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Re: Democritus_of_Abdera post# 491

Friday, 03/14/2008 1:23:43 PM

Friday, March 14, 2008 1:23:43 PM

Post# of 610
Hi DofA,

Thanks for your concerns. I greatly appreciate your comments.

In this case they are using the money to expand their market share which I think will ultimately payoff for investors. While the market is in the tubes my feeling is that management seems to know what they're doing and I think their dividend should be safe for a while.
FWIW and in IMHO

Abreis

This is from the the newswire:
Medical Properties Trust Inc., a health care facility real estate investment trust, said Friday it will buy some health care facilities from HCP Inc. for about $371 million.
Medical Properties Trust said the acquisition will significantly expand its holdings and broaden its geographic range.

This is from someone who follows the company from the Yahoo board:

Quick and Dirty First Take on HCP deal 14-Mar-08 09:26 am Here are a few quick and dirty calculations, based on the announced deal parameters of 21 new hospitals for $371mm, financed via $300mm in new debt and the sale of 11mm new common shares. The 21 hospitals generated $33.4mm in cash rents in 2007, which would presumably continue.

(1) In 2007, MPW generated $96.9mm in revenues, or $2.01 per share on 52.1mm in outstanding shares. Post HCP deal, MPW will presumably generate $130.3mm in revenues, or $2.07 per share on $63.1mm in outstanding shares.

(2) If the 11 million shares are sold for as little as $11 per share (I dunno how they'll be priced, but I think this is pretty conservative), MPW would be bringing in $421 in cash, including new debt, and spending $371 million. So the company's cash would go up by $50mm, from $94mm at present to $144mm, or from $1.80 per share to $2.35 per share.

(3) Debt service on the $300 million in new debt should be adequately covered by the $33.4mm in additional revenue, certainly leaving enough "left over" to fund about $1.2mm in divvys on the 11mm new shares at the current $1.08 annual dividend rate.

More important considerations include how MPW management will fare with these new hospitals (whether they will be more or less efficient that HCP's management team), and how this acquisition and the previously announced Vibra deal work together. (I have simply ignored the impacts of the Vibra deal on revenues and cash in the above quick and dirty.)

So all in all, a quick first glance indicates the deal wilt not be dilutive of a couple of key per share financial measures, and is therefore at least OK, and maybe better than that, for us existing MPW shareholders. I'll add a few more MPW shares if we get a knee-jerk market reaction to the newly introduced uncertainties and the share dilution that the HCP deal entails.





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