Running a successful health care REIT that specializes in hospitals requires a unique skill set, according to Edward Aldag, Jr., president and CEO of Medical Properties Trust (NYSE: MPW). A background in finance and the real estate business are important, but a thorough understanding of how hospitals operate is "absolutely critical," he says.
"If you're going to invest in general acute and post-acute care facilities, you have to have an understanding of the field," Aldag says.
Medical Properties Trust, which was founded in 2003 and is based in Birmingham, Ala., invests exclusively in hospitals. The company has been able to grow its portfolio to more than $1 billion in assets (close to 80 facilities throughout the country) in less than five years. In 2011 the company's net income was $26.5 million, compared to 22.9 million in 2012.
In February, the company announced a $400 million acquisition of Ernest Health Inc. The deal increased the size of the REIT by 25 percent, adding 16 additional hospitals located in 12 different geographic locations to its portfolio.
Aldag emphasizes the importance of partnering with strong hospital operators in his company's line of business.
"We make sure that we are doing business with operators who are the most efficient and completely understand the operation," he said.
With health care spending projected to consume roughly 20 percent of U.S. GDP by 2017, Aldag ays the company has no plans to slow down this year.
"We're not done," Aldag says. "We see a lot of opportunities left for 2012."
One of the biggest changes in the hospital industry has been the rise in the types of hospitals available to patients today, according to Aldag.
"When I was growing up, we just had downtown hospitals," Aldag said. "While we're still going to have the big, major teaching and research facilities, we are seeing more and more of the much smaller, local hospitals, where patients can get their basic needs met. You don't always need to go to a 1,000-bed hospital."