“The year 2019 was unlike any other,” says Edward K. Aldag, Jr., chairman, president and CEO of MPT, ticking off just a few accomplishments in 2019. In one single, remarkable year, MPT:
“But even prior to that, we had achieved more than almost 30% compound annual growth over the last six or seven years leading up to 2019,” Aldag says. “We had truly exceeded anything anybody thought we could do.”
After building on consistent, unmatched growth since its inception, Aldag anticipated the possibility of an extraordinary 2019. The company had laid the groundwork for blockbuster acquisitions―such as the $700 million purchase of LifePoint Health, Inc., properties in the U.S. and the expansion to Australia with 11 Healthscope, Ltd., hospitals. Steadfast in its mission to invest in premier, acute care hospitals and build relationships with best-in-class operators, MPT always has had an international presence in mind.
“We’ve been consciously planning for years to be able to achieve the results we did in 2019,” Aldag says. “Acquisitions of complicated hospital systems can take a long time—and we foresaw a rapid expansion in the hospital real estate market. So when operators, investors, private equity sponsors and conditions converged in 2019, MPT had the people, the capital, the industry relationships and the systems that could execute multiple transactions across the globe—clearly establishing MPT as the undisputed global leader in hospital real estate finance.”
More than ever, the industry can clearly see MPT as the undisputed global leader in hospital real estate financing.
The laudable 2019 performance of the company resulted from these key goals:
1. To increase geographic diversification. MPT now operates in eight countries across three continents. With approximately 390 total facilities in its portfolio, MPT grew its presence internationally in 2019 with key transactions in Switzerland and Australia, along with new holdings in Madrid, Spain, and Viseu, Portugal. It also grew domestically, leveraging past relationships to acquire LifePoint hospitals across six states and Prospect hospitals in the West and East regions of the U.S.
2. To increase operator diversification. With any operator MPT considers, it does due diligence, not just in vetting the company itself, but vetting every individual property that’s part of a potential deal. And in 2019, MPT added new operators, going from 30 to 41 world-class operators.
With so many new first-class operators, MPT improved the position of its valued operator Steward Health Care as a percentage of its overall portfolio so that it went from 40% to less than 25% only 12 months later. Now, no single property accounts for more than 2.3% of the MPT portfolio.
3. To take advantage of greatly improved cost of capital. Financial conditions were right to facilitate the record amount of transactions MPT closed on in 2019. “A lot of things came together last year,” says Charles Lambert, treasurer and managing director, Capital Markets. “It was a good time to borrow money, rates were low in the U.S. and they were lower outside the U.S. Moreover, our cost of equity capital declined as our share price and dividend yield continued their recent trend of substantial improvement. The stars aligned between available inventory that fit strategically into our overall plans and attractive financial rates.”
“What happened in 2019 wasn’t by accident,” says Steve Hamner, MPT’s chief financial officer. “Everything converged last year—all of our efforts, going back to when we formed the company.”
MPT held its initial public offering in 2005, and no other company was doing exactly what MPT set out to do. “Our investment thesis is that we’re only going to invest in hospitals,” says Aldag. “And that strategy has been a brilliant success.”
The strategy has worked in large part because so many of MPT’s executives and senior leadership have backgrounds in hospitals and other healthcare businesses, which sets MPT apart from competing real estate investors. This hospital expertise has always given the company an advantage in the underwriting process.
MPT invests not only with financial advantages in mind, but also with a sincere desire to improve the quality of healthcare in communities around the globe. That mindset has guided MPT in every decision. The associations among the company, private equity investors, shareholders and top-tier operators have worked to everyone’s favor.
“There has been no one who has done this,” Hamner says. “We established this market over the last 15 years, building a market that manifested itself in a huge way in 2019. Now there are so many operators, equity sponsors, sovereign wealth funds and investment banks who are looking at these types of transactions, who see that we have proven the value of this model.” MPT has the most experience and best track record using this strategy and is best positioned for more success in executing it on a global scale.
After guiding MPT to unprecedented success, company founders Aldag, Hamner and Emmett E. McLean, executive vice president, chief operating officer, know they can’t dwell on all they have achieved. “We don’t sit around and spend time thinking about what we’ve done,” McLean says. “You’re only as good as what you’re doing now.”
With a great position on the international stage and a robust pipeline, MPT qualifies as good—very good. In fact, 2019 showed definitively that no one leads this industry like this company does.
A visionary leader, Edward K. Aldag, Jr., founded MPT with the clear mission of providing capital for hospitals. As chairman, president and chief executive officer, he has the experience and insight that has been vital to MPT’s unprecedented growth, and his hands-on approach ensures its continued success.
Aldag and his co-founders, Steve Hamner and Emmett E. McLean, stay involved with every aspect of the business. This trio provides leadership and learning opportunities for talented senior leaders and their teams, imparting all they know from running this business for so many years. But as they pass on all their experience, they stay intimately involved in the day-to-day. “We have really smart people, and we’re bringing them along. But we built this business in an industry that’s focused on hospital capital solutions, and it requires significant input from the founding executives,” says Hamner.
As MPT embarks on a new decade, these three will continue to roll up their sleeves.
From his office at the MPT headquarters, Aldag feels just as energized by the MPT mission today as he did when he founded the company. But he doesn’t stay in his office often. A believer in dealing face to face with potential business partners, he orchestrated key transactions in 2019 by staying on the road and in the air, willing to go wherever he could to learn more about prospective operators and share more about why MPT makes such a strong business partner.
From the beginning, Aldag envisioned a company that focuses on hospitals alone, and he’s steered the enterprise to a global force in an industry that MPT pioneered. “I’ve had a lot of different jobs. This is the proudest I’ve ever been,” Aldag says.
With an eagle eye on the details, Hamner did not delegate the execution of the landmark transactions that made 2019 such a banner year. A certified public accountant by trade, Hamner brought years of business skill and prowess as a founder of MPT, and he’s demonstrated his talents and belief in the company’s mission for 17 years. As Hamner shares his experience with senior leaders and underwriters, he has no plans to scale back his involvement. “Hospitals are big, expensive assets. The deals we do are all different from other real estate acquisitions. There’s nothing cookie-cutter about them,” Hamner explains.
Being a founding partner in MPT came as a natural extension of McLean’s background in healthcare finance and investment banking. His finance skills and insight, paired with a strong interest in community and civic causes, have guided MPT to astute business decisions that keep compassionate care at its heart. “Seeing the company increase its presence in areas where we already were doing business and expand our holdings as well has been gratifying,” McLean says. And by growing the company, MPT feels greater responsibility to give back.
In 2019, McLean helped the MPT Charity Committee make a record number of financial contributions to causes in Alabama and abroad, and the company gave a record amount. “MPT has always contributed and supported great causes,” McLean says, “but now we’re able to make a real difference in the world—in the industry as a whole and in the communities where we have assets.”