Strategy Students Hear What’s Right about REITs

MedPropTrustEdward K. Aldag, Jr., Chief Executive Officer of Medical Properties Trust, Inc., spoke to students recently in the combined MBA and undergraduate capstone class “Strategic leadership through the eyes of the C-Suite.”

Aldag described how he and three partners devised the strategy and created Medical Properties Trust just eight years ago. The company is a real estate investment trust, which enables it to avoid most federal income taxes so long as it distributes at least 90% of its taxable income to shareholders. Medical Properties Trust purchases real estate used by health care operators such as acute care hospitals and leases the premises back to the operators. The company also makes mortgage loans to its health care operators.

Mr. Aldag noted that less than one year before he was able to obtain financing for the new company, he had been turned down by 100 venture capitalists. His message to students: “Persevere!”

Medical Properties Trust became a public company in July 2005, and is headquartered in Birmingham. The company’s lead independent director is former UAB School of Business dean Robert E. Holmes, Ph.D.

Students asked Mr. Aldag what effect the uncertainty over health care reform might have on the company. Aldag said that he believes that the company’s business model will be successful regardless of what Congress might choose to do with health care reform, because “we will always need hospitals.”

He countered concerns raised by some investors that the United States pays too much for health care, and might eventually reduce health care spending, by noting, among other things, that most Americans spend far more on transportation than they do on health care, and spend about the same on entertainment as they spend on health care.

A group of students who had studied the strategy of Medical Properties Trust in depth made a presentation to Mr. Aldag and made several recommendations, one of which was that the company take advantage of the trend toward outpatient care in the acquisition of future properties.Aldag MadMondy

Mr. Aldag was recently interviewed on the CNBC show “Mad Money,” with Jim Cramer, available here.

 “Strategic leadership through the eyes of the C-Suite” is taught by School of Business professor Stephen Yoder and UAB Vice Provost for Administration and Quality Improvement Harlan Sands, and features visits from CEOs of public or other large complex organizations who discuss their organizations’ strategies and how they are developed and implemented.

[Pictured left to right:] Bryan McWhorter, Taylor Mitchell, Mr. Aldag, Vincent Turner, Bidisa Chandra, Dominique Gibson