Q4 2019 Earnings Call
[music], ladies and gentlemen, thank you for standing by and welcome to the Q4 2019 Medical properties Trust earnings Conference call. At this time all participant lines are in listen only mode. After the speakers presentation. There will be a question and answer session to ask a question during the session you any.
Star one on your telephone please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I when I like to end the conference over to your hosts today Charles Lambert managing director. Thank you. Please go ahead Sir.
Good morning, welcome to the medical properties Trust Conference call.
I'll discuss our fourth quarter and full year 2019 financial results.
With me today are Edward K., Aldag Junior Chairman, President and Chief Executive Officer, and the company and Steven Hamner Executive Vice President and Chief Financial Officer.
A press release was distributed this morning and furnished on form eight.
With the Securities and Exchange Commission.
He did not receive a copy is available on our website.
W. Dot medical properties Trust column in the Investor Relations section. Additionally, we're hosting a live webcast of today's call.
You can access and nothing section.
During the course of this call.
Well my projections and certain other statements that may be considered forward looking statements within the meaning of the private Securities Litigation Reform Act 1990 Park.
These forward looking statements are subject to known and unknown risks uncertainties and other factors that may cause our financial results and future events to differ.
Clearly from those expressed and underlying such forward looking statements.
We refer you to the company's reports filed with the Securities Exchange Commission for discussion of the factors that could cause the companys actual results for future events to differ materially from those expressed in this call.
The information.
And being provided today is as of the state only and except as required by federal Securities laws. The company does not undertake no duty to update any such information.
In addition, during the course of the conference call, we will describe certain non-GAAP financial measures, which should be considered in addition to knock and Lou.
Comparable GAAP financial measures.
Please note that in our press release medical properties Trust is reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements.
You can also refer to our website at Www Dot medical properties Trust Dot com for the most.
Comparable financial measures and related reconciliation.
I'll now turn the call over to our Chief Executive Officer It out.
Thank you Charles Good morning, and thank you all for joining us on today's fourth quarter earnings call.
2019 was a record year for MPT during 2000.
Then lighting, we completed approximately $4.5 billion in international and domestic acquisitions with new as well as existing operators.
Investing at approximately 2.7 billion domestically and 1.8 billion in international acquisitions MPT now this hospital located in the U.S.
Yes, United Kingdom, Germany, Switzerland, Spain, Italy, Portugal, and Australia.
On 12, 30, 118, our enterprise value was approximately $10 billion today. It is approximately $19 billion. This represents a 90% increase.
At the end of 2018 or equity market cap was approximately 6 billion today, it's almost 12 billion.
From our IPO in 2005 to date, our total shareholder return was more than 554% compared to 336% for the S. In L. health care REIT index.
At 195% for the broader read index.
Our three year total shareholder return was 113% compared to 33% for the SNL health care REIT index and 29% for the broader read index.
Last year, our total shareholder return was 38 <unk> percent compared.
The 21 and I have present for the SNL read index.
26% for the broader reach index.
At the beginning of 2019, our largest send it represented almost 40% of our total portfolio.
Today, our largest then it represents less than 25% of our next two.
Just at our next two largest tenant represent 13% and not into half percent respectively.
And most importantly to US no one property represents more than 2.3% of our total portfolio.
In early January we acquired 30, B M a acute care facilities in the United Kingdom.
Well in aggregate purchase price approximating $1.95 billion.
In a related transaction circle help well, it's been a trusted MPT tenant for years has assumed the operations of the entire B M. A portfolio of acute care facilities.
Circle is committed to a multimillion pound didnt.
That's what program for facility infrastructure technology and people, we're confident in circles ability to operate this portfolio of hospitals circle brings significant depth of experience UK private hospital health care leadership combined with the backing of a strong financial inexperienced health care partner.
Since the incorporation along with deep knowledge of local markets from experienced existing B M. A hospital level <unk> leadership.
MPT is excited about the benefits of this transaction from a portfolio perspective, including the increase of our UK hospital footprint and the growing opportunities related to <unk>.
That hospital operators in the UK.
Circle is confident that there's significant opportunity to expand private insurance and self pay volumes maximize certain service lines within local markets.
<unk> facility infrastructure and technology and to partner with the NHS to augment local market provisions.
The timely patient care and a comfortable setting.
Additionally in December we closed on May 700 million dollar transaction that expanded our already strong relationship with Lifepoint health at Apollo Global management.
This transaction included 10 acute care hospitals across the state.
An increase our total investment would like Boeing the 17 acute care hospitals and $1.2 billion.
We continued our strong finish the year with yet another acquisition in December this transaction was an approximate hundred $30 million equity investment for 45% stake into joint.
Your propco entities in Spain.
These joint ventures on the real estate of two Madrid acute care hospitals that are leased to an operated by H.M. Hospital by hospital. It was one of the largest private hospital operators insight.
We're also very excited about our first hospital investment in Portugal.
We're Jos a de Mello Portugal's largest private operator.
MPD acquired a newly constructed 37 bed hospital in the city of this zoo more approximately $31 million. This transaction represents MBT presents MPG with the unique opportunity the entered the attractive Portuguese.
With care market, where they leading growth oriented hospital, operator that we've known for years.
Similar to the UK health care market, the private hospitals in Portugal are filling the increasing gaps in coverage offered by the public system, and then increasingly consumer driven healthcare marketplace, it's rewarding providers.
Strong quality care metrics. This threats. This transaction provides a growth platform and market recognition for MPT to participate in future acquisitions with Jos a de Mello and other operators in Portugal.
With our continued strong international expansion highlighted above and BT has undertaken to.
The expansion of its international office space and people based to meet our day to day business needs.
Quarterly during 2019, we expanded our operations in Luxembourg, increasing our head count to approximately 15 full time employees, including the transfer of asset management and.
Writing personnel from our Birmingham Office. In addition, we are in the process of establishing our first Australian office to open in Sydney during the second quarter of this year.
We also continue to grow the death and personnel and experience in our U.S. offices in Birmingham and New York.
With these acquisitions are.
You asked investment concentration of 67% and international is 33% as we've said, we expect our portfolio to generally be about 70% U.S. and 30% International However, as we make significant investments that will fluctuate from time to time.
As reported last quarter.
We closed on a 28 million dollar behavioral health opportunity with zero psychiatric hospitals for the development of the 92 bed freestanding hospitals in the Houston, Texas market.
In the ages, the behavioral health company focused on providing best in class care for patients with acute complex medical and psychiatric.
Conditions, and it's known as the largest neuro psychiatric care organization in the country. They need an underserved need in treating the severe co morbidities is that traditionally psych hospitals are not equipped to handle today.
Estrogen began in the fourth quarter 2019 and continues to progress as planned.
We expect this hospital the open in the third quarter of this year.
There's such a tremendous unmet need for behavioral hospitals in the U.S., we expect to be at the forefront of the which led to be at the forefront to provide financing the held me these needs.
For 2020, we are projecting that we will close in around $3 billion.
The property to date, we have already close on 2 billion and are actively working an additional 3 billion.
At this point I'm not comfortable enough to project that we will do the full 5 million in 2020, but it's certainly possible. We will update you on this as we progress.
And healthcare related.
Legislation, we are seeing some increased talk regarding transparency and Medicaid fiscal accountability regulation, we do not expect any negative impact on our portfolio for me either.
Now I'll provide a quick a quick update on our existing portfolio.
We added 13 properties.
11 general acute care into arbs to our same store reporting as a frac did three to acute care in one eltek with these changes we saw our EBITDARM essentially flat across all categories. Just to remind you report we report one quarter in arrears. So this is referring to the third.
Quarterly year, which is historically the softest quarter.
The over operators have reported a slight uptick in fourth quarter admissions with the flu. However, none of our operators have reported cases, though the corona of ours at this time.
I would like to provide a quick update on Stuart Stuart continues to see good progress.
Both operationally and financially as Stuart continues to implement it's fully integrated model and the various markets in which it operates opportunities remain for both growth and potential Divestures and December Stewart successfully completed the sale of itself George managed care plan in Arizona.
I'm health care continues to be consistently the hopper former that it has been since our initial investment in 2000 and Oh.
Overall EBITDARM coverage for our 22 problem hospitals remain strong nearly half of their hospitals covered greater than four times at health grades 20.
20 reports of the nation event problem hospitals were identified among the best in the nation, receiving over 300 recognitions for exceptional performance in quality.
Currently proms concentration is 6.9%.
Prospect continues to perform in line with our underwriting expectations.
And they're concentration is currently at 95%.
No that all of you are well aware the wildfires in Australia at this time, none of our facilities had been affected in non had been seriously threatened we continue to stay in consistent content withheld scoping and monitor the evolving situation.
At this time I'll, let Steve.
You to go over our for that you will perform steep.
Thank you Ed.
This morning, we reported normalized FFO of 35 cents per diluted share for the fourth quarter of 2019, and the dollar 30 for the full year.
I will highlight a few items in just a minute, but most important.
The most important.
Good point to make is that even though 2019 was a truly monumental year, regardless of how success is defined MPT has already demonstrated that when you when he should continue to provide unmatched pershare growth.
First of vacation and financial performance.
In 2019, we.
Wired immediately get strongly accretive hospital real estate totaling four and a half billion dollars, resulting in a 64% year over year increase in total assets.
This along with a tremendous start for 2020 demonstrates that Npts Hospital real estate solutions are gaining acceptance at an accelerated pace from.
Hospital operators sponsors investors and other market participants both in the U.S. and internationally.
Our acquisition activity in 2019 was supported by similarly unmatched execution in the capital markets. During the year, we issued almost $4 billion of unsecured notes in term loans with strategically.
The staggered maturities in multiple currencies at a blended interest rate of approximately 3%.
That's a full 500 basis points spread compared to the 8% blended investment yield on the four and a half billion dollars a hospital real estate we acquired.
We also issued 100.
And 45 million shares of common stock for more than $2.6 billion in proceeds accounting for a full 10% of all read equity raised during the year.
Even with this substantial amount of new common equity we delivered total returns to shareholders are almost 39%.
And our dividend yield just.
Now below the health care read average for the first time.
And we have an outstanding a F O pro forma payout ratio was 75%.
Reflecting all time highs in our share price.
With respect to the fourth quarter financial results that we released this morning, there just a couple of items to highlight.
These are primarily the result of the very busy quarter that included large acquisitions dispositions closings and capital markets activities number one there are a handful of transactions primarily the gain on sale of Q hospitals in New Jersey, then in accordance with Navarrete guidance and aggregating about 29.
On a half million dollars, our adjusted from F., though.
Below the full line to arrive at normalized FFO, we make adjustments that are similar to what we've done in recent years, including for unused financing fees related to Prefunding expected acquisitions straight line rent write offs related to dispose properties.
And other less material items that are not expected to recur.
DNA expenses were nominally higher in the fourth quarter relative to recent prior quarters due primarily to the tremendous growth in assets in revenue and the achievement of certain share based compensation performance metrics, we expect 2020 DNA will normalize.
Yes, do a range of between nine and 9.5% of total adjusted revenue.
The real story about 29 genius, how our efforts and their results have positioned us for continued growth into 2020.
In late December upon announcing our 1.95 billion dollar agreement to acquire 30 hospitals.
In the UK, we also announced our estimate that the resulting portfolio after expected de levering from our current 6.0 times net debt to EBITDA do around 5.5 times will generate a run rate annualized FFO per share up between $1.65 ended dollarssixty eight.
This morning, we reaffirmed that estimate and while that is not meant to be a prediction of actual calendar year F. O. The 25% plus increased over 2019th actual FFO per share is virtually unmatched in almost any meaningfully sized threed.
I'll point out also that other than the January.
The completion of the 1.95 billion dollar UK transaction that run rate doesn't include any estimates for further acquisitions.
As Ed mentioned, just a few minutes ago, we are actively working a pipeline of about $3 billion. So we certainly expect you add accretive Fo during 2020.
And with that we'll be happy to take any questions are not turn this back to the operator.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press. The pound key please standby will be compiled the culinary roster.
And our first question comes from the line of Chad Vanacore.
From Stifel. Your line is now fan.
Thanks, So with the new Circle health transaction.
There are large portfolio, what can you tell us about that coverage. There and then you also have to development projects with them as well.
Do you actually have plans on the board expand that relationship further.
Jed I think that from an expansion standpoint, so I think they'll have their hands full for for the upcoming year, we certainly think that they'll they'll be able to to grow the company but.
Not not in the in the near future. The coverage for these facilities are approximately two time.
And the two development facilities are really do development facilities are one location or do two developments in one location. They are expected to be completed in may of this year.
All right then Ed just thinking about any potential Brexit impact there how do you think about that in your underwriting coverage.
Yeah, we really haven't seen any any impact whatsoever judge the only real impact a that that we had any concern over would be the a loss of physicians or the inability to recruit decisions, but we haven't seen that affected any of our facilities and neither have any the operators that were.
Yes and.
Alright, then sticking in in the European locale you increased your Luxembourg worsening personnel you promote it looks average senior management is there anything case in a more opportunities that you're seeing abroad, and how should we think about any kind of shift from a from today's distribution you asked it and.
National.
Well, that's that's a good question, we see tremendous amount of opportunities internationally, not Justin in Europe, but with our expansions and Australia and potentially expansions into a central and South America, but Luke is responsible.
Well for all of our international a property she's been with US for 12 years is done an outstanding job I don't think that our overall mix will change much. It will obviously fluctuated because all acquisitions on happened on the same day, but we're still generally comfortable with the 30% to 35% or a.
No number.
Alright, and then you you're developing as psychiatric hospital, how should we think about the opportunities there.
Well, that's a great need in this country, there's a great opportunity for it out there, but a there just aren't that many big operators out there. So I don't think it will be a.
Very big part of our portfolio, but I certainly hope that we can grow it from where it is today.
All right one last one from me, which is a straight line rent bumped up pretty significantly in the quarter, how should we think about what normalized run rate.
I think what you see the adjustment in the CFO.
Reconciliation is probably indicative of a you know what you'd expect going forward on a quarterly basis.
Alright, thank Steve that's it for me.
Thanks, Chad.
Thank you know our next question comes from the line of drew Babin from Baird. Your line is now fan.
Hey.
Good morning.
Morning grew.
Question related to one of the Chad on the airport cooling screen investments.
I think it was mentioned in the release, if there's some opportunity for consolidation here I mean, obviously you believed in the partners that you've chosen in those markets I guess can you reconcile.
What you did with those investments with acquisitions that meet the occur.
During this year and also add anything about the Portugal, and Spain health care models nationally that yeah, potentially create an opportunity or things that are you can give some color on a dynamics in one of those markets are attractive that would also be helpful.
Sure, let me start with Portugal, Oh, we've been working in Portugal for very long time, we've.
Build very strong relationships with three different a private operators. There are the largest one is jos a de mello a it's a relationship that we've been cultivating a very very well for a three to four years, we think they do an outstanding job of of running hospitals, we're excited about.
This button. This this first opportunity that we've done with them. We think it gives us a great platform to grow that relationship with them. They're also to other operators that we've known for long time that we're working with as well that we think a in the near future we'll be able to.
Actually consummate some of those transactions.
Portugal is a is much like the UK from the standpoint that they have the a public health care, but they also have a very vibrant private health care, which supplements, though the public health care as a model that the a the country knows very well and it's very comfortable with and so we think that being a part of the private health care.
Factor in Portugal is a much sold after a model. It's it's a model where there are other a big U.S. operators United on some of this important views hospitals always one that we feel very strongly about.
In Spain.
We actually started work in Spain, probably eight or heaters.
Plus.
She has been more than that now back during during the credit crisis. Spain's a great example of a country that is committed to health care for its people. We all know the suffering the Spain had during the great credit crisis, but even during that time period, the EBITDA for their hospitals continue to increase.
We all know.
Oh people generally gets sick or in bad times than they do in good times that was certainly the case in Spain in the country continued to support the health care for their people. It's a model that's very much like Portugal in the UK is well, it's got a very vibrant private healthcare system as well as there are very well respected public.
Health care system, we think we'll be able to grow in Spain, we've been able to do this particular.
Investment with the largest Haas private hospital operator in Spain, we spent a lot of time in their hospitals, we're very pleased with the way they operate hospitals in or enter tickled to death due to be able to have that under our belt.
Yeah as you know the UK took a very long time for us to get the footprint that we thought we would have is long ago is eight plus years ago. We're glad that we finally have it now we've got a big investment a in Ramsey hospitals, and this BMR circle, a transaction and we think that with those two.
Oh operators will be able to grow as well.
Thanks for all the color on that and then the fourth quarter hospital sales when they come into they were in New Jersey can you talk about kind of the pricing you pay for those assets relative to where they were sold and maybe the type of buyer that was the took goes down.
Yeah. These these facilities were not force.
So we weren't looking to sell them, we had a one of those situations, where we had an opportunistic a situation where.
Purchase or came to us an offer to purchase them from us for significantly.
A significant gain the the.
Total gain was about the.
Well within it was included in a primary part of the adjustment you saw in the F. a reconciliation of of $29 million, if it was actually more than that.
The operator of both of those facilities is in the midst of exiting the business itself and so.
When this opportunistic buyer came along and was willing to pay us.
At least full value.
We were excited to take it frankly.
I just want to related follow on obviously with the share prices right now [noise].
Moving on the ATM from a cost of equity standpoint, probably.
Make sense to bring down leverage, but you did mention the property sales.
Could be part of the capital strategy for this year I guess, what are the odds that we see something larger on the property sale or JV sale side, and how does that relate to pricing for hospital assets as it stands right now.
Yeah, Andrew I would.
Not look for any any big large cells of properties. We don't expect to have any additional that you'll see it will be purely opportunistic like this one or so so don't look for that from a joint venture standpoint.
Well, we certainly like the concept at the very time consuming process.
The people that are we at we get calls all the time for people that are interested in doing your joint venture with us well. They generally move that a very slow pace and it's not something that we're actively pursuing right now.
Okay, Great that's all for me.
Okay. Thank you.
Thank you.
Our next question comes from the line up almost tie Okusanya from Mizuho. Your line is now fan.
Hi, Good morning, everyone got great quarter.
Yeah, I know one.
Two quick ones for me in the full reconciliation for the quarter does it to some adjustment the write off of straight line rent I'm.
Oh, that's net of tax benefit.
Could you tell me what that means.
Well, it's mostly the write off a straight line rent and my prepared remarks.
You know reference that just other.
Aggregation of.
Activities that happened in the busy quarter that we have.
I don't have Mike.
Hands right on exactly what what makes that up I'd be happy to follow up with you.
Okay. That's helpful. Then.
Second thing.
And as well as Australia.
You'll offices, there could you talk kind of ultimately how big of <unk> office is going to be what the skill set of people you're looking to hire there is it more people from Birmingham going over there or is it more kind of hiring local talent.
I would love to digest, a little bit more about look savages background as well.
Sure absolutely. So we start with blue glucose background is that he's been in health care all of his life outside of a public accounting he worked for.
One of the a very large hospital operators.
CHS originally as a financed person and a in one of their regional offices, he's been with US for 12 years and the entire time he's been with us he's been involved in acquisitions Luke opened the Luxembourg office for us about five years ago and.
Has done an outstanding job, our asset management underwriting people in Luxembourg.
The people that we moved over from Birmingham, we.
We have probably close to the right number there right now.
Any additions that we make in that particular department would probably continue to be transfers from.
Birmingham, we are in the process of hiring some additional.
Asset management, and a county, I'm, sorry acquisition analyst and a accounting personnel.
At the lower level, we certainly will have some people that will go swap in and out between our New York Birmingham offices in Luxembourg.
I guess as time goes through and people come back to the U.S.
In Australia, where we're starting from scratch the person that we have opening the opposite somebody that we've known for 18 years. He's been involved involved in commercial real estate and is a knows us.
Very very well and his primary responsibility is a relationship building and relationship maintaining with our customers that we have there now ultimately I think the Australian office will probably a match out somewhere but it four or five additional people in that office and they'll all be in.
The acquisitions area, whether it's a relationships or analyst.
Great. Thank you.
Thanks style.
Thank you. Our next question comes from the line as Steven Valiquette from Barclays. Your line is now fan.
Thanks, Good morning, everyone and thanks for taking the question.
I think when is your first the public apparent since announcing the Lifepoint 10 Hospital deal, which was just after your last quarterly earnings call I guess Im just curious if we're able to provide a little more general color around which specific lifepoint hospitals were chosen.
For sale.
Back in this particular transaction versus which ones, where we're not chosen you whether its financial variables or or geographic slash ascensus related et cetera, and also is there a chance to do more deals with lifepoint slash Apollo in the future given that they still own nothing more than half of their hospital. Thanks.
Sure let me let.
We start with a the original a portfolio that we then we acquired here. We had we literally have been working on this transaction with Apollo probably since the middle of last summer.
They had a number that they knew that they wanted to get so that they did.
Some different changes to their balance sheet and so they pretty much gave us their entire portfolio and said here big pick what you'd like to have for this particular price and so we took our time and analyzing the entire portfolio. We went to all of the different locations and we were able to come back with them and.
Here are the ones that we want to put together I don't have the exact list here in front of me, but but that they were our choice and Apollo worked very well.
Well with us and putting that portfolio together, we got a long relationship with Apollo and the Lifepoint a management team, but I certainly hope that we.
We'll continue to do.
Additional business with them, but we are very excited about this particular portfolio because of the way we were able to put it together.
Okay appreciate the extra color. Thanks.
Thank you. Our next question comes from the line of Derrick Johnson.
Deutsche Bank. Your line is now fan.
Good morning, everyone.
Good morning based on your based on your attractive cost of capital and track record has the deal pipeline increase to where you can even be more selective and engage with even a higher quality operators.
And one way could be to.
Actually offer better deal terms, you know due to the lower cost of capital that you guys are enjoying.
Well there I mean, let me point out that we think we have a very strong group of operators in our portfolio now we're very happy.
With the all but but maybe one of our.
Operators.
But yes. The overall answer is absolutely as as we continue to grow in the market people know, who we are our cost of capital obviously has changed dramatically over the last 18 months.
Our pipeline continues to grow dramatically and and is really.
The only limited at this point about our ability to the actively give the attention that that each potential deal needs.
I would just at a derik de the the ideal target for that is the not for profit World. Dan. If you look back over the last couple of years.
Although it's probably.
In total less than half a billion dollars. It's a tremendous increase relative to what we've had invested would not for profits in the past and we today or negotiating.
Potential transaction, some you know fairly sized with with not for profit systems. So we expect that we'll continue to grow.
And.
But but just to reiterate what what Ed said, we've got great operators on profits out already.
Okay, great understood.
And then secondly, you know you raised the dividend by a penny.
As I look at our model you know we see further room.
As we approach 2021, especially given the pro forma Fad payout I think you said around the mid seventies.
Certainly, noting the accretive that circle, you know will bring to the table throughout.
2020, how does the board assess when to raise the dividend, especially when you have you know very healthy 20% plus.
FFO growth you know do it do you anticipate raising it more than once a year and as you approach the pro forma AFFO guidance range.
So Derrick I think the board has done a great job over the years of upsetting the dividend after properties of act in deal transactions of.
Actually close not just when we announce them. We obviously have gotten everything closed at this point a wheel we have an upcoming board meeting of the board, we'll certainly look at where everything is and make those decisions, but we we understand the importance of raising dividends.
Great guys I'll I'll people I can give others.
A chance to ask questions in queue, and if I have anything else. Thank you.
Thanks there.
Thank you. Our next question comes from the line of Jordan Sadler from Keybanc Capital. Your line is now fan.
[noise]. Thank you good morning.
Morning.
Ed.
Just a interested in your mention of the backing of circle by Centene can you elaborate it all on their stake in circle and their interest in the UK portfolio.
Yeah, I shouldn't Centene has a a passive minority interest in ER.
In circle.
As they do in other areas of Europe with other operators.
You know for sake of everybody on this call who may not know Centene has a very large very successful managed care provider.
Based out of St. Louis.
And.
In there.
Underwriting and diligence on different.
Markets in particular the UK.
They they felt like circle gave him the greatest opportunity to expand there are relatively little if any antitrust issues given circle size.
So circles management continues to be circles management, we see no.
Anticipated changes there and the investment is is passive.
You X expect to see them do more in is there an.
Kennedy for you guys to do more with.
Yeah.
<unk> managed care enterprises of the world.
Well I certainly think do we have the opportunity to grow with them. It is their intention to grow throughout Europe, Steve and I spent a good amount of time with the Centene management team.
Before we did the the circle transaction and I'm very comfortable that our relationship with them allows us to do participate in some of their future growth, but but Jordan, you're absolutely right I mean circles and I'm sorry sent teams not the only managed care company, that's looking to get into operations the biggest obviously being United.
And.
And we haven't done anything with United or others, but we absolutely think it offers opportunity for us.
<unk>.
Thank you and and as it relates to the 3 billion dollar pipeline.
It sounds like you're confident billion now that getting done this year.
No.
That's not necessarily in the run rate.
Can you talk about maybe the pipeline a little bit can you characterize you know.
Domestic versus your first Australia, and then you know how much of it is under active nearer negotiation or contract versus maybe not being as far along.
So there's there's $3 billion that a that we are actively working a billion dollars of that we are much further along and that's why I broke it out the way I did a in todays.
Earlier part of the call.
It's still continues to be about.
50, 50, 50% international and a in 50% here in the U.S.
Right now that is all broken out between the Western Europe and South America.
And it's all general acute care hospitals.
Okay.
And then.
I guess, Steve just last one for you.
If the.
The billion dollars if that billion gets done this year at some point.
Reasonable near term or how should we be expecting the timing of that.
It's sort of hit.
We've learned long ago not to try to predict I mean, you you can look at last year and and we got into June and and I think we had close one little hospital over in a in the UK and yet we ended up you know with with almost $5 billion. It's just totally not not predictable lot you know I hate to leave you.
You know hanging would not being able to model no I know, but yeah, you're right.
The run rate.
Well, we will struggle with is run rate just to sort of.
You know bridge, our own estimates for the full year to the run rate so <unk>.
Is there anything it seems like you're in pretty good shape having.
On the M.I. early in the year.
Sure.
Be on course toward this run rate am I thinking about that correctly no you absolutely our kind of the run rate is what we have today and only what we have today.
So the only the only difference in this this would be virtually miniscule would would be included in that run rate or our development. I think you had mentioned a little earlier, we've got a project in.
In Birmingham, England was circle, we've still got the one in Idaho.
<unk>.
Others, but but those are the only a projects in the run rate that that were not earning as of right now.
Okay. Thank you.
Thank you Sir our next question comes from the line of Michael Mueller from JP Morgan. Your line is now fan.
Hi, a couple of questions I guess as a follow up to that Steve are you permanently moving away from calendar year guidance at this point.
Yeah, we really haven't.
Provided calendar year guidance about this time last year for the very reasons that you know Jordan I would just discussing its just especially in especially when you're growing.
You know as 30% to 60% for years, we had it is just impossible with the gestation periods that we have you heard Ed mentioned in a minute ago that we've been talking do Jos a de Mello in Portugal for three plus years about projects. So it's just not predictable.
And we haven't we haven't tried to give calendar.
Guidance in well over here.
Got it Okay, and then excuse me.
You mentioned I think about half of the prime assets were covering more than four times can you talk a little bit about you know when leases expire and is there an opportunity to really roll some of those rents up.
So the <unk> the question about when they expire the first sort of a prime hospitals expire in 22, a they're under a master lease a it's an all or nothing situation.
I don't know what their intentions are right now.
But from a standpoint, if they if they want to roll it over again.
And then the than the.
Rental rates will just continue what they were under the lease under the increases in the existing lease.
Got it so there's not a bring to market.
Well, we think that that is going to be very close to market. The way we structure our leases there there.
All have the inflation protection at home, so theoretically or whatever the market rents are in 22, the the Lee should be at that.
Okay, but if you're doing new hospital deals today, the coverages aren't or more in the twos right.
Well, that's right a week, if we're buying into an existing.
I think hospital, we expect to see it into two to two and a half range from a go against standpoint, but.
The prime and some of the other hospitals that have been in our portfolio for so long and performed so well that's how you you get them well over three or three times covered.
Okay think times it thank you.
Thanks, Mike.
Thank you Sir our next question comes from the line of Todd Stender from Wells Fargo. Your line is now fan.
Hi, Thanks, I, just going back to the dispositions in the quarter is.
The median.
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No the no those.
Those were to a general acute care hospitals in New Jersey.
And so median medians no longer on your top tenant list is that just a reflection of a there's been diluted down I guess.
Well, it's two things its last year's joint venture, where we sold half of median and then of course, the you know upwards.
Six plus billion dollars of non median acquisitions in the last year. Okay. Thank you and then Ed you you provided the rent coverage for circle, we saw that never Lisa two times do you have the rent coverages for the other acquisitions.
I guess just to give us context for Spain, maybe those markets like.
Portugal, and certainly Lifepoint yeah.
Yeah, there, they're all in that same range and the a 175 to two and a half times for all of the new acquisitions.
Okay. Thank you and then we see your equity investments on the balance sheet creeping up anything in the fourth quarter.
Order and then so far in Q1 are you investing alongside the operators in any cases.
No the equity investments for example, the two hospitals in Madrid are accounted for in equity because it's a it's a structurally a joint venture.
Okay, but no no equity investments to known and that's that's now that's not what we're trying to to mean there when we say equity that does not mean, we're investing in the equity of the operator necessarily it's the structure our of our investment isn't the equity other joint venture rather than the fee interest of of the hospital. That's that's all that means.
Oh the less.
Investment we've made in a hospital operator was the Switzerland transaction, where we bought a 5% interest in the operator.
Okay. Thank you very much.
Thanks Todd.
Thank you at this time I'm showing no further questions I would like to turn the call back over to Ed.
Our bags for closing remarks.
Thank you operator and again, thank all of you for listening in today you have any additional follow up questions. Please don't hesitate to reach out to one of us. Thank you very much.
Ladies and gentlemen, this concludes today's conference call. Thank you for Sandy. Thank you for participating you may now disconnect.
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