Charles Lambert - Managing Director Edward Aldag Jr. - Chairman, President and CEO Steven Hamner - Executive Vice President and CFO.

Karin Ford - KeyBanc Capital Markets Michael Carroll - RBC Capital Markets Juan Sanabria - Bank of America Merrill Lynch Chad Vanacore - Stifel Nicolaus & Company.

Good day, ladies and gentlemen and welcome to the Third Quarter 2014 Medical Properties Trust Earnings Conference Call. My name is Tony and I’ll be your operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session.

(Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Charles Lambert, Managing Director. Please proceed..

Thank you. Good morning, everyone. Welcome to the Medical Properties Trust conference call to discuss our third quarter 2014 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 website 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 risks, 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 the 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 website 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 good morning, everyone. Last week we announced a little over $1 billion in new investments. This is in addition to the $320 million already announced by us earlier in the year. As a consummation of these transactions, MPT’s total assets were approximately $4.5 billion.

Since the beginning of 2011 our assets have grown at a compound annual growth rate of 33%.

With the strategic growth we have done over the last few years combined with this most recent announcement, we have greatly improved the value of our portfolio through the performance of our properties, geographic diversification, operator diversification and size.

In the announcement last week we announced the acquisition of 40 facilities with MEDIAN Kliniken located throughout Germany, an acute hospital in West Virginia with Alecto Healthcare, an acute care hospital in Texas with Alecto Healthcare, a freestanding emergency department in Alabama with Med Center West, an affiliate of the University of Alabama Birmingham, and three additional rehab facilities in Germany with our existing German tenant RHM.

Each of these investments are strongly immediately accretive. Let me start with the largest of these acquisitions, the $900 million MEDIAN transaction. The MEDIAN acquisition is our second large investment in Germany. Germany is a great place to do business.

We know the German rehabilitation market, we like the German healthcare market and we all know the strength of the German economy and that Germany is the economic backbone of the Eurozone. The rehab market is viewed very favorably by the German regulators and payers.

The regulators and the payers see this market as a way to reduce cost from the traditional acute care hospital segment and, very importantly, as a way to get people back in the workforce and to avoid costly long-term care. German law requires that an acute care patient receive post acute rehabilitation if it is indicated.

MEDIAN is the largest private operator in a strong stable post acute rehabilitation market in Germany. The CAGR for the rehabilitation market has been 2.7% since 2006 and is expected to continue to experience strong growth rates. The 55 plus age population is expected to increase from 34% to 44% of the population by 2030.

The rehabilitation market’s two largest segments are those still in the workforce trying to get back to work and the elderly trying to avoid costly long-term care. The German reimbursement system is basically divided into three segments, Statutory Health Insurance or SHI, German Public Pension Funds or DRV and private insurance.

Both the SHI and DRV are funded through contributions by employees and employers. The SHI is similar to a combined U.S. Medicare and Medicaid program. There are approximately 130 different SHIs in Germany. These programs are primarily for children, unemployed and retirees. These payers represent approximately 46% of MEDIAN’s revenue.

The incentive here for the payer is to get the patient rehabbed and avoid costly long-term care. The DRVs are similar to our employer based insurance programs. There are 16 of these in Germany. These payers represent approximately 36% of MEDIAN's revenue. The incentive here is for the payer to get the patient back into the workforce.

The remainder of MEDIAN's revenue comes from various sources, including private-pay and private insurance options. The German payer system is experiencing a large surplus and is very financially sound. MEDIAN is a strong, diverse company well positioned as a leader in the healthcare field in Germany.

Our cap rate on this transaction is in the lower mid range of our target area. The coverage is close to two times. This investment adds significantly to the strength and diversity of our portfolio in a market with a very solid economy and healthcare industry. Last week we also announced four other investments, Alecto, West Virginia and Sherman, Texas.

We're pleased to expand our portfolio with two properties to be operated by Alecto Healthcare Services. Alecto is a healthcare system based in California with operations in California, West Virginia and Texas. MPT has had a longstanding relationship with Alecto's management team.

The first of these will add to our geographic diversification with a $25 million investment in a 207 bed acute care hospital in Fairmont, West Virginia. The hospital has a strong community support and Alecto has received tremendous support from the local and regional government bodies as well as the medical staff.

The second hospital will be a $40 million investment in a 237 bed acute care hospital along the rapidly growing I-75 Corridor in Sherman, Texas just north of Dallas. During most of the hospital's history, it was operated as a local not-for-profit hospital.

However, in 2010 it was sold to a joint venture between Texas Health Resources and LHP Hospital Group. The JV since 2010 has invested significantly in the hospital infrastructure. Both of these investments will be structured as sale leasebacks with 15-year terms along with an extension option at an initial cap rate at the high end of our range.

UAB, we're pleased to announce our first project in Alabama and it's in a suburb of our corporate office here in Birmingham. MPT has agreed to fund the development of the first freestanding emergency department in the state for Medical West which is an affiliate of the nationally recognized University of Alabama at Birmingham Health Systems.

The 23,000 square foot state-of-the-art facility will offer convenient emergency medical services to the largest city in the state which does not currently have access to acute care services within their community. The investment in this project is just under 9 million.

RHM's three new facilities, MPT has expanded its investment with RHM with three additional rehabilitation facilities located in Southern Germany. This investment approximates $81 million for a total of 730 beds with medical care focused on orthopedics, geriatrics, neurology and cardiology.

RHM has a strong and proven business model that is focused on quality patient care. RHM plans to have these three facilities in line with the RHM utilization standards within a short period of time.

These three additional investments will be added to the current master lease with RHM which has a 27 year term, escalation provisions and an initial cap rate near the midpoint of MPT's investment range. As most of you know, our goal is to increase the size of our U.S. acute care hospital portfolio as a percent of our overall portfolio.

Currently, our U.S. portfolio mix is approximately 59% acute care, 16% inpatient rehabilitation facilities, 16% LTACs and 9% freestanding ERs. We will continue to push the 59% number for acute care hospitals closer to the 70% to 75% range.

Post the transactions announced last week, our largest tenants will be MEDIAN at approximately 20%, Prime at 16% and Ernest at 11%. No other tenant will represent more than 8% of our portfolio. For each of our three sectors of hospitals, the EBITDAR coverage was essentially flat to slightly down trailing 12 months quarter-over-quarter.

When comparing same-store coverage for our acute care hospitals, recoveries declined from 4.9 to 4.82 times. For the LTACs, the coverage dropped from 1.87 to 1.81. And for the rehabs the coverage dropped from 2.71 to 2.68 times.

2014 has been an outstanding year for Medical Properties Trust, our portfolio is stronger than it has ever been, the investments we announced last week will continue to strengthen our company, the diversification both geographic and operational, the quality of the properties and the strong returns we're generating all combine to further increase the value of MPT.

Steve?.

Thank you, Ed. We'll go right into the operational results and then discuss a few events that will impact comparable future results and then some additional detail about the MEDIAN and other recent acquisitions before we go into questions.

Normalized FFO per share for the quarter was an expected $0.27 per diluted share, an 8% year-over-year increase compared to 2013. Similarly, year-to-date FFO per share was up 8% over 2013 results to $0.79 per diluted share.

Operationally, the quarter benefited from the acquisition in September of the Alecto Fairmont Hospital, in July of the CircleBath Hospital in England and throughout the quarter of the completion and placement into service of eight First Choice ERs.

We sold the Bucks County Hospital in July, resulting in the loss of annual income going forward of approximately $3 million. We'll discuss go forward run rate guidance in just a few minutes. Ed has given you some more background on the $900 million MEDIAN acquisition, so let me follow up with further detail.

We continue to be optimistic that the German equivalent of the Federal Trade Commission will clear the transaction to close in the first quarter of 2015.

Once the majority purchaser, Waterland Private Equity, completes that acquisition, we expect to purchase and lease back the 40 clinics starting about 30 days later, with completion of all 40 also in the first quarter of 2015. Of course there is now assurance that regulatory or other impediments will not delay this time.

The contractual purchase price of the real estate is €705 million, about $900 million. For GAAP purposes, certain taxes may result in an all-in GAAP allocation of up to €730 million. Accordingly, we expect the yield on our investment to approximate between 9.2% and 9.5%. This includes the straight line effect of a minimum 1% annual escalator.

However, the escalation provision actually requires the lessee to increase the lease payments each year by 70% of German CPI with no upward limit. In today’s environment, this is a very strong protection because many lessees are able to hold fast to a lower maximum such as 4% to 5%.

It may also be important to emphasize that the MEDIAN transaction is a simple sale and leaseback between MPT and MEDIAN. As we disclosed last week, MPT will make a nominal 5.1% investment as part of the acquisition of MEDIAN. But this is not a RIDEA type investment.

When we purchased the real estate from MEDIAN for leaseback, we will be required as usual to pay transfer tax and this will be recognized as acquisition expense at that time. Our 5.1% equity, which although we are prohibited from disclosing the amount, we can say that it is immaterial from any perspective.

The 5.1% equity allows us to avoid paying a second level of real estate transfer tax which may have otherwise cost approximately €35 million. The purchase by MPT of each property will require the transfer tax and, as mentioned, this cost will be reflected as an expense at the time.

We will retain this small passive equity investment even after we purchase and lease back the real estate, because we think it offers opportunity for long-term value creation at the minimus risk. But we do not assume any income from it in our calculations of accretion and run rate guidance.

After completion of the purchase of the real estate to leaseback to MEDIAN, we may make loans up to the purchase prices of the respective facilities. During the time between making any such loans and closing of the real estate purchases, we will be paid cash interest on those loans at the lease rate.

The loan balance will be offset against what would otherwise be a cash payment for the real estate purchase prices. As you may recall from our RHM deal last year, the local municipalities in Germany have something similar to a right of first refusal to purchase the hospitals, which are logically considered infrastructure assets.

Although that is not expected to happen, in the unlikely event that it does on certain facilities, our sale leaseback agreement has provisions to assure us that MEDIAN will substitute any such facility with a similar asset.

I will be happy to answer further questions about MEDIAN and the other acquisitions during our Q&A, but first let me move to financing.

We announced last week that we have amended our bank facilities to assure that we have more than sufficient flexibility to complete the MEDIAN sale and the leaseback along with the other transactions that we have announced and give us plenty of covenant headroom and time in the event that approval and other conditions cause unexpected delays in closing.

In summary, we exercised our $250 million accordion feature to increase our committed availability to over $1 billion. We negotiated a new accordion that provides an additional $400 million of capacity for a total of $1.5 billion.

We obtained commitments from the syndicated banks to provide a one-year term loan for $225 million and we modified certain other provisions of the credit agreement. These modifications will allow us, if necessary, to complete all aspects of the MEDIAN transactions without additional capital-raising activities.

However, our practice has always been to manage our growth as rapid and successful as it has been with long-term capital that has predictable cost.

So at the appropriate time in the future, based on market conditions, clarity about the timing of closing and our overall pipeline and capital needs, we will access capital to replace any borrowings that may have been made under the revolving facility.

As we complete that process of accessing more permanent capital, we intend to have reverted to our long-established balance sheet practices of moderate leverage, that is 40% to 45% debt to gross assets, net debt of around 5.5 times normalized EBITDA and well sequenced maturities in combination with a comfortably well covered dividend payout ratio.

Based on those practices and principals and on recent market conditions in both the debt and equity capital markets, we have estimated that the MEDIAN and other recently announced transactions, once permanent financing is completed, will generate incremental FFO per diluted share of between $0.09 and $0.12.

Compared to our previous run rate estimates at the mid range of $1.12 per share, this represents an increase of between 8% and 11% on a go forward basis if we suggest an in place run rate of between $1.19 per share and $1.26 per share.

Those estimates assume interest cost will range between about 3.5% for secured mortgage debt and about 5% for unsecured debt. As most of you will remember, there is not a strong mortgage market in the U.S. for hospital assets, so we do have to be able to benefit from the German market and its lower secured rates.

Let's discuss briefly the operators that are in bankruptcy, starting with Monroe. An affiliate of Prime Health Services has recently been confirmed by the court as the winning bidder for the acquisition of assets of the original operator of Monroe Hospital in Bloomington, Indiana. We expect that sale to close during the fourth quarter.

The impact on MPT will be that we will begin receiving cash rent of approximately $2.5 million annually, a little more than $0.01 per share. The Gilbert Hospital in the suburb of Phoenix has not missed a rent payment since it entered bankruptcy almost a year ago and for the last several months has operated profitably.

We have already agreed to new lease terms with Gilbert that provide higher rents, more security and to longer term, all of which has been approved by the court. We expect Gilbert to emerge from bankruptcy a much stronger tenant for us in the near future.

The Florence Hospital, also in the Phoenix area, has recently announced that it has accepted a bid from a prospective purchaser that is conditioned, among other things, on reaching agreement with us regarding the lease.

Meanwhile, Florence continues to pay its rent and we retain an irrevocable letter of credit in the amount of about four months of rent. There is no assurance at all that we will reach agreement concerning new lease terms with the stalking horse bidder.

Our investments in tenant operations, that is our RIDEA investment, continue to report results and otherwise execute their strategic growth plans as we have expected.

For the nine months ended September 30, we have recognized approximately $12 million from our loans to Ernest and the operator of our Hoboken facility and another $2 million in operating income from the remaining investments.

Since last December, we have invested approximately $90 million in three acute care hospitals in turnaround conditions that are leased to Alecto Healthcare. These investments pay a double-digit lease and loan rates and we also participate in their profitability. It's important to remember that we paid no additional amount for this profit's interest.

Because the facilities are in the early stages of turnaround, we have not yet recognized any profits participation, but all lease and interest payments are paid current.

We will continue to selectively invest in similar opportunities to supplement our high real estate lease returns with profit participations when we can do so with little or no incremental risk. With that, I'll turn the call back to the operator for any questions..

(Operator Instructions) Your first question comes from the line of Karin Ford of Capital Markets. Please proceed..

My first question is just on your portfolio and where you -- where it is today and where you'd like it to be. Can you just talk about what percentage of the portfolio you'd like to have in Europe ultimately versus the U.S.

and how your pipeline is sort of shaping up to, sort of, manage your longer-term goals on portfolio exposure?.

Karin, in the near term, near and medium term, we expect that our exposure in Western Europe on the total portfolio basis will be somewhere in the 30% range. Now that may spike up a little bit as we do transactions and then come way back down as we do U.S. transactions.

But overall if there ever were a stable point, it would be somewhere in that particular range..

And then on the MEDIAN close, it sounds like that's still a little bit of a moving target.

But it sounds like it should be sort of late first quarter, early second, is that your current thought?.

No. I think it will be much sooner than that. As Steve mentioned, the only thing holding back the closing at this point is the approval from their equivalents of the FTC. We hope that that will occur sometime this year, probably sometime in December..

And then your sale leaseback would close 30 days after that?.

Well, that will probably close sometime in the middle of the first quarter and as each one of the municipalities waive their right..

And then, what's driving the changes in the coverage levels that you saw across the three different segments of your portfolio? What sort of -- what's been the -- what are the emission trends you're seeing and what are the sort of overall fundamental dynamics?.

It wasn't much of a decline. If you go back to the numbers, they were slightly down to hardly down at all. Most of it's attributable to the typical third quarter slowdown that you see in the summertime. Some of it is attributable to a softer market in the California than the rest of the country..

And then my last question is just on Monroe.

The cash rent that Prime will pay, does that commence immediately upon the closing of their purchase?.

Yes, it does. And lease rolls into the Prime master lease. So we have all of the credit benefits of Prime’s master lease structure..

Your next question comes from the line of Mr. Michael Carroll of RBC Capital Markets. Please proceed..

How many other assets does MEDIAN operate outside of the assets you agreed to purchase?.

Well, they have two other acute care hospitals, but it is essentially the whole company..

I thought you said in your remarks too that if the local government decided not to or decided to exercise its right to purchase one of the assets, then MEDIAN would give you an asset similar to the ones that the government decided to buy?.

That’s correct. That’s because they are in an acquisition mode and have other acquisitions planned..

They've already identified to the extent that that would be necessary, which frankly we think it won't be. They've already identified over €140 million in new assets that they are in the process of acquiring..

It is highly unlikely, Mike, that any of the municipalities will exercise that right. They had that same right on the RHM transaction and didn’t exercise any of those either..

So, is MEDIAN buying those assets themselves or is that something that you could partner with them?.

You mean in the their acquisitions that they are doing, an additional acquisition?.

Yes..

We expect to acquire those assets in a straight sale leaseback, not in a partnership type structure, just like we are doing on the large transaction..

And then how many additional international markets is MPW interested in outside of the UK and Germany?.

Mike, we haven’t identified the specific countries other to say that it’s Western Europe and there is less than a handful of it we are looking at right now..

So most of the near-term investments on the international side will be still in the UK and Germany?.

We just haven’t made that announcement yet..

And then, in Germany, are you more interested in rehab hospitals or you're also interested in general acute care hospitals?.

Right now we are just interested in the rehab market. We know it very well. We are very, very comfortable with it. It’s a very, very strong market..

(Operator Instructions) Your next question comes from the line of Mr. Juan Sanabria, Bank of America. Please proceed..

I was just wondering if you could give us a little bit more color on that 5% stake you took in MEDIAN and what the implied valuation was and what the potential CapEx commitments or commitments towards future acquisitions they may do. And excuse me if you just answered this, the line kind of cut out for me..

No problem, Juan. It cut out for us also. The 5.1% is a totally passive, immaterial from a dollar value standpoint. And again, we are prohibited from saying just how immaterial. It carries no obligations. There's no CapEx obligation.

If in the highly unusual and unexpected circumstance that there needed to be a capital call, it’s entirely up to us as to whether we participate in that capital call or not. Obviously we did not. We'd be diluted. And again, we have no assumption in our guidance that there is any income that comes from that..

And then can you just talk to the 1.7 times coverage for MEDIAN and kind of what made you comfortable there? At face maybe it seems a little low to what I guess we're typically used to expecting it. And if you could also give us a sense of the coverage with the U.S., the new acute care hospital coverage levels..

Juan, as you saw in the press release, it’s more than 1.7. It’s actually almost identical to the going in coverage rate when we bought Ernest Health. It is a very typical going in coverage rate for us on post acute care LTACs and rehabilitation hospitals.

Well, we expect that number to be shortly up above the two times coverage and we expect to continue to grow modestly from that particular number. It's a number that we've always said in underwriting the post acute care sector that we've always been very comfortable with.

The roughly 1.7 times to 2 times coverage is what we underwrite from a going in basis. For the acute care hospitals, we like to see the coverage on a stabilized basis to be in the 3 times range. For the Alecto facilities, as Steve mentioned, these facilities we expect will get to those heights of coverages in short order.

They're not there now, but we expect they will get there in short order..

And those are the turnarounds just because there's just a recently new operator, is that the story?.

Well, in West Virginia, it's very similar to the situation that we had in Hoboken and in the Bayonne where you had a not-for-profit operator and a for-profit operator coming in and taking control of the facility. We expect to see the same types of results here that we've seen in other situations where we've had that particular instance.

There is a lot of low hanging fruit when you had that type of situation. The facility down in Texas was a not-for-profit for a very long time. It was then operated by a joint venture with Texas Health and LHP that never really fit in their portfolio.

LHP didn't -- never really managed that facility as they have their other facilities within their particular model. So it will fit better with the Alecto model..

And can you give us any sense, given both MEDIAN and RHM are controlled by private equity, as to the leverage that they are using at those two operators and kind of a sense of how much flexibility they may have from a balance sheet perspective?.

Well, I mean you can look at -- we're purchasing them. And the coverage, which again as we mentioned, is at least at 1.7 times and our view when we look at that coverage is not necessarily what's the corporate level debt, it's what debt and what operating metrics are down at the location.

So just for example, you can go back to the transaction we did about this time last year with IASIS, which if you look at it from a corporate level, is fairly levered. But the hospitals are generating very strong profitability and that's our concern.

So that if we had to make a change for whatever reason, the hospitals are doing well and you can leave the corporate debt behind and easily replace an operator with new capital at a business that's generating, again as we pointed out, at least 1.7 times profitability coverage.

So it's a long-winded answer, but it's basically corporate level debt does not affect our credit and our remedy availability if in fact we had to take remedies under our leases..

I'm not sure if you're asking this particular part of the question or not. But in the ways you asked it, it brought up a point that I want to be sure to make. MEDIAN represents about 6% of the total market in Germany. The RHM portfolio represents about 1.5 times to 2 times, I mean 2% of the total market.

So combined, they will control roughly 8%, 8.5% of the total rehabilitation market in Germany. The most important factor for the payers in Germany is quality of care. When they're doing their payer contracts, they make sure that they're doing it with facilities that generate great patient outcomes.

The MEDIAN facilities, the management team that's in place there has been in place now for about two years or three years. They have a great plan. We think that they will continue to grow in the market. And the synergies between the two we think will help very much in the total operation of the portfolio..

(Operator Instructions) Your next question comes from the line of Mr. Chad Vanacore of Stifel. Please proceed..

So, it sounds like there is going to be some excess tax leakage in the German assets.

Can you give us a better picture of why that is and then what the magnitude is?.

Well, there's really not, Chad. The tax that I mentioned earlier is the transaction tax. You'll find even in the state, there are many states and other jurisdictions that charges stamp duty or a transfer tax on a real estate transaction. That's all that we're talking about here.

when there is a transfer of ownership, there is a tax to be paid regardless of whether there is profit. So we're not talking about income tax leakage at all. And to the extent there is local income tax, which in the case of MEDIAN there is not, we would have rolled it into the guidance. But all we're talking about is the transfer tax..

We don't expect any ongoing tax leakage here, Chad..

And then, a large part of your portfolio is now in German market.

So what would you point investors toward for them to get comfortable with that aspect?.

Well, it’s all the things that I have mentioned in my presentation earlier. There's various material that we'd be glad to share with people. We'll put it up on our website, some of it's there already. It is a very strong and stable market. It is a great economy, a great healthcare market particularly in the rehabilitation area..

Your next question comes from the line of Ms. Karin Ford of Capital Markets. Please proceed..

Just a couple of follow-ups.

Can you give us an update on the re-leasing efforts on the two hospitals currently operated by Community Health?.

(Operator Instructions) Ms. Karin Ford of Capital Markets, please proceed..

I didn’t hear, but the very first few words of your questions..

Yeah. Sorry, cut out there. I apologize.

Can you just give us an update on the status of the re-leasing for the two hospitals currently operated by Community Health?.

Yes. We've gone through a process, we've had approximately five or six people indicate an interest on the facilities and that seems to be moving well..

And then just last question.

Can you give us a sense of when you expect timing on the permanent financing for the acquisitions? Do you expect it to be relatively close to closing or is it basically could be any time?.

Well, it will be, as I mentioned earlier, when market conditions are appropriate, when we do have more clarity on the timing of closing. We have got a very, very robust pipeline. We continue to work other transactions. So the development of those will also impact timing.

We want to take the opportunity we have right now to get in front of investors and make sure that the current and prospective investors have all the benefit of the information we have about not only this particular transaction, but the German market and its strength. So again, a long-winded answer, Karin, but it comes back to we just don’t know.

We have a lot of flexibility and we will keep our eye on the markets..

And we have plenty of liquidity to close the transaction as is and we will try to make the best decision on when the right time it is to make permanent financing..

Your next question comes from the line of Mr. Juan Sanabria of Bank of America. Please proceed..

Just with regards to your European exposure, I mean, if I recall, previously you'd said that you'd expect that exposure to remain similar to what it was just when you had the RHM exposure. Now, you've had a big increase with MEDIAN. I mean, how should we think about the exposure going forward? I know you kind of discussed it.

And then how do you feel comfortable given the European economy and sort of increased weakness as of late?.

Juan, we have said in many of the recent calls and meetings that we have had that we expected the near-term to be in the 15% to 20% range. Now we had this opportunity come available to us. We believe that this is an outstanding acquisition. It’s a very strong acquisition, one of the strongest acquisitions that we think we could have made.

So despite that you saying about what we had indicated most recently is exactly that, just a spike. Now in answering the question where we think we will be in the mid-term, we think that the 30% range is the right target. Now that doesn’t mean that we will stay there or get there.

It means that we may be slightly above that at times and we may be way below that at times as the acquisitions fall out. As far as the economy and the recession standpoint, let me address that the same way that I addressed the U.S. recession that we had in 2008, 2009, 2010 and so forth.

During that time period, our hospitals performed exceptionally well. People get sick in good times and they get sick in bad times. During that time period when many other companies were struggling with cash flow issues, our hospitals actually saw their EBITDAR coverage grow from roughly 3.5 times to over 4.5 times.

So we see that the hospital portfolio, the hospital industry is never going to be a high-flying industry, but it also does well in all types of economies. When you look at Europe, take Spain in particular, Spain's a country that suffered greatly during the worldwide recession.

Yet, Spanish hospitals actually saw their EBITDAR increase during that same time period by roughly 35%. So it's more than just looking at the overall economies. Obviously, that's very important. Now look at the strength of their governments in those particular countries. But take Germany as a particular example.

Germany has one of the strongest balance sheets in all of the world. It is certainly and has been throughout the recession the backbone of the Eurozone and that the German healthcare in particular is well funded with a very large surplus with not the deficit issues that other countries such as the U.S. is seeing. .

Ladies and gentlemen, thank you for your participation in the question-and-answer session. We will now proceed with closing remarks..

Tony, thank you very much and thank all of you and we apologize for the technical difficulty in some of the Q&A process. But again, thank to all of you for listening. If you had any further questions, please don't hesitate to call us. We'll be glad to get back with you. Thank you very much..

Ladies and gentlemen, thank you again for your participation. You may now disconnect and everyone have a great day..