Medical Properties Trust, Inc. Company Interview: R. Steven Hamner

• On 2:35 pm EDT, Tuesday September 22, 2009

67 WALL STREET, New York - September 22, 2009 - The Wall Street Transcript has just published its Medical Real Estate: Healthcare REITs, Long-Term Care Facilities and Hospitals Report offering a timely review of the sector to serious investors and industry executives. This 45 page feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Investor Perception -- Secular Shift -- Health Care Reform -- REITs Growth -- Public Markets -- Divident Yields -- Debt Levels -- Grow Generation -- Outpatient Versus Inpatient Care -- Health Care Delivery -- Leaseback Arrangements -- Skilled Nursing -- Seniors Housing -- Growth and Expansion -- Positioning the Company for Winning -- Portfolio Diversification -- Geographical Growth -- Advantages to Investing in Licensed Hospitals -- Higher Returns -- Underwriting -- Fragmented Industry -- Consolidation Opportunities -- Debt Refinancing -- Growth in Health Care Spending

Companies include: LifePoint Hospitals (LPNT); Community Health Systems (CYH); Psychiatric Solutions (PSYS) and Tenet (THC); Medical Properties Trust (MPW); Healthcare Realty Trust (HR); LTC Properties (LTC); Health Care REIT (HCN); National Health Investors (NHI); HCP Inc. (HCP); Alexandria (ARE); BioMed (BMR); Senior Housing Properties Trust (SNH); Omega Healthcare Investors (OHI); Ventas (VTR); Emeritus (ESC); Brookdale (BKO); Fannie Mae (FNM); US Physical Therapy (USPH); AmSurg (AMSG)

In the following brief excerpt from the 45 page report, R. Steven Hamner, the Executive Vice President and Chief Financial Officer of Medical Properties Trust, Inc., discusses the company and the outlook for the sector and for investors.

TWST: Let's begin with a brief history of Medical Properties Trust.

Mr. Hamner: Our Chairman and CEO, Ed Aldag, gathered together three other partners back in 2003 - myself, Emmett McLean, who is our Chief Operating Officer, and Gil McKenzie, who is our Vice Chairman - and began to put together this business plan for developing a REIT that would focus on licensed hospitals. Most of the other health care REITs don't have that focus; their focus is more on medical office buildings and skilled nursing, and long-term assisted living type facilities with a very small piece of licensed hospitals. As we were putting this company together, we recognized there really wasn't a need for another assisted living or skilled nursing or medical office building REIT. And our experience was in hospitals, in any case. With the exception of myself, Ed, Emmett and Gil all had extensive experience in developing hospitals, running hospitals, doing financing, strategic plannings, M&A and investment banking for licensed hospitals. So we saw this as a niche that was needed and didn't have much attention. When we put the company together, we had no properties, no contracts. We went out on the road in the spring of 2004 with the intention of raising $200 million. It was a great time to be putting a real estate company together. We came back from our roadshow with orders for almost $1 billion, and so we upsized it just a little bit. We took $250 million and went to work buying hospitals. We took the company public about a year and a half later, in July of 2005. And from that time, we have grown from, as I said, no assets, no contracts, to a company that today has over $1.3 billion in assets, has a very successful and profitable track record going back to the spring of 2004. And coming out of the current economic conditions that we all find ourselves in, we are well positioned for further and continued growth in the hospital space.

TWST: It sounds like there was a lot more investor interest than you anticipated.

Mr. Hamner: There was tremendous investor interest. Now the market conditions back in 2004 very obviously were different than what they are today. But there are a number of unique advantages to investing in licensed hospitals, the first and foremost being that the returns are much higher for hospital real estate than for either other types of health care real estate or, more broadly, other types of commercial real estate, like office, retail and multifamily. And the reason the returns are higher is primarily because there is not a deep market of buyers for hospital real estate, and so there is a paucity of information available. We are able to achieve higher returns for what we believe are equivalent risks. And so it's very attractive to investors, both institutional and retail investors.

TWST: Do you find this property niche is getting more attention today than when you first started out?

Mr. Hamner: Absolutely. Again, we've become a $1 billion investor in hospital real estate. There are very few investors in hospital real estate. And so as we have demonstrated the success and we've demonstrated that our business model is in fact a very strong one, others have noticed and are getting into or exploring, at least, the hospital space. There are a couple or three other REITs that have been beefing up their management staffs in order to make hospital acquisitions. In our view, that's a very good thing because the market is huge. One way to measure the market is to estimate the amount of owner-occupied hospital real estate, and we think that's in excess of $0.5 trillion. And so the market is huge, and it's really beneficial to us to have competition out there that's further demonstrating the validity of the market, and educating the hospital operator community as to the benefits and advantages of sale-leaseback financing. So the market is getting better and better now, and it is attracting competition to us, which as I say is a good thing.

TWST: Are there any other key components to your business strategy or business model?

Mr. Hamner: I would reiterate the most important part of it is the ability to underwrite hospital real estate, and to do that you've got to underwrite the hospital operator. We buy very expensive assets. A typical hospital can cost upwards of $100 million or more. And the ability of us to earn a legitimate risk-adjusted return on that investment is based on the hospital operator continuing to be profitable. Our management team, as I mentioned earlier, began with experienced hospital people, and we built it further with more experienced hospital people. We have to be able to underwrite the hospital operations and to be able to assess whether any particular operator in any particular location is going to be able to maintain profitability. That's the real key to successful investing in the hospital space.

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 45 page special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online .

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.

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