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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2019 Medical Properties Trust Earnings Conference Call. [Operator Instructions].
I would now like to hand the conference over to your host today, Charles Lambert, Managing Director. Thank you. Please go ahead, sir.
Good morning. Welcome to the Medical Properties Trust conference call to discuss our fourth quarter and full year 2019 financial results. With me today are Edward 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're 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 and/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 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. Good morning, and thank you all for joining us on today's fourth quarter earnings call. 2019 was a record year for MPT. During 2019, we completed approximately $4.5 billion in international and domestic acquisitions with new as well as existing operators, investing in approximately $2.7 billion domestically and $1.8 billion in international acquisitions. MPT now has hospitals located in the U.S., United Kingdom, Germany, Switzerland, Spain, Italy, Portugal and Australia. On 12/31/18, our enterprise value was approximately $10 billion. Today, it is approximately $19 billion. This represents a 90% increase.
At the end of 2018, our equity market cap was approximately $6 billion. Today, it's almost $12 billion. From our IPO in 2005 to date, our total shareholder return was more than 554% compared to 336% for the SNL Healthcare REIT index, and 195% of the broader REIT index. Our 3-year total shareholder return was 113% compared to the 33% for the SNL Healthcare REIT index, and 29% for the broader REIT Index. Last year, our total shareholder return was 38.5% compared to 21.5% for the SNL REIT Index, and 26% for the broader REIT Index. At the beginning of 2019, our largest tenant represented almost 40% of our total portfolio. Today, our largest tenant represents less than 25% of our next 2 largest -- and our next 2 largest tenants represent 13% and 9.5%, respectively. And most importantly, to us, no 1 property represents more than 2.3% of our total portfolio.
In early January, we acquired 30 BMI acute care facilities in the United Kingdom for an aggregate purchase price approximating $1.95 billion. In a related transaction, Circle Health, who has been a trusted MPT tenant for years, has assumed the operations of the entire BMI portfolio of acute care facilities. Circle has committed to a multi-million pound investment program for facility infrastructure, technology and people. We are confident in Circle's ability to operate this portfolio of hospitals. Circle brings significant depth of experienced U.K. private healthcare leadership, combined with the backing of a strong financial and experienced healthcare partner in Centene Corporation, along with deep knowledge of local markets from experienced existing BMI hospital level leadership. MPT is excited about the benefits of this transaction from a portfolio perspective, including the increase of our U.K. hospital footprint and the growing opportunities related to private hospital operators in the U.K.
Circle is confident that there's significant opportunity to expand private insurance and self-pay volumes, maximize certain service lines within local markets, optimize facility infrastructure and technology and to partner with the NHS to augment local market provisions of timely patient care in a comfortable setting. Additionally, in December, we closed on a $700 million transaction that expanded our already strong relationship with LifePoint Health and Apollo Global Management.
This transaction included 10 acute care hospitals across 6 states, and increased our total investment with LifePoint to 17 acute care hospitals and $1.2 billion. We continued our strong finish to the year with yet another acquisition in December. This transaction was an approximate $130 million equity investment for a 45% stake in two joint venture propco entities in Spain. These joint ventures own the real estate of two Madrid acute care hospitals that are leased to and operated by HM Hospitales, one of the largest private hospital operators in Spain.
We are also very excited about our first hospital investment in Portugal with José de Mello, Portugal's largest private operator. MPT acquired a newly-constructed, 37-bed hospital in the city of Viseu for approximately $31 million. This transaction represents MPT -- presents MPT with a unique opportunity to enter the attractive Portuguese healthcare market with a leading growth-oriented hospital operator that we've known for years. Similar to the U.K. healthcare market, the private hospitals in Portugal are filling the increasing gaps in coverage offered by the public system, and an increasingly consumer-driven health care marketplace is rewarding the providers with strong quality care metrics. This transaction provides a growth platform and market recognition for MPT to participate in future acquisitions with José de Mello and other operators in Portugal.
With our continued strong international expansion highlighted above, MPT has undertaken the expansion of its international office space and people base to meet our day-to-day business needs. Accordingly, during 2019, we expanded our operations in Luxembourg, increasing our headcount to approximately 15 full-time employees, including the transfer of asset management and underwriting personnel from our Birmingham office.
In addition, we are in the process of establishing our first Australian office to open in Sydney during the second quarter of this year. We also have continued to grow the depth and personnel and experience in our U.S. offices in Birmingham and New York. With these acquisitions, our U.S. investment concentration is 67%, and International is 33%. As we've said, we expect our portfolio to generally be about 70% U.S. and 30% International. However, as we make significant investments, that will fluctuate from time to time.
As reported last quarter, we closed on a $28 million behavioral health opportunity with NeuroPsychiatric Hospitals for the development of a 92-bed, freestanding hospital in the Houston, Texas market. NPH is a behavioral health company focused on providing best-in-class care for patients with acute complex medical and psychiatric conditions, and is known as the largest neuropsychiatric care organization in the country. They meet an underserved need in treating the severe comorbid cases that traditionally psych hospitals are not equipped to handle today. Construction began in the fourth quarter of 2019 and continues to progress as planned. We expect this hospital to open in the third quarter of this year. There is such a tremendous unmet need for behavioral hospitals in the U.S. We expect to be at the forefront of -- we expect to be at the forefront to provide financing to help meet these needs.
For 2020, we are projecting that we will close on around $3 billion of property. To date, we have already closed on $2 billion and are actively working an additional $3 billion. At this point, I'm not comfortable enough to project that we will do the full $5 million in 2020, but it is certainly possible. We will update you on this as we progress.
In healthcare-related legislation, we are seeing some increased talk regarding transparency and Medicaid fiscal accountability regulation. We do not expect any negative impact on our portfolio from either. Now I'll provide a quick update on our existing portfolio. We added 13 properties, 11 general acute care and 2 IRFs, to our same-store reporting; and subtracted 3, 2 acute care and 1 LTAC. With these changes, we saw our EBITDARM essentially flat across all categories. Just to remind you, we will report one quarter in arrears. So this is referring to the third quarter of the year, which is historically the softest quarter. Some of our operators have reported a slight uptick in fourth quarter admissions with the flu. However, none of our operators have reported cases of the coronavirus at this time.
I would like to provide a quick update on Steward. Steward continues to see good progress, both operationally and financially. As Steward continues to implement its fully integrated model in the various markets in which it operates, opportunities remain for both growth and potential divestitures. In December, Steward successfully completed the sale of its health choice managed care plan in Arizona. Prime Healthcare continues to be consistently the high performer that it has been since our initial investment in 2005. Overall, EBITDARM coverage for our 22 Prime hospitals remain strong. Nearly half of their hospitals covered greater than 4x. At Healthgrades 2020 Report to the Nation event, Prime hospitals were identified among the best in the nation, receiving over 300 recognitions for exceptional performance and quality. Currently, Prime's concentration is 6.9%. Prospect continues to perform in line with our underwriting expectations, and their concentration is currently at 9.5%.
I know that all of you are well aware of the wildfires in Australia. At this time, none of our facilities have been affected and none have been seriously threatened. We continue to stay in consistent contact with Healthscope and monitor the evolving situation. At this time, I'll ask Steve to go over our financial performance. Steve?
Thank you, Ed. This morning, we reported normalized FFO of $0.35 per diluted share for the fourth quarter of 2019, and $1.30 for the full year. I will highlight a few items in just a minute, but most important -- the most important point to make is that even though 2019 was a truly monumental year regardless of how success is defined, MPT has already demonstrated that 2020 should continue to provide unmatched per share growth, diversification and financial performance.
In 2019, we acquired immediately and strongly accretive hospital real estate, totaling $4.5 billion, resulting in a 64% year-over-year increase in total assets. This, along with the tremendous start for 2020, demonstrates that MPT's hospital real estate solutions are gaining acceptance at an accelerated pace from hospital operators, sponsors, investors and other market participants, both in the U.S. and internationally. Our acquisition activity in 2019 was supported by similarly unmatched execution in the capital markets. During the year, we issued almost $4 billion of unsecured notes and term loans with strategically staggered maturities in multiple currencies at a blended interest rate of approximately 3%. That's a full 500 basis point spread compared to the 8% blended investment yield on the $4.5 billion of hospital real estate we acquired.
We also issued 145 million shares of common stock for more than $2.6 billion in proceeds, accounting for a full 10% of all REIT equity raised during the year. Even with this substantial amount of new common equity, we delivered total return to shareholders of almost 39%, and our dividend yield is now below the health care REIT average for the first time. And we have an outstanding AFFO pro forma payout ratio of 75%, reflecting all-time highs in our share price.
With respect to the fourth quarter financial results that we released this morning, there are just a couple of items to highlight. These are primarily the results of the very busy quarter that included large acquisitions, dispositions, closings and capital markets activities. Number one, there are a handful of transactions, primarily, the gain on sale of 2 hospitals in New Jersey, then in accordance with NAREIT guidance, an aggregating about $20.5 million are adjusted from FFO. Below the FFO line to arrive at normalized FFO, we make adjustments that are similar to what we have done in recent years, including for unused financing fees related to pre-funding expected acquisitions, straight-line rent write-offs related to disposed properties and other less material items that are not expected to recur. G&A expenses were nominally higher in the fourth quarter relative to recent prior quarters, due primarily to the tremendous growth in assets and revenue and the achievement of certain share-based compensation performance metrics. We expect 2020 G&A will normalize to a range of between 9% and 9.5% of total adjusted revenue.
The real story about 2019 is how our efforts and their results have positioned us for continued growth into 2020. In late December, upon announcing our $1.95 billion agreement to acquire 30 hospitals in the U.K., We also announced our estimate that the resulting portfolio, after expected delevering from our current 6.0x debt-to-EBITDA to around 5.5x, will generate a run rate annualized FFO per share of between $1.65 and $1.68. This morning, we reaffirmed that estimate. And while that is not meant to be a prediction of actual calendar year FFO, the 25% plus increase over 2019's actual FFO per share is virtually unmatched in almost any meaningfully-sized REIT. I'll point out also that other than the January completion of the $1.95 billion U.K. transaction, that run rate doesn't include any estimates for further acquisitions. As Ed mentioned just a few minutes ago, we are actively working a pipeline of about $3 billion, so we certainly expect to add accretive FFO during 2020.
And with that, we'll be happy to take any questions, and I'll turn this back to the operator.
[Operator Instructions]. And our first question comes from the line of Chad Vanacore from Stifel.
So with the new Circle Health transaction, they're a large part of your portfolio, what can you tell us about the coverage there? And then you also have 2 development projects with them as well. So do you actually have plans on the board to expand that relationship further?
Chad, I think that, from an expansion standpoint, I think they'll have their hands full for the upcoming year. We certainly think that they'll be able to grow the company, but not in the near future. The coverage for these facilities are approximately 2x, and the two development facilities are really -- two development facilities at one location, or two developments in one location, they're expected to be completed in May of this year.
All right. Then, Ed, just think about any potential Brexit impact there? How do you think about that in your underwriting coverage?
Yes, we really haven't seen any impact whatsoever, Chad. The only real impact that that we had any concern over would be the loss of physicians or the inability to recruit physicians, but we haven't seen that affect at any of our facilities and neither have any of the operators that we're working in.
All right. Then sticking in the European locale. You increased your Luxembourg personnel. You promoted Luke Savage to senior management. Is that an indication of more opportunities that you're seeing abroad? And then how should we think about any kind of shift from today's distribution in U.S. and international?
Well, that's a good question. We see a tremendous amount of opportunities internationally, not just in Europe, but with our expansions in Australia, and potentially expansions into Central and South America. But Luke is responsible for all of our international properties. He's been with us for 12 years and has done an outstanding job. I don't think that our overall mix will change much. It will, obviously, fluctuate because all acquisitions don't happen on the same day, but we're still generally comfortable with the 30% to 35% international number.
All right. And then you're developing a psychiatric hospital. How should we think about the opportunities there?
Well, it's a great need in this country. There's a great opportunity for it out there, but there just aren't that many big operators out there. So I don't think it will be a very big part of our portfolio, but I certainly hope that we can grow it from where it is today.
All right. One last one for me, which is straight-line rent bumped up pretty significantly in the quarter. How should we think about a normalized run rate?
I think what you see, the adjustment in the FFO reconciliation is probably indicative of what you'd expect going forward on a quarterly basis.
Our next question comes from the line of Drew Babin from Baird.
A question related to one of Chad's on the Portugal and Spain investments. I think it was mentioned in the release that there's some opportunity for consolidation here, and obviously, you believe in the partners that you've chosen in those markets. I guess, can you reconcile what you did with those investments with acquisitions that may be occurring this year? And also add anything about the Portugal and Spain healthcare models nationally that potentially create an opportunity or things that are -- if you could give some color on the dynamics and why those markets are attractive, that would also be helpful.
Sure. Let me start with Portugal. We've been working in Portugal for a very long time. We've built very strong relationships with 3 different private operators there, the largest one is José de Mello. It's a relationship that we've been cultivating very, very well for 3 to 4 years. We think they do an outstanding job of running hospitals. We're excited about this first opportunity that we've done with them. We think it gives us a great platform to grow that relationship with them. There are also 2 other operators that we've known for a long time, that we're working with as well, that we think, in the near future, we'll be able to actually consummate some of those transactions.
Portugal is much like the U.K. from a standpoint that they have the public healthcare, but they also have a very vibrant private health care, which supplements the public healthcare. It's a model that the country knows very well and is very comfortable with. And so we think that being a part of the private health care sector in Portugal is a much sought after model. It's a model where there are other big U.S. operators United owns some Portuguese hospitals. So it's one that we feel very strongly about.
In Spain, we actually started work in Spain probably 8-plus years ago, more than that now, back during the credit crisis. Spain is a great example of a country that's committed to healthcare for its people. We all know the suffering that Spain had during the great credit crisis. But even during that time period, the EBITDA for their hospitals continued to increase. As we all know, people generally get sicker in bad times than they do in good times. That was certainly the case in Spain and the country continued to support the healthcare for their people. It's a model that's very much like Portugal and the U.K. as well. It's got a very vibrant private healthcare system as well as their very well-respected public health care system. We think we'll be able to grow in Spain. We've been able to do this particular investment with the largest private hospital operator in Spain. We've spent a lot of time in their hospitals. We are very pleased with the way they operate hospitals and [indiscernible] be able to have that under our belt.
As you know, the U.K. took a very long time for us to get the footprint that we thought we would have as long ago as 8-plus years ago. We're glad that we finally have it now. We've got a big investment in Ramsay hospitals and in this BMI Circle transaction. And we think that with those 2 operators, we'll be able to grow as well.
And then the fourth quarter hospital sales, I think you mentioned they were in New Jersey. Can you talk about kind of the pricing you paid for those assets relative to where they were sold? And maybe the type of buyer that was -- that took those down?
Yes, these facilities were not for sale. We weren't looking to sell them. We had one of those situations where we had an opportunistic situation, where purchaser came to us and offered to purchase them from us for significantly -- a significant gain. The total gain was about...
Well, it was included in a primary part of the adjustment you saw in the FFO reconciliation of $20.5 million. It was actually more than that. The operator of both of those facilities is in the midst of exiting the business itself. And so when this opportunistic buyer came along and was willing to pay us at least full value, we were excited to take it, frankly.
And just one related follow-on. Obviously, with the share price is right now, issuing on the ATM from a cost of equity standpoint probably begins to make some sense to bring down leverage, but you did mention the property sales could be part of the capital strategy for this year. I guess, what are the odds that we see something larger on the property sale or JV sale side? And how does that relate to pricing for hospital assets as it stands right now?
Yes, Drew. I would not look for any big, large sales of properties. We don't expect to have any additional that you'll see will be purely opportunistic like this one. So don't look for that. From a joint venture standpoint, while we certainly like the concept, it's a very time-consuming process. The people that are -- we get calls all the time for people that are interested in doing a joint venture with us, but they generally move at a very slow pace, and it's not something that we're actively pursuing right now.
Our next question comes from the line of Omotayo Okusanya from Mizuho.
Great quarter. Two quick ones for me. In the AFFO reconciliation for the quarter, there's a $0.02 adjustment, the write-off of straight-line rent and other net of tax benefit, could you tell me what that relates to?
Well, it's mostly the write-off of straight-line rent. And my prepared remarks referenced that just other aggregation of activities that happen in the busy quarter that we have. I don't have my hands right on exactly what makes that up, I'd be happy to follow-up with you.
Okay, great. That's helpful. Then the second thing, Luxembourg and as well as Australia and your offices there, could you talk, kind of, ultimately, how big are those offices going to be? What's the skill set of people you're looking to hire there? Is it more of people from Birmingham going over there? Is it more of you kind of hiring local talent? we'd love to do just a little bit more about Luke Savage's background as well?
Sure, absolutely. So let me start with Luke. Luke's background is that he's been in healthcare, all of his life outside of public accounting. He worked for one of the very large hospital operators, CHS, originally as a finance person and -- in one of their regional offices. He's been with us for 12 years, and the entire time he's been with us. He's been involved in acquisitions. Luke opened to the Luxembourg office for us about five years ago and has done an outstanding job.
Our asset management, underwriting people in Luxembourg, the people that we moved over from Birmingham, we have probably close to the right number there right now. Any additions that we make in that particular department would probably continue to be transfers from Birmingham. We are in the process of hiring some additional asset management and accounting -- I'm sorry, acquisition analysts and accounting personnel at the lower level. We certainly will have some people that will swap in and out between our New York, Birmingham offices and Luxembourg as time goes through and people come back to the U.S.
And in Australia, where we're starting from scratch, the person that we have opening the office of somebody that we've known for '18 years. He's been involved in commercial real estate and is -- knows us very, very well and his primary responsibility is relationship building and relationship maintaining with our customers that we have there now.
Ultimately, I think the Australian office will probably match out somewhere at 4 or 5 additional people in that office, and they'll all be in the acquisitions area, whether it's relationships or analysts.
Your next question comes from the line of Steven Valiquette from Barclays.
I think this is your first public appearance since announcing the LifePoint 10 hospital deal, which was just after your last quarterly earnings call. I guess, I'm just curious if you're able to provide a little more general color around which specific LifePoint hospitals were chosen for sale leaseback in this particular transaction versus which ones we're not chosen? Whether it's financial variables or geographic/census-related, et cetera? And also, is there a chance to do more deals with LifePoint/Apollo in the future given that they still own, I think, more than half of their hospitals?
Sure. Let me start with the original portfolio that we acquired here. We had -- we literally have been working on this transaction with Apollo probably since the middle of last summer. They had a number that they knew that they wanted to get so that they could make some different changes to their balance sheet. And so they pretty much gave us their entire portfolio and said, "Here, pick what you'd like to have for this particular price." And so we took our time in analyzing the entire portfolio. We went to all of the different locations, and we were able to come back with them and say, "Here are the ones that we want to put together." I don't have the exact list here in front of me, but they were our choice, and Apollo worked very well with us in putting that portfolio together.
We've got a long relationship with Apollo and the LifePoint management team. I certainly hope that we will continue to do additional business with them. But we are very excited about this particular portfolio because of the way we were able to put it together.
Our next question comes from the line of Derek Johnston from Deutsche Bank.
Based on your attractive cost of capital and track record. Has the deal pipeline increased to where you can even be more selective and engage with even higher quality operators. And one way could be to potentially offer better deal terms due to the lower cost of capital that you guys are enjoying?
Well, Derek, let me point out that we think we have a very strong group of operators in our portfolio now. We are very happy with all, but maybe one of our operators. But yes, the overall answer is absolutely. As we continue to grow in the market, people know who we are, our cost of capital, obviously, has changed dramatically over the last 18 months, we -- our pipeline continues to grow dramatically and is really only limited, at this point, by our ability to actively give the attention that each potential deal needs.
I would just add, Derek, the ideal target for that is the not-for-profit world. And if you look back over the last couple of years, although it's probably, in total, less than $500 million, it's a tremendous increase relative to what we've had invested with not-for-profits in the past. And we, today, are negotiating potential transactions, some fairly sized with not-for-profit systems. So we expect that will continue to grow. And -- but just to reiterate what Ed said, we've got great operators on profit side already.
Okay, great. Understood. And then secondly, you raised the dividend by $0.01. As I look at our model, we see further room as we approach 2021, especially given the pro forma FAD payout, I think you said around the mid-70s. It's certainly noting the accretive that Circle will bring to the table throughout 2020. I mean, how does the Board assess when to raise the dividend, especially when you have very healthy 20% plus FFO growth? Do you anticipate raising it more than once a year as you approach the pro forma FFO guidance range?
So Derek, I think the Board has done a great job over the years of setting the dividend after properties have -- and deal transactions have actually closed, not just when we announce them. We obviously have gotten everything closed at this point. We have an upcoming Board meeting, and the Board will certainly look at where everything is and make those decisions, but we understand the importance of raising dividends.
Our next question comes from the line of Jordan Sadler from KeyBanc Capital.
So, Ed, I was interested in your mention of the backing of Circle by Centene. Can you elaborate at all on their stake in Circle and their interest in the U.K. portfolio?
Yes. Centene has a passive minority interest in Circle, as they do in other areas of Europe with other operators. For the sake of everybody on this call, who may not know, Centene is a very large, very successful managed care provider based out of St. Louis. And in their underwriting and diligence on different markets, in particular, the U.K., they felt like Circle gave them the greatest opportunity to expand. There are relatively little, if any, antitrust issues given Circle's size. So Circle's management continues to be Circle's management. We see no anticipated changes there and the investment is passive.
Do you expect to see them do more? And is there an opportunity for you guys to do more with some managed care enterprises of the world?
Well, I certainly think that we have the opportunity to grow with them. It is their intention to grow throughout Europe. Steve and I spent a good amount of time with the Centene management team before we did the Circle transaction and are very comfortable that our relationship with them allows us to participate in some of their future growth.
But Jordan, you're absolutely right. I mean, Circle's not -- sorry, Centene is not the only managed care company that's looking to get into operations, the biggest, obviously, being United. And we haven't done anything with United or others, but we absolutely think it offers opportunity for us.
And as it relates to the $3 billion pipeline, Ed, it sounds like you're confident in $1 billion of it getting done this year, although that's not necessarily in the run rate. Can you talk about maybe the pipeline a little bit? Can you characterize domestic versus your Australia and then how much of it is under active negotiation or contract versus maybe not being as far along?
So there's $3 billion that we are actively working, $1 billion of that, we are much further along, and that's why I broke it out the way it did in today's -- earlier part of the call. It still continues to be about 50-50, 50% international and 50% here in the U.S. Right now, that is all broken out between Western Europe and in South America. And it's all general acute care hospitals.
Okay. And then I guess, Steve, just last one for you. If the $1 billion -- if that $1 billion gets done this year at some point in the reasonable near-term -- or how should we be expecting the timing of that to sort of hit?
We've learned long ago not to try to predict. I mean, you can look at last year, and we got into June, and I think we had closed one little hospital over in the U.K. and yet we ended up with almost $5 billion. It's just totally not predictable. I hate to leave you hanging with not being able to model.
No, I know.
But yes, you're...
We always struggle with this run rate, just to sort of bridge our own estimates for the full year to the run rate. So is there anything -- it seems like you're in pretty good shape having closed on BMI early in the year to sort of be on course toward this run rate. Am I thinking about that correctly?
No, you absolutely are. Kind of the run rate is what we have today and only what we have today. So the only difference, and this would be virtually miniscule would be included in that run rate or in our development. I think Ed, mentioned a little earlier, we've got a project in in Birmingham, England with Circle. We've still got the one in Idaho and a few others, but those are the only projects in the run rate that we're not earning as of right now.
Our next question comes from the line of Michael Mueller from JP Morgan.
A couple of questions. I guess, just a follow-up to that. Steve, are you permanently moving away from calendar year guidance at this point?
Yes, we really haven't provided calendar year guidance since about this time last year for the very reasons that Jordan and I were just discussing. It's just, especially when you're growing as at 30% to 60% per year as we have, it is just impossible with the gestation periods that we have. You heard Ed mentioned a minute ago that we've been talking to José de Mello in Portugal for 3-plus years about projects. So it's just not predictable. And we haven't tried to give calendar guidance in well over a year.
Got it. Okay. And then, Ed, you mentioned, I think, about half of the Prime assets were covering more than 4x. Can you talk a little bit about when leases expire? And is there an opportunity to really roll some of those rents up?
So the question about when they expire? The first set of Prime hospitals expire in '22. They're under a master lease, so it's an all or nothing situation. I don't know what their intentions are right now, but from a standpoint, if they want to roll it over again, then the rental rates will just continue what they were under the lease -- under the increases in the existing lease.
Got it. So there's not a bring-to-market?
Well, we think that, that is going to be very close to market. The way we structure our leases, they all have the inflation protection in them. So theoretically, whatever the market rents are in '22, the lease should be at that.
Okay. But if you're doing new hospital deals today, the coverages are more in the 2s, right?
Well, that's right. If we're buying an existing hospital, we expect to see it in the 2% to 2.5% range from a going-in standpoint. But the Prime and some of the other hospitals have been in our portfolio for so long and performed so well, that's how you get them well over 3x covered.
Our next question comes from the line of Todd Stender from Wells Fargo.
Just going back to the dispositions in the quarter, were those the Median assets?
No, no. Those were two general acute care hospitals in New Jersey.
Okay. And so Median is no longer on your top tenant list. Is that just a reflection of they've been diluted down, I guess?
Well, it's two things. It's last year's joint venture, where we sold half of Median and then, of course, the upwards of $6-plus billion of non-Median acquisitions in the last year.
Okay. And then, Ed, you provided the rent coverage for Circle. We saw that in the release at 2x. Do you have the rent coverages for the other acquisitions? I guess, just to give us context for Spain, maybe those markets like Portugal and certainly LifePoint.
Yes, they're all in that same range in the 175 to 2.5x for all of the new acquisitions.
Okay. And then we see your equity investments on the balance sheet creeping up. Anything in the fourth quarter and then so far in Q1, are you investing alongside the operators in any cases?
No. The equity investments, for example, the 2 hospitals in Madrid are accounted for in equity because it's structurally a joint venture.
Okay. But no equity investments to...
That's not what we're trying to mean there when we say equity, that does not mean we're investing in the equity of the operator necessarily is the structure of our investment is in the equity of a joint venture rather than the fee interest of the hospital. That's all that means.
Todd, the last investment we've made in a hospital operator was the Switzerland transaction, where we bought a 5% interest in the operator.
Right. I remember that.
At this time, I'm showing no further questions. I would like to turn the call back over to Ed Aldag for closing remarks.
Thank you, Operator. And again, thank all of you for listening in today. If you have any additional follow-up questions, please do not hesitate to reach out to one of us. Thank you very much.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.