okusanya - Jefferies: That’s very helpful. And then just one more if you could please endorse me. Could you just walk us through the economics of the First Choice deals again, how they work. Are you providing the construction financing or you ultimately pick them out or…? Edward Aldag, Jr.: Yeah. We are in fact doing that, Tayo. It’s difficult of most of the development type of transactions we do. We provide the construction financing during which time the lease rate accrues. And at completion of construction that accrued construction period lease rolls into the lease-base. And then we earn obviously the escalated lease rates which in the case of First Choice are very strong. And they are way ahead of where we thought they would with respect to putting this money to work. And if we were to approve all of the properties that we are now looking at with them then we would be depleted in our $100 million commitment to them. Remember when we entered that commitment we thought it was about 3.5 year build out and if we reassess that today I am sure it will be much shorter than that 3.5 year. Tayo Okusanya - Jefferies: Got it. Okay. That’s very helpful. Thank you so much. Edward Aldag, Jr.: Thank you, Tayo.

Thank you for your question. Your next question comes from the line of Michael Mueller of JPMorgan. Please proceed. Michael Mueller - JPMorgan: Hi. Just few questions here. First of all, do you have any more specific timing on Germany closing? Edward Aldag, Jr.: Yeah Mike, it should be fairly eminent as Steve pointed out in his prepared statements earlier. We potentially closed everything in Escrow. We’re waiting on regulatory approval that’s basically a seven step process and most of them are through the six step process. It could be within the next couple of weeks or could be within the next 30 days. Michael Mueller - JPMorgan: Got it. Okay, okay. I mean is the right way to look at, it looks like your run rate guidance before this quarter was I think 106 to 110 and else 107 to 111, it looks like the only real large moving part that wasn’t in last guidance was Germany. I mean is that the right way to think about that that this transaction is fully funded on a permanent basis at about a penny?

No, that's not the way to look at that at all. Michael Mueller - JPMorgan: Okay.

I mean obviously three months down the road, we've got three months better visibility into 2014 and so we continue to refine and adjust as necessary, there is nothing more to look in that. Michael Mueller - JPMorgan: Okay. Was there any notable offset to that, because if Germany in future winning more than few cents or something is there any interesting offset? Edward Aldag, Jr.: Keep in mind Michael, we give you our estimates, we are not necessarily, we are including what we are highly confident in achieving and though, yeah. Michael Mueller - JPMorgan: Okay. And then one or two other ones here. Just in terms of underwriting or -- can you kind of walk through kind of how you thought about underwriting this transaction. I mean is that a market you looked at for some time and then when the books came out, you had already done the due diligence or the books came out then you kind of started looking at it, can you just tell us about the process? Edward Aldag, Jr.: Are you talking about the one in Germany? Michael Mueller - JPMorgan: Yes. Edward Aldag, Jr.: Yeah, absolutely, Mike, we have been looking at doing something cross-border literally since the company was started 10 years ago. We found a lot of opportunities going all way back many years to opportunities in Australia, some in Latin America and even some in Asia. We’ve decided on Western Europe for a number of reasons. And so literally for the past three plus years, we’ve been exploring learning and exploring those particular markets very hard. So even before this particular opportunity came up, we were very excited about the German healthcare market in particular. This particular opportunity came up to us little more than a year ago. We spent the better part of the year looking detail into this particular portfolio, this particular market within Germany and in the submarkets with the local communities within market where each of these facilities are located. We reviewed in great detail with our own team and then to, since we are making a big step cross-border we decided to have that confirmed. We had an outside firm with which then spend couple of months doing their own analysis and came to the same conclusions that we did. So we spent a lot of time reviewing the markets before this opportunity and we spent a lot of time in detail in reviewing this particular transaction in these particular markets once it became available to us literally to the tune of right at a year in this particular situation. Michael Mueller - JPMorgan: Okay. Thanks.

Your next question comes from the line of Rob Mains of Stifel. Please proceed. Rob Mains - Stifel Nicolaus: One follow-up to that question. Since this is a different country than the U.S., what was the bidding process like, were there other entities I assume not REITs because it sounds like they have REITs in Germany. So like who are the interested parties when these sorts of assets become available? Edward Aldag, Jr.: There were other opportunity funds, real estate opportunity basic funds in the U.S. and there were a large number of sovereign wealth funds located in places like the Middle East, a lot of interest in the properties, no one with the healthcare experience like we had and the ability that they sell to grow with the company in their acquisition mode. Rob Mains - Stifel Nicolaus: And then could you just give us an update on the [Emeris] emergency room developments kind of how the economics is shaking out with those? Edward Aldag, Jr.: They are doing outstanding Rob. They are so far ahead of where we thought they would be. It’s truly been a phenomenal investment. As you know we don’t give specifics on individual properties for what the coverages are, but these are way ahead of where we thought they would be. Rob Mains - Stifel Nicolaus: Okay, great. Thank you very much.

Your next question comes from the line of (inaudible) Bank of America. Your line is open. Please proceed.

Just a couple questions for me. On the coverage levels and I may have missed this, do you have sort of the exact numbers that you have given previously for the three different buckets?

I did not give the specifics, but we will get those posted on the website. They are very close to the numbers that I did give though.

And on the guidance, the run rate number, it seems like some of your sort of previous answer that you had included the German acquisition and I guess you offset in finances given you are highly confident executing that at the second quarter. Is there anything else that you are highly confident on with the revised guidance that was sort of up a penny?

No, the guidance we gave this morning is run rate guidance based on what you see, what we have, what the capital structure is right now without anticipation of any new capital transactions or further acquisition.

Okay. And you mentioned one of these maturities in 2014 having option to sort of repurchase the asset, what's your expectation, what do you think that they will execute that purchase option on that $2 million in rent on an annualized basis?

Yeah, we probably wouldn't speculate on a call as to what we think is going to happen. The reason that bring that up is again just to confirm that we really, we don't have any lease maturities coming due. Is it possible? Of course that this operator could elect to repurchase, in which case we will make a very strong profit on that purchase and redeploy the capital. But the handicap, whether they will simply renew or repurchase that would be hard for us to do.

Thanks guys.

I would now like to turn the call over to Mr. Ed Aldag for closing remarks. Edward Aldag, Jr.: Thank you, Matthew. We certainly appreciate all of your interest today. As always, if you have any questions, don't hesitate to call my call myself, Steve or Charles. Thank you very much.

Thank you for joining today’s conference. Ladies and gentlemen, this concludes the presentation. You may now disconnect. Have a very good day.