MPT Operating Partnership 10Q 2024 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-32559

Commission file number 333-177186

MEDICAL PROPERTIES TRUST, INC.

MPT OPERATING PARTNERSHIP, L.P.

(Exact Name of Registrant as Specified in Its Charter)



maryland delaware		20-0191742 20-0242069
(State or other jurisdiction of incorporation or organization)		(I. R. S. Employer Identification No.)



1000 URBAN CENTER DRIVE, SUITE 501 BIRMINGHAM, AL		35242
(Address of principal executive offices)		(Zip Code)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (205) 969-3755

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001 per share, of Medical Properties Trust, Inc.	MPW	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒ (Medical Properties Trust, Inc. only)	Accelerated filer	☐
Non-accelerated filer	☒ (MPT Operating Partnership, L.P. only)	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 24, 2024, Medical Properties Trust, Inc. had 600.1 million shares of common stock, par value $0.001, outstanding.

EXPLANATORY NOTE

This report combines the Quarterly Reports on Form 10-Q for the three months ended March 31, 2024 of Medical Properties Trust, Inc., a Maryland corporation, and MPT Operating Partnership, L.P., a Delaware limited partnership, through which Medical Properties Trust, Inc. conducts substantially all of its operations. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” “Medical Properties,” “MPT,” or the “company” refer to Medical Properties Trust, Inc. together with its consolidated subsidiaries, including MPT Operating Partnership, L.P. Unless otherwise indicated or unless the context requires otherwise, all references to “operating partnership” refer to MPT Operating Partnership, L.P. together with its consolidated subsidiaries.

MEDICAL PROPERTIES TRUST, INC. AND MPT OPERATING PARTNERSHIP, L.P.

AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED March 31, 2024

Table of Contents


	Page
PART I — FINANCIAL INFORMATION	3
Item 1 Financial Statements	3
Medical Properties Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets at March 31, 2024 and December 31, 2023	3
Condensed Consolidated Statements of Net Income for the Three Months Ended March 31, 2024 and 2023	4
Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended March 31, 2024 and 2023	5
Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2024 and 2023	6
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023	7
MPT Operating Partnership, L.P. and Subsidiaries
Condensed Consolidated Balance Sheets at March 31, 2024 and December 31, 2023	8
Condensed Consolidated Statements of Net Income for the Three Months Ended March 31, 2024 and 2023	9
Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended March 31, 2024 and 2023	10
Condensed Consolidated Statements of Capital for the Three Months Ended March 31, 2024 and 2023	11
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023	12
Medical Properties Trust, Inc. and MPT Operating Partnership, L.P. and Subsidiaries
Notes to Condensed Consolidated Financial Statements	13
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3 Quantitative and Qualitative Disclosures about Market Risk	38
Item 4 Controls and Procedures	39
PART II — OTHER INFORMATION	41
Item 1 Legal Proceedings	41
Item 1A Risk Factors	41
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3 Defaults Upon Senior Securities	43
Item 4 Mine Safety Disclosures	43
Item 5 Other Information	43
Item 6 Exhibits	44
SIGNATURE	45

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets


	March 31, 2024			December 31, 2023
(In thousands, except per share amounts)	(Unaudited)			(Note 2)
Assets
Real estate assets
Land, buildings and improvements, intangible lease assets, and other	$	12,823,748		$	13,237,187
Investment in financing leases		1,233,178			1,231,630
Real estate held for sale		295,130			—
Mortgage loans		309,926			309,315
Gross investment in real estate assets		14,661,982			14,778,132
Accumulated depreciation and amortization		(1,422,728	)		(1,407,971	)
Net investment in real estate assets		13,239,254			13,370,161
Cash and cash equivalents		224,340			250,016
Interest and rent receivables		34,492			45,059
Straight-line rent receivables		677,570			635,987
Investments in unconsolidated real estate joint ventures		1,450,482			1,474,455
Investments in unconsolidated operating entities		794,138			1,778,640
Other loans		426,971			292,615
Other assets		453,709			457,911
Total Assets	$	17,300,956		$	18,304,844
Liabilities and Equity
Liabilities
Debt, net	$	10,098,723		$	10,064,236
Accounts payable and accrued expenses		302,526			412,178
Deferred revenue		32,076			37,962
Obligations to tenants and other lease liabilities		163,264			156,603
Total Liabilities		10,596,589			10,670,979
Equity
Preferred stock, $0.001 par value. Authorized 10,000 shares; no shares outstanding		—			—
Common stock, $0.001 par value. Authorized 750,000 shares; issued and outstanding — 600,304 shares at March 31, 2024 and 598,991 shares at December 31, 2023		600			599
Additional paid-in capital		8,567,199			8,560,309
Retained deficit		(1,846,862	)		(971,809	)
Accumulated other comprehensive (loss) income		(18,838	)		42,501
Total Medical Properties Trust, Inc. stockholders’ equity		6,702,099			7,631,600
Non-controlling interests		2,268			2,265
Total Equity		6,704,367			7,633,865
Total Liabilities and Equity	$	17,300,956		$	18,304,844

See accompanying notes to condensed consolidated financial statements.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Net Income

(Unaudited)


	For the Three Months Ended March 31,
(In thousands, except per share amounts)	2024			2023
Revenues
Rent billed	$	199,299		$	248,157
Straight-line rent		44,736			56,693
Income from financing leases		16,393			13,195
Interest and other income		10,888			32,166
Total revenues		271,316			350,211
Expenses
Interest		108,685			97,654
Real estate depreciation and amortization		75,586			83,860
Property-related		4,818			7,110
General and administrative		33,348			41,724
Total expenses		222,437			230,348
Other expense
(Loss) gain on sale of real estate		(1,423	)		62
Real estate and other impairment charges, net		(693,088	)		(89,538	)
Earnings from equity interests		10,549			11,352
Other (including fair value adjustments on securities)		(229,345	)		(5,166	)
Total other expense		(913,307	)		(83,290	)

(Loss) income before income tax		(864,428	)		36,573
Income tax expense		(10,949	)		(3,543	)

Net (loss) income		(875,377	)		33,030
Net income attributable to non-controlling interests		(248	)		(236	)
Net (loss) income attributable to MPT common stockholders	$	(875,625	)	$	32,794

Earnings per common share — basic and diluted
Net (loss) income attributable to MPT common stockholders	$	(1.46	)	$	0.05

Weighted average shares outstanding — basic		600,304			598,302
Weighted average shares outstanding — diluted		600,304			598,310

Dividends declared per common share	$	—		$	0.29

See accompanying notes to condensed consolidated financial statements.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive (Loss) Income

(Unaudited)


	For the Three Months Ended March 31,
(In thousands)	2024			2023
Net (loss) income	$	(875,377	)	$	33,030
Other comprehensive (loss) income:
Unrealized loss on interest rate swaps, net of tax		(2,797	)		(15,325	)
Reclassification of interest rate swap gain from AOCI, net of tax		—			(28,553	)
Foreign currency translation (loss) gain		(58,542	)		28,143
Total comprehensive (loss) income		(936,716	)		17,295
Comprehensive income attributable to non-controlling interests		(248	)		(236	)
Comprehensive (loss) income attributable to MPT common stockholders	$	(936,964	)	$	17,059

See accompanying notes to condensed consolidated financial statements.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Equity

(Unaudited)


	Preferred				Common
(In thousands, except per share amounts)	Shares		Par Value		Shares			Par Value		Additional Paid-in Capital			Retained Deficit			Accumulated Other Comprehensive (Loss) Income			Non- Controlling Interests			Total Equity
Balance at December 31, 2023		—	$	—		598,991		$	599	$	8,560,309		$	(971,809	)	$	42,501		$	2,265		$	7,633,865
Net (loss) income		—		—		—			—		—			(875,625	)		—			248			(875,377	)
Unrealized loss on interest rate swaps, net of tax		—		—		—			—		—			—			(2,797	)		—			(2,797	)
Foreign currency translation loss		—		—		—			—		—			—			(58,542	)		—			(58,542	)
Stock vesting and amortization of stock-based compensation		—		—		1,370			1		7,173			—			—			—			7,174
Stock vesting - satisfaction of tax withholdings		—		—		(57	)		—		(283	)		—			—			—			(283	)
Distributions to non-controlling interests		—		—		—			—		—			—			—			(245	)		(245	)
Dividends declared adjustment		—		—		—			—		—			572			—			—			572
Balance at March 31, 2024		—	$	—		600,304		$	600	$	8,567,199		$	(1,846,862	)	$	(18,838	)	$	2,268		$	6,704,367


	Preferred				Common
(In thousands, except per share amounts)	Shares		Par Value		Shares			Par Value		Additional Paid-in Capital			Retained Deficit			Accumulated Other Comprehensive (Loss) Income			Non- Controlling Interests			Total Equity
Balance at December 31, 2022		—	$	—		597,476		$	597	$	8,535,140		$	116,285		$	(59,184	)	$	1,569		$	8,594,407
Net income		—		—		—			—		—			32,794			—			236			33,030
Unrealized loss on interest rate swaps, net of tax		—		—		—			—		—			—			(15,325	)		—			(15,325	)
Foreign currency translation gain		—		—		—			—		—			—			28,143			—			28,143
Reclassification of interest rate swap gain to earnings, net of tax		—		—		—			—		—			—			(28,553	)		—			(28,553	)
Stock vesting and amortization of stock-based compensation		—		—		1,325			1		11,828			—			—			—			11,829
Stock vesting - satisfaction of tax withholdings		—		—		(499	)		—		(5,554	)		—			—			—			(5,554	)
Distributions to non-controlling interests		—		—		—			—		—			—			—			(231	)		(231	)
Dividends declared ($0.29 per common share)		—		—		—			—		—			(174,492	)		—			—			(174,492	)
Balance at March 31, 2023		—	$	—		598,302		$	598	$	8,541,414		$	(25,413	)	$	(74,919	)	$	1,574		$	8,443,254

See accompanying notes to condensed consolidated financial statements.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	For the Three Months Ended March 31,
	2024			2023
	(In thousands)
Operating activities
Net (loss) income	$	(875,377	)	$	33,030
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		77,214			87,586
Amortization of deferred financing costs and debt discount		3,698			4,014
Straight-line rent revenue and other		(46,566	)		(58,566	)
Stock-based compensation		7,633			11,829
Loss (gain) on sale of real estate		1,423			(62	)
Real estate and other impairment charges, net		693,088			89,538
Straight-line rent and other write-off		1,817			2,192
Tax rate changes and other		(307	)		(7,305	)
Other adjustments (including fair value adjustments on securities)		223,674			(8,505	)
Changes in:
Interest and rent receivables		5,369			(514	)
Other assets		5,689			(2,493	)
Accounts payable and accrued expenses		(18,878	)		(15,696	)
Deferred revenue		(4,135	)		600
Net cash provided by operating activities		74,342			135,648
Investing activities
Cash paid for acquisitions and other related investments		—			(72,900	)
Net proceeds from sale of real estate		6,596			100
Proceeds received from sale and repayment of loans receivable		114,416			221,876
Investment in loans receivable		(135,000	)		(50,000	)
Construction in progress and other		(29,885	)		(13,292	)
Proceeds from sale and return of equity investment		11,656			—
Capital additions and other investments, net		(87,045	)		(68,606	)
Net cash (used for) provided by investing activities		(119,262	)		17,178
Financing activities
Revolving credit facility, net		111,186			95,919
Dividends paid		(92,763	)		(176,580	)
Lease deposits and other obligations to tenants		6,226			(2,691	)
Stock vesting - satisfaction of tax withholdings		(283	)		(5,554	)
Other financing activities, payment of debt refinancing, and deferred financing costs		(2,291	)		(219	)
Net cash provided by (used for) financing activities		22,075			(89,125	)
(Decrease) increase in cash, cash equivalents, and restricted cash for period		(22,845	)		63,701
Effect of exchange rate changes		(2,889	)		2,927
Cash, cash equivalents, and restricted cash at beginning of period		255,952			241,538
Cash, cash equivalents, and restricted cash at end of period	$	230,218		$	308,166
Interest paid	$	131,815		$	116,436
Supplemental schedule of non-cash financing activities:
Dividends declared, unpaid	$	—		$	174,492
Cash, cash equivalents, and restricted cash are comprised of the following:
Beginning of period:
Cash and cash equivalents	$	250,016		$	235,668
Restricted cash, included in Other assets		5,936			5,870
	$	255,952		$	241,538
End of period:
Cash and cash equivalents	$	224,340		$	302,321
Restricted cash, included in Other assets		5,878			5,845
	$	230,218		$	308,166

See accompanying notes to condensed consolidated financial statements.

MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets


	March 31, 2024			December 31, 2023
(In thousands)	(Unaudited)			(Note 2)
Assets
Real estate assets
Land, buildings and improvements, intangible lease assets, and other	$	12,823,748		$	13,237,187
Investment in financing leases		1,233,178			1,231,630
Real estate held for sale		295,130			—
Mortgage loans		309,926			309,315
Gross investment in real estate assets		14,661,982			14,778,132
Accumulated depreciation and amortization		(1,422,728	)		(1,407,971	)
Net investment in real estate assets		13,239,254			13,370,161
Cash and cash equivalents		224,340			250,016
Interest and rent receivables		34,492			45,059
Straight-line rent receivables		677,570			635,987
Investments in unconsolidated real estate joint ventures		1,450,482			1,474,455
Investments in unconsolidated operating entities		794,138			1,778,640
Other loans		426,971			292,615
Other assets		453,709			457,911
Total Assets	$	17,300,956		$	18,304,844
Liabilities and Capital
Liabilities
Debt, net	$	10,098,723		$	10,064,236
Accounts payable and accrued expenses		302,136			318,980
Deferred revenue		32,076			37,962
Obligations to tenants and other lease liabilities		163,264			156,603
Payable due to Medical Properties Trust, Inc.		—			92,808
Total Liabilities		10,596,199			10,670,589
Capital
General Partner — issued and outstanding — 6,004 units at March 31, 2024 and 5,991 units at December 31, 2023		67,288			75,969
Limited Partners — issued and outstanding — 594,300 units at March 31, 2024 and 593,000 units at December 31, 2023		6,654,039			7,513,520
Accumulated other comprehensive (loss) income		(18,838	)		42,501
Total MPT Operating Partnership, L.P. capital		6,702,489			7,631,990
Non-controlling interests		2,268			2,265
Total Capital		6,704,757			7,634,255
Total Liabilities and Capital	$	17,300,956		$	18,304,844

See accompanying notes to condensed consolidated financial statements.

MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Net Income

(Unaudited)


	For the Three Months Ended March 31,
(In thousands, except per unit amounts)	2024			2023
Revenues
Rent billed	$	199,299		$	248,157
Straight-line rent		44,736			56,693
Income from financing leases		16,393			13,195
Interest and other income		10,888			32,166
Total revenues		271,316			350,211
Expenses
Interest		108,685			97,654
Real estate depreciation and amortization		75,586			83,860
Property-related		4,818			7,110
General and administrative		33,348			41,724
Total expenses		222,437			230,348
Other expense
(Loss) gain on sale of real estate		(1,423	)		62
Real estate and other impairment charges, net		(693,088	)		(89,538	)
Earnings from equity interests		10,549			11,352
Other (including fair value adjustments on securities)		(229,345	)		(5,166	)
Total other expense		(913,307	)		(83,290	)

(Loss) income before income tax		(864,428	)		36,573
Income tax expense		(10,949	)		(3,543	)

Net (loss) income		(875,377	)		33,030
Net income attributable to non-controlling interests		(248	)		(236	)
Net (loss) income attributable to MPT Operating Partnership partners	$	(875,625	)	$	32,794

Earnings per unit — basic and diluted
Net (loss) income attributable to MPT Operating Partnership partners	$	(1.46	)	$	0.05

Weighted average units outstanding — basic		600,304			598,302
Weighted average units outstanding — diluted		600,304			598,310

Dividends declared per unit	$	—		$	0.29

See accompanying notes to condensed consolidated financial statements.

MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive (Loss) Income

(Unaudited)


	For the Three Months Ended March 31,
(In thousands)	2024			2023
Net (loss) income	$	(875,377	)	$	33,030
Other comprehensive (loss) income:
Unrealized loss on interest rate swaps, net of tax		(2,797	)		(15,325	)
Reclassification of interest rate swap gain from AOCI, net of tax		—			(28,553	)
Foreign currency translation (loss) gain		(58,542	)		28,143
Total comprehensive (loss) income		(936,716	)		17,295
Comprehensive income attributable to non-controlling interests		(248	)		(236	)
Comprehensive (loss) income attributable to MPT Operating Partnership partners	$	(936,964	)	$	17,059

See accompanying notes to condensed consolidated financial statements.

MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Capital

(Unaudited)


	General												Accumulated
	Partner						Limited Partners						Other			Non-
(In thousands, except per unit amounts)	Units			Unit Value			Units			Unit Value			Comprehensive (Loss) Income			Controlling Interests			Total Capital
Balance at December 31, 2023		5,991		$	75,969			593,000		$	7,513,520		$	42,501		$	2,265		$	7,634,255
Net (loss) income		—			(8,756	)		—			(866,869	)		—			248			(875,377	)
Unrealized loss on interest rate swaps, net of tax		—			—			—			—			(2,797	)		—			(2,797	)
Foreign currency translation loss		—			—			—			—			(58,542	)		—			(58,542	)
Unit vesting and amortization of unit-based compensation		14			72			1,356			7,102			—			—			7,174
Unit vesting - satisfaction of tax withholdings		(1	)		(3	)		(56	)		(280	)		—			—			(283	)
Distributions to non-controlling interests		—			—			—			—			—			(245	)		(245	)
Distributions declared adjustment		—			6			—			566			—			—			572
Balance at March 31, 2024		6,004		$	67,288			594,300		$	6,654,039		$	(18,838	)	$	2,268		$	6,704,757


	General												Accumulated
	Partner						Limited Partners						Other			Non-
(In thousands, except per unit amounts)	Units			Unit Value			Units			Unit Value			Comprehensive (Loss) Income			Controlling Interests			Total Capital
Balance at December 31, 2022		5,976		$	86,599			591,500		$	8,565,813		$	(59,184	)	$	1,569		$	8,594,797
Net income		—			328			—			32,466			—			236			33,030
Unrealized loss on interest rate swaps, net of tax		—			—			—			—			(15,325	)		—			(15,325	)
Foreign currency translation gain		—			—			—			—			28,143			—			28,143
Reclassification of interest rate swap gain to earnings, net of tax		—			—			—			—			(28,553	)		—			(28,553	)
Unit vesting and amortization of unit-based compensation		13			118			1,312			11,711			—			—			11,829
Unit vesting - satisfaction of tax withholdings		(5	)		(56	)		(494	)		(5,498	)		—			—			(5,554	)
Distributions to non-controlling interests		—			—			—			—			—			(231	)		(231	)
Distributions declared ($0.29 per unit)		—			(1,745	)		—			(172,747	)		—			—			(174,492	)
Balance at March 31, 2023		5,984		$	85,244			592,318		$	8,431,745		$	(74,919	)	$	1,574		$	8,443,644

See accompanying notes to condensed consolidated financial statements.

MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	For the Three Months Ended March 31,
	2024			2023
	(In thousands)
Operating activities
Net (loss) income	$	(875,377	)	$	33,030
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		77,214			87,586
Amortization of deferred financing costs and debt discount		3,698			4,014
Straight-line rent revenue and other		(46,566	)		(58,566	)
Unit-based compensation		7,633			11,829
Loss (gain) on sale of real estate		1,423			(62	)
Real estate and other impairment charges, net		693,088			89,538
Straight-line rent and other write-off		1,817			2,192
Tax rate changes and other		(307	)		(7,305	)
Other adjustments (including fair value adjustments on securities)		223,674			(8,505	)
Changes in:
Interest and rent receivables		5,369			(514	)
Other assets		5,689			(2,493	)
Accounts payable and accrued expenses		(18,878	)		(15,696	)
Deferred revenue		(4,135	)		600
Net cash provided by operating activities		74,342			135,648
Investing activities
Cash paid for acquisitions and other related investments		—			(72,900	)
Net proceeds from sale of real estate		6,596			100
Proceeds received from sale and repayment of loans receivable		114,416			221,876
Investment in loans receivable		(135,000	)		(50,000	)
Construction in progress and other		(29,885	)		(13,292	)
Proceeds from sale and return of equity investments		11,656			—
Capital additions and other investments, net		(87,045	)		(68,606	)
Net cash (used for) provided by investing activities		(119,262	)		17,178
Financing activities
Revolving credit facility, net		111,186			95,919
Distributions paid		(92,763	)		(176,580	)
Lease deposits and other obligations to tenants		6,226			(2,691	)
Unit vesting - satisfaction of tax withholdings		(283	)		(5,554	)
Other financing activities, payment of debt refinancing, and deferred financing costs		(2,291	)		(219	)
Net cash provided by (used for) financing activities		22,075			(89,125	)
(Decrease) increase in cash, cash equivalents, and restricted cash for period		(22,845	)		63,701
Effect of exchange rate changes		(2,889	)		2,927
Cash, cash equivalents, and restricted cash at beginning of period		255,952			241,538
Cash, cash equivalents, and restricted cash at end of period	$	230,218		$	308,166
Interest paid	$	131,815		$	116,436
Supplemental schedule of non-cash financing activities:
Distributions declared, unpaid	$	—		$	174,492
Cash, cash equivalents, and restricted cash are comprised of the following:
Beginning of period:
Cash and cash equivalents	$	250,016		$	235,668
Restricted cash, included in Other assets		5,936			5,870
	$	255,952		$	241,538
End of period:
Cash and cash equivalents	$	224,340		$	302,321
Restricted cash, included in Other assets		5,878			5,845
	$	230,218		$	308,166

See accompanying notes to condensed consolidated financial statements.

MEDICAL PROPERTIES TRUST, INC. AND MPT OPERATING PARTNERSHIP, L.P.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization

Medical Properties Trust, Inc., a Maryland corporation, was formed on August 27, 2003, under the Maryland General Corporation Law for the purpose of engaging in the business of investing in, owning, and leasing healthcare real estate. Our operating partnership subsidiary, MPT Operating Partnership, L.P. (the “Operating Partnership”), through which we conduct substantially all of our operations, was formed in September 2003. At present, we own, directly and indirectly, all of the partnership interests in the Operating Partnership and have elected to report our required disclosures and that of the Operating Partnership on a combined basis, except where material differences exist.

We operate as a real estate investment trust (“REIT”). Accordingly, we are generally not subject to United States (“U.S.”) federal income tax on our REIT taxable income, provided that we continue to qualify as a REIT and our distributions to our stockholders equal or exceed such taxable income. Similarly, the majority of our real estate operations in the United Kingdom ("U.K.") operate as a REIT and generally are subject only to a withholding tax on earnings upon distribution out of the U.K. REIT. Certain non-real estate activities we undertake in the U.S. are conducted by entities which we elected to be treated as taxable REIT subsidiaries (“TRS”). Our TRS entities are subject to both U.S. federal and state income taxes. For our properties located outside the U.S. (excluding those assets that are in the U.K. REIT), we are subject to the local income taxes of the jurisdictions where our properties reside and/or legal entities are domiciled; however, we do not expect to incur additional taxes, of a significant nature, in the U.S. from foreign-based income as the majority of such income flows through our REIT.

Our primary business strategy is to acquire and develop healthcare facilities and lease the facilities to healthcare operating companies under long-term net leases, which require the tenant to bear most of the costs associated with the property. The majority of our leased assets are owned 100%; however, we do own some leased assets through joint ventures with other partners that share our view that healthcare facilities are part of the infrastructure of any community, which we refer to as investments in unconsolidated real estate joint ventures. We also may make mortgage loans to healthcare operators collateralized by their real estate. In addition, we may make noncontrolling investments in our tenants (which we refer to as investments in unconsolidated operating entities), from time-to-time, typically in conjunction with larger real estate transactions with the tenant, which may enhance our overall return and provide for certain minority rights and protections.

Our business model facilitates acquisitions and recapitalizations, and allows operators of healthcare facilities to unlock the value of their real estate to fund facility improvements, technology upgrades, and other investments in operations. At March 31, 2024, we have investments in 436 facilities in 31 states in the U.S., in seven countries in Europe, and one country in South America. Our properties consist of general acute care hospitals, behavioral health facilities, inpatient physical rehabilitation facilities, long-term acute care hospitals, and freestanding ER/urgent care facilities. We manage our business as a single business segment.

2. Summary of Significant Accounting Policies

Unaudited Interim Condensed Consolidated Financial Statements: The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. for interim financial information, including rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the three months ended March 31, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. The condensed consolidated balance sheet at December 31, 2023 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements.

The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We believe the estimates and assumptions underlying our condensed consolidated financial statements are reasonable and supportable based on the information available as of March 31, 2024, (particularly as it relates to our assessments of the recoverability of our real estate, the ability of our tenants/borrowers to make lease/loan payments in accordance with their respective agreements, the fair value of our equity and loan investments, and the adequacy of our credit loss reserves on loans and financing receivables).

For information about significant accounting policies, and how actual results could differ from estimates, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to these significant accounting policies.

Reclassifications

Certain amounts in the condensed consolidated financial statements for prior periods have been reclassified to conform to the current period presentation.

Variable Interest Entities

At March 31, 2024, we had loans and/or equity investments in certain variable interest entities ("VIEs"), which are also tenants of our facilities. We have determined that we were not the primary beneficiary of these VIEs. The carrying value and classification of the related assets and maximum exposure to loss as a result of our involvement with these VIEs at March 31, 2024 are presented below (in thousands):


VIE Type	Carrying Amount(1)		Asset Type Classification	Maximum Loss Exposure(2)
Loans, net and equity investments	$	498,632	Investments in Unconsolidated Operating Entities	$	498,632
Loans, net		150,494	Mortgage and other loans		150,523

(1)

Carrying amount only reflects the net book value of our loan or equity investment in the VIE.

(2)

Our maximum loss exposure related to loans with VIEs represents our current aggregate gross carrying value of the loan plus accrued interest and any other related assets (such as rent receivables), less any liabilities. Our maximum loss exposure related to our equity investments in VIEs represents the current carrying values of such investments plus any other related assets (such as rent receivables), less any liabilities.

For the VIE types above, we do not consolidate the VIEs because we do not have the ability to control the activities (such as the day-to-day healthcare operations of our borrowers or investees) that most significantly impact the VIE's economic performance. As of March 31, 2024, we were not required to provide financial support through a liquidity arrangement or otherwise to our unconsolidated VIEs, including circumstances in which they could be exposed to further losses (e.g. cash short falls).

Recent Accounting Developments

Segment Reporting

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" ("ASU 2023-07") to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We do not expect to have a significant impact from the adoption of this standard on our consolidated financial statements and disclosures, as we consider our investments in healthcare real estate, other loans, and any investments in our tenants a single reportable segment.

Income Taxes

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09") which focuses on income tax disclosures regarding effective tax rates and cash income taxes paid. This standard requires public entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit, and (3) provide additional information for certain reconciling items at or above a quantitative threshold of 5% of the statutory tax. Additionally, this standard requires disclosure of income taxes paid (net of refunds), separated by international, federal, state, and local jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. We are currently evaluating the potential impact of the adoption of this standard on our consolidated financial statements.

3. Real Estate and Other Activities

New Investments

We acquired or invested in the following net assets (in thousands):


	For the Three Months Ended March 31,
	2024		2023

Land and land improvements	$	—	$	9,313
Buildings		—		11,652
Intangible lease assets — subject to amortization (weighted-average useful life of 28.8 years for 2023)		—		1,935
Investments in unconsolidated operating entities		—		50,000
	$	—	$	72,900
Loans repaid(1)		—		(22,900	)
Total net assets acquired	$	—	$	50,000

(1)

The 2023 column includes a $23 million mortgage loan that was converted to fee simple ownership of one property as described under Lifepoint Transaction below.

2023 Activity

Prospect Transaction

In August 2019, we invested in a portfolio of 14 acute care hospitals in three states (California, Pennsylvania, and Connecticut) operated by and master leased to or mortgaged by Prospect Medical Holdings, Inc. ("Prospect") for a combined investment of approximately $1.5 billion. In addition, we originated a $112.9 million term loan cross-defaulted to the master lease and mortgage loan agreements and further secured by a parent guaranty. In the 2022 second quarter, we funded an additional $100 million towards the existing mortgage loan that was secured by a first lien on a California hospital. Prospect's operations were negatively impacted by the coronavirus global pandemic commencing in early 2020, but Prospect remained current with respect to contractual rent and interest payments until the fourth quarter of 2022. Accordingly, and due further to the termination of certain refinancing negotiations between Prospect and certain third parties in early 2023 that would have recapitalized Prospect and provided for payment of unpaid rent and interest, we recorded an approximate $280 million impairment charge in the 2022 fourth quarter. As part of this charge, we reduced the carrying value of the underperforming Pennsylvania properties by approximately $170 million (to approximately $250 million) and reserved all unbilled rent accruals for a total of $112 million.

However, Prospect continued to pursue a recapitalization plan, and, in late March 2023, Prospect received a binding commitment from several lenders to provide liquidity to pay down certain debt instruments. Along with these commitments from third-party lenders, we agreed to pursue certain transactions with Prospect as part of their recapitalization plan, including originating a $50 million convertible loan to PHP Holdings, the managed care business of Prospect, in the first quarter of 2023.

On May 23, 2023, Prospect completed its recapitalization plan, which included receiving $375 million in new financing from several lenders. Along with this new debt capital from third-party lenders, we agreed to the following restructuring of our then $1.7 billion investment in Prospect including: a) maintaining the master lease covering six California hospitals without any changes in rental rates or escalator provisions, but with cash payments starting in September 2023 for a substantial portion of the contractual monthly rent due on these California properties, b) transitioning the Pennsylvania properties back to Prospect in return for a $150 million first lien mortgage on the facilities, c) providing up to $75 million in a loan secured by a first lien on Prospect's accounts receivable and certain other assets, of which we funded in full during 2023, d) continuing to pursue the previously disclosed sale of the three Connecticut properties to Yale New Haven ("Yale"), as more fully described in Note 9 to the condensed consolidated financial statements, and e) obtaining a non-controlling ownership interest in PHP Holdings of approximately $654 million, after applying a discount for lack of marketability, consisting of an approximate $68 million equity investment and $586 million loan convertible into equity of PHP Holdings (collectively, the "Prospect Transaction"). This non-controlling ownership interest was received in exchange for unpaid rent and interest through December 2022, previously unrecorded rent and interest revenue in 2023 totaling approximately $82 million, our $151 million mortgage loan on a California property, our $112.9 million term loan, and other obligations at the time of such investment.

Lifepoint Transaction

On February 7, 2023, a subsidiary of Lifepoint Health, Inc. ("Lifepoint") acquired a majority interest in Springstone (now Lifepoint Behavioral Health, "Lifepoint Behavioral") (the "Lifepoint Transaction") based on an enterprise value of $250 million. As part of the transaction, we received approximately $205 million in full satisfaction of our initial acquisition loan, including accrued

interest, and we retained our minority equity investment in the operations of Lifepoint Behavioral. Separately, we converted a mortgage loan (as part of our initial acquisition in 2021) into the fee simple ownership of a property in Washington, which is leased, along with the other 18 behavioral health hospitals, to Lifepoint Behavioral, under a master lease agreement. In connection with the Lifepoint Transaction, Lifepoint extended its lease on eight existing general acute care hospitals by five years to 2041.

In the first quarter of 2024, we sold our minority equity investment in Lifepoint Behavioral for approximately $12 million.

Development Activities

See table below for a status summary of our current development projects (in thousands):


Property	Commitment		Costs Incurred as of March 31, 2024		Estimated Rent Commencement Date
IMED Hospitales ("IMED") (Spain)	$	37,790	$	21,586	4Q 2024
IMED (Spain)		51,802		19,299	1Q 2025
	$	89,592	$	40,885

We have two other development projects ongoing in Texas (Wadley development) and Massachusetts (Norwood redevelopment). These are not highlighted above given the ongoing restructuring of Steward Health Care System ("Steward") as discussed further in this same Note 3. However, on a combined basis, we have spent approximately $395 million through March 31, 2024.

Separately, on the Norwood redevelopment, we have approximately $150 million, net of payments received to date, due to us from a combination of recovery receivables (included in "Other assets" in the condensed consolidated balance sheets) associated with the damage to the original facility in 2020 and a $50 million advance (reflected in "Other loans" in the condensed consolidated balance sheets) made to Steward in the first half of 2023 that is secured by, among other things, proceeds from Steward's business interruption insurance claims.

2024 Activity

During the first three months of 2024, we completed construction and began recording rental income on a $35.4 million behavioral health facility located in McKinney, Texas, that is leased to Lifepoint Behavioral. We also completed construction and began recording rental income on a €45.4 million (approximately $49.0 million) general acute care facility located in Spain that is leased to IMED.

Disposals

2024 Activity

On February 19, 2024, we entered into definitive agreements to sell five properties to Prime Healthcare Services, Inc. ("Prime") for total proceeds of approximately $250 million along with a $100 million interest-bearing mortgage loan due in approximately nine months from the closing date. As such, we designated these properties as held for sale at March 31, 2024. This transaction, which closed on April 9, 2024, resulted in a gain on real estate of approximately $50 million and a non-cash straight-line rent write-off of approximately $28 million.

As part of this sale transaction, we also agreed to extend the lease maturity of four other facilities with Prime to 2044. This amended lease has inflation-based escalators, collared between 2% and 4% and a purchase option on or prior to August 26, 2028 for a value of $238 million, which is greater than our net book value for these properties at March 31, 2024. After August 26, 2028, this option price reverts to $260 million (subject to annual escalations).

During the first three months of 2024, we also completed the sale of three other facilities and two ancillary facilities for approximately $7 million, resulting in a loss on real estate of approximately $1.4 million.

Summary of Operations for Disposed (or to be Disposed) Assets in 2024

The following represents the operating results from the five properties designated as held for sale at March 31, 2024, as well as the five properties sold in April 2024 as part of the Utah Transaction (further described in Note 10 to the condensed consolidated financial statements) (in thousands):


	For the Three Months Ended March 31,
	2024			2023
Revenues	$	39,007		$	43,198
Real estate depreciation and amortization		(6,381	)		(10,718	)
Property-related expenses		(4	)		(120	)
Other expense		(42	)		(21	)
Income from real estate dispositions, net	$	32,580		$	32,339

2023 Activity

On March 30, 2023, we entered into a definitive agreement to sell our 11 general acute care facilities located in Australia and operated by Healthscope Ltd. ("Healthscope") (the "Australia Transaction") to affiliates of HMC Capital for cash proceeds of approximately A$1.2 billion. As a result, we designated the Australian portfolio as held for sale in the first quarter of 2023 and recorded approximately $79 million of net impairment charges at that time, which included $37.4 million of straight-line rent receivable writeoffs and approximately $8 million in fees to sell the hospitals, partially offset by approximately $16 million of gains from our interest rate swap and foreign currency translation amounts in accumulated other comprehensive income that were reclassified to earnings in 2023 as part of the transaction. This transaction closed in two phases. The first phase closed on May 18, 2023, in which we sold seven of the 11 facilities for A$730 million, and the final phase closed on October 10, 2023, in which we sold the remaining four facilities for approximately A$470 million.

On March 8, 2023, we received notice that Prime planned to exercise its right to repurchase from us the real estate associated with one master lease for approximately $100 million. As such, we recorded an approximate $11 million non-cash impairment charge in the first quarter of 2023 related to unbilled rent on the three facilities that were sold on July 11, 2023.

Leasing Operations (Lessor)

We acquire and develop healthcare facilities and lease the facilities to healthcare operating companies. The initial fixed lease terms of these infrastructure-type assets are typically at least 15 years, and most include renewal options at the election of our tenants, generally in five year increments. Over 99% of our leases provide annual rent escalations based on increases in the Consumer Price Index ("CPI") (or similar indices outside the U.S.) and/or fixed minimum annual rent escalations. Many of our domestic leases contain purchase options with pricing set at various terms but in no case less than our total initial investment. Our leases typically require the tenant to handle and bear most of the costs associated with our properties including repair/maintenance, property taxes, and insurance.

For all of our properties subject to lease, we are the legal owner of the property and the tenant's right to use and possess such property is guided by the terms of a lease. At March 31, 2024, we account for all of these leases as operating leases, except where GAAP requires alternative classification, including leases on 13 Ernest facilities that are accounted for as direct financing leases and leases on nine of our Prospect facilities and five of our Ernest facilities that are accounted for as a financing. The components of our total investment in financing leases consisted of the following (in thousands):


	As of March 31, 2024			As of December 31, 2023
Minimum lease payments receivable	$	606,537		$	611,669
Estimated unguaranteed residual values		203,818			203,818
Less: Unearned income and allowance for credit loss		(565,116	)		(571,059	)
Net investment in direct financing leases		245,239			244,428
Other financing leases (net of allowance for credit loss)		987,939			987,202
Total investment in financing leases	$	1,233,178		$	1,231,630

Other Leasing Activities

At March 31, 2024, our vacant properties represent less than 0.3% of total assets. We are in various stages of either re-leasing or selling these vacant properties.

Our tenants’ financial performance and resulting ability to satisfy their lease and loan obligations to us are material to our financial results and our ability to service our debt and make distributions to our stockholders. Our tenants operate in the healthcare industry, which is highly regulated, and changes in regulation (or delays in enacting regulation) may temporarily impact our tenants’

operations until they are able to make the appropriate adjustments to their business. In addition, our tenants may experience operational challenges from time-to-time as a result of many factors, including those external to them, such as cybersecurity attacks or public health crises (like the COVID-19 pandemic), economic issues resulting in high inflation and spikes in labor costs, extreme or severe weather and climate-related events, and adverse market and political conditions. We monitor our tenants' operating results and the potential impact from these challenges. We may elect to provide support to our tenants from time-to-time in the form of short-term rent deferrals to be paid back in full (like as described below under Pipeline Health System), or in the form of temporary loans (like as described previously in the Prospect Transaction). See below for an update on some of our tenants:

Steward Health Care System

Due to the uncertainty concerning the sale of Steward's managed care business, ongoing operational and liquidity challenges, and the bankruptcy filing as more fully described in "Significant Tenant Update" under the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-Q, we have recorded approximately $470 million of additional impairment charges in the quarter ending March 31, 2024, that fully reserves for the remaining value of our 9.9% equity investment in Steward and the $362 million loan due from affiliates of Steward along with the accrual for property taxes and other obligations not paid by Steward under its master leases. The equity investment and loan to Steward affiliates are included in “Investments in unconsolidated operating entities” on our condensed consolidated balance sheets and were adjusted for after comparing our carrying value of these investments to an updated fair value analysis of the underlying collateral, with assistance from a third-party, independent valuation firm.

At March 31, 2024, we have approximately $346 million of non-real estate investments in Steward, consisting of the working capital loan and other secured loans advanced in 2024. Based on the analysis discussed above, we believe these investments are fully recoverable at this time. However, no assurances can be given that we will not have any additional impairments in future periods.

In the three months ending March 31, 2024, we received approximately $11 million of rent and interest, which we recorded as revenue. In addition, approximately $38 million of rent ($9 million relating to December 2023) was received in our Massachusetts partnership during the 2024 first quarter, of which approximately $19 million represents our share.

Prospect

Starting January 1, 2023, we began accounting for our leases and loans to Prospect on a cash basis versus our normal accrual method. In the first quarter of 2024, we recognized approximately $7 million of revenue representing cash received for rents on our California properties.

In regard to PHP Holdings, we account for our investment (both the equity investment and convertible loan) using the fair value option method. On May 23, 2024, Prospect's investment bankers informed us that they had received updated indications of interest from prospective bidders for PHP Holdings. Based on our consideration of information in the updated indications, along with consultations with our third party appraisers, we recorded as of March 31, 2024, a $201 million unfavorable fair value adjustment, resulting in a total investment in PHP Holdings of approximately $500 million at March 31, 2024. Each quarter, we mark such investment to fair value as more fully described in Note 7 to the condensed consolidated financial statements.

Pipeline Health System

On October 2, 2022, Pipeline Health System ("Pipeline") filed for reorganization relief under Chapter 11 protection of the United States Bankruptcy Code in the Southern District of Texas, while keeping its hospitals open to continue providing care to the communities served. On February 6, 2023, Pipeline emerged from bankruptcy. Per the bankruptcy settlement, Pipeline's lease of our California assets remained in place, and we were repaid on February 7, 2023, for all rent that was outstanding at December 31, 2022, along with what was due for the first quarter of 2023. As part of the settlement, we deferred approximately $6 million, or approximately 30%, of rent in 2023 to be paid in 2024 with interest. As of March 31, 2024, Pipeline is current on their monthly rent obligations per the terms of the lease, and we hold a rent deposit that more than covers all rent previously deferred.

Other Matters

As discussed in our Annual Report on Form 10-K for the year ending December 31, 2023, we placed our loan to the international joint venture on the cash basis of accounting, as we determined that it was no longer probable that the borrower would pay its future interest in full. This loan, accounted for under the fair value option method, was collateralized by the equity of Steward held by an investor in both Steward and the international joint venture. Consistent with the discussion above on non-real estate investments in Steward, we have recorded a $220 million unfavorable fair value adjustment in the 2024 first quarter to fully reserve for the loan. The loan, which is included in “Investments in unconsolidated operating entities” on our condensed consolidated balance sheets, was adjusted for after comparing our carrying value of the loan to an updated fair value analysis of the underlying collateral, with assistance from a third-party, independent valuation firm.

Investments in Unconsolidated Entities

Investments in Unconsolidated Real Estate Joint Ventures

Our primary business strategy is to acquire real estate and lease to providers of healthcare services. Typically, we directly own 100% of such investments. However, from time-to-time, we will co-invest with other investors that share a similar view that hospital real estate is a necessary infrastructure-type asset in communities. In these types of investments, we will own undivided interests of less than 100% of the real estate and share control over the assets through unconsolidated real estate joint ventures. The underlying real estate and leases in these unconsolidated real estate joint ventures are generally structured similarly and carry a similar risk profile to the rest of our real estate portfolio.

The following is a summary of our investments in unconsolidated real estate joint ventures by operator (amounts in thousands):


Operator	Ownership Percentage	As of March 31, 2024		As of December 31, 2023
MEDIAN	50%	$	471,303	$	471,336
Swiss Medical Network	70%		441,636		472,434
Steward (Macquarie partnership)	50%		405,781		394,052
Policlinico di Monza	50%		78,752		80,562
HM Hospitales	45%		53,010		56,071
Total		$	1,450,482	$	1,474,455

Investments in Unconsolidated Operating Entities

Our investments in unconsolidated operating entities are noncontrolling investments that are typically made in conjunction with larger real estate transactions in which the operators are vetted as part of our overall underwriting process. In many cases, we would not be able to acquire the larger real estate portfolio without such investments in operators. These investments also offer the opportunity to enhance our overall return and provide for certain minority rights and protections.

The following is a summary of our investments in unconsolidated operating entities (amounts in thousands):


Operator	As of March 31, 2024		As of December 31, 2023
PHP Holdings	$	498,632	$	699,535
Swiss Medical Network		173,647		186,113
Aevis Victoria SA ("Aevis")		65,120		77,345
Priory Group ("Priory")		40,394		163,837
Aspris Children's Services ("Aspris")		15,977		15,986
Caremax		368		1,148
Steward (loan investment)		—		361,591
International joint venture		—		225,960
Steward (equity investment)		—		35,696
Lifepoint Behavioral		—		11,429
Total	$	794,138	$	1,778,640

See "Leasing Operations (Lessor)" under this same Note 3 for details on the change in the quarter related to Steward and the international joint venture.

For our other investments marked to fair value (including our investment in PHP Holdings), we recorded approximately $216 million in unfavorable non-cash fair value adjustments during the first three months of 2024 as shown in the "Other (including fair value adjustments on securities)" line of the condensed consolidated statements of net income; whereas, this was a $4 million favorable non-cash fair value adjustment for the same period of 2023. The amount recorded in 2024 includes an approximate $201 million unfavorable fair market value adjustment to our investment in PHP Holdings, as further described in the "Prospect" subheading of this Note 3.

In the first quarter of 2024, we sold our interest in the Priory syndicated term loan for £90 million (approximately $115 million), resulting in an approximate £6 million ($7.8 million) economic loss. In addition, we sold our remaining minority equity investment in Lifepoint Behavioral in the 2024 first quarter.

Credit Loss Reserves

We apply a forward-looking "expected loss" model to all of our financing receivables, including financing leases and loans, based on historical credit losses of similar instruments.

The following table summarizes the activity in our credit loss reserves (in thousands):


	For the Three Months Ended March 31,
	2024				2023
Balance at beginning of the year	$	96,001			$	121,146
Provision for credit loss, net		362,187		(1)		986
Expected credit loss reserve related to financial instruments sold, repaid, or satisfied		(1,596	)			(160	)
Balance at end of the period	$	456,592			$	121,972

(1)

Reflects the charge related to the $362 million loan to Steward, as further described under "Steward Health Care System" subheading of this Note 3.

Concentrations of Credit Risk

We monitor concentration risk in several ways due to the nature of our real estate assets that are vital to the communities in which they are located and given our history of being able to replace inefficient operators of our facilities, if needed, with more effective operators. See below for our concentration details (dollars in thousands):

Total Assets by Operator


	As of March 31, 2024						As of December 31, 2023
Operators	Total Assets (1)			Percentage of Total Assets			Total Assets (1)		Percentage of Total Assets
Steward	$	3,218,969			18.6	%	$	3,518,537		19.2	%
Circle Health Ltd ("Circle")		2,088,232			12.1	%		2,119,392		11.6	%
Priory		1,250,626			7.2	%		1,391,005		7.6	%
Prospect		1,093,094			6.3	%		1,092,974		6.0	%
Lifepoint Behavioral		813,498			4.7	%		813,527		4.4	%
Other operators		7,018,904			40.6	%		7,352,012		40.2	%
Other assets		1,817,633	(2)		10.5	%		2,017,397		11.0	%
Total	$	17,300,956			100.0	%	$	18,304,844		100.0	%

(1)

Total assets by operator are generally comprised of real estate assets, mortgage loans, investments in unconsolidated real estate joint ventures, investments in unconsolidated operating entities, and other loans.

(2)

Includes our investment in PHP Holdings of approximately $500 million as part of the Prospect Transaction as further described above in this same Note 3.

Total Assets by U.S. State and Country (1)


	As of March 31, 2024					As of December 31, 2023
U.S. States and Other Countries	Total Assets		Percentage of Total Assets			Total Assets		Percentage of Total Assets
Texas	$	1,434,667		8.3	%	$	1,891,482		10.3	%
Florida		1,271,192		7.3	%		1,348,210		7.4	%
California		1,248,995		7.2	%		1,252,674		6.8	%
Utah		818,704		4.7	%		824,048		4.5	%
Massachusetts		759,268		4.4	%		732,550		4.0	%
All other states		3,695,029		21.4	%		3,726,145		20.4	%
Other domestic assets		1,229,695		7.1	%		1,397,170		7.6	%
Total U.S.	$	10,457,550		60.4	%	$	11,172,279		61.0	%
United Kingdom	$	4,079,869		23.6	%	$	4,261,944		23.3	%
Germany		726,940		4.2	%		734,630		4.0	%
Switzerland		680,403		3.9	%		735,891		4.0	%
Spain		250,043		1.5	%		252,529		1.4	%
All other countries		518,213		3.0	%		527,344		2.9	%
Other international assets		587,938		3.4	%		620,227		3.4	%
Total international	$	6,843,406		39.6	%	$	7,132,565		39.0	%
Grand total	$	17,300,956		100.0	%	$	18,304,844		100.0	%

Total Assets by Facility Type (1)


	As of March 31, 2024					As of December 31, 2023
Facility Types	Total Assets		Percentage of Total Assets			Total Assets		Percentage of Total Assets
General acute care hospitals	$	11,115,957		64.3	%	$	11,764,151		64.3	%
Behavioral health facilities		2,432,850		14.1	%		2,576,983		14.1	%
Inpatient rehabilitation hospitals		1,436,694		8.3	%		1,445,399		7.9	%
Long-term acute care hospitals		269,235		1.5	%		270,849		1.5	%
Freestanding ER/urgent care facilities		228,587		1.3	%		230,065		1.2	%
Other assets		1,817,633		10.5	%		2,017,397		11.0	%
Total	$	17,300,956		100.0	%	$	18,304,844		100.0	%

(1)

For geographic and facility type concentration metrics in the tables above, we allocate our investments in operating entities pro rata based on the gross book value of the real estate. Such pro rata allocations are subject to change from period to period.

On an individual property basis, our largest investment in any single property was approximately 2% of our total assets as of March 31, 2024.

From a revenue concentration perspective, Circle and CommonSpirit individually represented more than 10% of our total revenues for the three months ended March 31, 2024, and Steward and Circle represented more than 10% for the same period of 2023.

4. Debt

The following is a summary of debt (dollar amounts in thousands):


	As of March 31, 2024			As of December 31, 2023
Revolving credit facility(A)	$	1,614,791		$	1,514,420
Term loan		200,000			200,000
British pound sterling secured term loan due 2024(B)		132,352			133,484
British pound sterling term loan due 2025(B)		883,610			891,170
Australian term loan facility(B)		306,487			320,164
3.325% Senior Unsecured Notes due 2025(B)		539,500			551,950
0.993% Senior Unsecured Notes due 2026(B)		539,500			551,950
2.500% Senior Unsecured Notes due 2026(B)		631,150			636,550
5.250% Senior Unsecured Notes due 2026		500,000			500,000
5.000% Senior Unsecured Notes due 2027		1,400,000			1,400,000
3.692% Senior Unsecured Notes due 2028(B)		757,380			763,860
4.625% Senior Unsecured Notes due 2029		900,000			900,000
3.375% Senior Unsecured Notes due 2030(B)		441,805			445,585
3.500% Senior Unsecured Notes due 2031		1,300,000			1,300,000
	$	10,146,575		$	10,109,133
Debt issue costs and discount, net		(47,852	)		(44,897	)
	$	10,098,723		$	10,064,236

(A)

Includes £232 million and £322 million of GBP-denominated borrowings and €303 million and €303 million of Euro-denominated borrowings that reflect the applicable exchange rates at March 31, 2024 and December 31, 2023, respectively.

(B)

Non-U.S. dollar denominated debt reflects the exchange rates at March 31, 2024 and December 31, 2023.

As of March 31, 2024, principal payments due on our debt (which exclude the effects of any discounts, premiums, or debt issue costs recorded) are as follows (amounts in thousands):


2024	$	438,839
2025		1,423,110
2026		3,285,441
2027		1,600,000
2028		757,380
Thereafter		2,641,805
Total	$	10,146,575

Covenants

Our debt facilities impose certain restrictions on us, including restrictions on our ability to: incur debts; create or incur liens; provide guarantees in respect of obligations of any other entity; make redemptions and repurchases of our capital stock; prepay, redeem, or repurchase debt; engage in mergers or consolidations; enter into affiliated transactions; dispose of real estate or other assets; and change our business. In addition, the credit agreements governing our unsecured credit facility ("Credit Facility") limit the amount of dividends we can pay as a percentage of normalized adjusted funds from operations (“NAFFO”), as defined in the agreements, on a rolling four quarter basis. At March 31, 2024, the dividend restriction was 95% of NAFFO. The indentures governing our senior unsecured notes also limit the amount of dividends we can pay based on the sum of 95% of NAFFO, proceeds of equity issuances, and certain other net cash proceeds. Finally, our senior unsecured notes require us to maintain total unencumbered assets (as defined in the related indenture) of not less than 150% of our unsecured indebtedness.

In addition to these restrictions, the Credit Facility contains customary financial and operating covenants, including covenants relating to our total leverage ratio, fixed charge coverage ratio, secured leverage ratio, consolidated adjusted net worth, unsecured leverage ratio, and unsecured interest coverage ratio. The Credit Facility also contains customary events of default, including among others, nonpayment of principal or interest, material inaccuracy of representations, and failure to comply with our covenants. If an event of default occurs and is continuing under the Credit Facility, the entire outstanding balance may become immediately due and payable. At March 31, 2024, we were in compliance with all such financial and operating covenants.

See Note 10 to the condensed consolidated financial statements for subsequent event information related to debt.

5. Income Taxes

As a result of the Australia Transaction described in Note 3 to the condensed consolidated financial statements, we recorded a $5 million tax benefit in the first quarter of 2023.

6. Stock Awards

During the second quarter of 2022, we amended the 2019 Equity Incentive Plan (the “Equity Incentive Plan”), which authorizes the issuance of common stock options, restricted stock, restricted stock units, deferred stock units, stock appreciation rights, performance units, and awards of interests in our Operating Partnership. Our Equity Incentive Plan is administered by the Compensation Committee of the Board of Directors, and we have reserved 28.9 million shares of common stock for awards, of which 8.6 million shares remain available for future stock awards as of March 31, 2024. Share-based compensation expense totaled $7.6 million (including $0.5 million related to certain grants in 2024 with cash-settlement features) and $11.8 million for the three months ended March 31, 2024 and 2023, respectively.

7. Fair Value of Financial Instruments

We have various assets and liabilities that are considered financial instruments. We estimate that the carrying value of cash and cash equivalents and accounts payable and accrued expenses approximate their fair values. We estimate the fair value of our interest and rent receivables using Level 2 inputs such as discounting the estimated future cash flows using the current rates at which similar receivables would be made to others with similar credit ratings and for the same remaining maturities. The fair value of our mortgage loans and other loans are estimated by using Level 2 inputs such as discounting the estimated future cash flows using the current rates which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. We determine the fair value of our senior unsecured notes using Level 2 inputs such as quotes from securities dealers and market makers. We estimate the fair value of our revolving credit facility and term loans using Level 2 inputs based on the present value of future payments, discounted at a rate which we consider appropriate for such debt.

Fair value estimates are made at a specific point in time, are subjective in nature, and involve uncertainties and matters of significant judgment. Settlement of such fair value amounts may not be a prudent management decision.

The following table summarizes fair value estimates for our financial instruments (in thousands):


	As of March 31, 2024							As of December 31, 2023
Asset (Liability)	Book Value				Fair Value			Book Value				Fair Value
Interest and rent receivables	$	34,492			$	34,730		$	45,059			$	45,476
Loans(1)		955,388		(2)		900,597			1,302,727		(2)		1,202,383
Debt, net		(10,098,723	)			(8,619,882	)		(10,064,236	)			(8,256,465	)

(1)

Excludes the convertible loan made in May 2023 to PHP Holdings and the acquisition loan made in May 2020 related to our investment in the international joint venture, along with the related subsequent investment in the real estate of three hospitals in Colombia, as these assets are accounted for under the fair value option method, as noted below.

(2)

Includes $162.4 million and $162.4 million of mortgage loans, a $329.0 million and $323.8 million shareholder loan included in investments in unconsolidated real estate joint ventures, $40.0 million and $526.9 million of loans that are part of our investments in unconsolidated operating entities, and $424.0 million and $289.6 million of other loans at March 31, 2024 and December 31, 2023, respectively.

Items Measured at Fair Value on a Recurring Basis

Our equity investment and related loan to the international joint venture, our loan investment in the real estate of three hospitals operated by subsidiaries of the international joint venture in Colombia, our equity investment in Lifepoint Behavioral (which was sold in March 2024), and our investment in PHP Holdings are measured at fair value on a recurring basis as we elected to account for these investments using the fair value option at the point of initial investment. We elected to account for these investments at fair value due to the size of the investments and because we believe this method was more reflective of current values.

At March 31, 2024 and December 31, 2023, the amounts recorded under the fair value option method were as follows (in thousands):


	As of March 31, 2024				As of December 31, 2023
Asset (Liability)	Fair Value		Original Cost		Fair Value		Original Cost		Asset Type Classification
Mortgage loans	$	147,502	$	147,502	$	146,892	$	146,892	Mortgage loans
Equity investment and other loans		501,623		906,602		939,903		912,999	Investments in unconsolidated operating entities/Other loans

Our loans to the international joint venture and its subsidiaries are recorded at fair value based on Level 2 and Level 3 inputs by discounting the estimated cash flows using the market rates at which similar loans would be made to borrowers with similar credit ratings and the same remaining maturities, while also considering the value of the underlying collateral of the loans. Our equity investment in Lifepoint Behavioral (which was sold in March 2024) was recorded at fair value as of December 31, 2023, based on Level 2 inputs by discounting the estimated cash flows expected to be realized as part of the Lifepoint Transaction described in Note 3 to the condensed consolidated financial statements. Our equity investment in the international joint venture and our investment in PHP Holdings are recorded at fair value based on Level 3 inputs, by using a market approach (for our equity investment in the international joint venture) and a discounted cash flow model (for our equity investment in PHP Holdings), which requires significant estimates of our investee such as projected revenue and expenses and appropriate consideration of the underlying risk profile of the forecasted assumptions associated with the investee. We classify our valuations of these investments as Level 3, as we use certain unobservable inputs to the valuation methodology that are significant to the fair value measurement, and the valuations require management judgment due to the absence of quoted market prices. For the cash flow model used for our equity investment in PHP Holdings, our unobservable inputs include use of a discount rate (which is based on a weighted-average cost of capital) and an adjustment for a marketability discount ("DLOM"). In regard to the underlying projections used in the discounted cash flow model, such projections are provided by the investees. However, we may modify such projections as needed based on our review and analysis of historical results, meetings with key members of management, and our understanding of trends and developments within the healthcare industry.

In the first three months of 2024, we recorded a net unfavorable adjustment to the investments accounted for under the fair value option method of approximately $430 million, primarily related to the loan to the international joint venture and our investment in PHP Holdings as further discussed in Note 3 to the condensed consolidated financial statements. In the first quarter of 2023, we had a net favorable adjustment of $2.3 million for our investments accounted for under the fair value option method.

The discount rate and DLOM on our investment in PHP Holdings was approximately 19% and 7%, respectively, at March 31, 2024, compared to 11% and 8% at December 31, 2023. In arriving at the DLOM, we considered many qualitative factors, including the percent of control, the nature of the underlying investee's business along with our rights as an investor pursuant to the operating agreement, the size of investment, expected holding period, number of shareholders, access to capital marketplace, etc. To illustrate the effect of movements in the DLOM, we performed a sensitivity analysis below by using full basis point variations (in thousands):


Basis Point Change in Marketability Discount	Estimated Increase (Decrease) In Fair Value
+100 basis points	$	(5,356	)
- 100 basis points		5,356

Items Measured at Fair Value on a Nonrecurring Basis

In addition to items that are measured at fair value on a recurring basis, we have assets and liabilities that are measured, from time-to-time, at fair value on a nonrecurring basis, such as for impairment purposes of our financial instruments and for certain equity investments without a readily determinable fair value.

Impairment of Non-Real Estate Investments

Our non-real estate investments in Steward and related affiliates include our 9.9% equity investment, approximately $346 million in working capital and other secured loans, and an approximate $362 million loan made to a Steward affiliate in 2021, proceeds of which were used to redeem a similarly sized convertible loan held by Steward’s former private equity sponsor. In addition, the approximate $220 million loan to the international joint venture is collateralized by the equity of Steward held by an investor in both Steward and the international joint venture. To assess recovery of these investments, we performed a valuation of Steward’s business at March 31, 2024, with assistance from a third-party, independent valuation firm. The valuation approaches utilized included the cost, market, and income approaches. The fair value analysis was performed under a non-going concern, orderly liquidation premise of value and assuming normal exposure to market participants. We utilized this premise of value due to Steward’s

ongoing financial distress and subsequent filing of bankruptcy. Accordingly, the valuation approaches used, including the Level 3 inputs, were based on the financial performance of the Steward assets. For profitable hospitals, Level 3 inputs included a weighted average EBITDA multiple of 6.48x from a selected range of 5x to 7x in reference to comparable transactions. We also used a weighted average discount rate of 15.03% from a selected range of 15% to 16%. For unprofitable hospitals, Level 3 inputs included a weighted average net revenue multiple range of 0.275x from a selected range of 0.25x to 0.30x in reference to comparable transactions. We also considered the reported book values inclusive of various adjustments for unprofitable hospitals. After reducing the derived fair value of Steward's business for Steward's secured debt (including our working capital and other secured loans) and their working capital deficit, we arrived at only a nominal remaining value that could not support the carrying value of our $362 million loan to a Steward affiliate or our remaining 9.9% equity investment. In addition, the value of the investor's share of the remaining 90.1% of Steward's equity that collateralizes the loan to the international joint venture was deemed insufficient to support recovery of this investment. As a result, we recorded impairment charges and fair value adjustments in the 2024 first quarter, as discussed further in Note 3 to the condensed consolidated financial statements.

8. Earnings Per Share/Unit

Medical Properties Trust, Inc.

Our earnings per share were calculated based on the following (in thousands):


	For the Three Months Ended March 31,
	2024			2023
Numerator:
Net (loss) income	$	(875,377	)	$	33,030
Non-controlling interests’ share in earnings		(248	)		(236	)
Participating securities’ share in earnings		—			(515	)
Net (loss) income, less participating securities’ share in earnings	$	(875,625	)	$	32,279
Denominator:
Basic weighted-average common shares		600,304			598,302
Dilutive potential common shares		—			8
Diluted weighted-average common shares		600,304			598,310

MPT Operating Partnership, L.P.

Our earnings per unit were calculated based on the following (in thousands):


	For the Three Months Ended March 31,
	2024			2023
Numerator:
Net (loss) income	$	(875,377	)	$	33,030
Non-controlling interests’ share in earnings		(248	)		(236	)
Participating securities’ share in earnings		—			(515	)
Net (loss) income, less participating securities’ share in earnings	$	(875,625	)	$	32,279
Denominator:
Basic weighted-average units		600,304			598,302
Dilutive potential units		—			8
Diluted weighted-average units		600,304			598,310

9. Commitments and Contingencies

Commitments

On October 5, 2022, we entered into definitive agreements to sell three Prospect facilities located in Connecticut to Yale for approximately $457 million, of which we expect to receive $355 million in cash and have received the remainder in additional investments in PHP Holdings - part of the Prospect Transaction discussed in Note 3. This transaction was approved by the state of Connecticut's Office of Health Strategy on March 27, 2024 and is now subject to the completion of Yale's acquisition of the hospital operations from Prospect. No assurances can be given that this transaction will be consummated as described or at all.

Contingencies

With Steward's ongoing operational and liquidity challenges as discussed in Note 3 and in the "Significant Tenant Update" section in "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-Q, we and certain of Steward’s asset backed lenders agreed to a new bridge facility in February 2024 and have funded an additional $75 million each to Steward during the 2024 first quarter. Of the $75 million funded by Steward's asset backed lenders, up to $60 million can be put to us in 2025 if not previously paid by Steward or through liquidation of Steward's collateral. If any amount is put to us in 2025, we would then be eligible to collect this full amount plus a return from Steward. Given this, we have determined that any liability from this financial guarantee has minimal value at March 31, 2024.

We are party to various lawsuits as described below:

Securities and Derivative Litigation

On April 13, 2023, we and certain of our executives were named as defendants in a putative federal securities class action lawsuit alleging false and/or misleading statements and/or omissions resulted in artificially inflated prices for our common stock, filed by a purported stockholder in the United States District Court for the Northern District of Alabama (Case No. 2:23-cv-00486). The complaint seeks class certification on behalf of purchasers of our common stock between July 15, 2019 and February 22, 2023 and unspecified damages including interest and an award of reasonable costs and expenses. This class action complaint was amended on September 22, 2023 and alleges that we made material misstatements or omissions relating to the financial health of certain of our tenants.

Members of our Board of Directors were also named as defendants in two related shareholder derivative lawsuits filed by purported stockholders in the United States District Court for the Northern District of Alabama on October 19, 2023 (Case No. 2:23- cv-01415) and December 7, 2023 (Case No. 2:23-cv-01667). The Company was named as a nominal defendant in both complaints. These shareholder derivative complaints both make allegations similar to those made in the Alabama securities lawsuit described above relating to purported material misstatements or omissions relating to the financial health of certain of our tenants. On February 16, 2024, members of our Board of Directors were named as defendants in a shareholder derivative lawsuit filed by a purported stockholder in the United States District Court for the District of Maryland (Case No. 1:24-cv-00471). The Company was named as a nominal defendant. This shareholder derivative complaint makes allegations similar to those made in the Alabama securities and derivative lawsuits described above relating to purported material misstatements or omissions relating to the financial health of certain of our tenants.

On September 29, 2023, we and certain of our executives were named as defendants in a putative federal securities class action lawsuit filed by a purported stockholder in the United States District Court for the Southern District of New York (Case No. 1:23-cv- 08597). The complaint seeks class certification on behalf of purchasers of our common stock between May 23, 2023 and August 17, 2023 and alleges false and/or misleading statements and/or omissions in connection with certain transactions involving Prospect. Members of our Board of Directors were also named as defendants in two related shareholder derivative lawsuits filed by purported stockholders in the United States District Court for the Southern District of New York on December 18, 2023 (Case No. 1:23-cv-10934) and March 1, 2024 (Case No. 1:24-cv-01589). The Company was named as a nominal defendant in both complaints. These shareholder derivative complaints both make allegations similar to those made in the New York securities lawsuit described above relating to purported false and/or misleading statements and/or omissions in connection with certain transactions involving Prospect. On February 21, 2024, members of our Board of Directors were named as defendants in a shareholder derivative lawsuit filed by a purported stockholder in the United States District Court for the District of Maryland (Case No. 1:24-cv-00527). The Company was named as a nominal defendant. This shareholder derivative complaint makes allegations similar to those made in the New York securities and derivative lawsuits described above relating to purported false and/or misleading statements and/or omissions in connection with certain transactions involving Prospect.

We believe these claims are without merit and intend to defend the remaining open cases vigorously. We have not recorded a liability related to the lawsuits above because, at this time, we are unable to determine whether an unfavorable outcome is probable or to estimate reasonably possible losses.

Defamation Litigation

On March 30, 2023, we commenced an action in the United States District Court for the Northern District of Alabama (Case No. 2:23-cv-00408), against short-seller Viceroy Research LLC (“Viceroy”) and its members. We are seeking injunctive relief and damages for defamation, civil conspiracy, tortious interference, private nuisance, and unjust enrichment based on defamatory statements expressed against us. On June 29, 2023, we won a preliminary ruling in this lawsuit after Viceroy's motion to dismiss the case was denied by a judge in the United States District Court for the Northern District of Alabama.

From time-to-time, we are a party to other legal proceedings, claims, or regulatory inquiries and investigations arising out of, or incidental to, our business. While we are unable to predict with certainty the outcome of any particular matter, in the opinion of management, after consultation with legal counsel, the ultimate liability, if any, with respect to those proceedings is not presently expected to materially affect our financial position, results of operations, or cash flows.

10. Subsequent Events

Utah Transaction

On April 12, 2024, we sold our interests in five Utah hospitals for an aggregate agreed valuation of approximately $1.2 billion to a newly formed joint venture (the "Venture") with Blue Owl RE Nucleus Holdco LLC (the "Fund"), which we call the Utah Transaction. We have retained an approximately 25% interest in the Venture (which we plan to account for on the equity method on a quarterly lag basis), and the Fund purchased an approximately 75% interest for $886 million. In conjunction with this transaction closing, the Venture placed new non-recourse secured financing, providing $190 million of additional cash to us. We used the majority of the $1.1 billion proceeds from this transaction to pay down a portion of our revolving credit facility and to pay off our Australia term loan, as described below.

As previously reported, the Utah lessee (an affiliate of CommonSpirit Health) may acquire the leased real estate at a price equal to the greater of fair market value and the approximate $1.2 billion lease base at the fifth or tenth anniversary of the 2023 master lease commencement. We granted the Fund certain limited and conditional preferences based on the possible execution of the purchase option, which we expect to account for as a derivative liability with an initial value of less than $5 million.

Credit Facility

On April 12, 2024, we amended the Credit Facility and certain other agreements to (i) reduce revolving commitments from $1.8 billion to $1.4 billion, (ii) apply certain proceeds from the Utah Transaction and other asset sales and debt transactions to repay the Australian term loan facility and certain other outstanding obligations of the Borrower, including revolving loans under the Credit Facility to the extent necessary to reduce the outstanding borrowings to no more than the amended $1.4 billion commitment, (iii) lower the maximum permitted secured leverage ratio from 40% to 25%, and (iv) waive the 10% cap on unencumbered asset value attributable to tenants subject to a bankruptcy event for purposes of determining compliance with the unsecured leverage ratio for the trailing four fiscal quarter periods ended June 30, 2024, and for purposes of determining pro forma compliance with the unsecured leverage ratio for certain asset sale and debt transactions.

Australian Term Loan Facility

On April 18, 2024, we paid off and terminated the approximate $306 million Australian term loan facility with proceeds from the Utah Transaction described in this same Note 10. We did not incur any early termination penalties in connection with this repayment.

Dividend

On April 12, 2024, our Board of Directors declared a quarterly cash dividend of $0.15 per common share that was paid on May 1, 2024.

Secured Term Loan Facility

On May 24, 2024, we closed on a secured loan facility with a consortium of institutional investors that provides for a term loan in aggregate principal amount of approximately £631 million (approximately $800 million) secured by a portfolio of 27 properties located in the U.K. currently leased to affiliates of Circle. The facility carries a fixed rate of 6.877% over its 10-year term, excluding fees and expenses, and is interest-only (payable quarterly in advance) through the maturity date. The facility is secured by first priority mortgages or similar security instruments on the relevant properties, including assignments of rents and security over accounts, and is non-recourse to us. We intend to use the majority of the net proceeds of the facility to pay down portions of our revolving credit facility and British pound sterling term loan due 2025, and to pay off our British pound sterling secured term loan due 2024 (approximately £105 million).

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of the consolidated financial condition and consolidated results of operations are presented on a combined basis for Medical Properties Trust, Inc. and MPT Operating Partnership, L.P. as there are no material differences between these two entities. Such discussion and analysis should be read together with the condensed consolidated financial statements and notes thereto contained in this Form 10-Q and the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2023.

Forward-Looking Statements.

This Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or future performance, achievements or transactions or events to be materially different from those expressed or implied by such forward-looking statements, including, but not limited to, the risks described in our Annual Report on Form 10-K and as updated in our quarterly reports on Form 10-Q for future periods, and current reports on Form 8-K as we file them with the SEC under the Exchange Act. Such factors include, among others, the following:

•

the risk that Steward's bankruptcy prevents us from being able to recover deferred rent or our other investments in Steward and its affiliates at full value, within a reasonable time period or at all;

•

the risk that property sales, loan repayments, and other capital recycling transactions do not occur as anticipated or at all, including the transaction described in Note 9 to the condensed consolidated financial statements;

•

the risk that we are not able to attain our leverage, liquidity, and cost of capital objectives within a reasonable time period or at all;

•

our ability to obtain debt financing on attractive terms or at all, as a result of changes in interest rates and other factors, which may adversely impact our ability to pay down, refinance, restructure, or extend our indebtedness as it becomes due, or pursue acquisition and development opportunities;

•

macroeconomic conditions, including due to geopolitical conditions and instability, which may lead to a disruption of or lack of access to the capital markets, disruptions and instability in the banking and financial services industries, rising inflation and movements in currency exchange rates, and may negatively impact the financial condition of our tenants;

•

the risk that the expected sale of three Connecticut hospitals currently leased to Prospect does not occur on the agreed upon terms or at all, and that we are otherwise unable to monetize our investment in Prospect at full value within a reasonable time period or at all;

•

any downgrades in our credit ratings;

•

the ability of our tenants, operators, and borrowers (including those of our joint ventures) to satisfy their obligations under their respective contractual arrangements with us;

•

the ability of our tenants and operators to operate profitably and generate positive cash flow, comply with applicable laws, rules and regulations in the operation of our properties, to deliver high-quality services, to attract and retain qualified personnel, and to attract patients;

•

the cooperation of our joint venture partners, including adverse developments affecting the financial health of such joint venture partners or the joint venture itself;

•

the economic, political and social impact of, and uncertainty relating to, the potential impact from health crises (like COVID-19), which may adversely affect our and our tenants’ business, financial condition, results of operations, and liquidity;

•

our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate, and integrate acquisitions and investments;

•

the nature and extent of our current and future competition;

•

factors affecting the real estate industry generally or the healthcare real estate industry in particular;

•

our ability to maintain our status as a REIT for income tax purposes in the U.S. and U.K.;

•

changes in federal, state, or local tax laws in the U.S., Europe, South America, or other jurisdictions in which we may own healthcare facilities or transact business;

•

federal and state healthcare and other regulatory requirements, as well as those in the foreign jurisdictions where we own properties;

•

the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain equity or debt financing secured by our properties or on an unsecured basis;

•

loss of property owned through ground leases upon breach or termination of the ground leases;

•

potential environmental contingencies and other liabilities;

•

our ability to attract and retain qualified personnel;

•

the risks and uncertainties of litigation or other regulatory proceedings and investigations; and

•

the accuracy of our methodologies and estimates regarding environmental, social, and governance (“ESG”) metrics and targets, tenant willingness and ability to collaborate towards reporting ESG metrics and meeting ESG goals and targets, and the impact of governmental regulation on our and our tenants’ ESG efforts.

Key Factors that May Affect Our Operations

Our revenue is derived from rents we earn pursuant to the lease agreements with our tenants, from interest income from loans to our tenants and other facility owners, and from profits or equity interests in certain of our tenants’ operations. Our tenants operate in the healthcare industry, generally providing medical, surgical, rehabilitative, and behavioral health care to patients. The capacity of our tenants to pay our rents and interest is dependent upon their ability to conduct their operations at profitable levels. We believe that the business environment of the industry segments in which our tenants operate is generally positive for efficient operators. However, our tenants’ operations are subject to economic, regulatory, market, and other conditions (such as the impact of the COVID-19 pandemic) that may affect their profitability, which could impact our results. Accordingly, we monitor certain key performance indicators that we believe provide us with early indications of conditions that could affect the level of risk in our portfolio.

Key factors that we may consider in underwriting prospective deals and in our ongoing monitoring of our tenants’ (and guarantors’) performance, as well as the condition of our properties, include, but are not limited to, the following:

•

the scope and breadth of clinical services and programs, including utilization trends (both inpatient and outpatient) by service type;

•

the size and composition of medical staff and physician leadership at our facilities, including specialty, tenure, and number of procedures performed and/or referrals;

•

an evaluation of our operators’ administrative team, as applicable, including background and tenure within the healthcare industry;

•

staffing trends, including ratios, turnover metrics, recruitment and retention strategies at corporate and individual facility levels;

•

facility operating performance measured by current, historical, and prospective operating margins (measured by a tenant's earnings before interest, taxes, depreciation, amortization, management fees, and facility rent) of each tenant and at each facility;

•

the ratio of our tenants' operating earnings to facility rent and to other fixed costs, including debt costs;

•

changes in revenue sources of our tenants, including the relative mix of public payors (including Medicare, Medicaid/MediCal, and managed care in the U.S., as well as equivalent payors in Europe, and South America) and private payors (including commercial insurance and private pay patients);

•

historical support (financial or otherwise) from governments and/or other public payor systems during major economic downturns/depressions;

•

trends in tenants' cash collections, including comparison to recorded net patient service revenues, knowing and assessing current revenue cycle management systems and potential future planned upgrades or replacements;

•

tenants' free cash flow;

•

the potential impact of healthcare pandemics/epidemics, legislation, and other regulations (including changes in reimbursement) on our tenants', borrowers', and guarantors' profitability and liquidity;

•

the potential impact of any legal, regulatory, or compliance proceedings with our tenants (including at the facility level);

•

the potential impact of supply chain and inflation-related challenges as they relate to new developments or capital addition projects;

•

an ongoing assessment of the operating environment of our tenants, including demographics, competition, market position, status of compliance, accreditation, quality performance, and health outcomes as measured by The Centers for Medicare and Medicaid Services ("CMS"), The Joint Commission, and other governmental bodies in which our tenants operate;

•

the level of investment in the hospital infrastructure and health IT systems; and

•

physical real estate due diligence, typically including property condition and Phase 1 environmental assessments, along with annual property inspections thereafter.

Certain business factors, in addition to those described above that may directly affect our tenants and borrowers, will likely materially influence our future results of operations. These factors include:

•

trends in interest rates and other costs due to general inflation and availability and increased costs from labor shortages could adversely impact the operations of our tenants and their ability to meet their lease obligations;

•

changes in healthcare regulations that may limit the opportunities for physicians to participate in the ownership of healthcare providers and healthcare real estate;

•

reductions (or non-timely increases) in reimbursements from Medicare, state healthcare programs, and commercial insurance providers that may reduce our tenants’ or borrowers’ profitability and our revenues;

•

competition from other financing sources; and

•

the ability of our tenants and borrowers to access funds in the credit markets.

CRITICAL ACCOUNTING POLICIES

Refer to our 2023 Annual Report on Form 10-K for a discussion of our critical accounting policies, which include investments in real estate, purchase price allocation, loans, credit losses, losses from rent and interest receivables, investments accounted for under the fair value option election, and our accounting policy on consolidation. During the three months ended March 31, 2024, there were no material changes to these policies.

Overview

We are a self-advised REIT focused on investing in and owning net-leased healthcare facilities across the U.S. and selectively in foreign jurisdictions. Medical Properties Trust, Inc. was incorporated under Maryland law on August 27, 2003, and MPT Operating Partnership, L.P. was formed under Delaware law on September 10, 2003. We conduct substantially all of our business through MPT Operating Partnership, L.P. We acquire and develop healthcare facilities and lease the facilities to healthcare operating companies under long-term net leases, which require the tenant to bear most of the costs associated with the property. The majority of our leased assets are owned 100%; however, we do own some leased assets through joint ventures with other partners that share our view that healthcare facilities are part of the infrastructure of any community, which we refer to as investments in unconsolidated real estate joint ventures. We also make mortgage loans to healthcare operators collateralized by their real estate assets. In addition, we may make loans to certain of our operators through our TRS, the proceeds of which are typically used for working capital and other purposes. From time-to-time, we may make noncontrolling investments in our tenants, which we refer to as investments in unconsolidated operating entities. These investments are typically made in conjunction with larger real estate transactions with the tenant that give us a right to share in such tenant’s profits and losses, and provide for certain minority rights and protections. Our business model facilitates acquisitions and recapitalizations, and allows operators of healthcare facilities to serve their communities by unlocking the value of their real estate assets to fund facility improvements, technology upgrades, and other investments in operations.

At March 31, 2024, our portfolio consisted of 436 properties leased or loaned to 53 operators, of which three are under development. We manage our business as a single business segment.

At March 31, 2024, all of our investments are located in the U.S., Europe, and South America. Our total assets are made up of the following (dollars in thousands):


	As of March 31, 2024			% of Total			As of December 31, 2023			% of Total
Real estate assets - at cost	$	14,661,982			84.7	%	$	14,778,132			80.8	%
Accumulated real estate depreciation and amortization		(1,422,728	)		(8.2	)%		(1,407,971	)		(7.7	)%
Net investment in real estate assets		13,239,254			76.5	%		13,370,161			73.1	%
Cash and cash equivalents		224,340			1.3	%		250,016			1.4	%
Investments in unconsolidated real estate joint ventures		1,450,482			8.4	%		1,474,455			8.0	%
Investments in unconsolidated operating entities		794,138			4.6	%		1,778,640			9.7	%
Other		1,592,742			9.2	%		1,431,572			7.8	%
Total assets	$	17,300,956			100.0	%	$	18,304,844			100.0	%

Significant Tenant Update

Steward Health Care System

At March 31, 2024, affiliates of Steward lease 28 of our facilities across five different markets under a master lease totaling approximately $2.4 billion, along with eight properties pursuant to a separate master lease agreement that are part of the Massachusetts partnership with Macquarie Asset Management ("Macquarie") (our investment in this partnership approximates $406 million). In addition to the master leases, we hold working capital and other secured loans totaling approximately $346 million, which the working capital loan consists of multiple tranches with varying terms. We also have a $362 million loan due from affiliates of Steward that was made in 2021, proceeds of which were used to redeem a similarly sized convertible loan held by Steward's former private equity sponsor. Finally, we hold a 9.9% equity investment in Steward.

Operational and Liquidity Challenges

As disclosed in our Annual Report on Form 10-K for the year ending December 31, 2023, Steward delayed until early October 2023 paying a portion of its September 2023 rent and paid less than 30% of its required $70 million of rent and interest obligations (including our share of rent due to the Massachusetts partnership) for the 2023 fourth quarter.

According to Steward, its cash flows from operations have been impacted by challenges related to insufficient reimbursement revenue, increased costs and expenses, revenue cycle management, and a backlog of accounts payable. With a single exception, Steward historically paid rent timely until its late payment of a portion of September 2023. Earlier in 2023, Steward’s management had described to us its plans for continued improvements to profitability, improvements to collections of billed revenue, access to working capital liquidity, and sales of certain non-core assets. Based on these initiatives, the reported profitability of Steward's operations at our facilities, our cross-defaulted master lease structure, and the additional security of our overall collateral interests, we believed that Steward would be able to satisfy its rental obligations over the full term of our master leases. However, despite Steward obtaining additional working capital financing and selling its non-core laboratory business in the 2023 fourth quarter, Steward informed us in December 2023 that its cash collection challenges had become more pronounced and coupled with significant changes to vendor payment terms, their liquidity had been negatively impacted. To improve its liquidity position, Steward stated in December 2023 that it would be pursuing several strategic transactions, including the sale or re-tenanting of certain hospital operations and working with a third-party capital partner to divest of its managed care business. In addition, Steward stated it planned to intensify measures to improve cash collections and overall governance, including the establishment of a transformation committee comprised of newly appointed independent directors.

Separately, we engaged financial and legal advisors in the 2023 fourth quarter to advise us on options to maximize the ultimate recovery of our investments, including the recovery of unpaid rent and interest. To this point and while Steward was working to execute its stated plan, we agreed to fund a $60 million bridge loan (which we funded in January 2024) secured by our existing collateral as well as new second liens on the managed care business of Steward. In addition, we and certain of Steward’s asset backed lenders agreed to a new bridge facility in February 2024 and have funded an additional $75 million each to Steward during the 2024 first quarter (of which, up to $60 million advanced by certain of Steward's asset backed lenders could be put to us in 2025 if not previously paid by Steward or through liquidation of Steward's collateral). In addition to these fundings, we agreed to a forbearance agreement in which we consented to the deferral of unpaid rent and interest through December 2023, as well as a limited and tapering deferral of rent in 2024.

Due to the operational and liquidity challenges that Steward is experiencing, we moved to the cash basis of accounting for our leases and loans with Steward effective December 31, 2023. This resulted in the reserving of all unpaid rent and interest receivables at December 31, 2023 and the reversal of previously recognized straight-line rent receivables. In addition, we recorded impairment charges on certain real estate assets and on our 9.9% equity interest. In total, we recorded approximately $714 million of impairment and other charges in 2023.

Steward signed a letter of intent for the sale of its managed care business ("Stewardship") in February 2024. However, the sale price of Stewardship was less than what was anticipated earlier in 2024, and important regulatory and anti-trust approvals have not yet been forthcoming as soon as earlier planned. These circumstances have created a level of uncertainty about the likelihood, valuation, and timing of Steward's realizations of Stewardship. Moreover, as of the end of the first quarter of 2024, Steward had not signed any agreements for possible sales of its operations in or the re-tenanting of our hospital real estate. Meanwhile, Steward’s working capital deficit has continued to increase from December 31, 2023, despite the influx of cash and rent concessions from us and certain of Steward’s asset backed lenders as described earlier, which culminated in Steward's filing for reorganization relief under Chapter 11 protection of the United States Bankruptcy Code in the Southern District of Texas on May 6, 2024.

Due to the uncertainty concerning the sale of Stewardship, status of sales of Steward operations or the re-tenanting of our real estate, the ongoing operational and liquidity challenges, and new bankruptcy filing, we have recorded approximately $470 million of additional impairment charges in the quarter ending March 31, 2024, that fully reserve for the remaining value of our 9.9% equity investment in Steward and the $362 million loan due from affiliates of Steward along with the accrual for property taxes and other obligations not paid by Steward under its master leases. The equity investment and loan to Steward affiliates were included in “Investments in unconsolidated operating entities” on our condensed consolidated balance sheets and were adjusted for after comparing our carrying value of these investments to an updated fair value analysis of the underlying collateral, with assistance from a third-party, independent valuation firm.

Results of Operations

Three Months Ended March 31, 2024 Compared to March 31, 2023

Net loss for the three months ended March 31, 2024, was ($875.6) million, or ($1.46) per share compared to net income of $32.8 million, or $0.05 per diluted share, for the three months ended March 31, 2023. This decrease in net income is primarily driven by the $693 million of impairment charges in the first quarter of 2024 related to Steward and the international joint venture and an approximate $201 million unfavorable fair value adjustment to our investment in PHP Holdings, as described in Note 3 to the condensed consolidated financial statements, along with lower rent and interest from Steward. Normalized funds from operations (“FFO”), after adjusting for certain items (as more fully described in the section titled “Reconciliation of Non-GAAP Financial Measures” in Item 2 of this Quarterly Report on Form 10-Q), was $141.8 million for the 2024 first quarter, or $0.24 per diluted share, as compared to $222.2 million, or $0.37 per diluted share, for the 2023 first quarter. This 36% decrease in Normalized FFO is primarily due to lower revenues from Steward moving to the cash basis of accounting on December 31, 2023, higher interest expense, and lower revenues as a result of various disposals in 2023.

Revenues

A comparison of revenues for the three months ended March 31, 2024 and 2023 is as follows (dollar amounts in thousands):


	2024		% of Total			2023		% of Total			Year over Year Change
Rent billed	$	199,299		73.5	%	$	248,157		70.8	%		(19.7	)%
Straight-line rent		44,736		16.5	%		56,693		16.2	%		(21.1	)%
Income from financing leases		16,393		6.0	%		13,195		3.8	%		24.2	%
Interest and other income		10,888		4.0	%		32,166		9.2	%		(66.2	)%
Total revenues	$	271,316		100.0	%	$	350,211		100.0	%		(22.5	)%

Our total revenues for the 2024 first quarter are down $78.9 million, or 23%, over the same period in the prior year. This decrease is made up of the following:

•

Operating lease revenue (includes rent billed and straight-line rent) – down $60.8 million over the prior year, of which approximately $57 million is due to less revenue from our operators on a cash basis in the first quarter of 2024 as compared to the prior year. The majority of this decline is due to Steward as we recognized $60 million of rent revenue in

the 2023 first quarter (excluding revenue on Utah properties now leased to CommonSpirit), while receiving and recording only $9 million of rent revenue in the first three months of 2024.

Operating lease revenues in the 2024 first quarter further declined by approximately $17 million due to disposals and other leasing transactions in 2023. These decreases are partially offset by approximately $5.5 million in incremental revenue from acquisitions in 2023, capital additions, and the commencement of rent on two development properties in 2024; $3.3 million of favorable foreign currency fluctuations; and approximately $4.5 million from increases in CPI above the contractual minimum escalations in our leases.

•

Income from financing leases – up $3.2 million primarily due to receiving cash of approximately $7 million for rent revenue from Prospect in the first quarter of 2024, whereas we did not receive any cash from this cash basis tenant in the 2023 first quarter. In addition, financing lease income was higher by $0.5 million from the increase in CPI above the lease contractual minimum escalations. These increases were partially offset by a $3.9 million decrease from the disposal of three Prime financing leases in the third quarter of 2023 as described in Note 3 to the condensed consolidated financial statements.

•

Interest and other income – down $21.3 million from the prior year due to the following:

Interest from loans – down $19.4 million, primarily due to a $16 million decrease in interest income related to Steward and the international joint venture and an approximate $5 million decrease from loan payoffs (including $1.9 million from the sale of our interest in the Priory syndicated term loan in the first quarter of 2024). These decreases are partially offset by approximately $0.7 million of higher income from annual escalations due to increases in CPI and $0.8 million of favorable foreign currency fluctuations.

Other income – down $1.9 million from the prior year as we had less direct reimbursements from our tenants for ground leases, property taxes, and insurance.

Interest Expense

Interest expense for the quarters ended March 31, 2024 and 2023 totaled $108.7 million and $97.7 million, respectively. This increase is primarily related to an increase in borrowings on our revolving credit facility that carried higher interest rates (as variable rate debt) compared to the lower fixed interest rates of debt that was repaid in 2023, including the A$730 million Australian term loan facility paid off in the 2023 second quarter and the 2.550% Senior Unsecured Notes paid off in December 2023. Overall, our weighted-average interest rate was 4.2% for the quarter ended March 31, 2024, compared to 3.7% for the same period in 2023, as general interest rates have trended higher post the 2023 first quarter and our specific rates have increased due to a credit rating adjustment in March 2023.

Real Estate Depreciation and Amortization

Real estate depreciation and amortization during the first quarter of 2024 decreased to $75.6 million from $83.9 million in 2023. This decrease is primarily due to the sale of 11 properties related to the Australia Transaction (as described in Note 3 to the condensed consolidated financial statements) and three Prime properties in 2023. We also classified five Prime facilities as held for sale in the first quarter of 2024 and are no longer recording depreciation on these properties.

Property-related

Property-related expenses totaled $4.8 million and $7.1 million for the quarters ended March 31, 2024 and 2023, respectively. Of the property expenses in the first quarter of 2024 and 2023, approximately $2.3 million and $4.2 million, respectively, represents costs that were reimbursed by our tenants and included in the “Interest and other income” line on our condensed consolidated statements of net income.

General and Administrative

General and administrative expenses totaled $33.3 million for the 2024 first quarter, compared to $41.7 million for the 2023 first quarter. Approximately $4 million of this decrease is stock compensation expense related, of which approximately $1.5 million of this decrease is related to timing of when the 2024 awards were granted in the quarter. In regard to the 2024 stock grants, and as described in Note 6 to the condensed consolidated financial statements, certain stock awards have cash-settlement features that will be accounted for as liability awards verses equity awards and adjusted to fair value quarterly.

Excluding stock compensation expense, general and administrative expenses totaled $25.6 million in the 2024 first quarter, compared to $29.8 million in the prior year reflecting our ongoing efforts to manage our expenses.

(Loss) Gain on Sale of Real Estate

During the three months ended March 31, 2024, we disposed of three facilities and two ancillary facilities resulting in a net loss of $1.4 million.

Real Estate and Other Impairment Charges, Net

In the 2024 first quarter, we recognized $693 million of non-real estate impairment charges and fair value adjustments associated with our investments in Steward and the international joint venture as further described in Note 3 to the condensed consolidated financial statements. In the first quarter of 2023, we recorded an $89.5 million net impairment charge, of which $79 million related to the Australia Transaction and $11 million was a non-cash impairment charge on the three Prime properties as more fully described in Note 3 to the condensed consolidated financial statements.

Earnings from Equity Interests

Earnings from equity interests was $10.5 million for the quarter ended March 31, 2024, slightly below the $11.4 million for the same period in 2023, primarily due to lower revenue earned on our Italian joint venture.

Other (Including Fair Value Adjustments on Securities)

Other expense for the first three months of 2024 was $229.3 million, compared to $5.2 million in the prior year. For 2024, we recognized approximately $216 million in unfavorable non-cash fair value adjustments from our investments marked to fair value, primarily due to an approximate $201 million unfavorable adjustment to our investment in PHP Holdings. The remaining expense in the 2024 first quarter included a $7.8 million economic loss from the sale of our interest in the Priory syndicated term loan and approximately $5.9 million of expenses associated with responding to certain defamatory statements published by certain parties, including those who are defendants to a lawsuit we filed on March 30, 2023. For 2023, we incurred $8 million of expenses associated with responding to defamatory statements previously mentioned, partially offset by approximately $4 million of favorable non-cash fair value adjustments on our investment in Aevis and other investments marked to fair value during the first quarter of 2023.

With certain investments accounted for at fair value, such as our investment in PHP Holdings, we may have positive or negative fair value adjustments from quarter-to-quarter.

Income Tax Expense

Income tax expense includes U.S. federal and state income taxes on our TRS entities, as well as non-U.S. income based or withholding taxes on certain investments located in jurisdictions outside the U.S. The $10.9 million income tax expense for the three months ended March 31, 2024 is primarily based on the income generated by our investments in the U.K., Colombia, and Germany. In comparison, we incurred $3.5 million in income tax expense in the first quarter of 2023 that was net of a $5.0 million tax benefit recognized from the Australia Transaction.

We utilize the asset and liability method of accounting for income taxes. Deferred tax assets are recorded to the extent we believe these assets will more likely than not be realized. In making such determination, all available positive and negative evidence is considered, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Based upon our review of all positive and negative evidence, including our three-year cumulative pre-tax book loss position in certain entities, we concluded that a valuation allowance of approximately $152 million should be reflected against certain of our international and domestic net deferred tax assets at March 31, 2024. In the future, if we determine that it is more likely than not that we will realize our net deferred tax assets, we will reverse the applicable portion of the valuation allowance, recognize an income tax benefit in the period in which such determination is made, and potentially incur higher income tax expense in future periods as income is earned.

Reconciliation of Non-GAAP Financial Measures

Investors and analysts following the real estate industry utilize funds from operations, or FFO, as a supplemental performance measure. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets, which assumes that the value of real estate diminishes predictably over time. We compute FFO in accordance with the definition provided by the National Association of Real Estate Investment Trusts, or Nareit, which represents net income (loss) (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairment charges on real estate assets, plus real estate depreciation and amortization, including amortization related to in-place lease intangibles, and after adjustments for unconsolidated partnerships and joint ventures.

In addition to presenting FFO in accordance with the Nareit definition, we disclose normalized FFO, which adjusts FFO for items that relate to unanticipated or non-core events or activities or accounting changes that, if not noted, would make comparison to prior period results and market expectations less meaningful to investors and analysts.

We believe that the use of FFO, combined with the required GAAP presentations, improves the understanding of our operating results among investors and the use of normalized FFO makes comparisons of our operating results with prior periods and other companies more meaningful. While FFO and normalized FFO are relevant and widely used supplemental measures of operating and financial performance of REITs, they should not be viewed as a substitute measure of our operating performance since the measures do not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs (if any are not paid by our tenants) to maintain the operating performance of our properties, which can be significant economic costs that could materially impact our results of operations. FFO and normalized FFO should not be considered an alternative to net income (loss) (computed in accordance with GAAP) as indicators of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.

The following table presents a reconciliation of net (loss) income attributable to MPT common stockholders to FFO and Normalized FFO for the three months ended March 31, 2024 and 2023 (in thousands except per share data):


	For the Three Months Ended
	March 31, 2024			March 31, 2023
FFO information:
Net (loss) income attributable to MPT common stockholders	$	(875,625	)	$	32,794
Participating securities’ share in earnings		—			(515	)
Net (loss) income, less participating securities’ share in earnings	$	(875,625	)	$	32,279
Depreciation and amortization		94,243			101,960
Loss (gain) on sale of real estate		1,423			(62	)
Real estate impairment charges		—			52,104
Funds from operations	$	(779,959	)	$	186,281
Write-off of billed and unbilled rent and other		1,817			2,192
Other impairment charges, net		693,088			37,434
Litigation and other		5,870			7,726
Non-cash fair value adjustments		221,276			(4,121	)
Tax rate changes and other		(307	)		(7,305	)
Normalized funds from operations	$	141,785		$	222,207
Per diluted share data:
Net (loss) income, less participating securities’ share in earnings	$	(1.46	)	$	0.05
Depreciation and amortization		0.16			0.17
Loss (gain) on sale of real estate		—			—
Real estate impairment charges		—			0.09
Funds from operations	$	(1.30	)	$	0.31
Write-off of billed and unbilled rent and other		—			0.01
Other impairment charges, net		1.16			0.06
Litigation and other		0.01			0.01
Non-cash fair value adjustments		0.37			(0.01	)
Tax rate changes and other		—			(0.01	)
Normalized funds from operations	$	0.24		$	0.37

LIQUIDITY AND CAPITAL RESOURCES

2024 Cash Flow Activity

During the first three months of 2024, we generated approximately $74.3 million of cash flows from operating activities, primarily consisting of rent and interest from mortgage and other loans. In addition, we received approximately $133 million during the quarter from sales of our interest in the syndicated Priory term loan, the remaining minority equity interest in Lifepoint Behavioral, and certain real estate properties. We used our operating cash flows, asset sale proceeds, and cash on-hand and borrowings under our revolving credit facility to fund our dividends (declared in November 2023) of $92.8 million, approximately $135 million of advances to Steward, on a secured basis, in order to protect our investments in Steward (see Note 3 to the condensed consolidated financial statements for further discussion), and other investing activities.

Subsequent to March 31, 2024, the following transactions occurred:

•

we completed the sale of five properties to Prime for cash proceeds of $250 million along with a $100 million interest-bearing mortgage loan due in 2024;

•

we completed the Utah Transaction (as discussed in Note 10 to the condensed consolidated financial statements) that generated cash proceeds of approximately $1.1 billion. With the proceeds from these asset sales, we paid off and terminated our $306 million Australian term loan facility that was due in May 2024 and reduced the outstanding balance on the revolving credit facility by $500 million;

•

our Board of Directors declared a quarterly cash dividend of $0.15 per common share on April 12, 2024, that was paid on May 1, 2024, totaling approximately $90 million;

•

on April 12, 2024, we amended the Credit Facility and certain other agreements to (i) reduce revolving commitments from $1.8 billion to $1.4 billion, (ii) apply certain proceeds from the Utah Transaction and other asset sales and debt transactions to repay the Australian term loan facility and certain other outstanding obligations, including revolving loans under the Credit Facility to the extent necessary to reduce the outstanding borrowings to no more than the amended $1.4 billion commitment, (iii) lower the maximum permitted secured leverage ratio from 40% to 25%, and (iv) waive the 10% cap on unencumbered asset value attributable to tenants subject to a bankruptcy event for purposes of determining compliance with the unsecured leverage ratio for the trailing four fiscal quarter period ended June 30, 2024, and for purposes of determining pro forma compliance with the unsecured leverage ratio for certain asset sale and debt transactions.

The relief afforded under the April 12, 2024 amendment to the Credit Facility is limited to the relief specified in the amendment, including waiving the 10% cap on unencumbered asset value attributable to tenants subject to a bankruptcy event for purposes of determining compliance with the unsecured leverage ratio for the trailing four fiscal quarter period ended June 30, 2024 and for purposes of determining pro forma compliance with the unsecured leverage ratio for certain asset sale and debt transactions specified in the amendment. The amendment does not provide relief beyond its specific provisions and other adverse consequences of the Steward bankruptcy filing may occur;

•

in May 2024, both S&P Global Ratings and Moody's downgraded our corporate ratings. These ratings declining could have a negative impact on us in the form of higher interest rates on any new or amended debt instruments we may enter into in the future;

•

primarily as a result of this Quarterly Report on Form 10-Q not being filed timely, we are currently ineligible to file a new short-form registration statement on Form S-3 or access our existing registration statement on Form S-3 for sales of securities, including under our at-the-market ("ATM") program, until June 1, 2025, which may impair our ability to raise capital in the public markets. While we are able to use other registration avenues for public offerings, such avenues are less expeditious and efficient than a shelf registration statement on Form S-3. See "Risk Factors" for additional information; and

•

on May 24, 2024, we closed on a secured loan facility with a consortium of institutional investors that provides for a term loan in aggregate principal amount of approximately £631 million (approximately $800 million) secured by a portfolio of 27 properties located in the U.K. currently leased to affiliates of Circle. The facility carries a fixed rate of 6.877% over its 10-year term, excluding fees and expenses, and is interest-only (payable quarterly in advance) through the maturity date. The facility is secured by first priority mortgages or similar security instruments on the relevant properties, including assignments of rents and security over accounts, and is non-recourse to us. We intend to use the majority of the net proceeds of the facility to pay down portions of our revolving credit facility and British pound sterling term loan due 2025, and to pay off our British pound sterling secured term loan due 2024 (approximately £105 million).

2023 Cash Flow Activity

During the first three months of 2023, we generated approximately $135.6 million of cash flows from operating activities, primarily consisting of rent and interest from mortgage and other loans. We used these operating cash flows (along with cash on-hand) to fund our dividends of $176.6 million.

Short-term Liquidity Requirements:

Our short-term liquidity requirements typically consist of general and administrative expenses, dividends in order to comply with REIT requirements, interest payments on our debt, and planned funding commitments on development and capital improvement projects, for the next twelve months. Our monthly rent and interest receipts and distributions from our joint venture arrangements are typically enough to cover our short-term liquidity requirements.

However, with increasing interest rates, loss of a substantial portion of cash rent and interest from Steward, possible debtor in possession financing ("DIP") of up to $75 million related to the Steward bankruptcy (of which we have funded $60 million to-date), and $1.4 billion of debt coming due within the next twelve months (post subsequent event activity discussed earlier), we have looked to other initiatives to improve cash flows including:

•

in the first five months of 2024, we have raised $2.4 billion of liquidity (as previously discussed above under "2024 Cash Flow Activity") comfortably exceeding our initial full year liquidity target of $2.0 billion;

•

completing the binding sale of three Connecticut facilities to Yale New Haven for $355 million, which has been approved by the state of Connecticut's Office of Health Strategy;

•

extending the maturity of existing term loans (including the British pound sterling loan due 2025); and

•

managing the form (cash or stock) and amount of our dividend requirements.

We believe these initiatives, along with liquidity of approximately $1.4 billion (including cash on-hand and availability under our $1.4 billion revolving credit facility) at May 24, 2024 (and including subsequent event activity discussed in Note 3 to the condensed consolidated financial statements), routine cash receipts of rent and interest, and the $100 million due from Prime in 2024, can fund our short-term liquidity requirements, including up to $75 million of DIP financing to Steward.

In addition to the cash flow improvement initiatives discussed above, we could see further cash flow upside from the monetization of our investment in PHP Holdings and any proceeds received from Steward's plan to divest of its managed care business and to transition operations to new healthcare operators (whether it be from a concurrent sale of our real estate or in the form of rent paid by the new lessee).

Long-term Liquidity Requirements:

Our long-term liquidity requirements generally consist of the same requirements described above under “Short-term Liquidity Requirements” along with the acquisition of real estate and the funding of debt maturities coming due after the next twelve months. At this time, we do not expect any material acquisitions of real estate in the foreseeable future.

As described previously, our monthly rent and interest receipts and distributions from our joint venture arrangements along with our current liquidity of approximately $1.4 billion at May 24, 2024, are typically enough to cover our short-term liquidity requirements. However, to address upcoming debt maturities (as outlined below), we may need to look to other sources, which may include one or a combination of the following:

•

reducing our dividend (or moving to a stock dividend), while still complying with REIT requirements;

•

further property sales or joint ventures, including the completion of the binding sale of three Connecticut facilities to Yale that is expected to generate $355 million;

•

monetizing our investment in operators, including our investment in PHP Holdings;

•

entering into new secured loans on real estate;

•

extending the maturity of existing term loans;

•

identifying and implementing cost reduction opportunities;

•

entering into new bank term loans or issuing new USD, EUR, or GBP denominated debt securities; and

•

sale of equity securities.

However, there is no assurance that conditions will be favorable for such possible transactions or that our plans will be successful. As described in the "Risk Factors" section of this Form 10-Q, as a result of this Quarterly Report on Form 10-Q not being filed timely, we are currently ineligible to file a new shelf registration statement on Form S-3 or access our existing registration statement on Form S-3 for sales of securities, including under our ATM program, until June 1, 2025, which may impair our ability to raise capital in the public markets. While we are able to use other registration avenues for public offerings, such avenues are less expeditious and efficient than a shelf registration statement on Form S-3. See "Risk Factors" for additional information.

Principal payments due on our debt (which exclude the effects of any discounts, premiums, or debt issue costs recorded) as of May 24, 2024 are as follows (in thousands):


2024	$	133,547
2025		1,300,202
2026		2,374,864
2027		1,600,000
2028		764,220
Thereafter		3,449,983
Total	$	9,622,816

Contractual Commitments

We presented our contractual commitments in our 2023 Annual Report on Form 10-K. Except for the payoff and termination of our Australian term loan facility on April 18, 2024, and the changes noted below, there have been no significant changes through May 24, 2024.

The following table updates our contractual commitments schedule as of May 24, 2024 (in thousands):


Contractual Commitments	2024(1)		2025		2026		2027		2028		Thereafter		Total
British pound secured loan facility	$	27,879	$	55,304	$	55,304	$	55,304	$	55,456	$	1,108,284	$	1,357,531
British pound sterling term loans		148,268		758,583		—		—		—		—		906,851
Revolving credit facility		28,438		47,178		719,122		—		—		—		794,738

(1)

This column represents obligations post May 24, 2024.

Distribution Policy

The table below is a summary of our distributions declared during the two year period ended March 31, 2024:


Declaration Date	Record Date	Date of Distribution	Distribution per Share
November 9, 2023	December 7, 2023	January 11, 2024	$	0.15
August 21, 2023	September 14, 2023	October 12, 2023	$	0.15
April 27, 2023	June 15, 2023	July 13, 2023	$	0.29
February 16, 2023	March 16, 2023	April 13, 2023	$	0.29
November 10, 2022	December 8, 2022	January 12, 2023	$	0.29
August 18, 2022	September 15, 2022	October 13, 2022	$	0.29
May 26, 2022	June 16, 2022	July 14, 2022	$	0.29

On April 12, 2024, we announced that our Board of Directors declared a regular quarterly cash dividend of $0.15 per share of common stock that was paid on May 1, 2024, to stockholders of record on April 22, 2024.

It is our policy to make sufficient distributions to stockholders in order for us to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended, and to efficiently manage corporate income and excise taxes on undistributed income. However, our Credit Facility limits the amount of dividends we can make- see Note 4 to the condensed consolidated financial statements for further information.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices, and other market changes that affect market sensitive instruments. We seek to mitigate the effects of fluctuations in interest rates by matching the terms of new investments with new long-term fixed rate borrowings to the extent possible. We may or may not elect to use financial derivative instruments to hedge interest rate or foreign currency exposure. For interest rate hedging, these decisions are principally based on our policy to match investments with comparable borrowings, but are also based on the general trend in interest rates at the applicable dates and our perception of the future volatility of interest rates. For foreign currency hedging, these decisions are principally based on how our investments are financed, the long-term nature of our investments, the need to repatriate earnings back to the U.S., and the general trend in foreign currency exchange rates.

In addition, the value of our facilities will be subject to fluctuations based on changes in local and regional economic conditions and changes in the ability of our tenants to generate profits.

Our primary exposure to market risks relates to fluctuations in interest rates and foreign currency. The following analyses present the sensitivity of the market value, earnings, and cash flows of our significant financial instruments to hypothetical changes in interest rates and exchange rates as if these changes had occurred. The hypothetical changes chosen for these analyses reflect our view of changes that are reasonably possible over a one-year period. These forward looking disclosures are selective in nature and only address the potential impact from these hypothetical changes. They do not include other potential effects which could impact our business as a result of changes in market conditions. In addition, they do not include measures we may take to minimize our exposure such as entering into future interest rate swaps to hedge against interest rate increases on our variable rate debt.

Interest Rate Sensitivity

For fixed rate debt, interest rate changes affect the fair market value but do not impact net income to common stockholders or cash flows. Conversely, for floating rate debt, interest rate changes generally do not affect the fair market value but do impact net income to common stockholders and cash flows, assuming other factors are held constant. At March 31, 2024, our outstanding debt totaled $10.1 billion, which consisted of fixed-rate debt of approximately $8.3 billion (after considering interest rate swaps in-place) and variable rate debt of $1.8 billion. If market interest rates increase by 10%, the fair value of our debt at March 31, 2024 would decrease by approximately $200.3 million. Changes in the fair value of our fixed rate debt will not have any impact on us unless we decided to repurchase the debt in the open market.

If market rates of interest on our variable rate debt increase by 10%, the increase in annual interest expense on our variable rate debt would decrease future earnings and cash flows by $12.0 million per year. If market rates of interest on our variable rate debt decrease by 10%, the decrease in interest expense on our variable rate debt would increase future earnings and cash flows by $12.0 million per year. This assumes that the average amount outstanding under our variable rate debt for a year is $1.8 billion, the balance of such variable rate debt at March 31, 2024.

Foreign Currency Sensitivity

With our investments in the U.K., Germany, Spain, Italy, Portugal, Switzerland, Finland, and Colombia, we are subject to fluctuations in the British pound, euro, Swiss franc, and Colombian peso to U.S. dollar currency exchange rates. Although we generally deem investments in these countries to be of a long-term nature, are typically able to match any non-U.S. dollar borrowings with investments in such currencies, and historically have not needed to repatriate a material amount of earnings back to the U.S., increases or decreases in the value of the respective non-U.S. dollar currencies to U.S. dollar exchange rates may impact our financial condition and/or our results of operations. Based solely on our 2024 operating results to-date and on an annualized basis, a 10% change to the following exchange rates would have impacted our net income, FFO, and Normalized FFO by the amounts below (in thousands):


	Net Income Impact		FFO Impact		NFFO Impact
British pound (£)	$	9,426	$	19,046	$	22,163
Euro (€)		1,513		6,129		6,502
Swiss franc (CHF)		2,555		35		2,869
Colombian peso (COP)		69		147		1,856

Item 4. Controls and Procedures.

Medical Properties Trust, Inc. and MPT Operating Partnership, L.P.

We have adopted and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b), under the Securities Exchange Act of 1934, as amended, we have carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of

the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the quarter covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by us in the reports that we file under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

We are party to various lawsuits as further described in Note 9 “Commitments and Contingencies” to the condensed consolidated financial statements. We have not recorded a liability related to these lawsuits because, at this time, we are unable to determine whether an unfavorable outcome is probable or to estimate reasonably possible losses.

In addition to the foregoing, we are currently and have in the past been subject to various legal proceedings and regulatory actions in connection with our business. We believe that the resolution of any current pending legal or regulatory matters will not have a material adverse effect on our business, financial condition, results of operations, or cash flows. Nonetheless, we cannot predict the outcome of these proceedings, as legal and regulatory matters are subject to inherent uncertainties, and there exists the possibility that the ultimate resolution of such matters could have a material adverse effect on our financial condition, cash flows, results of operations, and the trading price of our common stock.

Item 1A. Risk Factors.

Other than as noted below, there have been no material changes to the Risk Factors as presented in our Annual Report on Form 10-K for the year ended December 31, 2023.

Steward’s deteriorating financial condition has material adversely affected our operating results and financial condition, and Steward’s recent Chapter 11 filing adds further risks and uncertainties that could materially adversely affect us.

On May 6, 2024, Steward filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas. At March 31, 2024, affiliates of Steward lease 28 of our facilities under a master lease totaling approximately $2.4 billion, along with eight properties pursuant to a separate master lease agreement with one of our unconsolidated joint ventures in which our investment is approximately $406 million. In addition to the master leases, we hold a working capital and other secured loans totaling approximately $346 million, which the working capital loan consists of multiple tranches with varying terms. We also have a $362 million loan due from affiliates of Steward that was made in 2021, and we hold a 9.9% equity investment in Steward. At March 31, 2024, our aggregate investments in Steward and its affiliates represented approximately 18.5% of our total assets. In addition, our approximately $220 million loan to an international joint venture is collateralized by the equity of Steward held by an investor in both Steward and the international joint venture. Subject to approval by the bankruptcy court (including with regards to financing terms), we separately anticipate entering into agreements to provide debtor-in-possession financing to Steward of up to $75 million.

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, we moved to the cash basis of accounting for all leases and loans with Steward effective December 31, 2023. This resulted in the reserving of all unpaid rent and interest receivables at December 31, 2023 and the reversal of previously recognized straight-line rent receivables. In addition, we recorded impairment charges on certain real estate assets and on our 9.9% equity interest in Steward. In total, the Company recorded approximately $700 million of impairment and other charges as of December 31, 2023. Due to Steward’s ongoing operational and liquidity challenges and new bankruptcy filing, we recorded approximately $470 million of additional impairment charges in the quarter ending March 31, 2024 that fully reserves for the remaining value of our 9.9% equity investment in Steward and the $362 million loan due from affiliates of Steward along with the accrual for property taxes and obligations not paid per Steward under its master leases. In addition, we recorded a $220 million unfavorable fair value adjustment in the quarter ending March 31, 2024 to fully reserve for our loan to the international joint venture. We cannot assure you that we will not have any additional impairments in future periods.

Steward’s bankruptcy filing constitutes a default under the terms of our master leases and loan agreements with Steward, and imposes a stay on our ability to exercise contractual rights with respect to these defaults. The bankruptcy filing bars us from collecting pre-bankruptcy debts from Steward, unless we receive an order permitting us to do so from the bankruptcy court. While we expect to engage in negotiations with Steward and other stakeholders and to pursue all legal remedies to maximize our recovery with respect to our Steward investments, the outcome of any such negotiations and remedies is uncertain at this time and will be subject in all cases to the approval of the bankruptcy court. In addition, there is a risk that third parties may seek to bring claims against us in Steward’s bankruptcy proceeding.

If our Steward master leases are rejected by the bankruptcy trustee, in whole or in part, we would have only a general unsecured claim for damages. Any unsecured claim (including our equity interest in Steward) may be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. We may recover none or substantially less than the full value of any unsecured claims, which would materially harm our financial condition. Moreover, any secured claims we have against Steward may only be paid to the extent of the value of the collateral, which may not cover any or all of our losses.

Steward’s filing and other defaults under its master leases may give us the right to terminate the leases and seek one or more replacement operators for these facilities. However, the process for transferring the operations of healthcare facilities is highly

regulated, which may result in delays and increased costs in locating a suitable replacement tenant. There can be no assurance that we would be able to find another tenant in a timely fashion, or at all, or that, if another tenant were found, we would be able to enter into a new lease on favorable terms. If we are unable to re-let the Steward properties, we may be forced to sell the properties at a loss.

In addition, the terms of our unsecured credit facility and the indentures governing our outstanding unsecured senior notes are subject to customary financial, operational, and reporting covenants, including covenants relating to our total leverage ratio, fixed charge coverage ratio, secured leverage ratio, consolidated adjusted net worth, unsecured leverage ratio, and unsecured interest coverage ratio. The terms of our unsecured credit facility also require us to maintain a minimum amount of total unencumbered assets and a 10% cap on unencumbered asset value attributable to tenants subject to a bankruptcy event, such as Steward. In April 2024, the lenders under our unsecured credit facility agreed, among other things, to waive the 10% cap on unencumbered asset value attributable to tenants subject to a bankruptcy event for purposes of determining compliance with the unsecured leverage ratio for the trailing four fiscal quarter periods ended June 30, 2024, and for purposes of determining pro forma compliance with the unsecured leverage ratio for certain asset sale and debt transactions. The amendment does not provide relief beyond its specific provisions and other adverse consequences of the Steward bankruptcy filing may occur. Such waiver and modified covenant are temporary, and we will be required to meet the standard covenant threshold when the waiver period expires on September 30, 2024, unless extended. Our continued ability to incur debt and operate our business is subject to compliance with the covenants in our debt instruments, breaches of which could result in defaults and cross-defaults that could have a material adverse effect on our financial condition and results of operations.

Steward is early in its bankruptcy proceedings and the ultimate outcome of such proceedings is uncertain. At this time we are unable to predict the timing of any of the foregoing matters or the timing for a resolution of the Steward bankruptcy proceeding.

Form S-3 permits eligible issuers to conduct registered offerings using a short-form registration statement that is automatically effective and allows the incorporation by reference of past and future filings and reports made under the Exchange Act. In addition, Form S-3 enables eligible issuers to conduct primary offerings “off the shelf” by registering an indeterminate amount of specified securities which, combined with automatic effectiveness and the ability to forward incorporate information, allows issuers to access the capital markets in a more expeditious and efficient manner than raising capital in a standard registered offering pursuant to Form S-11.

As a result of this Quarterly Report on Form 10-Q not being filed timely, we are currently ineligible to file a new short-form registration statement on Form S-3 or access our existing registration statement on Form S-3 for sales of securities, including under our ATM program, until June 1, 2025, which may impair our ability to raise necessary capital to repay our debt obligations as they become due, pursue acquisition and development opportunities, and execute our business strategy. If we seek to access the capital markets through a registered offering during the period of time that we are unable to use a registration statement on Form S-3, we may experience delays in the offering process due to SEC review of a registration statement on Form S-11, experience downward pressure on our share price given that we will have to disclose the offering prior to formal commencement, and incur increased offering and transaction costs. If we are unable to raise capital through a registered offering, we would be required to conduct financing transactions on a private placement basis, subject to pricing, size and other limitations for equity raises under the NYSE rules, or seek other sources of capital, which are not guaranteed. The foregoing limitations on our financing approaches could have a material adverse effect on our results of operations, liquidity and financial position.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a)

None.

(b)

Not applicable.

(c)

Stock repurchases:

The table below summarizes repurchases of our common stock made during the quarter ended March 31, 2024:


Period	Total number of shares purchased(1) (in thousands)		Average price per share		Total number of shares purchased as part of publicly announced programs		Approximate dollar value of shares that may yet be purchased under the plans or programs (in thousands)
January 1-January 31, 2024		57	$	4.96		—	$	—

(1)

The number of shares purchased consists of shares of common stock tendered by employees to satisfy the employees' tax withholding obligations arising as a result of vesting of restricted stock awards under the Equity Incentive Plan, which shares were purchased based on their fair market value on the vesting date.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

(a)

None.

(b)

None.

(c)

Director and Officer Trading Arrangements

During the three months ended March 31, 2024, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Securities and Exchange Act) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

Item 6. Exhibits


Exhibit Number		Description

10.1*		Amendment to Second Amended and Restated Master Lease Agreement between certain subsidiaries of MPT Operating Partnership, L.P. as Lessor and certain subsidiaries of Steward Health Care System LLC, Lessee

10.2*		Second Amendment to Second Amended and Restated Master Lease Agreement between certain subsidiaries of MPT Operating Partnership, L.P. as Lessor and certain subsidiaries of Steward Health Care System LLC, Lessee

31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (Medical Properties Trust, Inc.)

31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (Medical Properties Trust, Inc.)

31.3*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (MPT Operating Partnership, L.P.)

31.4*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (MPT Operating Partnership, L.P.)

32.1**		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Medical Properties Trust, Inc.)

32.2**		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (MPT Operating Partnership, L.P.)

Exhibit 101.INS*		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Exhibit 101.SCH*		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents

Exhibit 104*		Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)

* Filed herewith.

** Furnished herewith.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.


MEDICAL PROPERTIES TRUST, INC.

By:		/s/ J. Kevin Hanna
		J. Kevin Hanna
		Senior Vice President, Controller, Assistant Treasurer, and Chief Accounting Officer (Principal Accounting Officer)


MPT OPERATING PARTNERSHIP, L.P.

By:		/s/ J. Kevin Hanna
		J. Kevin Hanna
		Senior Vice President, Controller, Assistant Treasurer, and Chief Accounting Officer of the sole member of the general partner of MPT Operating Partnership, L.P. (Principal Accounting Officer)

Date: May 29, 2024

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. senior Good

MPT Operating Partnership 10-Q2024 Q1 Quarterly report

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