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MEDICAL PROPERTIES TRUST INC - Quarter Report: 2012 March (Form 10-Q)

10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

 

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 001-32559

 

 

MEDICAL PROPERTIES TRUST, INC.

MPT OPERATING PARTNERSHIP, L.P.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

MARYLAND

DELAWARE

 

20-0191742

20-0242069

(State or other jurisdiction of

incorporation or organization)

 

(I. R. S. Employer

Identification No.)

1000 URBAN CENTER DRIVE, SUITE 501

BIRMINGHAM, AL

  35242
(Address of principal executive offices)   (Zip Code)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (205) 969-3755

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x    No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes x    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   x (Medical Properties Trust, Inc. only)    Accelerated filer   ¨
Non-accelerated filer  

x (Do not check if a smaller reporting company)

     (MPT Operating Partnership, L.P. only)

   Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨    No x

As of May 4, 2012, Medical Properties Trust, Inc. had 135,572,700 shares of common stock, par value $.001, outstanding.

 

 

 


Table of Contents

EXPLANATORY NOTE

This report combines the Quarterly Reports on Form 10-Q for the year ended March 31, 2012 of Medical Properties Trust, Inc., a Maryland corporation, and MPT Operating Partnership, L.P., a Delaware limited partnership, through which Medical Properties Trust, Inc. conducts substantially all of its operations. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” “our company,” “Medical Properties,” “MPT,” or “the Company” refer to Medical Properties Trust, Inc. together with its consolidated subsidiaries, including MPT Operating Partnership, L.P. Unless otherwise indicated or unless the context requires otherwise, all references to “our operating partnership” or “the operating partnership” refer to MPT Operating Partnership, L.P. together with its consolidated subsidiaries.


Table of Contents

MEDICAL PROPERTIES TRUST, INC. AND MPT OPERATING PARTNERSHIP, L.P.

AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2012

Table of Contents

 

     Page  

PART I — FINANCIAL INFORMATION

     2   

Item 1 Financial Statements

     2   

Medical Properties Trust, Inc. and Subsidiaries

     2   

Condensed Consolidated Balance Sheets at March 31, 2012 and December 31, 2011

     2   

Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2012 and 2011

     3   

Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March  31, 2012 and 2011

     4   

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011

     5   

MPT Operating Partnership, L.P. and Subsidiaries

     6   

Condensed Consolidated Balance Sheets at March 31, 2012 and December 31, 2011

     6   

Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2012 and 2011

     7   

Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March  31, 2012 and 2011

     8   

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011

     9   

Medical Properties Trust, Inc. and MPT Operating Partnership, L.P.

     10   

Notes to Condensed Consolidated Financial Statements

     10   

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations

     26   

Item 3 Quantitative and Qualitative Disclosures about Market Risk

     31   

Item 4 Controls and Procedures

     32   

PART II — OTHER INFORMATION

     33   

Item 1 Legal Proceedings

     33   

Item 1A Risk Factors

     33   

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

     33   

Item 3 Defaults Upon Senior Securities

     33   

Item 4 Mine Safety Disclosures

     33   

Item 5 Other Information

     33   

Item 6 Exhibits

     34   

SIGNATURE

     35   

INDEX TO EXHIBITS

     36   

 

1


Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

 

     March 31,
2012
    December 31,
2011
 
(In thousands, except per share amounts)    (Unaudited)     (Note 2)  

Assets

    

Real estate assets

    

Land, buildings and improvements, and intangible lease assets

   $ 1,282,373      $ 1,275,399   

Mortgage loans

     265,000        165,000   

Net investment in direct financing leases

     200,285        —     
  

 

 

   

 

 

 

Gross investment in real estate assets

     1,747,658        1,440,399   

Accumulated depreciation and amortization

     (112,484     (103,737
  

 

 

   

 

 

 

Net investment in real estate assets

     1,635,174        1,336,662   

Cash and cash equivalents

     126,500        102,726   

Interest and rent receivable

     33,650        29,862   

Straight-line rent receivable

     35,493        33,993   

Other loans

     165,207        74,839   

Other assets

     52,438        43,792   
  

 

 

   

 

 

 

Total Assets

   $ 2,048,462      $ 1,621,874   
  

 

 

   

 

 

 

Liabilities and Equity

    

Liabilities

    

Debt, net

   $ 900,225      $ 689,849   

Accounts payable and accrued expenses

     62,278        51,125   

Deferred revenue

     22,544        23,307   

Lease deposits and other obligations to tenants

     28,668        28,778   
  

 

 

   

 

 

 

Total liabilities

     1,013,715        793,059   

Equity

    

Preferred stock, $0.001 par value. Authorized 10,000 shares; no shares outstanding

     —          —     

Common stock, $0.001 par value. Authorized 250,000 shares; issued and outstanding — 134,524 shares at March 31, 2012, and 110,786 shares at December 31, 2011

     134        111   

Additional paid in capital

     1,277,283        1,055,256   

Distributions in excess of net income

     (230,676     (214,059

Accumulated other comprehensive loss

     (11,732     (12,231

Treasury shares, at cost

     (262     (262
  

 

 

   

 

 

 

Total Medical Properties Trust, Inc. stockholders’ equity

     1,034,747        828,815   
  

 

 

   

 

 

 

Non-controlling interests

     —          —     
  

 

 

   

 

 

 

Total equity

     1,034,747        828,815   
  

 

 

   

 

 

 

Total Liabilities and Equity

   $ 2,048,462      $ 1,621,874   
  

 

 

   

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

2


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MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(Unaudited)

 

     For the Three Months
Ended March 31
 
(In thousands, except per share amounts)    2012     2011  

Revenues

    

Rent billed

   $ 32,165      $ 27,355   

Straight-line rent

     1,449        1,710   

Income from direct financing leases

     1,835        —     

Interest and fee income

     7,942        5,282   
  

 

 

   

 

 

 

Total revenues

     43,391        34,347   

Expenses

    

Real estate depreciation and amortization

     8,746        7,570   

Property-related

     331        58   

General and administrative

     7,592        6,874   

Acquisition expenses

     3,425        2,040   
  

 

 

   

 

 

 

Total operating expenses

     20,094        16,542   
  

 

 

   

 

 

 

Operating income

     23,297        17,805   

Other income (expense)

    

Interest income (expense) and other

     (16     (14

Interest expense

     (12,796     (8,139
  

 

 

   

 

 

 

Net other expense

     (12,812     (8,153
  

 

 

   

 

 

 

Income from continuing operations

     10,485        9,652   

Income from discontinued operations

     121        1,172   
  

 

 

   

 

 

 

Net income

     10,606        10,824   

Net income attributable to non-controlling interests

     (42     (44
  

 

 

   

 

 

 

Net income attributable to MPT common stockholders

   $ 10,564      $ 10,780   
  

 

 

   

 

 

 

Earnings per common share — basic and diluted

    

Income from continuing operations attributable to MPT common stockholders

   $ 0.08     $ 0.08   

Income from discontinued operations attributable to MPT common stockholders

     —          0.01  
  

 

 

   

 

 

 

Net income attributable to MPT common stockholders

   $ 0.08     $ 0.09   
  

 

 

   

 

 

 

Weighted average shares outstanding:

    

Basic

     124,906        110,400   

Diluted

     124,906        110,408   

Dividends declared per common share

   $ 0.20      $ 0.20   

See accompanying notes to condensed consolidated financial statements.

 

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MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

 

     For the Three Months
Ended March 31,
 
(In thousands)    2012      2011  

Net income

   $ 10,606       $ 10,824   

Other comprehensive income:

     

Unrealized gain on interest rate swap

     499         517   
  

 

 

    

 

 

 

Total comprehensive income

     11,105         11,341   

Comprehensive income attributable to non-controlling interests

     (42      (44
  

 

 

    

 

 

 

Comprehensive income attributable to MPT common stockholders

   $ 11,063       $ 11,297   
  

 

 

    

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

4


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MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

     For the Three Months
Ended March 31,
 
     2012     2011  
     (In thousands)  

Operating activities

    

Net income

   $ 10,606      $ 10,824   

Adjustments to reconcile net income to net cash provided by operating activities

    

Depreciation and amortization

     8,909        8,084   

Straight-line rent revenue

     (1,449     (1,735

Share-based compensation

     1,858        1,838   

Increase in accounts payable and accrued liabilities

     6,882        2,331   

Amortization and write-off of deferred financing costs and debt discount

     856        986   

Increase in interest and rent receivable

     (3,787     (801

Other adjustments

     (523     (2,241
  

 

 

   

 

 

 

Net cash provided by operating activities

     23,352        19,286   

Investing activities

    

Real estate acquired

     (671     (173,486

Principal received on loans receivable

     1,184        580   

Investment in loans receivable, direct financing leases and other investments

     (396,500     (5,463

Construction in progress and other

     (5,422     (4,647
  

 

 

   

 

 

 

Net cash used for investing activities

     (401,409     (183,016

Financing activities

    

Revolving credit facilities, net

     (89,600     98,400   

Additions to term debt

     300,000        —     

Payments of term debt

     (58     (6,945

Distributions paid

     (22,412     (22,374

Sale of common stock, net

     220,193       —     

Lease deposits and other obligations to tenants

     (110     3,612   

Debt issuance costs paid and other financing activities

     (6,182     (361
  

 

 

   

 

 

 

Net cash provided by financing activities

     401,831        72,332   
  

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents for period

     23,774        (91,398

Cash and cash equivalents at beginning of period

     102,726        98,408   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 126,500      $ 7,010   
  

 

 

   

 

 

 

Interest paid

   $ 3,202      $ 5,261   

Supplemental schedule of non-cash investing activities:

    

Real estate acquired via assumption of mortgage loan

   $ —        $ (14,592 )

Supplemental schedule of non-cash financing activities:

    

Distributions declared, unpaid

   $ 27,182      $ 22,403   

Assumption of mortgage loan (as part of real estate acquired)

     —          14,592  

See accompanying notes to condensed consolidated financial statements.

 

5


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MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

 

     March 31,
2012
    December 31,
2011
 
(In thousands)    (Unaudited)     (Note 2)  

Assets

    

Real estate assets

    

Land, buildings and improvements, and intangible lease assets

   $ 1,282,373      $ 1,275,399   

Mortgage loans

     265,000        165,000   

Net investment in direct financing leases

     200,285        —     
  

 

 

   

 

 

 

Gross investment in real estate assets

     1,747,658        1,440,399   

Accumulated depreciation and amortization

     (112,484     (103,737
  

 

 

   

 

 

 

Net investment in real estate assets

     1,635,174        1,336,662   

Cash and cash equivalents

     126,500        102,726   

Interest and rent receivable

     33,650        29,862   

Straight-line rent receivable

     35,493        33,993   

Other loans

     165,207        74,839   

Other assets

     52,438        43,792   
  

 

 

   

 

 

 

Total Assets

   $ 2,048,462      $ 1,621,874   
  

 

 

   

 

 

 

Liabilities and Capital

    

Liabilities

    

Debt, net

   $ 900,225      $ 689,849   

Accounts payable and accrued expenses

     34,768        28,780   

Deferred revenue

     22,544        23,307   

Lease deposits and other obligations to tenants

     28,668        28,778   

Payable due to Medical Properties Trust, Inc.

     27,120        21,955   
  

 

 

   

 

 

 

Total liabilities

     1,013,325        792,669   

Capital

    

General Partner – issued and outstanding – 1,344 units at March 31, 2012 and 1,107 units at December 31, 2011

     10,472        8,418   

Limited Partners:

    

Common units – issued and outstanding – 133,180 units at March 31, 2012 and 109,679 units at December 31, 2011

     1,036,397        833,018   

LTIP units – issued and outstanding – 150 units at March 31, 2012 and 150 units at December 31, 2011

     —          —     

Accumulated other comprehensive loss

     (11,732     (12,231
  

 

 

   

 

 

 

Total MPT Operating Partnership capital

     1,035,137        829,205   
  

 

 

   

 

 

 

Non-controlling interests

     —          —     
  

 

 

   

 

 

 

Total capital

     1,035,137        829,205   
  

 

 

   

 

 

 

Total Liabilities and Capital

   $ 2,048,462      $ 1,621,874   
  

 

 

   

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

6


Table of Contents

MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(Unaudited)

 

     For the Three Months
Ended March 31,
 
(In thousands, except per unit amounts)    2012     2011  

Revenues

    

Rent billed

   $ 32,165      $ 27,355   

Straight-line rent

     1,449        1,710   

Income from direct financing leases

     1,835        —     

Interest and fee income

     7,942        5,282   
  

 

 

   

 

 

 

Total revenues

     43,391        34,347   

Expenses

    

Real estate depreciation and amortization

     8,746        7,570   

Property-related

     331        58   

General and administrative

     7,592        6,858   

Acquisition expenses

     3,425        2,040   
  

 

 

   

 

 

 

Total operating expenses

     20,094        16,526   
  

 

 

   

 

 

 

Operating income

     23,297        17,821   

Other income (expense)

    

Interest income (expense) and other

     (16     (14

Interest expense

     (12,796     (8,139
  

 

 

   

 

 

 

Net other expense

     (12,812     (8,153
  

 

 

   

 

 

 

Income from continuing operations

     10,485        9,668   

Income from discontinued operations

     121        1,172   
  

 

 

   

 

 

 

Net income

     10,606        10,840   

Net income attributable to non-controlling interests

     (42     (44
  

 

 

   

 

 

 

Net income attributable to MPT Operating Partnership partners

   $ 10,564      $ 10,796   
  

 

 

   

 

 

 

Earnings per unit — basic and diluted

    

Income from continuing operations attributable to MPT Operating Partnership partners

   $ 0.08     $ 0.08   

Income from discontinued operations attributable to MPT Operating Partnership partners

     —          0.01  
  

 

 

   

 

 

 

Net income attributable to MPT Operating Partnership Partners

   $ 0.08     $ 0.09   
  

 

 

   

 

 

 

Weighted average units outstanding:

    

Basic

     124,906        110,400   

Diluted

     124,906        110,408   

Dividends declared per unit

   $ 0.20      $ 0.20   

See accompanying notes to condensed consolidated financial statements.

 

7


Table of Contents

MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

 

     For the Three Months
Ended March 31,
 
(In thousands)    2012     2011  

Net income

   $ 10,606      $ 10,840   

Other comprehensive income:

    

Unrealized gain on interest rate swap

     499        517   
  

 

 

   

 

 

 

Total comprehensive income

     11,105        11,357   

Comprehensive income attributable to non-controlling interests

     (42     (44
  

 

 

   

 

 

 

Comprehensive income attributable to MPT Operating Partnership partners

   $ 11,063      $ 11,313   
  

 

 

   

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

8


Table of Contents

MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

     For the Three Months
Ended March 31,
 
     2012     2011  
     (In thousands)  

Operating activities

    

Net income

   $ 10,606      $ 10,840   

Adjustments to reconcile net income to net cash provided by operating activities

    

Depreciation and amortization

     8,909        8,084   

Straight-line rent revenue

     (1,449     (1,735

Share-based compensation

     1,858        1,838   

Increase accounts payable and accrued liabilities

     6,882        2,331   

Amortization and write-off of deferred financing costs and debt discount

     856        970   

Increase in interest and rent receivable

     (3,787     (801

Other adjustments

     (523     (2,241
  

 

 

   

 

 

 

Net cash provided by operating activities

     23,352        19,286   

Investing activities

    

Real estate acquired

     (671     (173,486

Principal received on loans receivable

     1,184        580   

Investment in loans receivable, direct financing leases and other investments

     (396,500     (5,463

Construction in progress and other

     (5,422     (4,647
  

 

 

   

 

 

 

Net cash used for investing activities

     (401,409     (183,016

Financing activities

    

Revolving credit facilities, net

     (89,600     98,400   

Additions to term debt

     300,000        —     

Payments of term debt

     (58     (6,945

Distributions paid

     (22,412     (22,374

Sale of common stock, net

     220,193       —     

Lease deposits and other obligations to tenants

     (110     3,612   

Debt issuance costs paid and other financing activities

     (6,182     (361
  

 

 

   

 

 

 

Net cash provided by financing activities

     401,831        72,332   
  

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents for period

     23,774        (91,398

Cash and cash equivalents at beginning of period

     102,726        98,408   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 126,500      $ 7,010   
  

 

 

   

 

 

 

Interest paid

   $ 3,202      $ 5,261   

Supplemental schedule of non-cash investing activities:

    

Real estate acquired via assumption of mortgage loan

   $ —        $ (14,592 )

Supplemental schedule of non-cash financing activities:

    

Distributions declared, unpaid

   $ 27,182      $ 22,403   

Assumption of mortgage loan (as part of real estate acquired)

     —          14,592  

See accompanying notes to condensed consolidated financial statements.

 

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Table of Contents

MEDICAL PROPERTIES TRUST, INC. AND MPT OPERATING PARTNERSHIP, L.P.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization

Medical Properties Trust, Inc., a Maryland corporation, was formed on August 27, 2003 under the General Corporation Law of Maryland for the purpose of engaging in the business of investing in, owning, and leasing commercial real estate. Our operating partnership subsidiary, MPT Operating Partnership, L.P., through which we conduct all of our operations, was formed in September 2003. Through another wholly-owned subsidiary, Medical Properties Trust, LLC, we are the sole general partner of the Operating Partnership. At present, we directly own substantially all of the limited partnership interests in the Operating Partnership and have elected to report our required disclosures and that of the Operating Partnership on a combined basis except where material differences exist.

We have operated as a real estate investment trust (“REIT”) since April 6, 2004, and accordingly, elected REIT status upon the filing in September 2005 of the calendar year 2004 federal income tax return. Accordingly, we will not be subject to U.S. federal income tax, provided that we continue to qualify as a REIT and our distributions to our stockholders equal or exceed our taxable income. Certain activities we undertake must be conducted by entities which we elected to be treated as a taxable REIT subsidiaries (“TRSs”). Our TRSs are subject to both federal and state income taxes.

Our primary business strategy is to acquire and develop real estate and improvements, primarily for long-term lease to providers of healthcare services such as operators of general acute care hospitals, inpatient physical rehabilitation hospitals, long-term acute care hospitals, surgery centers, centers for treatment of specific conditions such as cardiac, pulmonary, cancer, and neurological hospitals, and other healthcare-oriented facilities. We also make mortgage and other loans to operators of similar facilities. In addition, we may obtain profits or equity interests in our tenants, from time to time, in order to enhance our overall return. We manage our business as a single business segment.

2. Summary of Significant Accounting Policies

Unaudited Interim Condensed Consolidated Financial Statements: The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information, including rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. The condensed consolidated balance sheet at December 31, 2011 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

For information about significant accounting policies, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2011. During the three months ended March 31, 2012, there were no material changes to these policies, except we began using direct finance lease (“DFL”) accounting with the acquisition and lease of the real estate of Ernest Health, Inc. (“Ernest”). Under DFL accounting, future minimum lease payments are recorded as a receivable. Unearned income, which represents the net investment in the DFL less the sum of minimum lease payments receivable and the estimated residual values of the leased properties, is deferred and amortized to income over the lease term to provide a constant yield when collectability of the lease payments is reasonably assured. Investments in DFLs are presented net of unamortized and unearned income. DFLs are placed on non-accrual status when management determines that the collectability of contractual amounts is not reasonably assured. While on non-accrual status, DFLs are accounted for on a cash basis, in which income is recognized only upon receipt of cash.

For our equity interest in Ernest and related loans (as more fully described in Note 3), we have elected to account for these investments at fair value due to size of the investments and because we believe this method is more reflective of current values. We have not made a similar election for other equity interests or loans made prior to 2012.

Variable Interest Entities

In regards to the Ernest Transaction, we have determined that Ernest is a variable interest entity (“VIE”); however, we are not the primary beneficiary as we lack the ability to direct the activities of Ernest that most significantly impact the entity’s economic performance. At March 31, 2012, we had loans and/or equity investments in several VIEs for which we are not the primary beneficiary. The carrying value and classification of the related assets and maximum exposure to loss as a result of our involvement with these VIEs are presented below at March 31, 2012 (in thousands):

 

VIE Type

   Maximum Loss
Exposure(1)
   Asset Type
Classification
   Carrying
Amount(2)

Loans, net

   $263,977    Mortgage and other loans    $231,568

Equity investments

   $  13,220    Other assets    $    2,751

 

(1) Our maximum loss exposure related to loans with VIEs represents our current aggregate gross carrying value of the loan plus accrued interest and any other related assets (such as rents receivable), less any liabilities. Our maximum loss exposure related to our equity investment in VIEs represent the current carrying values of such investment plus any other related assets (such as rent receivables) less any liabilities.

 

(2) Carrying amount reflects the net book value of our loan or equity interest only in the VIE.

For the VIE types above, we do not consolidate the VIE because we do not have the ability to control the activities (such as the day-to-day healthcare operations of our borrower or investee) that most significantly impact the VIE’s economic performance. As of March 31, 2012, we were not required to provide financial support through a liquidity arrangement or otherwise to our unconsolidated VIEs, including circumstances in which it could be exposed to further losses (e.g., cash short falls).

Typically, our loans are collateralized by assets of the borrower (some assets of which are on the premises of facilities owned by us) and further supported by limited guarantees made by certain principals of the borrower.

See Note 3 for additional description of the nature, purpose and activities of our more significant VIEs and interests therein.

Recent Accounting Pronouncement. In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Presentation of Comprehensive Income (“ASU 2011-05”). The amendments require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income and the total of comprehensive income. In December 2011, the FASB deferred portions of this update in its issuance of Accounting Standards Update No. 2011-12 (see discussion below). The Company has elected the two-statement approach and the required financial statements are presented herein.

 

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3. Real Estate and Lending Activities

Acquisitions

2012 Activity

On February 29, 2012, we made loans to and acquired assets from Ernest for a combined purchase price and investment of $396.5 million, consisting of $200 million to purchase real estate assets, a first mortgage loan of $100 million, an acquisition loan for $93.2 million and a capital contribution of $3.3 million (“Ernest Transaction”).

Real Estate Acquisition and Mortgage Loan Financing

Pursuant to a definitive real property asset purchase agreement (the “Purchase Agreement”), we acquired from Ernest and certain of its subsidiaries (i) a portfolio of five rehabilitation facilities (including a ground lease interest relating to a community-based acute rehabilitation facility in Wyoming), (ii) seven long-term acute care facilities located in seven states and (iii) undeveloped land in Provo, Utah (collectively, the “Acquired Facilities”) for an aggregate purchase price of $200 million, subject to certain adjustments. The Acquired Facilities are leased to subsidiaries of Ernest pursuant to a master lease agreement. The master lease agreement has a 20-year term with three five-year extension options and provides for an initial rental rate of 9%, with consumer price-indexed increases, limited to a 2% floor and 5% ceiling annually thereafter. In addition, we made Ernest a $100 million loan secured by a first mortgage interest in four subsidiaries of Ernest, which has terms similar to the leasing terms described above.

Acquisition Loan and Equity Contribution

Through an affiliate of one of our TRSs, we made investments of approximately $96.5 million in Ernest Health Holdings, LLC (“Ernest Holdings”), which is the owner of Ernest. These investments, which are structured as a $93.2 million loan and a $3.3 million equity contribution generally provide that we will receive a preferential return of 15% of the loan amount and approximately 79% of the remaining earnings of Ernest. Ernest is required to pay us a minimum of 6% and 7% of the loan amount in years one and two, respectively, and 10% thereafter, although there are provisions in the loan agreement that are expected to result in full payment of the 15% preference when funds are sufficient. Any of the 15% in excess of the minimum that is not paid may be accrued and paid upon the occurrence of a capital or liquidity event and is payable at maturity. The loan may be prepaid without penalty at any time.

Financing of Ernest Transaction

To finance the Ernest Transaction, we completed equity and senior unsecured notes offerings in February 2012. See Notes 4 and 5 for more information on these financing activities.

2011 Activity

On January 4, 2011, we acquired the real estate of the 19-bed, 4-year old Gilbert Hospital in a suburb of Phoenix, Arizona area for $17.1 million. Gilbert Hospital is operated by affiliates of Visionary Health, LLC. We acquired this asset subject to an existing lease that expires in May 2022.

On January 31, 2011, we acquired for $23.5 million the real estate of the 60-bed Atrium Medical Center at Corinth in the Dallas area, a long-term acute care hospital that was completed in 2009 and is subject to a lease that expires in June 2024. In addition, through one of our affiliates, we invested $1.3 million to acquire approximately 19% of a joint venture arrangement with an affiliate of Vibra Healthcare, LLC (“Vibra”) that will manage and has acquired a 51% interest in the operations of the facility. We also made a $5.2 million working capital loan to the joint venture. The former operators of the hospital, comprised primarily of local physicians, retained ownership of 49% of the operating entity.

On February 4, 2011, we purchased for $58 million the real estate of Bayonne Medical Center, a 6-story, 278-bed acute care hospital in the New Jersey area of metropolitan New York, and leased the facility to the operator under a 15-year lease, with six 5-year extension options. The operator is an affiliate of a private hospital operating company that acquired the hospital in 2008.

On February 9, 2011, we acquired the real estate of the 306-bed Alvarado Hospital in San Diego, California for $70 million from Prime Healthcare Services, Inc. (“Prime”). Prime is the operator of the facility and will lease the facility under a 10-year lease that provides, under certain conditions for lease extensions.

On February 14, 2011, we completed the acquisition of the Northland LTACH Hospital located in Kansas City, a 35-bed hospital that opened in April 2008 and has a lease that expires in 2028. This hospital is currently being operated by Kindred Healthcare Inc. The purchase price of this hospital was $19.5 million, which included the assumption of a $16 million mortgage loan.

 

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As part of these acquisitions, we purchased and invested in the following assets: (dollar amounts in thousands)

 

     2012      2011  

Land

   $ —         $ 16,151   

Building

     —           157,834   

Intangible lease assets — subject to amortization (weighted average useful life of 23.1 years in 2011)

     —           14,093   

Net investments in direct financing leases

     200,000         —     

Mortgage loans

     100,000         —     

Other loans

     93,200         5,233   

Equity investments

     3,300         1,268   
  

 

 

    

 

 

 

Total

   $ 396,500       $ 194,579   
  

 

 

    

 

 

 

From the acquisition date, the Ernest Transaction contributed $3.9 million of revenue and $3.9 million of income (excluding related acquisition expenses) for the three months ended March 31, 2012. In addition, we incurred $3.4 million of acquisition related costs on consummated and non-consummated deals for the three months ended March 31, 2012.

The purchase price allocation attributable to the Ernest Transaction is preliminary as we are waiting on additional information to perform our final analysis. When all relevant information is obtained, resulting changes, if any, to our provisional purchase price allocation will be retrospectively adjusted to reflect new information obtained about the facts and circumstances that existed as of the respective acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.

From the respective acquisition dates, the five hospitals acquired in 2011 contributed $3.2 million of revenue and $2.0 million of income (excluding related acquisition expenses) for the three months ended March 31, 2011, respectively. In addition, we incurred $2.0 million of acquisition related costs during the three months ended March 31, 2011.

The results of operations for each of the properties acquired are included in our consolidated results from the effective date of each acquisition. The following table sets forth certain unaudited pro forma consolidated financial data for 2012 and 2011, as if each acquisition in 2012 and 2011 were consummated on the same terms at the beginning of 2011. Supplemental pro forma earnings were adjusted to exclude acquisition-related costs on consummated deals incurred in the three months ended March 31, 2012 and 2011 (dollar amounts in thousands except per share/unit data).

 

     For the Three Months Ended
March 31,
 
     2012      2011  

Total revenues

   $ 50,735       $ 50,020   

Net income

     19,647         21,220   

Net income per share/unit — diluted

   $ 0.14       $ 0.16   

 

 

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Leasing Operations

Denham Springs facility

For the quarter ended March 31, 2012, there have been no significant developments to our Denham Springs facility or its operator. We have not recorded any rental revenue or reversed previously established reserves during the first quarter. At March 31, 2012, we continued to believe, based on existing collateral and the current real estate market, that the $0.7 million loan and the $4.2 million of real estate are fully recoverable; however, no assurances can be made that future reserves will not be needed.

Florence facility

On March 1, 2012, we received a certificate of occupancy for our recently constructed Florence acute care facility near Phoenix, Arizona. With this, we started recognizing rent on this facility in March 2012. During the construction period, we accrued and deferred rent based on the cost paid during the construction period. In March 2012, we began recognizing a portion of the accrued construction period rent along with interest on the unpaid amount. This accrued construction period rent will be recognized in our income statement and paid over the 25 year lease term. Land and building costs associated with this property approximates $30 million.

Ernest

We are accounting for the master lease of 12 facilities to Ernest as a DFL. The components of our net investment in DFL consisted of the following (dollars in thousands):

 

     As of March  31,
2012
 

Minimum lease payments receivable

   $ 901,400   

Estimated residual values

     200,000   

Less unearned income

     (901,115
  

 

 

 

Net investment in direct financing leases

   $ 200,285   
  

 

 

 

Monroe facility

As of March 31, 2012, we have advanced $28.6 million to the operator/lessee of Monroe Hospital in Bloomington, Indiana pursuant to a working capital loan agreement. In addition, as of March 31, 2012, we have $16.9 million of rent, interest and other charges owed to us by the operator, of which $5.6 million of interest receivables are significantly more than 90 days past due. Because the operator has not made all payments required by the working capital loan agreement and the related real estate lease agreement, we consider the loan to be impaired. During the first quarter of 2010, we evaluated alternative strategies for the recovery of our advances and accruals and at that time determined that the future cash flows of the current tenant or related collateral would, more likely than not, result in less than a full recovery of our loan advances. Accordingly, we recorded a $12 million charge in the 2010 first quarter to recognize the estimated impairment of the working capital loan. During the third quarter of 2010, we determined that it was reasonably likely that the existing tenant would be unable to make certain lease payments that become due in future years. Accordingly, we recorded a valuation allowance for unbilled straight-line rent in the amount of $2.5 million. At March 31, 2012, our net investment (exclusive of the related real estate) of $33.5 million is our maximum exposure to Monroe and the amount is deemed collectible/recoverable. In making this determination, we considered our first priority secured interest in approximately (i) $5 million in hospital patient receivables, (ii) cash balances of approximately $4 million, (iii) 100% of the membership interests of the operator/lessee and our assessment of the realizable value of our other collateral and (iv) continued improvement in operational revenue statistics compared to previous years.

We continue to evaluate possible operating strategies for the hospital. We have entered into a forbearance agreement with the operator whereby we have generally agreed, under certain conditions, not to fully exercise our rights and remedies under the lease and loan agreements during limited periods. We have not committed to the adoption of a plan to transition ownership or management of the hospital to any new operator, and there is no assurance that any such plan will be completed. Moreover, there is no assurance that any plan that we ultimately pursue will not result in additional charges for further impairment of our working capital loan. We have not recognized any interest income on the Monroe loan since it was considered impaired in the 2010 first quarter.

 

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Loans

On March 1, 2012, pursuant to our convertible note agreement, we converted $1.7 million of our $5.0 million convertible note into a 9.9% equity interest in the operator of our Hoboken University Medical Center facility. At March 31, 2012, $3.3 million remains outstanding on the convertible note, and we retain the option, through November 2014, to convert this remainder into 15.1% of equity interest in the operator.

Concentrations of Credit Risk

For the three months ended March 31, 2012, revenue from affiliates of Ernest (including rent and interest from mortgage and acquisition loans) accounted for 9.0% of total revenue. However, from an investment concentration perspective, Ernest represented 19.2% of our total assets at March 31, 2012.

For the three months ended March 31, 2012 and 2011, revenue from affiliates of Prime (including rent and interest from mortgage loans) accounted for 26.1% and 29.9%, respectively, of total revenue. However, from an investment concentration perspective, Prime represented 20.0% and 29.7% of our total assets at March 31, 2012 and 2011, respectively.

On an individual property basis, we had no investment of any single property greater than 5% of our total assets as of March 31, 2012.

From a geographic perspective, all of our properties are located in the United States with 24.0% of our total assets at March 31, 2012 located in Texas.

4. Debt

The following is a summary of debt, net of discounts (dollar amounts in thousands):

 

     As of March 31,
2012
  As of December 31,
2011
     Balance     Interest Rate   Balance     Interest Rate

Revolving credit facilities

   $ —        Variable   $ 89,600      Variable

2006 Senior Unsecured Notes

     125,000      Various     125,000      Various

2011 Senior Unsecured Notes

     450,000      6.875%     450,000      6.875%

2012 Senior Unsecured Notes

     200,000      6.375%     —       

Exchangeable senior notes:

        

Principal amount

     11,000      9.250%     11,000      9.250%

Unamortized discount

     (147       (180  
  

 

 

     

 

 

   
     10,853          10,820     

Term loans

     114,372      Various     14,429      6.2000%
  

 

 

     

 

 

   
   $ 900,225        $ 689,849     
  

 

 

     

 

 

   

As of March 31, 2012, principal payments due for our debt (which exclude the effects of any discounts recorded) are as follows:

 

2012

   $ 174   

2013

     11,249   

2014

     266   

2015

     283   

2016

     225,299   

Thereafter

     663,101   
  

 

 

 

Total

   $ 900,372   
  

 

 

 

 

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To help fund the 2012 acquisitions disclosed in Note 3, on February 17, 2012, we completed a $200 million offering of senior unsecured notes (“2012 Senior Unsecured Notes”), resulting in net proceeds, after underwriting discount, of $196.5 million. These 2012 senior unsecured notes accrue interest at a fixed rate of 6.375% per year and mature on February 15, 2022. The 2012 Senior Unsecured Notes include covenants substantially consistent with our 2011 Senior Unsecured Notes.

In addition, on March 9, 2012, we closed on a $100 million senior unsecured term loan facility (“2012 Term Loan”) and exercised the $70 million accordion feature on our revolving credit facility, increasing its capacity from $330 million to $400 million. The 2012 Term Loan facility has an interest rate option of (1) LIBOR plus an initial spread of 2.25% or (2) the higher of the “prime rate”, federal funds rate plus 0.5%, or Eurodollar rate plus 1.0%, plus an initial spread of 1.25%. The 2012 Term Loan facility is scheduled to mature on March 9, 2016, but we have the option to extend the facility one year to March 9, 2017.

During the second quarter 2010, we entered into an interest rate swap to fix $65 million of our 2006 Senior Unsecured Notes, which started July 31, 2011 (date on which the interest rate turned variable) through maturity date (or July 2016), at a rate of 5.507%. We also entered into an interest rate swap to fix $60 million of our 2006 Senior Unsecured Notes which started October 31, 2011 (date on which the related interest rate turned variable) through the maturity date (or October 2016) at a rate of 5.675%. At March 31, 2012 and December 31, 2011, the fair value of the interest rate swaps was $11.7 million and $12.2 million, respectively, which is reflected in accounts payable and accrued expenses on the condensed consolidated balance sheets.

We designated our interest rate swaps as cash flow hedges. Accordingly, the effective portion of changes in the fair value of our swaps is recorded as a component of accumulated other comprehensive income/loss on the balance sheet and reclassified into earnings in the same period, or periods, during which the hedged transactions effect earnings, while any ineffective portion is recorded through earnings immediately. We did not have any hedge ineffectiveness in the periods; therefore, there was no income statement effect recorded during the three month periods ended March 31, 2012 or 2011. We do not expect any of the current losses included in accumulated other comprehensive loss to be reclassified into earnings in the next 12 months. At March 31, 2012 and December 31, 2011, we had $6.7 million and $6.3 million, respectively, posted as collateral, which is currently reflected in other assets on our consolidated balance sheets.

Our debt facilities impose certain restrictions on us, including restrictions on our ability to: incur debts; create or incur liens; provide guarantees in respect of obligations of any other entity; make redemptions and repurchases of our capital stock; prepay, redeem or repurchase debt; engage in mergers or consolidations; enter into affiliated transactions; dispose of real estate or other assets; and change our business. In addition, the credit agreements governing our revolving credit facility and 2012 Term Loan limit the amount of dividends we can pay to 120% of normalized adjusted funds from operations, as defined in the agreements, on a rolling four quarter basis starting for the fiscal quarter ending March 31, 2012. Thereafter, a similar dividend restriction exists but the percentage drops each quarter (115% for quarter ending June 30, 2012) until reaching 95% at June 30, 2013. The indenture governing our 2011 and 2012 Senior Unsecured Notes also limits the amount of dividends we can pay based on the sum of 95% of funds from operations, proceeds of equity issuances and certain other net cash proceeds. Finally, our 2011 and 2012 Senior Unsecured Notes require us to maintain total unencumbered assets (as defined in the related indenture) of not less than 150% of our unsecured indebtedness.

In addition to these restrictions, the credit facility and 2012 Term Loan contains customary financial and operating covenants, including covenants relating to our total leverage ratio, fixed charge coverage ratio, mortgage secured leverage ratio, recourse mortgage secured leverage ratio, consolidated adjusted net worth, facility leverage ratio, and borrowing base interest coverage ratio. This facility also contains customary events of default, including among others, nonpayment of principal or interest, material inaccuracy of representations and failure to comply with our covenants. If an event of default occurs and is continuing under the facility, the entire outstanding balance may become immediately due and payable. At March 31, 2012, we were in compliance with all such financial and operating covenants.

5. Common Stock/Partner’s Capital

Medical Properties Trust, Inc.

To help fund the 2012 acquisitions disclosed in Note 3, on February 7, 2012, we completed an offering of 23,575,000 shares of our common stock (including 3,075,000 shares sold pursuant to the exercise in full of the underwriters’ overallotment option) at a price of $9.75 per share, resulting in net proceeds (after underwriting discount) of $220.2 million.

MPT Operating Partnership, L.P.

 

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At March 31, 2012, the Company has a 99.8% ownership interest in Operating Partnership with the remainder owned by three other partners, two of which are employees and one of which is a director. During the quarter ended March 31, 2012, the partnership issued 23,575,000 units in direct response to the common stock offering by Medical Properties Trust, Inc.

6. Stock Awards

Our Second Amended and Restated Medical Properties Trust, Inc. 2004 Equity Incentive Plan (the “Equity Incentive Plan”) authorizes the issuance of common stock options, restricted stock, restricted stock units, deferred stock units, stock appreciation rights, performance units and awards of interests in our Operating Partnership. The Equity Incentive Plan is administered by the Compensation Committee of the Board of Directors. We have reserved 7,441,180 shares of common stock for awards under the Equity Incentive Plan for which 1,438,541 shares remain available for future stock awards as of March 31, 2012. We awarded the following during 2012 and 2011:

Time-based awards—We granted 275,464 and 292,803 shares in 2012 and 2011, respectively, of time-based restricted stock to management, independent directors, and certain employees (2011 only). These awards vest quarterly based on service, over three years, in equal amounts.

Performance-based awards—Our management team and certain employees (2011 only) were awarded 252,566 and 253,655 performance based awards in 2012 and 2011, respectively. These awards vest ratably over a three year period based on the achievement of certain total shareholder return measures, with a carry-back and carryforward provision through December 31, 2015 (for the 2011 awards) and December 31, 2016 (for the 2012 awards). Dividends on these awards are paid only upon achievement of the performance measures.

Multi-year Performance-based awards—We awarded 649,793 and 600,000 shares in 2012 and 2011, respectively, of multi-year performance-based awards to management and certain employees. These shares are subject to three-year cumulative performance hurdles based on total shareholder return. At the end of the three-year performance period, any earned shares will be subject to an additional two years of ratable time-based vesting on an annual basis. Dividends are paid on these shares only upon achievement of the performance measures.

7. Fair Value of Financial Instruments

We have various assets and liabilities that are considered financial instruments. We estimate that the carrying value of cash and cash equivalents, and accounts payable and accrued expenses approximate their fair values. Included in our accounts payable and accrued expenses are our interest rate swaps, which are recorded at fair value based on Level 2 observable market assumptions using

 

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standardized derivative pricing models. We estimate the fair value of our loans, interest, and other receivables by discounting the estimated future cash flows using the current rates at which similar receivables would be made to others with similar credit ratings and for the same remaining maturities. We determine the fair value of our exchangeable notes based on quotes from securities dealers and market makers. We estimate the fair value of our senior notes, revolving credit facilities, and term loans based on the present value of future payments, discounted at a rate which we consider appropriate for such debt.

The following table summarizes fair value information for our financial instruments (dollar amounts in thousands):

 

     March 31,
2012
    December 31,
2011
 

Asset (Liability)

   Book
Value
    Fair
Value
    Book
Value
    Fair
Value
 

Interest and rent receivables (2)

   $ 33,650      $ 26,406      $ 29,862      $ 22,866   

Loans (2)

     430,207        433,033        239,839        243,272   

Debt, net (2)

     (900,225     (909,159     (689,849     (688,032

 

  (2) Level II: Fair value based on quoted prices for similar or identical instruments in active or inactive markets, respectively, or calculated utilizing model-derived valuations in which significant inputs or value drivers are observable in active markets.

As discussed in Note 2, our equity interest in Ernest and related loans are being measured at fair value on a recurring basis. At March 31, 2012, these amounts were as follows (in thousands):

 

                             Asset Type                            

   Fair
Value
   Cost    Asset Type
Classification

Mortgage loans

   $100,000    $100,000    Mortgage loans

Acquisition loan

       93,200        93,200    Other loans

Equity investments

         3,300          3,300    Other assets
  

 

  

 

  
   $196,500    $196,500   
  

 

  

 

  

Our mortgage and acquisition loans are recorded at fair value based on Level 2 observable market assumptions, which means they are calculated utilizing model-derived valuations in which significant inputs or value drivers (such as market interest rates are observable in active markets. Our equity investments is recorded at fair value based on Level III assumptions, which means it is calculated using valuation techniques in which one or more significant inputs or value drivers are unobservable. For the quarter ended March 31, 2012 and because the Ernest Transaction was completed and accounted for at fair value near quarter-end, we had no gains/losses from fair value adjustments in our income statement. We recorded approximately $2.0 million of interest on these loans during the quarter.

8. Discontinued Operations

On December 30, 2011, we sold MountainView Regional Rehabilitation Hospital in Morgantown, West Virginia to HealthSouth Corporation for $21.1 million, resulting in a gain of $2.3 million. On December 30, 2011, we also sold Sherman Oaks Hospital in Sherman Oaks, California to Prime for $20.0 million, resulting in a gain of $3.1 million. Due to this sale, we wrote-off $1.2 million in straight-line rent receivables.

The following table presents the results of discontinued operations, which include the revenue and expenses of the two previously-owned facilities noted above, for the three months ended March 31, 2012 and 2011 (dollar amounts in thousands except per share/unit amounts):

 

     For the Three Months
Ended March 31,
 
     2012      2011  

Revenues

   $ 121      $ 1,351   

Gain on sale

     —           5  

Income (loss)

     121         1,172   

Earnings per share/unit — diluted

   $ —         $ 0.01  

9. Earnings Per Share/Common Unit

Medical Properties Trust, Inc.

Our earnings per share were calculated based on the following (amounts in thousands):

 

     For the Three Months
Ended March 31,
 
     2012     2011  

Numerator:

    

Income from continuing operations

   $ 10,485      $ 9,652   

Non-controlling interests’ share in continuing operations

     (42     (44

Participating securities’ share in earnings

     (252     (316
  

 

 

   

 

 

 

Income from continuing operations, less participating securities’ share in earnings

     10,191        9,292   

Income from discontinued operations attributable to MPT common stockholders

     121        1,172   
  

 

 

   

 

 

 

Net income, less participating securities’ share in earnings

   $ 10,312      $ 10,464   
  

 

 

   

 

 

 

 

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     For the Three Months
Ended March 31,
 
     2012      2011  

Denominator

     

Basic weighted-average common shares

     124,906         110,400   

Dilutive share options

     —           8  
  

 

 

    

 

 

 

Dilutive weighted-average common shares

     124,906         110,408   
  

 

 

    

 

 

 

MPT Operating Partnership, L.P.

Our earnings per common unit were calculated based on the following (amounts in thousands):

 

     For the Three Months
Ended March 31,
 
     2012     2011  

Numerator:

    

Income from continuing operations

   $ 10,485      $ 9,668   

Non-controlling interests’ share in continuing operations

     (42     (44

Participating securities’ share in earnings

     (252     (316
  

 

 

   

 

 

 

Income from continuing operations, less participating securities’ share in earnings

     10,191        9,308   

Income from discontinued operations attributable to MPT Operating Partnership partners

     121        1,172   
  

 

 

   

 

 

 

Net income, less participating securities’ share in earnings

   $ 10,312      $ 10,480   
  

 

 

   

 

 

 

Denominator

    

Basic weighted-average units

     124,906        110,400   

Dilutive options

     —          8  
  

 

 

   

 

 

 

Dilutive weighted-average units

     124,906        110,408   
  

 

 

   

 

 

 

For the three months ended March 31, 2012 and 2011, 0.1 million of options were excluded from the diluted earnings per share/unit calculation as they were not determined to be dilutive. Shares/units that may be issued in the future in accordance with our exchangeable senior notes were excluded from the diluted earnings per share/unit calculation as they were not determined to be dilutive.

10. Contingencies

We are a party to various legal proceedings incidental to our business. In the opinion of management, after consultation with legal counsel, the ultimate liability, if any, with respect to those proceedings is not presently expected to materially affect our financial position, results of operations or cash flows.

 

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11. Condensed Consolidating Financial Information

The following tables present the condensed consolidating financial information for (a) Medical Properties Trust, Inc. (“Parent” and a guarantor to our 2011 and 2012 Senior Unsecured Notes), (b) MPT Operating Partnership, L.P. and MPT Finance Corporation (“Subsidiary Issuer”), (c) on a combined basis, the guarantors of our 2011 and 2012 Senior Unsecured Notes (“Subsidiary Guarantors”), and (d) on a combined basis, the non-guarantor subsidiaries (“Non-Guarantor Subsidiaries”). Separate financial statements of the Subsidiary Guarantors are not presented because the guarantee by each 100% owned Subsidiary Guarantor is joint and several, and we believe separate financial statements and other disclosures regarding the Subsidiary Guarantors are not material to investors. Furthermore, there are no significant legal restrictions on the Parent’s ability to obtain funds from its subsidiaries by dividend or loan.

The guarantees by the Subsidiary Guarantors may be released and discharged upon: (1) any sale, exchange or transfer of all of the capital stock of a Subsidiary Guarantor; (2) the merger or consolidation of a Subsidiary Guarantor with a Subsidiary Issuer or any other Subsidiary Guarantor; (3) the proper designation of any Subsidiary Guarantor by the Subsidiary Issuers as “unrestricted” for covenant purposes under the indenture governing the 2011 and 2012 Senior Unsecured Notes; (4) the legal defeasance or covenant defeasance or satisfaction and discharge of the indenture; (5) a liquidation or dissolution of a Subsidiary Guarantor permitted under the indenture governing the 2011 and 2012 Senior Unsecured Notes; or (6) the release or discharge of the Subsidiary Guarantor from its guarantee obligations under our revolving credit facility.

Subsequent to December 31, 2011, one of our subsidiaries was re-designated as a guarantor of our 2011 and 2012 Senior Unsecured Notes (subsidiary was a non-guarantor during 2011). With this re-designation, we have restated the 2011 condensed consolidating financial information below to reflect this change.

Condensed Consolidated Balance Sheet

March 31, 2012

(in thousands)

 

     Parent      Subsidiary
Issuers
     Subsidiary
Guarantors
    Non-
Guarantor
Subsidiaries
    Eliminations      Total
Consolidated
 

Assets

               

Real estate assets

               

Land, buildings and improvements and intangible lease assets

   $ —         $ 708       $ 1,153,464      $ 128,201      $ —         $ 1,282,373   

Mortgage loans

     —           —           165,000        100,000        —           265,000   

Net investment in direct financing leases

     —           —           —          200,285        —           200,285   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Gross investment in real estate assets

     —           708         1,318,464        428,486        —           1,747,658   

Accumulated depreciation and amortization

     —           —           (99,789     (12,695     —           (112,484
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Net investment in real estate assets

        708         1,218,675        415,791        —           1,635,174   

Cash & cash equivalents

     —           124,850         1,564        86        —           126,500   

Interest and rent receivable

     —           412         24,562        8,676        —           33,650   

 

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Straight-line rent receivable

     —                 25,050        10,443        —         35,493   

Other loans

     —           177         —          165,030        —          165,207   

Net intercompany receivable (payable)

     27,121         1,275,634         (864,229     (438,526     —          —     

Investment in subsidiaries

     1,035,137         519,209         42,969        —          (1,597,315     —     

Other assets

     —           32,868         1,606        17,964        —          52,438   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

   $ 1,062,258       $ 1,953,858       $ 450,197      $ 179,464      $ (1,597,315   $ 2,048,462   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and Equity

              

Liabilities

              

Debt, net

   $ —           885,853       $ —        $ 14,372      $ —        $ 900,225   

Accounts payable and accrued expenses

     27,511         32,317         1,862        588        —          62,278   

Deferred revenue

     —           551         16,782        5,211        —          22,544   

Lease deposits and other obligations to tenants

     —           —           28,028        640        —          28,668   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     27,511         918,721         46,672        20,811        —          1,013,715   

Total Medical Properties Trust Inc. stockholder’s equity

     1,034,747         1,035,137         403,525        158,653        (1,597,315     1,034,747   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Non-controlling interests

     —           —           —          —          —          —     
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     1,034,747         1,035,137         403,525        158,653        (1,597,315     1,034,747   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities and Equity

   $ 1,062,258       $ 1,953,858       $ 450,197      $ 179,464      $ (1,597,315   $ 2,048,462   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

Condensed Consolidated Statements of Income

For the Three Months Ended March 31, 2012

(in thousands)

 

     Parent     Subsidiary
Issuers
    Subsidiary
Guarantors
     Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Revenues

             

Rent billed

   $ —        $ —        $ 28,635       $ 5,990      $ (2,460   $ 32,165   

Straight-line rent

     —          —          993         456        —          1,449   

Income from direct financing leases

     —          —          1,653         1,835        (1,653     1,835   

Interest and fee income

     —          2,944        5,035         3,586        (3,623     7,942   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total revenues

     —          2,944        36,316         11,867        (7,736     43,391   

Expenses

             

Real estate depreciation and amortization

     —          —          7,966         780        —          8,746   

Property-related

     —          131        200         4,114        (4,114     331   

General and administrative

     —          6,962        —           630        —          7,592   

Acquisition expenses

     —          3,425        —           —          —          3,425   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total operating expenses

     —          10,518        8,166         5,524        (4,114     20,094   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Operating income (expense)

     —          (7,574     28,150         6,343        (3,622     23,297   

Other income (expense)

             

Interest income (expense) and other

     —          (14     —           (2     —          (16

Interest income (expense)

     —          (12,788     391         (4,021     3,622        (12,796
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net other income (expense)

     —          (12,802     391         (4,023     3,622        (12,812
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     —          (20,376     28,541         2,320        —          10,485   

Income from discontinued operations

     —          —          —           121        —          121   

Equity in earnings of consolidated subsidiaries net of income taxes

     10,606        30,982        1,121         —          (42,709     —     
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net income (loss)

     10,606        10,606        29,662         2,441        (42,709     10,606   

Net income attributable to non-controlling interests

     (42     (42     —           —          42        (42
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to MPT common stockholders

   $ 10,564      $ 10,564      $ 29,662       $ 2,441      $ (42,667   $ 10,564   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

 

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Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2012

(in thousands)

 

     Parent     Subsidiary
Issuers
    Subsidiary
Guarantors
    Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Operating Activities

            

Net cash provided by (used in) operating activities

   $ 395      $ (11,062   $ 32,317      $ 1,702      $ —        $ 23,352   

Investing Activities

            

Real estate acquired

     —          —          (671     —          —          (671

Principal received on loans receivable

     —          —          —          1,184        —          1,184   

Investments in and advances to subsidiaries

     (198,243     (406,447     174,658        232,184        197,848        —     

Investments in loans receivable direct financing leases, and other investments

     —          —          (200,000     (196,500     —          (396,500

Construction in progress and other

     —          (490     (6,304     1,372        —          (5,422
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (198,243     (406,937     (32,317     38,240        197,848        (401,409

Financing Activities

            

Revolving credit facilities, net

     —          (50,000     —          (39,600     —          (89,600

Additions to term debt

     —          300,000        —          —          —          300,000   

Payments of term debt

     —          —          —          (58     —          (58

Distributions paid

     (22,345     (22,412     —          —          22,345        (22,412

Sale of common stock, net

     220,193        220,193        —          —          (220,193     220,193   

Lease deposits and other obligations to tenants

     —          —          155        (265     —          (110

 

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Table of Contents

Debt issuance costs paid and other financing activities

            (6,162            (20           (6,182
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net cash provided by financing activities

     197,848         441,619        155        (39,943     (197,848     401,831   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents for period

     —           23,620        155         (1     —          23,774   

Cash and cash equivalents at beginning of period

     —           101,230        1,409         87        —          102,726   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ —         $ 124,850      $ 1,564       $ 86      $ —        $ 126,500   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

 

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Table of Contents

Condensed Consolidated Balance Sheets

December 31, 2011

(in thousands)

 

     Parent      Subsidiary
Issuers
     Subsidiary
Guarantors
    Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Assets

              

Real estate assets

              

Land, buildings and improvements and intangible lease assets

   $ —         $ 37       $ 1,147,161      $ 128,201      $ —        $ 1,275,399   

Mortgage loans

     —           —           165,000        —          —          165,000   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Gross investment in real estate assets

     —           37         1,312,161        128,201        —          1,440,399   

Accumulated depreciation and amortization

     —           —           (91,822     (11,915     —          (103,737
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Net investment in real estate assets

     —           37         1,220,339        116,286        —          1,336,662   

Cash & cash equivalents

     —           101,230         1,409        87        —          102,726   

Interest and rent receivables

     —           399         22,529        6,934        —          29,862   

Straight-line rent receivables

     —           —           24,005        9,988        —          33,993   

Other loans

     —           177         —          74,662        —          74,839   

Net intercompany receivable (payable)

     21,955         872,382         (889,585     (4,752     —          —     

Investment in subsidiaries

     829,205         489,858         43,008        —          (1,362,071     —     

Other assets

     —           27,284         1,727        14,781        —          43,792   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

   $ 851,160       $ 1,491,367       $ 423,432      $ 217,986      $ (1,362,071   $ 1,621,874   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and Equity

              

Liabilities

              

Debt, net

   $ —         $ 635,820       $ —        $ 54,029      $ —        $ 689,849   

Accounts payable and accrued expenses

     22,345         25,783         2,576        421        —          51,125   

Deferred revenue

     —           559         17,488        5,260        —          23,307   

Lease deposits and other obligations to tenants

     —           —           27,874        904        —          28,778   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     22,345         662,162         47,938        60,614        —          793,059   

Total Medical Properties Trust Inc. stockholder’s equity

     828,815         829,205         375,494        157,372        (1,362,071     828,815   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Non-controlling interests

     —           —           —          —          —          —     
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     828,815         829,205         375,494        157,372        (1,362,071     828,815   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities and Equity

   $ 851,160       $ 1,491,367       $ 423,432      $ 217,986      $ (1,362,071   $ 1,621,874   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

 

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Table of Contents

Condensed Consolidated Statements of Income

For the Three Months Ended March 31, 2011

(in thousands)

 

     Parent     Subsidiary
Issuers
    Subsidiary
Guarantors
    Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Revenues

            

Rent billed

   $ —        $ —        $ 24,179      $ 3,508      $ (332   $ 27,355   

Straight-line rent

     —          —          1,247        463        —          1,710   

Interest and fee income

     —          1,397        4,447        945        (1,507     5,282   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     —          1,397        29,873        4,916        (1,839     34,347   

Expenses

            

Real estate depreciation and amortization

     —          —          6,833        737        —          7,570   

Property-related

     —          35        (72     427        (332     58   

General and administrative

     16        6,005        —          853        —          6,874   

Acquisition expenses

     —          1,625        —          415        —          2,040   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     16        7,665        6,761        2,432        (332     16,542   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (16     (6,268     23,112        2,484        (1,507     17,805   

Other income (expense)

            

Interest income and other

     —          (24     8        2        —          (14

Interest expense

     —          (7,968     (27     (1,651     1,507        (8,139
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net other income (expense)

     —          (7,992     (19     (1,649     1,507        (8,153
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     (16     (14,260     23,093        835        —         9,652   

Income (loss) from discontinued operations

     —          —          —          1,172        —          1,172   

Equity in earnings of consolidated subsidiaries net of income taxes

     10,840        25,100        1,078        —          (37,018     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     10,824        10,840        24,171        2,007        (37,018     10,824   

Net income (loss) attributable to non-controlling interests

     (44     (44     —          —          44        (44
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to MPT common stockholders

   $ 10,780      $ 10,796      $ 24,171      $ 2,007      $ (36,974   $ 10,780   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

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Table of Contents

Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2011

(in thousands)

 

     Parent     Subsidiary
Issuers
    Subsidiary
Guarantors
    Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Operating Activities

            

Net cash provided by (used in) operating activities

   $ (49   $ (8,847   $ 19,492      $ 8,690      $ —        $ 19,286   

Investing Activities

            

Real estate acquired

     —          —          (168,589     (4,897     —          (173,486

Principal received on loans receivable

     —          —          —          580        —          580   

Investments in and advances to subsidiaries

     22,366        (109,826     147,823        (38,046     (22,317     —     

Investments in loans receivable and other investments

     —          —          —          (5,463     —          (5,463

Construction in progress and other

     —          —          (3,064     (1,583     —          (4,647
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     22,366        (109,826     (23,830     (49,409     (22,317     (183,016

Financing Activities

            

Revolving credit facilities, net

     —          58,000        —          40,400        —          98,400   

Payments of term debt

     —          (6,851     (70     (24     —          (6,945

Distributions paid

     (22,317     (22,374     —          —          22,317        (22,374

Lease deposits and other obligations to tenants

     —          —          3,032        580        —          3,612   

Debt issuance costs paid and other financing activities

     —          (225     —          (136     —          (361
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by financing activities

     (22,317     28,550        2,962        40,820        22,317        72,332   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increase in cash and cash equivalents for period

     —          (90,123     (1,376     101        —          (91,398

Cash and cash equivalents at beginning of period

     —          96,822        1,387        199        —          98,408   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ —        $ 6,699      $ 11      $ 300      $ —        $ 7,010   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of the consolidated financial condition and consolidated results of operations are presented on a combined basis for Medical Properties Trust, Inc. and MPT Operating Partnership, L.P. as there are no material differences between these two entities.

The discussion and analysis of the consolidated financial condition and consolidated results of operations should be read together with the condensed consolidated financial statements and notes thereto contained in this Form 10-Q and the financial statements and notes thereto contained in our Annual Report on Form 10-K (as amended) for the year ended December 31, 2011.

Forward-Looking Statements.

This report on Form 10-Q contains certain “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. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or future performance, achievements or transactions or events to be materially different from those expressed or implied by such forward-looking statements, including, but not limited to, the risks described in our Annual Report on Form 10-K for the year ended December 31, 2011, as amended, filed with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934. Such factors include, among others, the following:

 

 

national and local economic, business, real estate and other market conditions;

 

 

the competitive environment in which we operate;

 

 

the execution of our business plan;

 

 

financing risks;

 

 

acquisition and development risks;

 

 

potential environmental contingencies and other liabilities;

 

 

other factors affecting real estate industry generally or the healthcare real estate industry in particular;

 

 

our ability to maintain our status as a REIT for federal and state income tax purposes;

 

 

our ability to attract and retain qualified personnel;

 

 

federal and state healthcare regulatory requirements; and

 

 

the continuing impact of the recent economic recession, which may have a negative effect on the following, among other things:

 

   

the financial condition of our tenants, our lenders, and institutions that hold our cash balances, which may expose us to increased risks of default by these parties;

 

   

our ability to obtain equity and debt financing on attractive terms or at all, which may adversely impact our ability to pursue acquisition and development opportunities and our future interest expense; and

 

   

the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis.

Key Factors that May Affect Our Operations

Our revenues are derived primarily from rents we earn pursuant to the lease agreements with our tenants and from interest income from loans to our tenants and other facility owners. Our tenants operate in the healthcare industry, generally providing medical, surgical and rehabilitative care to patients. The capacity of our tenants to pay our rents and interest is dependent upon their ability to conduct their operations at profitable levels. We believe that the business environment of the industry segments in which our tenants operate is generally positive for efficient operators. However, our tenants’ operations are subject to economic, regulatory and market conditions that may affect their profitability. Accordingly, we monitor certain key factors, changes to which we believe may provide early indications of conditions that may affect the level of risk in our lease and loan portfolio.

Key factors that we consider in underwriting prospective tenants and borrowers and in monitoring the performance of existing tenants and borrowers include the following:

 

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the historical and prospective operating margins (measured by a tenant’s earnings before interest, taxes, depreciation, amortization and facility rent) of each tenant or borrower and at each facility;

 

 

the ratio of our tenants’ and borrowers’ operating earnings both to facility rent and to facility rent plus other fixed costs, including debt costs;

 

 

trends in the source of our tenants’ or borrowers’ revenue, including the relative mix of Medicare, Medicaid/MediCal, managed care, commercial insurance, and private pay patients; and

 

 

the effect of evolving healthcare regulations on our tenants’ and borrowers’ profitability.

Certain business factors, in addition to those described above that directly affect our tenants and borrowers, will likely materially influence our future results of operations. These factors include:

 

 

trends in the cost and availability of capital, including market interest rates, that our prospective tenants may use for their real estate assets instead of financing their real estate assets through lease structures;

 

 

changes in healthcare regulations that may limit the opportunities for physicians to participate in the ownership of healthcare providers and healthcare real estate;

 

 

reductions in reimbursements from Medicare, state healthcare programs, and commercial insurance providers that may reduce our tenants’ profitability and our lease rates;

 

 

competition from other financing sources; and

 

 

the ability of our tenants and borrowers to access funds in the credit markets.

CRITICAL ACCOUNTING POLICIES

Refer to our 2011 Annual Report on Form 10-K, as amended, for a discussion of our critical accounting policies, which include revenue recognition, investment in real estate, purchase price allocation, loans, losses from rent receivables, stock-based compensation, exchangeable senior notes, and our accounting policy on consolidation. During the three months ended March 31, 2012, there were no material changes to these policies, except we began using direct finance lease (“DFL”) accounting with the acquisition and lease of the real estate of Ernest. Under DFL accounting, future minimum lease payments are recorded as a receivable. Unearned income, which represents the net investment in the DFL less the sum of minimum lease payments receivable and the estimated residual values of the leased properties, is deferred and amortized to income over the lease term to provide a constant yield when collectability of the lease payments is reasonably assured. Investments in DFLs are presented net of unamortized and unearned income. DFLs are placed on non-accrual status when management determines that the collectability of contractual amounts is not reasonably assured. While on non-accrual status, DFLs are accounted for on a cash basis, in which income is recognized only upon receipt of cash.

Overview

We are a self-advised real estate investment trust (“REIT”) focused on investing in and owning net-leased healthcare facilities across the United States. We have operated as a REIT since April 6, 2004, and accordingly, elected REIT status upon the filing of our calendar year 2004 federal income tax return. Medical Properties Trust, Inc. was incorporated under Maryland law on August 27, 2004, and MPT Operating Partnership, L.P. was formed under Delaware law on September 10, 2003. We conduct substantially all of our business through MPT Operating Partnership, L.P. We acquire and develop healthcare facilities and lease the facilities to healthcare operating companies under long-term net leases, which require the tenant to bear most of the costs associated with the property. We also make mortgage loans to healthcare operators collateralized by their real estate assets. In addition, we selectively make loans to certain of our operators through our taxable REIT subsidiaries, the proceeds of which are typically used for acquisitions and working capital. Finally, from time to time, we acquire a profits or other equity interest in our tenants that gives us a right to share in such tenant’s profits and losses.

At March 31, 2012, our portfolio consisted of 78 properties: 67 facilities (of the 72 facilities that we own, of which two are subject to long-term ground leases) are leased to 21 tenants, one was not under lease as it is under re-development, three were under development, and the remaining assets are in the form of first mortgage loans to two operators. Our owned and ground leased facilities consisted of 27 general acute care hospitals, 27 long-term acute care hospitals, 16 inpatient rehabilitation hospitals, two medical office buildings, and six wellness centers. The non-owned facilities on which we have made mortgage loans consisted of general acute care facilities.

 

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Table of Contents

All of our investments are currently located in the United States. The following is our revenue by operating type (dollar amounts in thousands):

Revenue by property type:

 

     For the Three
Months Ended
March 31,
2012
     % of
Total
    For the Three
Months Ended
March 31,
2011
     % of
Total
 

General Acute Care Hospitals

   $ 24,625         56.8   $ 20,497         59.7

Long-term Acute Care Hospitals

     11,584         26.7     9,024         26.3

Rehabilitation Hospitals

     6,321         14.5     3,978         11.6

Medical Office Buildings

     446         1.0     433         1.2

Wellness Centers

     415         1.0     415         1.2
  

 

 

    

 

 

   

 

 

    

 

 

 

Total revenue

   $ 43,391         100.0   $ 34,347         100.0
  

 

 

      

 

 

    

We have 28 employees as of May 4, 2012. We believe that any increase in the number of our employees will have only immaterial effects on our operations and general and administrative expenses. We believe that our relations with our employees are good. None of our employees are members of any union.

Results of Operations

Three Months Ended March 31, 2012 Compared to March 31, 2011

Net income for the three months ended March 31, 2012 was $10.6 million, compared to $10.8 million for the three months ended March 31, 2011. Funds from operations (“FFO”), after adjusting for certain items (as more fully described in Reconciliation of Non-GAAP Financial Measures), was $22.5 million, or $0.18 per diluted share for the 2012 first quarter as compared to $20.4 million, or $0.18 per diluted share for the 2011 first quarter.

A comparison of revenues for the three month periods ended March 31, 2012 and 2011 is as follows, as adjusted in 2011 for discontinued operations (dollar amounts in thousands):

 

     2012      % of
Total
    2011      % of
Total
    Year over
Year
Change
 

Base rents

   $ 31,669         73.0   $ 26,864         78.2     17.9  % 

Straight-line rents

     1,449         3.3     1,710         5.0     (15.3 )% 

Percentage rents

     496         1.1     491         1.4     1.0  % 

Fee income

     133         0.4     65         0.2     104.6  % 

Income from direct financing leases

     1,835         4.2     —           0.0     100.0  % 

Interest from loans

     7,809         18.0     5,217         15.2     49.7  % 
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total revenue

   $ 43,391         100.0   $ 34,347         100.0     26.3  % 
  

 

 

    

 

 

   

 

 

    

 

 

   

Base rents for the 2012 first quarter increased 17.9% versus the prior year as a result of the additional rent generated from annual escalation provisions in our leases and $4 million of incremental revenue from properties acquired in 2011. Income from direct financing leases is solely related to the Ernest Transaction. Interest from loans is higher than the prior year due to the $2 million and $0.5 million of additional interest related to the Ernest and Hoboken loans, respectively.

Real estate depreciation and amortization during the first quarter of 2012 increased to $8.7 million from $7.6 million in 2011, due to the incremental depreciation from the properties acquired since March 2011.

 

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Acquisition expenses increased from $2.0 million in the first quarter of 2011 to $3.4 million in 2012 as a result of the Ernest Transaction in the first quarter of 2012.

General and administrative expenses totaled $7.6 million for the 2012 first quarter, which is 17.5% of total revenues, down from 20.0% of revenues in the prior year first quarter.

Interest expense for the quarters ended March 31, 2012 and 2011 totaled $12.8 million and $8.1 million, respectively. This increase is primarily related to higher debt balances associated with our 2011 and 2012 Senior Unsecured Notes and 2012 Term Loan . See Note 4 to our Condensed Consolidated Financial Statements in Item 1 to this Form 10-Q for further information on our debt activities.

In addition to the items noted above, net income (loss) for the first quarter in both years was impacted by discontinued operations. See Note 8 to our Condensed Consolidated Financial Statements in Item 1 to this Form 10-Q for further information.

Reconciliation of Non-GAAP Financial Measures

Investors and analysts following the real estate industry utilize funds from operations, or FFO, as a supplemental performance measure. While we believe net income available to common stockholders, as defined by generally accepted accounting principles (GAAP), is the most appropriate measure, our management considers FFO an appropriate supplemental measure given its wide use by and relevance to investors and analysts. 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.

As defined by the National Association of Real Estate Investment Trusts, or NAREIT, FFO 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 related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. We compute FFO in accordance with the NAREIT definition. FFO should not be viewed as a substitute measure of our operating performance since it does 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 are significant economic costs that could materially impact our results of operations.

The following table presents a reconciliation of net income attributable to MPT common stockholders to FFO for the three months ended March 31, 2012 and 2011 ($ amounts in thousands except per share data):

 

     For the Three Months Ended  
     March 31,
2012
    March 31,
2011
 

FFO information:

    

Net income attributable to MPT common stockholders

   $ 10,564      $ 10,780   

Participating securities’ share in earnings

     (252     (316
  

 

 

   

 

 

 

Net income, less participating securities’ share in earnings

   $ 10,312      $ 10,464   

Depreciation and amortization:

    

Continuing operations

     8,746        7,570   

Discontinued operations

     —          323   

Gain on sale of real estate

     —          (5
  

 

 

   

 

 

 

Funds from operations

   $ 19,058      $ 18,352   

Acquisition costs

     3,425        2,040   
  

 

 

   

 

 

 

Normalized funds from operations

   $ 22,483      $ 20,392   

Per diluted share data:

    

Net income, less participating securities’ share in earnings

   $ 0.08      $ 0.09   

Depreciation and amortization:

    

Continuing operations

     0.07        0.08   

Discontinued operations

     —          —     

Real estate impairment charge

     —          —     

Loss (gain) on sale of real estate

     —          —     
  

 

 

   

 

 

 

Funds from operations

   $ 0.15      $ 0.17   

Acquisition costs

     0.03        0.01   
  

 

 

   

 

 

 

Normalized funds from operations

   $ 0.18      $ 0.18   
  

 

 

   

 

 

 

 

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Table of Contents

Disclosure of Contractual Obligations

The following table summarizes known material contractual obligations as of March 31, 2012 (amounts in thousands):

 

Contractual Obligations

   Less Than
1 Year
     1-3 Years      3-5 Years      After
5 Years
     Total  

2006 Senior Unsecured Notes (1)

   $ 5,238       $ 13,969       $ 138,048       $ —         $ 157,255   

Exchangeable senior notes

     1,018         11,509         —           —           12,527   

2011 and 2012 Senior Unsecured Notes

     37,313         87,375         87,375         859,344         1,071,407   

Revolving credit facilities (2)

     1,500         4,000         1,500         —           7,000   

Term loans

     2,761         7,338         105,283         13,984         129,366   

Operating lease commitments (3)

     2,564         4,231         3,991         48,369         59,155   

Purchase Agreements (4)

     52,108         7,450         —           —           59,558   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Totals

   $ 102,502       $ 135,872       $ 336,197       $ 921,697       $ 1,496,268   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) The interest rates on these notes are currently variable rates, but we entered into interest rate swaps to fix these interest rates until maturity. For $65 million of our $125 million Senior Notes, the rate is 5.507% and for $60 million of our $125 million Senior Notes the rate is 5.675%. See Note 4 for more information.
(2) This assumes balance and rate in effect at March 31, 2012 ($0 as of March 31, 2012) remains in effect through maturity. This also reflects unused credit facility fees assuming balance remains in effect through maturity.
(3) Most of our contractual obligations to make operating lease payments are related to ground leases for which we are reimbursed by our tenants along with corporate office and equipment leases.
(4) Includes approximately $60 million of future development expenditures related to River Oaks re-development and other capital project expenditures, including our Emerus properties under development.

LIQUIDITY AND CAPITAL RESOURCES

During the first three months of 2012, operating cash flows, which primarily consisted of rent and interest from mortgage and working capital loans, approximated $23.4 million, which with cash on-hand, were principally used to fund our dividends of $22.4 million and working capital needs.

To fund the Ernest Transaction disclosed in Note 3, on February 7, 2012, we completed an offering of 23,575,000 shares of our common stock (including 3,075,000 shares sold pursuant to the exercise in full of the underwriters’ overallotment option), resulting in net proceeds (after underwriting discount) of $220.7 million. In addition, on February 17, 2012, we completed a $200 million offering of senior unsecured notes, resulting in net proceeds, after underwriting discount, of $196.5 million, which we also used to fund the Ernest Transaction. On March 9, 2012, we closed on a $100 million senior unsecured term loan facility and exercised the $70 million accordion feature on our revolving credit facility. Proceeds from this new term loan will be used for general corporate purposes, including potential future acquisitions.

During the 2011 first quarter, operating cash flows, which primarily consisted of rent and interest from mortgage and working capital loans, approximated $19.3 million, which, along with cash on-hand and draws on our revolvers, were principally used to fund our dividend of $22.4 million and investing activities of $183.0 million.

 

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Table of Contents

Short-term Liquidity Requirements: At May 4, 2012, our availability under our 2010 amended revolving credit facility plus cash on-hand approximated $325 million. This includes approximately $40 million of availability under our 2007 revolving credit facility that is set to mature in June 2012. We have only nominal principal payments due and no significant maturities in 2012– see five-year debt maturity schedule below. We believe that the liquidity available to us, along with our current monthly cash receipts from rent and loan interest, is sufficient to provide the resources necessary for operations, debt and interest obligations, our firm commitments (including capital expenditures, if any), dividends in order to comply with REIT requirements and to fund our current investment strategies for the next twelve months. In addition, we have an at-the-market equity offering program in place under which we may sell up to $50 million in shares (of which $10 million has been sold to-date) which may be used for general corporate purposes as needed.

Long-term Liquidity Requirements: As of March 31, 2012, we had less than $12 million in debt principal payments due before 2016 – see five-year debt maturity schedule below. With our liquidity at May 4, 2012 of $325 million along with our current monthly cash receipts from rent and loan interest, and availability under our at-the-market equity offering program, we believe we have the liquidity available to us to fund our operations, debt and interest obligations, dividends in order to comply with REIT requirements, firm commitments (including capital expenditures, if any) and investment strategies for the foreseeable future.

As of March 31, 2012, principal payments due for our debt (which exclude the effects of any discounts recorded) are as follows:

 

2012

   $ 174   

2013

     11,249   

2014

     266   

2015

     283   

2016

     225,299   

Thereafter

     663,101   
  

 

 

 

Total

   $ 900,372   
  

 

 

 

Distribution Policy

The table below is a summary of our distributions declared during the two year period ended March 31, 2012:

 

Declaration Date

  

Record Date

  

Date of Distribution

   Distribution
per Share
 

February 16, 2012

   March 15, 2012    April 12, 2012    $ 0.20   

November 10, 2011

   December 8, 2011    January 5, 2012    $ 0.20   

August 18, 2011

   September 15, 2011    October 13, 2011    $ 0.20   

May 19, 2011

   June 16, 2011    July 14, 2011    $ 0.20   

February 17, 2011

   March 17, 2011    April 14, 2011    $ 0.20   

November 11, 2010

   December 9, 2010    January 6, 2011    $ 0.20   

August 19, 2010

   September 14, 2010    October 14, 2010    $ 0.20   

May 20, 2010

   June 17, 2010    July 15, 2010    $ 0.20   

We intend to pay to our stockholders, within the time periods prescribed by the Internal Revenue Code (“Code”), all or substantially all of our annual taxable income, including taxable gains from the sale of real estate and recognized gains on the sale of securities. It is our policy to make sufficient cash distributions to stockholders in order for us to maintain our status as a REIT under the Code and to avoid corporate income and excise taxes on undistributed income. See Note 4 to our condensed consolidated financial statements in Item 1 to this Form 10-Q for any restrictions placed on dividends by our existing credit facility.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Our primary exposure to market risks relates to changes in interest rates and equity prices. In addition, the value of our facilities will be subject to fluctuations based on changes in local and regional economic conditions and changes in the ability of our tenants to generate profits, all of which may affect our ability to refinance our debt if necessary. The changes in the value of our facilities would be affected also by changes in “cap” rates, which is measured by the current annual base rent divided by the current market value of a facility.

 

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Our primary exposure to market risks relates to fluctuations in interest rates and equity prices. The following analyses present the sensitivity of the market value, earnings and cash flows of our significant financial instruments to hypothetical changes in interest rates and equity prices as if these changes had occurred. The hypothetical changes chosen for these analyses reflect our view of changes that are reasonably possible over a one year period. These forward looking disclosures are selective in nature and only address the potential impact from financial instruments. They do not include other potential effects which could impact our business as a result of changes in market conditions.

Interest Rate Sensitivity

For fixed rate debt, interest rate changes affect the fair market value but do not impact net income to common stockholders or cash flows. Conversely, for floating rate debt, interest rate changes generally do not affect the fair market value but do impact net income to common stockholders and cash flows, assuming other factors are held constant. At March 31, 2012, our outstanding debt totaled $900.2 million, which consisted of fixed-rate debt of $800.2 million (including $125.0 million of floating debt swapped to fixed) and variable rate debt of $100.0 million. If market interest rates increase by one-percentage point, the fair value of our fixed rate debt at March 31, 2012, after considering the effects of the interest rate swaps entered into in 2010, would decrease by $50.2 million. Changes in the fair value of our fixed rate debt will not have any impact on us unless we decided to repurchase the debt in the open markets.

If market rates of interest on our variable rate debt increase by 1%, the increase in annual interest expense on our variable rate debt would decrease future earnings and cash flows by $1.0 million per year. If market rates of interest on our variable rate debt decrease by 1%, the decrease in interest expense on our variable rate debt would increase future earnings and cash flows by $1.0 million per year. This assumes that the average amount outstanding under our variable rate debt for a year is $100.0 million, the balance of our term loan at March 31, 2012.

Share Price Sensitivity

At March 31, 2012, we have $11 million in 2008 exchangeable notes outstanding. These notes have a conversion adjustment feature, which could affect their stated exchange ratio of 80.8898 common shares per $1,000 principal amount of notes, equating to an exchange price of $12.36 per common share. Our dividends declared since we sold the 2008 exchangeable notes have not adjusted our conversion price as of March 31, 2012. Future changes to the conversion price will depend on our level of dividends which cannot be predicted at this time. Any adjustments for dividend increases until the 2008 exchangeable notes are settled in 2013 will affect the price of the notes and the number of shares for which they may eventually be settled. Using the outstanding notes and, assuming a price of $20 per share, we would be required to issue an additional 0.3 million shares. At $25 per share, we would be required to issue an additional 0.4 million shares.

Item 4. Controls and Procedures.

We have adopted and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the

 

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time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b), under the Securities Exchange Act of 1934, as amended, we have carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the quarter covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be disclosed by us in the reports that we file with the SEC.

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

There have been no material changes to the Risk Factors as presented in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2011.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

(a) None.

 

(b) Not applicable.

 

(c) None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

 

(a) None.

 

(b) None.

 

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Table of Contents

Item 6. Exhibits.

 

Exhibit

Number

  

Description

  3.1   

Articles of Amendment of Medical Properties Trust, Inc. (incorporated by reference to Medical Properties Trust, Inc.’s Current Report on Form 8-K, filed with the Commission on January 31, 2012).

10.1   

Purchase Agreement (incorporated by reference to Medical Properties Trust, Inc.’s Current Report on Form 8-K, filed with the Commission on January 31, 2012).

10.2   

Master Sublease Agreement (incorporated by reference to Medical Properties Trust, Inc.’s Current Report on Form 8-K, filed with the Commission on January 31, 2012).

10.3   

Real Estate Loan Agreement (incorporated by reference to Medical Properties Trust, Inc.’s Current Report on Form 8-K, filed with the Commission on January 31, 2012).

10.4   

Agreement and Plan of Merger (incorporated by reference to Medical Properties Trust, Inc.’s Current Report on Form 8-K, filed with the Commission on January 31, 2012).

10.5   

Term Loan Agreement, dated as of March 9, 2012, among Medical Properties Trust, Inc., MPT Operating Partnership, L.P., the several lenders from time to time party thereto, Royal Bank of Canada, as syndication agent, and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Medical Properties Trust, Inc. and MPT Operating Partnership, L.P.’s Current Report on Form 8-K, filed with the Commission on March 15, 2012).

31.1    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (Medical Properties Trust, Inc.)
31.2    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (Medical Properties Trust, Inc.)
31.3    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (MPT Operating Partnership, L.P.)
31.4    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (MPT Operating Partnership, L.P.)
32.1    Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Medical Properties Trust, Inc.)
32.2    Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (MPT Operating Partnership, L.P.)
Exhibit 101.INS    XBRL Instance Document
Exhibit 101.SCH    XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL    XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEF    XBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LAB    XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE    XBRL Taxonomy Extension Presentation Linkbase Document

 

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Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

MEDICAL PROPERTIES TRUST, INC.

By:

  /s/ R. Steven Hamner
 

 

  R. Steven Hamner
  Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
MPT OPERATING PARTNERSHIP, L.P.
 
By:  

/s/ R. Steven Hamner

  R. Steven Hamner
 

Executive Vice President and Chief

Financial Officer of the sole member of

the general partner of

MPT Operating Partnership, L.P.

(Principal Financial and Accounting Officer)

Date: May 10, 2012

 

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Table of Contents

INDEX TO EXHIBITS

 

Exhibit

Number

  

Description

3.1    Articles of Amendment of Medical Properties Trust, Inc. (incorporated by reference to Medical Properties Trust, Inc.’s Current Report on Form 8-K, filed with the Commission on January 31, 2012).
10.1    Purchase Agreement (incorporated by reference to Medical Properties Trust, Inc.’s Current Report on Form 8-K, filed with the Commission on January 31, 2012).
10.2    Master Sublease Agreement (incorporated by reference to Medical Properties Trust, Inc.’s Current Report on Form 8-K, filed with the Commission on January 31, 2012).
10.3    Real Estate Loan Agreement (incorporated by reference to Medical Properties Trust, Inc.’s Current Report on Form 8-K, filed with the Commission on January 31, 2012).
10.4    Agreement and Plan of Merger (incorporated by reference to Medical Properties Trust, Inc.’s Current Report on Form 8-K, filed with the Commission on January 31, 2012).
10.5    Term Loan Agreement, dated as of March 9, 2012, among Medical Properties Trust, Inc., MPT Operating Partnership, L.P., the several lenders from time to time party thereto, Royal Bank of Canada, as syndication agent, and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Medical Properties Trust, Inc. and MPT Operating Partnership, L.P.’s Current Report on Form 8-K, filed with the Commission on March 15, 2012).
31.1    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (Medical Properties Trust, Inc.)
31.2    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (Medical Properties Trust, Inc.)
31.3    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (MPT Operating Partnership, L.P.)
31.4    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (MPT Operating Partnership, L.P.)
32.1    Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Medical Properties Trust, Inc.)
32.2    Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (MPT Operating Partnership, L.P.)
Exhibit 101.INS    XBRL Instance Document
Exhibit 101.SCH    XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL    XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEF    XBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LAB    XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE    XBRL Taxonomy Extension Presentation Linkbase Document

 

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