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Medical Properties Trust, Inc. Reports Second Quarter Results

August 2, 2018

BIRMINGHAM, Ala.--(BUSINESS WIRE)--Aug 2, 2018--Medical Properties Trust, Inc. (the “Company” or “MPT”) (NYSE: MPW) today announced financial and operating results for the second quarter ended June 30, 2018.

The quarter was highlighted by MPT’s outstanding execution of its capital access and recycling strategies that included the previously disclosed €1.64 billion joint venture agreement with affiliates of Primonial Group and the highly profitable $175 million sale of its interest in Ernest Health, Inc. (“Ernest”). In addition, the Company reduced its investment in LTACH facilities by selling three Vibra Healthcare (“Vibra”) hospitals, generating $53 million in cash and a gain on sale of $24 million. When all these transactions have closed, which subject to certain conditions is expected during the third quarter, expected cash proceeds will be approximately $1.5 billion.

“These transactions demonstrate the significant value that exists across our portfolio,” said Edward K. Aldag, Jr., MPT’s Chairman, President and Chief Executive Officer. “The cash expected at closing will be used for accretive acquisitions while simultaneously reducing our net leverage to a sector-leading level,” added Aldag.

Healthcare Europa, the leading information source for private healthcare services in Europe, described the joint venture transaction as “a real coup for MPT, which has pioneered the hospital property market in Germany, Spain and Italy.”

SECOND QUARTER AND RECENT HIGHLIGHTS

Net income of $0.30 and Normalized Funds from Operations (“NFFO”) of $0.36 in the second quarter both on a per diluted share basis; Provided new data points for MPT’s net asset value with the price discovery of a 6.0% cap rate for rents from German rehabilitation hospitals, the $175 million sale of equity investment in Ernest and the highly profitable sale of three Vibra LTACH’s; Established a master lease with Dignity Health (“Dignity”), an investment grade-rated, not-for-profit health system, in June for eight Adeptus Health (“Adeptus”) facilities in Arizona with the same economic terms as the previous Adeptus master lease; Signed definitive agreements to purchase four IRFs in Germany for €23.0 million to be master leased to Median; Agreed to develop and lease the first rehabilitation hospital unit in the U.K. for £16.9 million (approximately $22.3 million) to allow for a 120-bed unit within MPT’s Circle Birmingham hospital; Sold three LTACH facilities back to Vibra for $73.1 million resulting in a $24.2 million gain on the sale of real estate and an aggregate 12.8% unlevered IRR; Previously announced transaction involving the sale of equity investment in Ernest to One Equity Partners for expected cash proceeds of $175 million to MPT; Previously announced joint venture with Primonial Group in June to own 71 German post-acute hospitals valued at €1.64 billion to result in a gain of approximately €500 million and expected cash proceeds to MPT of approximately €1.14 billion.

Aldag commented on the Company’s growth prospects following the announcement of second quarter results, “MPT is the world’s leading specialist in hospital real estate and possesses unparalleled hospital expertise. Our reputation for helping hospital operators achieve their goals now spans many countries and this dominant leadership has produced a robust pipeline.”

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 2017 results. In addition, a reconciliation of pro forma total gross assets to total assets is included in the financial tables accompanying this press release.

PORTFOLIO UPDATE

In the second quarter, MPT added Dignity to its portfolio of hospital operators following the addition of other investment grade-rated, not-for-profit operators, Ochsner Clinic Foundation and UCHealth, in 2017. Headquartered in San Francisco, Dignity is the fifth largest health system in the United States. The company currently operates 39 acute care facilities and has 8,400 acute care beds.

Aldag commented on MPT’s most recent tenant, “As MPT progressively diversifies and strengthens its portfolio we are pleased to add Dignity to our stable of quality hospital operators. Dignity is a leading not-for-profit operator with investment grade credit ratings of A3 from Moody’s, A from Standard & Poor’s and A- from Fitch, and the Guarantor of our rent payments, per the Master Lease. We look forward to a long-term relationship with this exceptional operator.”

MPT has pro forma total gross assets of approximately $9.6 billion, including $6.7 billion in general acute care hospitals, $2.0 billion in inpatient rehabilitation hospitals, and $0.3 billion in long-term acute care hospitals. This pro forma portfolio includes 277 properties representing more than 32,000 licensed beds in 29 states and in Germany, the United Kingdom, Italy and Spain. The properties are leased to or mortgaged by 31 hospital operating companies.

OPERATING RESULTS AND OUTLOOK

Net income for the second quarter of 2018 was $111.6 million (or $0.30 per diluted share), compared to $73.4 million (or $0.21 per diluted share) in the second quarter of 2017.

NFFO for the second quarter of 2018 increased 14% to $129.9 million compared with $113.6 million in the second quarter of 2017. Per share NFFO increased 13% to $0.36 per diluted share in the second quarter of 2018, compared with $0.32 per diluted share in the second quarter of 2017.

The Company intends to reinstate guidance regarding 2018 net income and NFFO upon closings of the recently announced European joint venture with Primonial Group and the sale of its interest in Ernest Health operations.

CONFERENCE CALL AND WEBCAST

The Company has scheduled a conference call and webcast for Thursday, August 2, 2018 at 11:00 a.m. Eastern Time to present the Company’s financial and operating results for the quarter ended June 30, 2018. The dial-in numbers for the conference call are 855-365-5214 (U.S.) and 440-996-5721 (International); both numbers require passcode 3584277. 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 August 16, 2018. Dial-in numbers for the replay are 855-859-2056 and 404-537-3406 for U.S. and International callers, respectively. The replay passcode for both U.S. and International callers is 3584277.

The Company’s supplemental information package for the current period will also be available on the Company’s website under the “Investor Relations” section.

About Medical Properties Trust, Inc.

Medical Properties Trust, Inc. is a self-advised real estate investment trust formed to capitalize on the changing trends in healthcare delivery by acquiring and developing net-leased healthcare facilities. MPT’s financing model helps facilitate acquisitions and recapitalizations and allows operators of hospitals and other healthcare facilities to unlock the value of their real estate assets to fund facility improvements, technology upgrades and other investments in operations. Facilities include acute care hospitals, inpatient rehabilitation hospitals, long-term acute care hospitals, and other medical and surgical facilities. For more information, please visit the Company’s website at www.medicalpropertiestrust.com.

The statements in this press release that are forward looking are based on current expectations and actual results or future events may differ materially. Words such as “expects,” “believes,” “anticipates,” “intends,” “will,” “should” and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results of the Company or future events to differ materially from those expressed in or underlying such forward-looking statements, including without limitation: the satisfaction of all conditions to, and the timely closing (if at all) of pending transactions; resulting financial gains from pending transactions; 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 certain hospital operations 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, 2017 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.

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