Good day, ladies and gentlemen and welcome to the Medical Properties Trust Fourth Quarter and Year End 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today’s conference Mr. Charles Lambert, Managing Director. Sir, you may begin.

Thank you. Good morning, everyone. Welcome to the Medical Properties Trust conference call to discuss our fourth quarter 2015 financial results. With me today are Edward K. Aldag Jr., Chairman, President and Chief Executive Officer of the Company; and Steven Hamner, Executive Vice President and Chief Financial Officer. Our press release was distributed this morning and furnished on Form 8-K with the Securities and Exchange Commission. If you did not receive a copy, it is available on our Web site at www.medicalpropertiestrust.com in the Investor Relations section. Additionally, we are hosting a live webcast of today’s call which you can access in that same section. During the course of this call, we will make projections and certain other statements that may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to known and unknown risk, uncertainties, and other factors that may cause our financial results and future events to differ materially from those expressed in or underlying such forward-looking statements. We refer you to the Company’s reports filed with the Securities and Exchange Commission for a discussion of the factors that could cause the Company’s actual results or future events to differ materially from those expressed in this call. The information being provided today is as of this date only and except as required by federal securities laws, the Company does not undertake a duty to update any such information. In addition, during the course of the conference call, we will describe certain non-GAAP financial measures, which should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release, Medical Properties Trust has reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. You can also refer to our Web site at www.medicalpropertiestrust.com for the most directly comparable financial measures and related reconciliations. I will now turn the call over to our Chief Executive Officer, Ed Aldag.

Thank you, Charles and thank all of you for listening in on our fourth quarter 2015 earnings call and for your interest in Medical Properties Trust. Success is defined by Webster’s Dictionary as having a favourable or desired outcome. 2015 for Medical Properties Trust would have to be described as a tremendous operational success. Our total revenue increased from $312 million to almost 442 million, an increase of $130 million or 42%. But revenue for growth sake is not enough. Net income increased by 180% to approximately $140 million up from $50 million. Normalized AFFO per share increased by almost 25% which allowed us to increase our dividend and still reduce our payout ratio. For the fourth quarter that just ended our payout ratio was 63%. On a same-store basis, Q3 2014 trailing 12 month total portfolio EBITDAR coverage was 3.66 times. Q3 2015 trailing 12 month total portfolio EBITDAR coverage grew to 3.75 times. Acute care hospitals were flat at 4.5 times. Our rehab hospitals grew a dramatic 49 basis points from 2.41 times to 2.9 times, and our LTACHs grew at an impressive 13 basis points from 1.79 times to 1.92 times. I noticed this morning in one of the early reports there is some confusion over our methodology of reporting coverages. Just to remind you, we report same-store on facilities that have been in our portfolio for 24 months. So each quarter the same store coverages will be updated buckets. Last quarter we reported acute care hospitals at 4.7 times. Showing the exact same bucket of acute care hospitals this quarter we would have also reported a 4.7 times, again flat as we previously said, because this quarter we had the additional hospitals that have now been in our portfolio for 24 months. The coverage for last…

Thank you, Ed. This morning we reported normalized FFO for the fourth quarter of $0.35 per diluted share, a 25% year-over-year increase. Our year-to-date results of $1.26 per share represent a 19% increase over full year 2014 results. We will discuss our future expectations momentarily but I do want to highlight that our per share FFO growth is expected to continue into 2016 and beyond. Even if we assume only very limited investment in 2016 along with asset sales, we believe calendar year 2016 normalized FFO will increase to further 4% to 5%. I'm not going to read what you've already seen in the earnings release from this morning. So, let me point out a couple of items that will help you better understand our reported results. Number one, the only difference between so called white paper FFO and our normalized FFO is the $4.3 million in acquisition cost. The great majority of which is related to transfer taxes and other costs paid as we had closed the sale lease back transactions of the MEDIAN acquisition. Included in both measures of FFO is share-based compensation which had averaged about $0.05 per share annually. When share awards are granted, even 100% performance based and multi-year awards, generally accepted accounting principles requires us to expense the value of those awards as expensed. Even if the performance hurdles are not achieved and no shares ultimately are awarded, companies are prohibited from reversing that expense in subsequent years. For 2015 because total shareholder return was negative, MPT management permanently forfeited 100% of the value of the three year award that was granted in 2013. This resulted in a reduction in compensation of more than $6 million that had been recognized over the three years ended December 2015. Aside from wanting to demonstrate the rigorous…

Thank you ladies and gentlemen.[Operator Instructions] And our first question comes from the line of Jordan Sadler with KeyBanc Capital Markets. Your line is now open.

Could you guys give us a sense of the asset sales I realized there has been some unsolicited interest and I am curious there relative to the package that you guys have actually put together to market for sale? Are those two separate tracks or potential areas for sales? Or how would you characterize your efforts to actually sale assets versus the unsolicited interest?

Jordan it's pretty much all have being going all simultaneously, most of it has been unsolicited offers as opposed to us getting out and marketing specific packages. It is properties within all of our property types and it is a pretty significant gain on most of those potential gains on most of those properties. Obviously it is just like acquisitions you don’t know exactly when all of them will happen. And as I’ve previous said, we certainly don’t want all of them to happen and so it's hard to give you an exact to which properties is it likely end up being at this point.

And can you discuss the nature of the potential investors?

You mean like who are they?

Yes, the folks who have sort of solicited you directly, or these as you said in the press release real estate, healthcare investors. I am just curious is it pension funds, is it private equity, all the above…

It is all the above, mostly domestic not that many pitching funds mostly opportunistic private equity funds and real estate funds.

And then as it relates to pricing, is it too soon to tell there and/or maybe give us a sense of what’s being modeled within the guidance, because obviously the range is reasonably narrow at this point with the initial guidance that’s been put out. So I am just curious what we kind of layered in there?

It's, as I said earlier that most of the potential sales are with fairly significant gains there are some rather new acquisitions that have smaller gains built in. But the number is pretty easy to figure out the arithmetic in our model. We’ve got roughly 1.1 billion on our revolver. We think we’ll do roughly 500 million in permanent financing which will be somewhere between 500 million and 600 million remaining on property sales if we were to pay it all.

And so it's all basically within the model here assumed that a midyear-ish convention in terms of timing?

Yes.

Given the asset sales and the bond issuance?

Well, it's just that Steve pointed out we expect the permanent financing to be sometime in the first quarter.

Thank you. And our next question comes from the line of Tayo Okusanya with Jefferies. Your line is now open.

Could you guys give us a sense in general what you’re expecting from a reimbursement perspective specifically for long-term acute care hospitals in 2016?

We expect overall Tayo that the revenue for our LTACH operators will decline slightly. We don’t expect significant decreases as you saw we actually had pretty good increases in the last quarter. We do expect that there will be some decline in 2016, but we expect that most of our operators will actually end up doing better than they did in 2015.

Is the decline volume driven, is it mix driven is it…?

It's mostly mix driven, it's mostly as they all adjust. We expect that 2017 would be back on the in-plan that mostly this is an adjustment year.

And then just a quick sense in regards to some of your larger investments if you could kind of give us a general sense of how things are going with, I know definitely it is going pretty well, but if that’s so some of the German investments Ernest and also Capella?

Tayo truly our portfolio is performing better to-date than it ever has. All of our operators are performing exceptionally well. The bigger acute care hospitals here in the U.S. have been essentially flat which is good considering there’re extremely strong coverages. Our German operator actually has increased and they continue to perform very well, they continue to see opportunities in the German market. And overall all of the portfolio even the LTACHs for the last quarter performed very well for us.

One last one from me, the bond offering that you were expecting to do this year, do you expect that to be more U.S.-based or you're going to do something you would denominate or a mix of both?

No, we expect that to be entirely U.S.-based.

Thank you. Our next question comes from the line of Juan Sanabria with Bank of America. Your line is now open.

Just ticking with time if I ask question on the bond offering, what kind of duration are you looking for and do you have any range or potential costs that you're looking at in your model?

Juan we yes while we want to go as long as we can, I certainly think it'll be at least eight years, we'd like to see 10 years our guide will be much longer than that. But we certainly want to go as long we possibly can.

Pricing Juan and again as we mentioned we're in daily contact with the bankers and the other advisors and it's volatile as everybody on this call knows, but we would expect around a low six handle rate, again depending literally sometimes it depends on the time of day but that's our expectation.

And that's unsecured?

Yes, correct.

And then on the asset sales, can you give us a sense of the range of CapEx or like a weighted number, weighted average type cap rate you're modelling to come up with guidance?

You are talking about what we’d be selling the properties for?

Correct.

Let me give it to you in a slightly different way because it's a mix of properties, but I think that where we are today based on the longer tenured properties that we've got in our portfolio that we've had interest in that we could have this much as a 20%-25%-30% gain. But let me just point out because it goes back to an earlier question with respect to guidance and of course what we're guiding is normalized FFO per share and there would be very little impact on that particular metric whether we sell at a 7.5 or 8.5 cap rate and then clearly the proceeds would increase or decrease which would have an impact on the amount of debt outstandings but as a $6 billion company with the volume of sales that we expect whether the cap rate is 100 points more or less than somebody's midpoint and so it is going to have a very little impact on the $1.29 to $1.33 calendar year guidance.

And then for G&A just curious if you can give us some color on kind of were you expecting any plans to open up European office or how should we think about management costs?

I think they would stay along with where they are, we don't have any expectations at this point for opening up a European office as I have said previously to that question I think that actually we probably slightly decreased our overall costs, you would see it because it wouldn't be that much. I think the synergies that we get right now from everybody walk the halls together it's much more valuable to us than the small savings that we would have by having the office directly in Europe. It's easy to get to Europe from this part of the United States, so we're very comfortable with where we are and we don’t see any significant increases in personnel at this point.

Thank you. Our next question comes from the line of Michael Carroll with RBC Capital Markets. Your line is now open.

With regard to the asset sales, could you guys give us an idea of timing I mean should we think about a mid-year convention or you're close to near these transactions I guess in the first quarter?

Yes Mike I think that the answer is to think about it in a mid-year convention is certainly the way we've modelled it. It obviously is not all going to happen on the same day, but we expect between now and the middle of the year that most of that will be taking care of.

And then are you focused on the real-estate sales or are you willing to sell from the zero investments in the half-year alone so are the investments in Ernest and Capella?

It is everything it is all buckets of our portfolio.

And then are you willing to sell more than 500 million that was highlighted in the press release or do you guys just want to do 500 million right now then look at it again and maybe next year?

Mike we're certainly opportunistic but our plan right now is that that 500 million is the right range.

And then Steve I guess with those $500 million of sales, I mean where do you expect your leverage metric to connect to the trend towards, are you still going to be well above your launch from target, are you okay with that?

No Mike -- if we did only the 500 million in property sales and we would be slightly below or right at 6 times EBITDA, our long-term historical average has been closer to the 5.5 times and again taking a long-term view that's where we want to get back to, we think that's generally the right place to operate the company at least under the current market conditions and regulatory and operational issues as we evaluate our risk in our assets. So we do expect to see that continue to trend down even after the call it the initial priming of the pump so to speak by selling assets and getting us into that 6.0 times which by the way puts us very right in the middle of where the peer group would be not withstanding again our view is to carefully continue to manage it down.

And Mike obviously as we pointed that earlier that's with very strong coverages.

And then how are you guys looking at the investments markets right now with the volatility in the capital markets then your current leverage position. Are you willing to do the relationship deals right now are you looking to another things how should we think about that?

If I understand your question, are you talking about our potential acquisitions out there?

Exactly.

Yes. Right now we are only focused on our existing customers and we are being very selective we certainly don’t want to be in a position where our leverage is increasing we don’t want to be in a position where our leverage is staying the same as we pointed on this call it is our intent to decrease it at the same time taking care of our customers as best we can.

Thank you. Our next question comes from the line of Phil DeFelice with Wells Fargo. Your line is now open.

Last year's dividend raise came slightly as per the Q4 results were reported, given where current yield is and a conservative payout ratio you’re wondering what your target current payout ratio is on a FFO and FAB basis? And then how you are thinking about the dividend in light of your capital position and currently in these expected asset sales?

Phil it's certainly something that the Board discusses it every single meeting as I've pointed out earlier our payout ratio in the fourth quarter was 63% that's obviously below our historical target but these are very interesting times we certainly see what the stock market has done today as an overall whole has done since the beginning of the year as an overall as certainly don’t think that the board would think that a raise in a dividend rate today would be beneficial to anyone. I think that where our coverage's are today, where our dividend is today is something that's you already look forward to in the near future.

Thank you. Our next question comes from the line of Eric Fleming with SunTrust. Your line is now open.

Just a quick question on the divestitures that you are talking about that 500 million that's the expected price as of the book value would be 25% below that our there are some number below that?

Some number below that yes.

Okay. Just want to make sure, I had those numbers right. Thanks.

Thank you. Our next question comes from the line of Michael Mueller with JPMorgan. Your line is now open.

Great, thanks. Just wanted to revisit the couple of things to make sure I am headed down the right way. So on the debt side you talked about rate being in the low sixes is the timing there mid-year as well or is the timing in the first quarter?

Yes. Now we expect that any bond issue that we would do would be in the first quarter.

And dispositions I know you said modelled mid-year but you think they are going to close before that so is anything [Multiple Speakers]?

Mike obviously they won't all happen at the same time. I think that the spread out between the first quarter and midyear would be the right modelling.

Got it, but your guidance assumes midyear?

Correct.

Okay, got it. And then Steve not to completely try to back you into a corner here but when you throw out 7.5 to 8.5 for cap rate range is that a reasonable assumption that these folks could turn the models for dispositions?

Yes. I used those numbers consciously.

Got it, okay. Just two more, in terms of capital commitments when you talked about just remaining capital commitments that's embedded in guidance does that include was it the 65 or is that in 45 for relationship acquisitions is that what the numbers were and is that embedded in guidance?

Yes, yes and yes.

Okay, got it. And last question Steve I know you talk about no CapEx commitments. Just I think curiously in the right year structures where you own a stake in an operator like Capella is it structured so even though you own the operations that the other partner is on the hook for all the CapEx is that how that works?

Well that is how it works and of course on an operating company like that you expect, you hope, you underwrite so that there won't be additional requirements for operating capital?

But all of the normal maintenance CapEx and everything is on the hook by the other?

Yes, yes absolutely yes.

Okay that was it. Thanks.

Thank you. And our next question is a follow-up from the line of Tayo Okusanya with Jefferies. Your line is now open.

So yes just a quick follow-up. Since you are talking about meaningful gains of some of the assets sales you would be thinking about a special dividend or not?

Well Tayo there are a lot of ways to deal without including rolling into new properties and timing special dividend none of which is that we've made any determination about.

Thank you. And I'm showing no further questions at this time. I would like to turn the conference back over to management for any final remarks.

Thank you operator, and again thank all of you for your interest. So if you have any questions please don’t hesitate to call Tim Berryman, Charles Lambert or Steve or myself. Thank you very much.