Deutsche Bank Markets Research Rating Buy North America United States Financial REITs Company Medical Properties Trust nut:rm MPW N MPW UN NYS MPW Long-term hospital opportunity and attractive relative value: Initiate at Buy (,Wt: p."1)/ ;,. L i.i /RA11 inotilutionni lip We believe MPW represents an attractive long-term consolidation play in the hospital space, given its industry expertise, discounted relative value and healthy 6% dividend. We think the institutionalization of the hospital real estate market is poised to accelerate, driven by positive industry trends, increased comfort with the sale/leaseback model, not-for-profit to for-profit conversions, and managed care consolidation that could spur additional hospital consolidation activity. As the only pure play in the hospital space, we believe MPW stands to benefit the most from these positive trends. With a 15% total expected return, including a 6% dividend yield, we are initiating with a Buy. Long-term tailwinds and atti active relative value Our positive long-term bias is based on 1) the attractive long-term roll-up opportunity. 2) potential acceleration of acquisition activity, 3) highly stable and visible cash flows, 4) solid hospital industry trends, and 5) the potential for a re-rating of the shares as investors become more comfortable with the hospital sector overall. We fully recognize that the path to realizing MPW's embedded value will be difficult to measure quarter-to-quarter as acquisitions are difficult to project and lumpy by nature, but we see the potential for significant value creation overtime. Normalization of relative value drives our TP; dividend protects the downside MPW currently trades at wider-than-historical FFO and AFFO multiple discounts versus its smaller-cap Healthcare REIT peers. However, we think there are several reasons why MPW should, at a minimum, trade in line with historical relative valuations including: 1) prospective earn