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Executives

Charles Lambert - Managing Director

Ed Aldag - Chairman, President and CEO

Steven Hamner - Executive Vice President and CFO

Analysts

Jana Galan - Bank of America Merrill Lynch

Karin Ford - KeyBanc Capital Markets

Philip Defelice - Wells Fargo Securities

Daniel Bernstein - Stifel

Tayo Okusanya - Jefferies

Medical Properties Trust Inc. (MPW) Q1 2013 Results Earnings Call April 26, 2013 11:00 AM ET

Operator

Good day, ladies and gentlemen. And welcome to the First Quarter 2013 Medical Properties Trust Earnings Conference Call. My name is Sequana, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards end of this conference. (Operator Instructions)

I would now like to turn the presentation over to your host for todays call, Mr. Charles Lambert, Managing Director. Please proceed, sir.

Charles Lambert

Good morning. Welcome to the Medical Properties Trust conference call to discuss our first quarter 2013 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 Relation’s 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 maybe 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 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.

Ed Aldag

Thank you, Charles, and thank you all of you for joining us today to review our first quarter 2013 results. As Steve will go over with you in detail in a few minutes, the financial results for our first quarter were right in line with our expectations. And more importantly, the financial results continue to show the health and performance of our portfolio. I want to take a few moments to go over with you what you cannot see from the financial results.

You will recall from our previous earnings call this year that we told you we expected our acquisitions for 2013 to be made in the second half of the year. During this past quarter we made tremendous progress on these acquisitions. Our active acquisitions pipeline is larger today than it has ever been. I want to be clear I’m referring to our active acquisition pipeline not a shadow pipeline. These are properties that we are actively working towards the close.

We certainly recognize that we will most likely not close on each of these. However, the number and dollar amount of properties we are actively working are larger than they have ever been and has always been the case we do not comment on acquisition targets but we ultimately pass on.

Our existing portfolio of performance fell right in line with what you've seen nationally over the past few weeks, essentially our EBITDA coverage for all three of our major sectors was flat to slightly down quarter-over-quarter. However, for year-over-year they were slightly up to flat, the utilization of our facilities also followed these trends.

Due to the number of acquisitions we have made in the past year, we are viewing our portfolio coverages can get a little confusing. So let me walk you through a couple of ways to look at it.

As you know on these calls I give you the EBITDA lease coverage for our mature operations meaning they've been in our portfolio for at least a year and I give these to you on a trailing 12-month quarter-over-quarter and a trailing 12 months year-over-year. So that's where I'll start.

For our acquisition hospitals trailing 12 months year-over-year actually rose to almost 5.5 times, trailing 12-month quarter-over-quarter at almost 5.5 times there is a slight decrease from the 5.65 times reported last quarter.

I'd like to point out that our hospital in Florence, Arizona which I'll discuss in a little more detail in a few minutes is included in this calculation as we have owned it for more than a year.

For our LTACHs they’ve remained essentially flat at almost 2.25 times year-over-year and quarter-over-quarter. For our IRFs quarter-over-quarter we saw a very slight decrease in coverage to approximately 2.8 times. This 2.8 times is almost 50 basis points lower than the year-over-year coverage, which is somewhat misleading.

This is normally is not due to a decline in the performance of the existing facilities but rather the addition of eight facilities that are still in their wrap-up coverage with less than -- that are less our seasoned properties. However, these additionally eight properties do have good positive coverage.

Now I want to go over with you the EBITDA coverages for all of our facilities including those that have not been in the portfolio for a complete year. For our acute care hospitals the coverage is 5.3 times, for the LTACHs the coverage is 2.21 times and the IRFs the coverage is 2.8 times.

Let me spend a few minutes discussing the success of our portfolio since our inception. Over the history of MPT we have acquired or developed 101 properties. Of these 101 properties 13 were development properties.

Of the 101 properties we have acquired over the past nine years only six have had any issues. This represents about 6% of our total portfolio, only one of these properties has resulted in any sort of impairment. The dollar amount of that impairment represented less than one half of 1% of our total portfolio investment.

Most of you heard me say that in the real world when you make long-term investments as we do there will be bumps in the road. The important thing is to be able to handle these bumps.

MPT has had very few bumps in the road and when we have our management team has proven their ability to address the issue. Even when tenants file bankruptcy we have been able to bring in new tenants under stronger lease terms and in some instances we were even able to obtain the participation entrance. The important thing to note is that we have been successful in managing these assets not just when everything works perfect.

Currently, we have two bumps in the road, Florence and Monroe. About two months ago one of our operators in Florence, Arizona filed bankruptcy. We believe the Florence situation is an operator issue and not a hospital issue.

As we always do, we have prepared for these situations with various forms of additional collateral that should provide a number of months cushion should the facility which is current on its rent at this time stop paying rent.

We have had a number of other operators support -- approach us with their interest in this facility and we're in discussions with them, as well as the current tenant. Florence represents approximately $0.02 of our FFO on an annualized basis and only 1.2% of our total portfolio.

Monroe is still not where we'd like for it to be. While there has been no deterioration. The improvement that we would like to see hasn't been there either. To be extra prudent we will no longer accrue any rent on this facility until rent begins to be paid current.

Let me take a few moments to review some of the portfolio highlights for the quarter. The number of our facilities continued to receive awards for their patient care, Prime Healthcare was once again recognized by Truven Health as one of the 15 top health systems in the country. This is the third time in five years and Prime remains the only for-profit system recognized for this honor. Eight of Prime’s hospital remained as part of the 100 top hospitals.

All of Ernest Health facilities that were eligible were recognized in the top 5% of the 2012 UDAS National rankings. North Cypress and CHS Chesterfield General Hospital also were recognize with patient care awards. The Ernest facility in Lafayette, Indiana opened in March.

All three of our managed facilities are opened and our exceeding our expectations. The construction commenced on the [NSH OakLeaf] facility. Westside Hospital opened in January in Twelve Oaks and again is exceeding our expectations.

We are very excited about the remaining part of 2013 and beyond. We are excited both about acquisition pipeline and the performance of our existing portfolio. We also expect to see continued growth in our FFO.

Steve will walk you through the details of the financials.

Steven Hamner

Thank you, Ed. We released our first quarter results earlier this morning. So instead of simply repeating what you probably already read, I just have a few comments about what those results indicate about our future outlook.

Total revenue for the quarter was up almost 42% over 2012’s first quarter, reflecting the $400 million acquisition of Ernest in 2012’s first quarter and all of the subsequent 2012 acquisitions. We expect to continue making substantial acquisitions of high-return hospital real estate, which should continue to drive double-digit revenue growth.

However, we do remind investors that we cannot predict with any certainty the specific quarters in which we will complete those acquisitions. And we do not manage our investing process with only quarterly results in mind.

Normalized FFO per share in the quarter was up by 39% over the 2012 quarter, the fourth consecutive quarter of 30% plus per share growth. This substantial and immediate accretion that this increase represents is a result of the outstanding returns we earn on our hospital real estate and the historically low cost of capital that we presently enjoy.

During the first quarter, we raised about $173 million of equity and those proceeds along with our undrawn revolver provide almost $500 million of immediately available resources for acquisitions. As Ed mentioned, our active pipeline of high-return acquisition possibilities is robust. So the outlook for continued and near-term increases in our FFO per share is outstanding.

Included in the results for the quarter are earnings from our idea-type investment of about $4.5 million or $0.03 per share. Of this amount, $1 million is from seven investments with an aggregate original cost of $12.2 million and $3.5 million is from our Ernest investment.

Of the Ernest income, $1.6 million is currently paid in payable that’s the 7% rate on our $93 million acquisition note and $1.9 million, or about $0.01 per share is accrued in accordance with the terms of the note. As a reminder, that, excuse me -- that 7% pay rate increases to 10% in 2014. And Ernest management is highly incentivized to satisfy that accrued interest as soon as practical.

The total accrued interest since we closed the transaction in February 2012 was $10.9 million as of March 31, 2013. And of course, these amounts are incremental to the $7.8 million in quarterly income from our Ernest real estate investments, which are separately accounted for as income from direct financing leases and real estate mortgages.

After the end of the quarter, we sold two facilities whose leases had expired to their lessees for $18.5 million. And we will recognize gains of about $2.1 million in the second quarter. The sale proceeds when combined with rental receipts since we acquired the properties resulted in an unlevered internal rate of return of about 10.3%.

The annualized FFO from these properties aggregated less than $0.02 per share. We presently have no other property sales pending or planned and there are no other lease maturities in 2013 and only two in 2014.

On last quarter’s call, we provided an estimate of 2013 normalized FFO of $1.10 per share. Since then we have aggressively worked our acquisition pipeline and we feel even stronger about the quality and volumes than we did three months ago.

On the flipside, we issued new common shares. We sold two small properties and we have elected to discontinue rent accrual at Monroe. We are not adjusting our 2013 outlook for normalized FFO at this time because of the strength of our active pipeline and our estimates about the timing of acquisitions.

We continue to believe that we will acquire at least $400 million in new properties this year. But it is self evident that the earlier in the year we acquire properties, the greater impact those acquisitions will have on the annual results.

Again, we manage the company with a long-term, certainly not a quarterly strategy. And regardless of whether we acquire any particular property in any particular quarter, we continue to see the following, robust double-digit year-over-year growth in assets and revenue, a very attractive spread between the going in cash returns from the high-quality real estate assets that we will acquire and our cost of capital indicating continued strong and immediate accretion from each acquisition we make, an evolving market both in the U.S. and other well-established healthcare markets that is attracting more sellers who are recognizing and considering the advantages that sale-leaseback capital brings to many company’s capital strategies.

And on the other side, our growing recognition from other REITs and competitors that the perceived risks of hospital reimbursement have been historically unfounded and overstated when compared to actual results. As usual, our estimates do not include the effects, if any, of debt refinancing cost, real estate operating cost, interest rate swaps, write-offs of straight-line rent, property sales or other non-recurring or unplanned transactions.

In addition, this estimate will change if market interest rates change, debt is refinanced, additional debt is incurred, assets are sold, other operating expenses vary, income from investments in tenant operations vary from expectations, the timing of acquisitions varies from expectations or existing leases do not perform in accordance with their terms.

With that, we will take any questions. And I will turn the call back to the operator.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Jana Galan representing Bank of America Merrill Lynch.

Jana Galan - Bank of America Merrill Lynch

Thank you. Good morning.

Ed Aldag

How are you doing?

Jana Galan - Bank of America Merrill Lynch

Very good. Thanks. Regarding your RIDEA investments, is it $0.03 of FFO per quarter good run rate until 2014 when Ernest may ramp up payments or through 2013, will it be volatile or do we see it ramping up through the course of the year?

Ed Aldag

Well, couple of points, let me make. Even when the Ernest note ramps up from 7% to 10% pay rates, that won’t affect the run rate of the income because we’re already recognizing that. It would just shift moreover to the cash receipts than the accrual.

So to answer your question overall, we -- at this time, certainly believe that the $0.03 a share which includes our Ernest and the other seven deals, smaller deals that we have is a fair estimate of the quarterly run rate.

Jana Galan - Bank of America Merrill Lynch

Thank you. And then, I guess the $0.02 of debt referral for the hospital sales, that wasn’t in original guidance. Was it?

Steven Hamner

We did not anticipate that when we made the original guidance estimate, no.

Jana Galan - Bank of America Merrill Lynch

Okay. And then, I know it’s very early but have you started discussions with the two leases you have expiring in 2014.

Steven Hamner

We started discussions with one and we got a pretty high level of confidence that that will result in a renewal. We’ve not started discussions with the other.

Jana Galan - Bank of America Merrill Lynch

Thank you.

Steven Hamner

I will point that though on the other in particular, the only other option to renew is to repurchase that’s a hospital, which they will not walk away from. So they will either repurchase at a price that will reflect a value that results in a gain or certainly no loss or they will renew.

Ed Aldag

And Jana, let me point out on your question about the sale of the two properties not being included in the original guidance. Just to reiterate what Steve said in his prepared remarks. While that was not included in original guidance given where we are on our acquisitions, we don't believe there is any adjustment to guidance.

Jana Galan - Bank of America Merrill Lynch

And can you just give a little bit of color on the acquisition or your investments. Do you see them trending more towards acquisition or developments, or is it even?

Steven Hamner

No. No, it’s heavily weighted toward acquisitions as it’s always has been in our portfolio. The vast majority of what we've done and what we will do in the future will be acquisitions. Most of the development that you will see will probably be the continuation of the Earnest facilities, which we’ve discussed in the last previous number of quarters.

Jana Galan - Bank of America Merrill Lynch

Thank you very much. Thanks, Steve.

Steven Hamner

Certainly.

Operator

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

Karin Ford - KeyBanc Capital Markets

Hi. Good morning.

Ed Aldag

Good morning, Karin.

Karin Ford - KeyBanc Capital Markets

I was wondering if you could expand a little bit more on your comment on the foreign hospital that you think is an operating issue and not an asset issue?

Ed Aldag

Sure. This is very similar to the situation you may recall that we had in facility in Louisiana several years ago, where the operator in that particular case got overextended on properties that we choose not to finance. And due to some of those issues, we were unable to handle their obligations in the -- I don’t like the name of the facility. No, no, one in Louisiana.

Steven Hamner

Covington.

Ed Aldag

Covington. Excuse me. And other than that, Karin, that’s about all I can say at this time.

Karin Ford - KeyBanc Capital Markets

Okay. Can you tell us what the current coverage is on that facility and in your discussions with the operators, has there been any talk about giving any rent relief on that asset?

Ed Aldag

Karin, the coverage is negative, that what I was alluding to when I went through the coverage is that negative coverage is included in the total coverage ratios that I gave you earlier. So the coverage in this facility is a negative coverage right now. And we have not had discussions with the tenant about any rent concessions. They are current on their rent and they've indicated us they continued to pay rent. They expect to continue to pay rent.

Karin Ford - KeyBanc Capital Markets

Got it. Can you just remind us what type of return premium you guys require on the development versus on acquisition?

Ed Aldag

Well, it’s not quite that simple. But just giving you an answer, it varies obviously from project to project completely. If you look surely from an arithmetic standpoint of what has been historically from the beginning of our time through, it’s anywhere from 75 basis points to 150 basis points. The answer -- the part of that answer in there is you’ll remember that none of our facilities are, if you fill the dreams developments where we're hoping to lease them up after we do the development. Their situation was they were all pre leased. They were leased to a tenant prior to the construction commencing.

So the risk is not a development risk. The risk is that the operator has the ability to perform, or execute on their business plan. In situations where they haven't been for whatever reason, some of the times -- actually most of the time that we've had an issue and as you know there have been very few of them.

There have been issues that have been totally outside of the operators of specific interest, as they want specifically rated -- I mean related to the operator's performance, Monroe being a perfect example of that. So the risk is in a typical development lease-up type risk, is purely operator’s performance and if we do our underwriting correctly, the market that has the need for that particular facility and we bring in new operators, as you know we’ve done in the past.

Karin Ford - KeyBanc Capital Markets

And does the, what you see now in Florence given that facility is only about a year old. Has it changed your underwriting process at all on the standard development side?

Ed Aldag

No. It hasn’t, Karin. We certainly can't control our tenants in what they do outside of our facilities even when we turn down their financing request for other facilities. You can't totally control what a potential operator is going to do outside of your particular project.

Karin Ford - KeyBanc Capital Markets

Okay. And the last question for me is what’s the impact on FFO from the stoppage of the accrual in Monroe?

Steven Hamner

That’s about $0.02 to $0.03 a share.

Karin Ford - KeyBanc Capital Markets

Annually.

Steven Hamner

Right. Yeah.

Karin Ford - KeyBanc Capital Markets

Thank you.

Ed Aldag

Thanks, Karin.

Operator

Your next question comes from the line of Philip Defelice representing Wells Fargo Securities. Please proceed.

Philip Defelice - Wells Fargo Securities

Thanks. It’s Phil Defelice. Good morning.

Ed Aldag

Hey, Phil.

Philip Defelice - Wells Fargo Securities

I had a question on the dividend. You have stated a consistent quarterly dividend of $0.20 now since early 2009. You’ve done a great job of growing into it from a cash flow standpoint over the past 12 to 18 months. With the payout ratio now sitting at 80% here on a run rate basis and normalized guidance implying below 70%. It will be great to get your take on the dividend policy here and how you are thinking about the long-term payout target?

Ed Aldag

It hasn't changed at all, Phil. It’s the same where that we’ve stated, which is that the Board’s policy is that they would like to see a sustained payout ratio of 80% or better. We’ve obviously -- as you’ve just pointed out, we've been there. Our next Board Meeting is coming up at the end of May. I'm sure that will be a topic of discussion, but it is not anything that’s planned to this particular point. It will be something that the Board will decide at that point.

Philip Defelice - Wells Fargo Securities

Great. That’s helpful. And then the current thirst for yield and where borrowing costs have certainly put downward pressure on cap rates across most healthcare property types. Are you seeing any increasing competitiveness for your targeted investments and do you still expect double-digit going in lease yields on average currently?

Steven Hamner

I think on an average that we do continue to see it in the double-digit range. There has been some additional interest, which is we've said all along for the last few years. We welcome it. We think the additional interest is very good for our investors from every aspect. It obviously will continue to prove the work of our total portfolio and obviously will help us to sell the product on the customer side.

We all know that some of the other major healthcare, REITs have recently made announcements that they are looking into the hospital space. Again, we welcome that. We think that's a good thing. And, as it has been the case for the past few years, some of the private -- publicly, I mean privately traded healthcare REITs out there have indeed made some hospital investments.

Philip Defelice - Wells Fargo Securities

Thanks for the color. Good quarter, again.

Operator

Your next question comes from the line of Daniel Bernstein representing Stifel. Please proceed.

Daniel Bernstein - Stifel

All right. Good morning.

Ed Aldag

Hey, Dan.

Daniel Bernstein - Stifel

Hi. I just got a follow-up on Monroe. If you could talk about maybe one, the operations there are not improving and what you guys can do to help to get the operations at Monroe moving a little bit better?

Ed Aldag

Dan, we still have great expectations for Monroe. We think that it’s going to end up being a great project. As you know, St. Vincent’s took over the management of that facility a while back. St. Vincent’s is a very large and successful not for profit operator in Indiana.

We just generally believe that not for profits don’t move at the same pace as most for profits do. I think that -- our disappointment is that we just haven’t seen the improvement is fast as we expected it to be there. We think that it will still be there but in an abundance of prudence, we think that stopping the accrual of rent until they are actual paying it is the right think to do.

Daniel Bernstein - Stifel

Do you have some expectation when you may begin accruing rents again on that facility? You have kind of a timeline maybe 12 months from now, 24 months from now…

Ed Aldag

Yeah. I hope is…

Daniel Bernstein - Stifel

…looking into that?

Ed Aldag

Yeah. I certainly hope is not that long and the facility is above break-even, not paying our rent yet, we certainly don’t want to drain them dry, but it has been above break-even for over two the years now and is good above break-even right now. But just not at the point where they can pay our rent?

Daniel Bernstein - Stifel

Okay. And then going back to Ernest, I was looking back at, when you first did the Ernest deal in late, I guess it was 2011? There was $43 million of EBITDAR that was in place for 2012? What are your expectations for EBITDAR for that portfolio in 2013?

And where I’m trying to go here, if you took your, the minimum cash payment back then, effective lease coverage is like 1.3 and obviously, you hoping was ramping up from then? But I’m trying to get a sense of where the lease coverage would be on that portfolio today? How many cushion you have their in terms of to ramp up to the 4%, 15% cash return on the operating line?

Ed Aldag

Well, the lease coverage when we acquired the property is was in the 1.77 range…

Daniel Bernstein - Stifel

I’m sorry, it was not, not the lease coverage, I guess the overall transaction coverage. I’m sorry, I didn’t mean to say lease, but go ahead.

Ed Aldag

Yeah. Let me answer it this way, Dan, if you take the $42 million, $43 million EBITDAR number.

Daniel Bernstein - Stifel

Right.

Ed Aldag

And you look at there, in that they have probably three or four properties that were just coming into the ramp up stage. So other than that the other properties, we’re running fairly well close to where we would expect their EBITDAR numbers to be on individual property basis.

So without the additional properties that they’ve had under construction that they completed and that the newest are under construction now, then you have a modest amount of growth in the EBITDAR from 2012.

Daniel Bernstein - Stifel

Okay.

Ed Aldag

If you look at the new properties and look at where they are performing today, where we expect based on additional time and knowledge that we have, we expect that each new facility will generate an EBITDAR addition of somewhere between $2.5 million and $3.5 million to the bottom line.

Daniel Bernstein - Stifel

Okay.

Steven Hamner

And let me just clarify, Dan, the $42 million are in place EBITDAR that we bought the company for basically, is sufficient to pay 100% of the 15% rate on the note. The reason that we’re not collecting the entire amount is simply because Ernest is in an aggressive growth stage and it’s better to give them some relief on the cash payments and let them reinvest that into these developments and remember Ernest has to pay for all of the ramp-up cost and all of the overhead that goes with opening a facility.

If we had not encouraged and bought Ernest in fact, in order to take advantage of their development. We had bought it as a status quo company. We would be collecting the 15% in cash right now, just the company wouldn’t be growing and that wasn’t our strategy.

Daniel Bernstein - Stifel

Right. We had calculated that back in ‘11 as well that you would more than cover the 15%. I’m just trying to understand, how much that cushion is increased, or I guess it hasn’t quiet increased that much until you -- until they ramp up the new development that you’re funding.

Ed Aldag

Well, I think that’s the point, that you got right Benny.

Daniel Bernstein - Stifel

Okay.

Ed Aldag

If we cut off the development and let all the development ramp up in -- the term you used cushion would be substantial.

Daniel Bernstein - Stifel

Okay. And I guess the only other question I have is, yesterday, Kindred announced they are selling assets to Vibra, which obviously is a large tenant of yours. I presume you can’t comment on that transaction. I don’t know if you’re involved in it but have you seen those assets, those -- do you think those assets, I guess, are of relatively high quality. Would you be interested in them if you were brought into that transaction by Vibra?

Ed Aldag

Yeah. Your first comment that we can comment....

Daniel Bernstein - Stifel

Okay.

Ed Aldag

It’s probably pretty good.

Daniel Bernstein - Stifel

Okay. I was trying to asking that we’re kind of convoluted way to get an answer but...

Ed Aldag

Yeah.

Daniel Bernstein - Stifel

I appreciate that. Okay. That’s all I have. Thank you very much.

Ed Aldag

Thanks Dan.

Operator

Your next question comes from the line Tayo Okusanya representing Jefferies. Please proceed.

Tayo Okusanya - Jefferies

Hi, guys. Good morning.

Ed Aldag

Good morning, Tayo

Tayo Okusanya - Jefferies

Yeah. On the acquisitions fronts, you guys aren’t really bullish, could you, kind of, give us a sense whether it’s kind of like one really large like $400 million transaction you’re looking at, that’s a game changer, but whether it’s kind of bunch of -- kind of $50 million type deals?

Ed Aldag

It’s all the above.

Tayo Okusanya - Jefferies

It’s all the above, okay. That’s helpful. And then in regard to Monroe, you were kind enough to give us the rent coverage on Florence. Could you kind of give us a sense of where it is on Monroe even though they are not paying the rent right now?

Ed Aldag

Well, it’d be positive -- they will be able to pay something but it obviously wouldn’t be one to one.

Tayo Okusanya - Jefferies

Okay. Are there any other tenants that I know historically kind of maintained that expect for one or two tenants, everybody else is kind of close to your averages with regards to rent coverage. Is that still true?

Ed Aldag

It is Tayo. This time I did something a little bit differently and I gave you the coverage for the entire portfolio as well as the mature properties. But if you look at the entire portfolio on the hospitals in particular on a -- including those that are still in the ramp-up stage then including Florence, you’ve got the two of them that are negative and the rest of them, with the exception obviously of Monroe, is doing very well.

Tayo Okusanya - Jefferies

Okay. That’s helpful. And then just last question with LifeCare, have they reaffirmed the lease at this point?

Ed Aldag

Yeah. We have the new lease with LifeCare during their bankruptcy. They haven't miss a single payment. And this is typical of -- when our hospital company goes into bankruptcy unless it’s going into liquidation, it is going to pay the lease payment because if it doesn’t have the business. So, LifeCare went into bankruptcy in December. Never miss the lease payment, never miss any kind of payment and we executed new lease with LifeCare, a few weeks ago.

Tayo Okusanya - Jefferies

Very helpful. Thank you very much.

Operator

I would now like to turn the call back over to Mr. Ed Aldag for closing remark.

Ed Aldag

Thank you very much again for all of your participation today and as always don't hesitate to call myself, Steve or Charles if you have any questions. Thank you very much.

Operator

Thank you for your participation of today’s conference. This concludes the presentation. You may now disconnect and all have a great day.

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