![]() This strategy helps insulate its income from inflation and higher interest rates. That's where Medical Properties differs because virtually all its leases "provide for annual contractual rental increases that are tied to inflation." Hamner then noted, "But critically, our model has always anticipated the likelihood of rising interest rates and the need for our contractual rental rates to increase with the inflationary pressures that result in higher interest rates." He went on to note that most hospital leases don't feature rental rate escalations tied to market rates. Leases are structured in a way that protects against higher rates ![]() The financial cornerstones of using fixed-rate debt with staggered maturities prevent the company from facing significant debt maturities amid surging interest rates like we're seeing today. It is also why we carefully plan on staggered maturities, both of those cornerstone strategies are consciously designed to help avoid a situation that might otherwise arise if interest rates spike upward and significant amounts of debt mature simultaneously." Hamner stated, "That is why all of our long-term debt is at fixed rates. Since it can't control the cost of debt, it focuses on what it can manage. This capital has a cost to the company in the form of debt costs. ![]() It predominantly acquires hospitals from operators via sale-leaseback transactions that provide them with capital to operate and grow their businesses. ![]() The CFO noted that at its core, Medical Properties Trust sells a product to its lessees: capital. He stated, "After a virtually unchanged business model since we started the company almost 20 years ago, I thought I would make a few comments relevant to analyzing that model's sustainability." Hamner discussed the company's financial foundation on its recent first-quarter call. Medical Properties Trust has three co-founders, CEO Edward Aldag, CFO Steve Hamner, and COO Emmett McLean, who will retire later this year. The balance sheet is designed to mute the impact of spiking interest rates ![]()
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