EFTA01389043

22 July 2016 REITs Medical Properties Trust In each of the past 5 years, the final reimbursement rate for inpatient services has been higher than the proposed rate, averaging 80bps higher than the proposed rates over this period. Final outpatient rates have been revised upward from proposed rate in 2 of the last 5 years, lowered twice, and kept unchanged once, with the increase from the proposed level averaging out to 0bps. lEigure 20. General Acute Care Medicare Reimb Rates 'Figure 21. LEACH al ifif Medicare Reimbursement Rates 0% 10% 00% 41114 50% 211% 4.0% on 2.0% 40% 10% 4.0% 00% 40% 2002 2001 502 2003 2004 2005 X042002 X0120092010 X1120122013201520152016 7002 rcos 2016 2144 2007 2000 2001 2010 all 2012 2013 1014 2015 Alb 104114114110401.44 • 110140 1104041/444 OLTAC14. •iRrs Sat• DINSMil•• an CMS Saar B1ao1•Bay, CMS Hospital revenues and margin profiles positive for MPW Overall hospital financials have been improving. Figure 22 shows broader hospital revenue growth and margin trends per data from the American Hospital Association. Notably, aggregate hospital revenue growth and margins remained positive throughout the Great Recession, while MPW's reported acute care EBITOAR coverage ratio remained healthy at —4.8x in 2008. Also of note was the ability of hospitals to drive margins higher despite slower revenue growth in 2013 and a relatively high rate of outpatient volumes. After reviewing more recent data for publicly traded hospital operators, we found that EBITDA margins have remained relatively stable since 1O14. We expect 2016 margins to track within the 2014-2015 ranges as per full-year outlooks issued by some of the operators. In addition to margin stability, publicly traded hospital operators in our review group posted greater than +3% yty revenue growth per admission since 1Q15 (on a same facility basis). Thought recent operating trends have been steady and we believe near-term risks are limited, hospitals and post-acute providers continue to face a number of challenges put forth by the Affordable Care Act, including the transition from volume to value-based payment systems and site-neutral reimbursements (see our discussion below). Page I S Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0093217 CONFIDENTIAL SDNY GM_00239401 EFTA01389043