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

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

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.

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 6,~~November 4, 2022, Medical Properties Trust, Inc. had ~~600.1~~598.0 million shares of common stock, par value $0.001, outstanding.

This report combines the Quarterly Reports on Form 10-Q for the three and nine months ended ~~March 31,~~September 30, 2022 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.

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 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 will generally not be subject to United States (“U.S.”) federal income tax, provided that we continue to qualify as a REIT and our distributions to our stockholders equal or exceed our taxable income. Certain non-real estate activities we undertake 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., we are subject to the local 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 real estate and improvements, primarily for long-term lease to providers of healthcare services, such as operators of general acute care hospitals, behavioral health facilities, inpatient physical rehabilitation ~~hospitals,~~facilities, long-term acute care hospitals, and freestanding ER/urgent care facilities. We also make mortgage loans to healthcare operators collateralized by their real estate. In addition, we may make noncontrolling investments in our tenants, from time-to-time, typically in ~~order to~~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,~~September 30, 2022, we have investments in ~~440~~437 facilities in 3231 states in the U.S., in 7seven countries in Europe, 1one country in South America, and across Australia. 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 and nine months ended ~~March 31,~~September 30, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The condensed consolidated balance sheet at December 31, 2021 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,~~September 30, 2022 (particularly as it relates to our assessments of the recoverability of our real estate and the adequacy of our credit loss reserves on loans and financing receivables). Actual results could differ from these estimates for various reasons including the impact from COVID-19 and other risk factors as outlined in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021.

For information about significant accounting policies (including any recent accounting developments), refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. ~~There~~Except

for changes disclosed in our Quarterly Report on Form 10-Q for the period ended March 31, 2022, there have been no material changes to these significant accounting ~~policies other than the following:~~

~~Recent Accounting Developments~~

~~Reference Rate Reform~~

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”) to simplify the accounting for contract modifications made to replace the London Interbank Offered Rate ("LIBOR") or other reference rates that are expected to be discontinued because of reference rate reform. The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criterion are met. The optional expedients and exceptions can be applied to contract modifications made until December 31, 2022. On January 7, 2021, the FASB issued ASU No. 2021-01, “Reference Rate Reform (Topic 848)” (“ASU 2021-01”), which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the transition. We have evaluated our contracts that are referenced to LIBOR or other reference rates expected to be discontinued. Our British pound sterling term loan and corresponding interest rate swap were modified with the Sterling Overnight Index Average Rate as a replacement reference rate during the fourth quarter of 2021, and our unsecured credit facility was modified with the Secured Overnight Financing Rate ("SOFR") during the second quarter of 2022. We accounted for such modifications prospectively using the expedients and exceptions provided for in ASU 2020-04 and ASU 2021-01. We are continuing to evaluate the need to modify other U.S. dollar LIBOR contracts, such as other loans, but the requirement to replace the U.S. dollar LIBOR has been extended to June 30, 2023. Moreover, we do not expect any impact to our Australian dollar term loan and corresponding interest rate swap, as these contracts are not referenced to rates that are expected to be discontinued.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,~~September 30, 2022, we had loans and/or equity investments in certain variable interest entities approximating $~~600~~625 million, which represents our maximum exposure to loss as a result of our involvement in such entities. We have determined that we were not the primary beneficiary of any variable interest entity in which we hold a variable interest because we do not control the activities (such as the day-to-day operations) that most significantly impact the economic performance of these entities.

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,					For the Nine Months Ended September 30,
	2022			2021		2022			2021

Land and land improvements	$	9,671		$	—	$	34,925		$	562,742
Buildings		204,526			—		312,645			1,670,741
Intangible lease assets — subject to amortization (weighted-average useful life of 13.2 years for 2022)		5,461			—
Intangible lease assets — subject to amortization (weighted-average useful life of 20.4 years for 2022 and 36.1 years for 2021)							19,839			197,735
Mortgage loans(2)		—			1,090,400		100,000			1,090,400
Investments in unconsolidated real estate joint ventures		399,456			—		399,456			—
Investments in unconsolidated operating entities		131,105			688,017		131,105			845,646
Liabilities assumed		(25,424	)		—		(25,727	)		(65,525	)
							972,243			4,301,739
Loans repaid(1)							—			(1,090,400	)
Total net assets acquired	$	724,795		$	1,778,417	$	972,243		$	3,211,339

(1)

The 2021 column includes an £800 million mortgage loan advanced to the Priory Group ("Priory") in the first quarter of 2021 and converted to fee simple ownership of

1435

properties in the second quarter of 2021 as described below.

(2)

In the 2022 second quarter, we increased our mortgage loan to Prospect Medical Holdings, Inc. ("Prospect") that was originated in 2019 and that is secured by a first lien on a California hospital. The loan bears interest at a current market rate plus a component of additional interest upon repayment.

2022 Activity

Macquarie Transaction

On March 14, 2022, we completed a transaction with Macquarie Asset Management (“MAM”), an unrelated party, to form a partnership (the “Macquarie Transaction”), pursuant to which we contributed eight Massachusetts-based general acute care hospitals that are leased to Steward Health Care System LLC ("Steward"), and a fund managed by MAM ~~has~~ acquired, for cash consideration, a 50% interest in the partnership. The transaction valued the portfolio at approximately $1.7 billion, and we recognized a gain on real estate of approximately $600 million from this transaction, partially offset by the write-off of unbilled straight-line rent receivables. The partnership raised nonrecourse secured debt of 55% of asset value, and we received proceeds, including from the secured debt, of approximately $1.3 billion, virtually all of which was used to repay debt. We obtained a 50% interest in the real estate partnership

valued at approximately $400 million (included in the "Investments in unconsolidated real estate joint ventures" line of the condensed consolidated balance sheets), which is being accounted for under the equity method of accounting.

Other Transactions

On March 11, 2022, we acquired 4four general acute care hospitals in Finland for €178 ~~million.~~million ($194 million). These hospitals are leased to Pihlajalinna pursuant to a long-term lease with annual inflation-based escalators. We acquired these facilities by the share purchase of real estate holding entities that included deferred income tax and other liabilities of approximately $~~25.4~~26 million.

On February 16, 2022, we agreed to participate in an existing syndicated term loan with a term of six years originated on behalf of ~~Priory Group ("Priory").~~Priory. We funded £96.5 million ($131 million) towards a £100 million participation level in the variable rate loan, reflecting a 3.5% discount.

Other acquisitions in the first nine months of 2022 included six general acute care facilities. Three general acute care facilities, located throughout Spain, were acquired on April 29, 2022 for €27 million and are leased to GenesisCare pursuant to a long-term lease with annual inflation-based escalators. Two general acute care facilities, one in Arizona and the other in Florida, were acquired on April 18 and 25, 2022, respectively, for approximately $80 million and are leased to Steward pursuant to an already existing master lease agreement with annual inflation-based escalators. The other general acute care facility, located in Colombia, was acquired on July 29, 2022 for $26 million and is leased to Fundación Cardiovascular de Colombia pursuant to a long-term lease with inflation-based escalators.

2021 Activity

Priory Group Transaction

On January 19, 2021, we completed the first of two phases in the Priory transaction in which we funded an £800 million interim mortgage loan on an identified portfolio of Priory real estate assets in the United Kingdom. On June 25, 2021, we completed the second phase of the transaction in which we converted this interim mortgage loan to fee simple ownership in a portfolio of 35 select real estate assets from Priory (which is currently majority-owned by Waterland Private Equity Fund VII C.V. (“Waterland VII”)) in individual sale-and-leaseback transactions. Therefore, the net aggregate purchase price for the real estate assets we acquired from Priory was approximately £800 million, plus customary stamp duty, tax, and other transaction costs.

In addition to the real estate investment, on January 19, 2021, we made a £250 million interim acquisition loan to Waterland VII, in connection with the closing of Waterland VII’s acquisition of Priory, which was repaid in full plus interest on October 22, 2021.

In addition, we acquired a 9.9% equity interest in the Waterland VII affiliate that indirectly owns Priory.

Other Transactions

On August 1, 2021, we completed the acquisition of five general acute care hospitals located in South Florida for approximately $900 million, plus closing and other transaction costs. These hospitals are leased to Steward pursuant to a master lease that has an initial fixed term ending in 2041 with annual inflation-based escalators.

On July 6, 2021, we acquired four acute care hospitals and two on-campus medical office buildings in Los Angeles, California for $215 million. These hospitals are leased to Pipeline Health System ("Pipeline") pursuant to a long-term lease with annual inflation-based escalators.

On July 6, 2021, we also acquired an acute care hospital in Stirling, Scotland for £15.6 million. This hospital is leased to Circle Health Ltd. ("Circle") pursuant to a long-term lease with annual inflation-based escalators.

On April 16, 2021, we made a CHF 145 million investment in Swiss Medical Network, our tenant via our Infracore SA ("Infracore") equity investment.

On January 8, 2021, we made a $335 million loan to affiliates of Steward, all of the proceeds of which were used to pay to and redeem a similarly sized convertible loan from Steward’s former private equity sponsor. This loan now carries a 4four percent interest rate with possible additional returns based on the increase in the value of Steward. The initial term of the loan is seven years.

Development Activities

During the 2022 second quarter, we agreed to finance the development of four new projects. One of these development projects is a behavioral health facility in McKinney, Texas with a total budget of approximately $35 million. This facility will be leased to Springstone, LLC ("Springstone") pursuant to the existing long-term master lease. In addition, we agreed to finance the development of and lease three general acute care facilities located throughout Spain for a total commitment of approximately €120 million. These facilities will be leased to our existing tenant, IMED Hospitales ("IMED"), under a long-term master lease agreement.

During the 2022 first quarter, we completed construction and began recording rental income on an inpatient rehabilitation facility located in Bakersfield, California. This facility commenced rent on March 1, 2022 and is being leased to Ernest Health, Inc. ("Ernest") pursuant to an existing long-term master lease.

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

Property

Commitment

Costs
Incurred as of
March 31, 2022

Estimated Rent
Commencement
Date
Ernest (Stockton, California)

$
47,700

$
37,104

3Q 2022
Steward (Texarkana, Texas)

169,408

56,890

2Q 2024

$
217,108

$
93,994


Property	Commitment		Costs Incurred as of September 30, 2022		Estimated Rent Commencement Date
Steward (Texas)	$	169,408	$	57,911	4Q 2025
Ernest (Stockton, California)		47,700		43,785	4Q 2022
IMED (Spain)		46,159		11,809	2Q 2023
IMED (Spain)		41,577		29,182	3Q 2023
Springstone (Texas)		34,600		1,144	1Q 2024
IMED (Spain)		33,635		7,535	3Q 2024
	$	373,079	$	151,366

Disposals

2022 Activity

On March 14, 2022, we completed the previously described partnership with MAM, in which we sold the real estate of 8eight Massachusetts-based general acute care hospitals, with a fair value of approximately $1.7 billion. See "New Investments" in this Note 3 for further details on this transaction.

During the first ~~three~~nine months of 2022, we also completed the sale of 215 other facilities (including 11 properties sold on September 1, 2022 related to the Prime Healthcare Services, Inc. ("Prime") repurchase option for proceeds of $366 million) and anfive ancillary ~~property~~properties for total proceeds of approximately $48522 million ~~resulting in~~and recognized a gain on real estate of approximately $15100 ~~million.~~million, along with a $42 million write-off of straight-line rent receivables due to the early termination of certain properties' expected lease terms.

Summary of Operations for Disposed Assets in 2022

The properties sold during 2022 do not meet the definition of discontinued operations. However, the following represents the operating results from these properties for the periods presented (in thousands):


	For the Three Months Ended March 31,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021			2022			2021
Revenues(1)	$	20,093		$	30,991		$	(27,026	)	$	44,963		$	17,831		$	135,392
Real estate depreciation and amortization(2)		(100	)		(7,403	)		(929	)		(7,245	)		(4,683	)		(26,292	)
Property-related expenses		(204	)		(351	)		156			(778	)		(1,752	)		(4,330	)
Other income(3)		451,609			72			68,867			47			536,823			181
Income from real estate dispositions, net	$	471,398		$	23,309		$	41,068		$	36,987		$	548,219		$	104,951

(1)

Includes approximately $~~4.5~~35 million and $42 million of straight-line rent and other write-offs associated with the non-Macquarie disposal transactions for the three and nine months ended ~~March 31, 2022.~~September 30, 2022, respectively.

(2)

Lower in 2022 as we stopped depreciating the properties making up the Macquarie Transaction once deemed held for sale in September 2021.

(3)

Includes $~~451.6~~68.8 million and $536.8 million of gains (net of $125 million write-off of straight-line rent receivables related to the Macquarie Transaction) for the three and nine months ended ~~March 31, 2022.~~September 30, 2022, respectively.

2021 Activity

During the first ~~three~~nine months of 2021, we completed the sale of 1nine ~~facility~~facilities and an ancillary property for approximately $1167 million, resulting in a net gain on real estate of approximately $~~1.0~~9 million.

Leasing Operations (Lessor)

We acquire and develop healthcare facilities and lease the facilities to healthcare operating ~~companies under long-term net leases (typical~~companies. The initial fixed lease terms of these infrastructure-type assets are typically at least 15 ~~years)~~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 (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. For 5three properties with a carrying value of approximately $~~231~~110 million at September 30, 2022, our leases require a residual value guarantee from the tenant. 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. We routinely inspect our properties to ensure our assets are being maintained properly and in compliance with the ~~residual value of each~~terms of our ~~assets is being maintained. Except for leases classified as financing leases as noted below,~~leases.

For all of our ~~leases~~properties subject to lease, we are ~~classified~~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 September 30, 2022, we account for all of these leases as operating ~~leases.~~

~~At March 31, 2022,~~leases, except where GAAP requires alternative classification, including leases on 13 Ernest facilities and 5three Prime ~~Healthcare Services, Inc.~~ facilities that are accounted for as direct financing leases and leases on 13 of our Prospect ~~Medical Holdings, Inc. (“Prospect”)~~ facilities and 5five 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 September 30, 2022			As of December 31, 2021
Minimum lease payments receivable	$	888,308		$	1,183,855
Estimated unguaranteed residual values		203,818			203,818
Less: Unearned income and allowance for credit loss		(741,083	)		(918,584	)
Net investment in direct financing leases		351,043			469,089
Other financing leases (net of allowance for credit loss)		1,613,978			1,584,238
Total investment in financing leases	$	1,965,021		$	2,053,327

The decrease in the total investment in financing leases during the first nine months of 2022 is primarily related to financing leases associated with

As of March 31,
2022

As of December 31,
2021

Minimum lease payments receivable

$
1,172,338

$
1,183,855

Estimated residual values

203,818

203,818

Less: Unearned income and allowance for credit loss

(905,874
)

(918,584
)
Net investment in direct financing leases

470,282

469,089

Other financing leases (net of allowance for credit loss)

1,592,945

1,584,238

Total investment in financing leases

$
2,063,227

$
2,053,327

two

properties sold on September 1, 2022 associated with the Prime repurchase transaction.

COVID-19 Rent Deferrals

Due to the COVID-19 pandemic and its impact on our tenants' business, we agreed to defer collection of a certain amount of rent for a few tenants. Pursuant to our agreements with these tenants, we expect repayments of previously deferred rent to continue, with the remaining outstanding deferred rent balance of approximately $~~12.4~~15.1 million as of ~~March 31,~~September 30, 2022, to be paid over specified periods in the future with interest.

~~Alecto Facilities~~Pipeline Health System

~~As noted in previous filings, we originally leased~~ 4 ~~acute care facilities to and had a mortgage loan on a fifth property (Olympia Medical Center) with Alecto Healthcare Services LLC (“Alecto”), along with working capital loans.~~ ~~NaN~~On October 2, 2022, Pipeline filed for reorganization relief under Chapter 11 protection of the ~~four leased acute~~United States Bankruptcy Code in the Southern District of Texas, while keeping its hospitals open to continue providing care ~~facilities were sold in prior periods. In the first quarter of 2021, Alecto completed the sale of Olympia Medical Center~~ to the ~~UCLA Health System. Our proceeds~~communities served. As mentioned above in this same Note 3, all of ~~approximately $~~the facilities we lease to Pipeline are located in California, representing 51 million from this sale were used to pay off the mortgage and working capital loans in full, with the remaining proceeds used to recover certain previously reserved past due receivables. In the first quarter of 2022, we signed a lease amendment on the remaining facility leased to Alecto, and all rent and other payment obligations have been made in accordance with the amended terms. At March 31, 2022, this acute care facility leased to Alecto represents less than ~~0.1~~1% of our total assets. At September 30, 2022, Pipeline has made all of its required rental payments, and we have on-hand cash deposits of approximately $13 million. We believe our investment in these facilities is fully recoverable at this time, but no assurances can be given that we will not have any write-offs or impairments in future periods.

~~Halsen Healthcare~~Watsonville Community Hospital

On September 30, 2019, we acquired the real estate of Watsonville Community Hospital in Watsonville, California for $40 million, which was then leased to Halsen Healthcare. In addition, we made a working capital loan to Halsen Healthcare. The hospital operator faced significant financial challenges over a two-year period that were worsened by ~~revenue losses during~~ the COVID-19 pandemic. During this time, we increased the loan in an effort to support the operator of this ~~facility.~~facility, allowing it to continue serving the community's needs. On December 5, 2021, Halsen Healthcare filed Chapter 11 bankruptcy in order to reorganize, while keeping the hospital open. As such, we ~~have~~ recorded a credit loss reserve against the estimated uncollectible portion of the loan and ~~have written~~wrote off approximately $2.5 million of billed and straight-line rent receivables.

On February 23, 2022, the bankruptcy court approved the bid by Pajaro Valley Healthcare ~~District's bid~~District Corporation ("Pajaro") to purchase the operations of the Watsonville Community Hospital and lease the real estate from us. ~~Although there are regulatory and other hurdles still to be met,~~On August 31, 2022, Pajaro completed this purchase of the operations of the Watsonville Community Hospital. As a result of this transaction, ~~is otherwise expected~~we were repaid

approximately $32 million of the loans previously provided to ~~close by August 31, 2022. At March 31, 2022, we believe our total investment~~the hospital. This loan repayment resulted in a credit loss recovery of approximately $20 million in the ~~Watsonville property, representing less than~~ ~~0.5~~%2022 third quarter as shown in the "Other (including fair value adjustments on securities)" line of ~~total assets, is fully recoverable, but no assurances can be given that we will not have any further write-offs or impairments in future periods.~~the condensed consolidated statements of net income. To date, Pajaro has been current on its monthly rental payments to us.

Other Leasing Activities

At ~~March 31,~~September 30, 2022, 99% of our properties are occupied by tenants, leaving ~~only~~ 6five properties as vacant, representing less than ~~0.5~~0.3% of total assets. ~~NaN~~We are in various stages of either releasing or selling these vacant ~~facilities was sold~~properties, for one of which we received and recorded a significant termination fee in ~~April 2022 for $~~45 ~~million.~~2019.

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 ~~fee simple real estate.~~investment. 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 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	As of March 31, 2022		As of December 31, 2021		As of September 30, 2022		As of December 31, 2021
Median Kliniken S.á.r.l ("MEDIAN")	$	505,883	$	517,648	$	449,226	$	517,648
Swiss Medical Network		473,235		476,193		422,731		476,193
Steward (Macquarie Transaction)		400,367		—		419,040		—
Policlinico di Monza		93,833		95,468		78,057		95,468
HM Hospitales		61,196		63,618		52,956		63,618
Total	$	1,534,514	$	1,152,927	$	1,422,010	$	1,152,927

17For the increase in our investments in unconsolidated real estate joint ventures since December 31, 2021, see "New Investments" section in this same

Note 3 for a discussion of the Macquarie Transaction. Through the first nine months of 2022, we received approximately $

66 million of dividends from these real estate joint ventures, including approximately $27 million of annual dividends from our joint venture in Switzerland.

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. ~~We make these~~In many cases, we would not be able to acquire the larger real estate portfolio without such investments ~~from time-to-time~~ in ~~order~~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, 2022		As of December 31, 2021		As of September 30, 2022		As of December 31, 2021
Steward (loan investment)	$	363,236	$	360,164	$	362,825	$	360,164
International joint venture		231,403		219,387		231,402		219,387
Springstone, LLC ("Springstone")		192,958		187,450
Springstone						200,827		187,450
Priory		167,478		42,315		144,266		42,315
Swiss Medical Network		157,431		159,208		147,189		159,208
Steward (equity investment)		139,000		139,000		139,000		139,000
Prospect		112,319		112,283		112,774		112,283
Aevis Victoria SA ("Aevis")		76,029		61,271		73,746		61,271
Aspris Children's Services ("Aspris")		15,988		8,356		16,032		8,356
Total	$	1,455,842	$	1,289,434	$	1,428,061	$	1,289,434

The increase during the ~~2022~~ first ~~quarter~~nine months of 2022 is primarily due to our investment in the Priory syndicated term loan as described under "New Investments" in this Note 3.

Pursuant to our approximate 5% stake in Aevis and other investments marked to fair value, we recorded a $12.6 million favorable non-cash fair value adjustment during the first nine months of 2022 as shown in the "Other (including fair value adjustments on securities)" line of the condensed consolidated statements of net income; whereas, this was a $2.8 million favorable non-cash fair value adjustment for the same period of 2021. We also earned approximately $4 million of dividend income from our Switzerland investments during the first nine months of 2022.

Pursuant to our existing 9.9% equity interest in Steward, we received an $11 million cash distribution during the first nine months of 2021, which was accounted for as a return of capital.

Upon the adoption of Accounting Standards Update ("ASU") No. 2016-13 "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13") on January 1, 2020, we began applying a forward-looking "expected loss" model to all of our financing receivables, including financing leases and loans. We are using ASU 2016-13 to establish credit loss reserves on all ~~outstanding loans~~financing receivables 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 September 30,
	2022			2021
Balance at beginning of the period	$	55,250		$	7,783
Provision (recovery) for credit loss		(19,677	)		1,829
Expected credit loss reserve related to financial instruments sold, repaid, or satisfied		(26,362	)		(85	)
Balance at end of the period	$	9,211		$	9,527


	For the Nine Months Ended September 30,
	2022			2021
Balance at beginning of the year	$	48,527		$	8,726
Provision (recovery) for credit loss		(12,920	)		890
Expected credit loss reserve related to financial instruments sold, repaid, or satisfied		(26,396	)		(89	)
Balance at end of the period	$	9,211		$	9,527

For the Three Months
Ended March 31,

2022

2021

Balance at beginning of the year

$
48,527

$
8,726

Provision for credit loss

5,412

—

Expected credit losses related to financial instruments sold
or repaid

(6
)

(4
)
Balance at end of the period

$
53,933

$
8,722

~~Pursuant to our approximate~~ 5~~% stake in Aevis and other investments marked to fair value,~~In the 2022 second quarter, we ~~recorded an~~loaned $~~8.0~~150 million ~~favorable non-cash fair value adjustment during the first quarter~~to Steward pursuant to a five-year secured loan. The loan bears interest at a current market rate (comparable to recent lease rates) plus a component of ~~2022; whereas, this was a $4.1~~ ~~million favorable non-cash fair value adjustment for the same period~~additional interest upon repayment. The loan is prepayable without penalty and is mandatorily prepayable upon certain sales of ~~2021.~~

~~Pursuant to our existing~~ ~~9.9% equity interest in~~ Steward ~~we received an $~~11 ~~million cash distribution during the first quarter of 2021, which was accounted for as a return of capital.~~assets and operations.

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:

(For geographic and facility type concentration metrics 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.)

4. Debt

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


	As of September 30, 2022			As of December 31, 2021
Revolving credit facility(A)	$	637,991		$	730,000
Interim credit facility		—			869,606
Term loan		200,000			200,000
British pound sterling term loan(B)		781,900			947,240
Australian term loan facility(B)		768,000			871,560
2.550% Senior Unsecured Notes due 2023(B)		446,800			541,280
3.325% Senior Unsecured Notes due 2025(B)		490,100			568,500
0.993% Senior Unsecured Notes due 2026(B)		490,100			568,500
2.500% Senior Unsecured Notes due 2026(B)		558,500			676,600
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)		670,200			811,920
4.625% Senior Unsecured Notes due 2029		900,000			900,000
3.375% Senior Unsecured Notes due 2030(B)		390,950			473,620
3.500% Senior Unsecured Notes due 2031		1,300,000			1,300,000
	$	9,534,541		$	11,358,826
Debt issue costs and discount, net		(58,397	)		(76,056	)
	$	9,476,144		$	11,282,770

As of March 31,
2022

As of December 31,
2021

Revolving credit facility(A)

$
531,419

$
730,000

Interim credit facilities

—

869,606

Term loan

200,000

200,000

British pound sterling term loan(B)

919,660

947,240

Australian term loan facility(B)

897,840

871,560

2.550% Senior Unsecured Notes due 2023(B)

525,520

541,280

3.325% Senior Unsecured Notes due 2025(B)

553,350

568,500

0.993% Senior Unsecured Notes due 2026(B)

553,350

568,500

2.500% Senior Unsecured Notes due 2026(B)

656,900

676,600

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)

788,280

811,920

4.625% Senior Unsecured Notes due 2029

900,000

900,000

3.375% Senior Unsecured Notes due 2030(B)

459,830

473,620

3.500% Senior Unsecured Notes due 2031

1,300,000

1,300,000

$
10,186,149

$
11,358,826

Debt issue costs and discount, net

(68,160
)

(76,056
)

$
10,117,989

$
11,282,770

(A)

Includes €~~182~~253 million of Euro-denominated borrowings that reflect the exchange rate at ~~March 31,~~September 30, 2022.

(B)

Non-U.S. dollar denominated debt reflects the exchange rate at ~~March 31,~~September 30, 2022 and December 31, 2021.

As of ~~March 31,~~September 30, 2022, 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):

2022

$
0

2023

525,520

2024

1,429,259

2025

1,473,010

2026

1,910,250

Thereafter

4,848,110

Total

$
10,186,149


2022	$	—
2023		446,800
2024		768,000
2025		1,272,000
2026		2,186,591
Thereafter		4,861,150
Total	$	9,534,541

2022 Activity

On May 6, 2022, we increased the amount of our unsecured credit facility ("Credit Facility") by $500 million by exercising the accordion feature. In addition, our revolver and U.S. dollar term loan were modified with Secured Overnight Financing Rate as a replacement reference rate to U.S. dollar LIBOR. Currently, our Credit Facility includes a $1.8 billion unsecured revolving loan facility and a $200 million unsecured term loan facility.

On June 29, 2022, we amended our Credit Facility. The amendment extended the maturity date of our revolving facility to June 30, 2026 with our option to extend for an additional 12 months. The maturity date of our $200 million unsecured term loan facility was extended to June 30, 2027. Additionally, we may request incremental term loan and/or revolving loan commitments in an aggregate amount not to exceed $1 billion.

In addition, the amendment improved interest rate spreads for both facilities. Under the amended Credit Facility and at our election, loans may be made as either ABR Loans or Term Benchmark Loans. The applicable margin for term loans that are ABR Loans is adjustable on a sliding scale from 0.00% to 0.70% based on current credit rating. The applicable margin for term loans that are Term Benchmark Loans is adjustable on a sliding scale from 0.875% to 1.70% based on current credit rating. The applicable margin for revolving loans that are ABR Loans is adjustable on a sliding scale from 0.00% to 0.50% based on current credit rating. The applicable margin for revolving loans that are Term Benchmark Loans or RFR Loans is adjustable on a sliding scale from 0.80% to 1.50% based on current credit rating. The facility fee is adjustable on a sliding scale from 0.125% to 0.30% (currently 0.25%) based on current credit rating and is payable on the revolving loan facility.

On March 15, 2022, we paid off and terminated our $1 billion interim credit facility that was entered into on July 27, 2021 ("July 2021 Interim Credit Facility") ~~and paid down our revolving credit facility~~ with proceeds from the Macquarie Transaction as more fully described in Note 3 to the condensed consolidated financial statements.

2021 Activity

~~Interim Credit Facility~~

On January 15, 2021, we entered into a $900 million interim credit facility (“January 2021 Interim Credit Facility”), of which we borrowed £500 million to partially fund the Priory Group Transaction. We paid off and terminated this facility on March 26, 2021 with proceeds from the issuance of the 2.500% Senior Unsecured Notes due 2026 and the 3.375% Senior Unsecured Notes due 2030.

~~Credit Facility Amendment~~

~~On January 15, 2021, we amended our unsecured credit facility (“Credit Facility”). The amendment extended the maturity of our revolving facility to~~ ~~February 1, 2024~~ ~~and can be extended for an additional 12 months at our option. The maturity date of our term loan facility was extended to~~ ~~February 1, 2026~~.

Senior Unsecured Notes

On March 24, 2021, we completed an £850 million senior unsecured notes offering in two tranches. See below for details of each tranche:

2.500% Senior Unsecured Notes due 2026

On March 24, 2021, we completed a £500 million senior unsecured notes offering. The notes were issued at 99.937% of par value, and interest on the notes is payable annually on March 24 of each year, commencing on March 24, 2022. The notes pay interest in cash at a rate of 2.500% and mature on March 24, 2026.

3.375% Senior Unsecured Notes due 2030

On March 24, 2021, we completed a £350 million senior unsecured notes offering. The notes were issued at 99.448% of par value, and interest on the notes is payable annually on April 24 of each year, commencing on April 24, 2022. The notes pay interest in cash at a rate of 3.375% and mature on April 24, 2030.

~~We used proceeds from the £850~~ ~~million senior unsecured notes offering to payoff the January 2021 Interim Credit Facility and reduce our revolving facility by approximately £340~~ ~~million on March 26, 2021.~~

Debt Refinancing and Unutilized Financing Costs

2022 Activity

~~With~~In the first nine months of 2022, we incurred approximately $9.5 million of debt refinancing costs. These costs were incurred as a result of the payoff of our July 2021 Interim Credit Facility with proceeds from the Macquarie Transaction on March 14, 2022, ~~we fully paid off~~along with the amendment of our $Credit Facility on 1June 29, 2022 ~~billion interim credit facility. As a result, we incurred $8.8~~ ~~million of debt refinancing costs in the first quarter of 2022.~~.

2021 Activity

With ~~the amendment of our Credit Facility and~~ the termination of our January 2021 Interim Credit Facility and other debt activity, we incurred approximately $2.3 million of debt refinancing costs in the first ~~quarter~~nine months of 2021.

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 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,~~September 30, 2022, 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,~~September 30, 2022, we were in compliance with all such financial and operating covenants.

5. Income Taxes

In the 2022 third quarter, we incurred approximately $5 million of income tax expense from the credit loss recovery on loans made to the Watsonville Community Hospital, as more fully described in Note 3.

During the 2021 second quarter, the United Kingdom enacted an increase in its corporate income tax rates from 19% to 25% effective April 1, 2023, which resulted in higher tax expense, from adjusting our net deferred tax liabilities, of approximately $43 million.

6. Common Stock/Partners’ Capital

Medical Properties Trust, Inc.

On January 11, 2021, we completed an underwritten public offering of 36.8 million shares of our common stock, resulting in net proceeds of approximately $711 million, after deducting underwriting discounts and commissions and offering expenses.

In addition, we sold ~~3.1~~15.8 million shares of common stock under our at-the-market equity offering program during the ~~2021~~ first ~~quarter,~~nine months of 2021, resulting in net proceeds of approximately $68330 million.

MPT Operating Partnership, L.P.

At ~~March 31,~~September 30, 2022, the Operating Partnership is made up of a general partner, Medical Properties Trust, LLC (“General Partner”) and limited partners, including the Company (which owns 100% of the General Partner) and MPT TRS, Inc. (which is 100% owned by the General Partner). By virtue of its ownership of the General Partner, the Company has a 100% ownership interest in the Operating Partnership. During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, the Operating Partnership issued approximately ~~39.9~~52.6 million units in direct response to the common stock offerings by Medical Properties Trust, Inc. during the same ~~periods.~~period.

6.7. Stock Awards

~~We adopted~~During the second quarter of 2022, we amended the 2019 Equity Incentive Plan (the “Equity Incentive Plan”) ~~during the second quarter of 2019,~~, which authorizes the issuance of common stock options, restricted stock, restricted stock units, deferred stock units, stock appreciation rights, performance units, and other stock-based awards. The Equity Incentive Plan is administered by the Compensation Committee of the Board of ~~Directors, and we have reserved~~ ~~12.9~~ ~~million~~Directors. Among other things, the recent amendment increased the number of shares of common stock registered and reserved for stock awards ~~out~~by 16 million to 28.9 million. As of ~~which~~September 30, 2022, ~~3.2~~19.3 million shares remain available for future stock ~~awards as of March 31, 2022.~~awards. Share-based compensation expense totaled $~~11.8~~33.0 million and $~~12.3~~38.6 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, respectively.

Our loans to Springstone and the international joint venture and its subsidiaries are recorded at fair value based on Level 2 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.~~maturities, while also considering the value of the underlying collateral of each loan. Our equity ~~investment~~investments in Springstone and the international joint venture isare recorded at fair value based on Level 3 inputs, by using a discounted cash flow model, 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 equity 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 absence of quoted market prices. For the cash flow models, our observable inputs include use of a capitalization rate and discount rate (which is based on a weighted-average cost of capital) and our unobservable input includes an adjustment for a marketability discount (“DLOM”). In regards to the underlying projections used in the discounted cash flow model, such projections are provided by the investees. However, we will 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 ~~quarter~~nine months of 2022, we recorded an unfavorable fair value adjustment to our investments. ~~NaN~~No fair value adjustment was recorded in the ~~2021~~ first ~~quarter.~~nine months of 2021.

8.9. Earnings Per Share/Unit

Medical Properties Trust, Inc.

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


	For the Three Months Ended March 31,						For the Three Months Ended September 30,
	2022			2021			2022			2021
Numerator:
Net income	$	631,947		$	163,880		$	222,020		$	171,395
Non-controlling interests’ share in net income		(266	)		(97	)		(227	)		(258	)
Participating securities’ share in earnings		(402	)		(370	)		(288	)		(328	)
Net income, less participating securities’ share in earnings	$	631,279		$	163,413		$	221,505		$	170,809
Denominator:
Basic weighted-average common shares		598,676			576,240			598,980			595,119
Dilutive potential common shares		256			1,301			359			2,201
Diluted weighted-average common shares		598,932			577,541			599,339			597,320


	For the Nine Months Ended September 30,
	2022			2021
Numerator:
Net income	$	1,044,031		$	450,096
Non-controlling interests’ share in net income		(960	)		(611	)
Participating securities’ share in earnings		(1,035	)		(1,088	)
Net income, less participating securities’ share in earnings	$	1,042,036		$	448,397
Denominator:
Basic weighted-average common shares		598,828			586,291
Dilutive potential common shares		271			1,680
Diluted weighted-average common shares		599,099			587,971

MPT Operating Partnership, L.P.

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


	For the Three Months Ended September 30,
	2022			2021
Numerator:
Net income	$	222,020		$	171,395
Non-controlling interests’ share in net income		(227	)		(258	)
Participating securities’ share in earnings		(288	)		(328	)
Net income, less participating securities’ share in earnings	$	221,505		$	170,809
Denominator:
Basic weighted-average units		598,980			595,119
Dilutive potential units		359			2,201
Diluted weighted-average units		599,339			597,320

For the Three Months
Ended March 31,

2022

2021

Numerator:

Net income

$
631,947

$
163,880

Non-controlling interests’ share in net income

(266
)

(97
)
Participating securities’ share in earnings

(402
)

(370
)
Net income, less participating securities’ share in earnings

$
631,279

$
163,413

Denominator:

Basic weighted-average units

598,676

576,240

Dilutive potential units

256

1,301

Diluted weighted-average units

598,932

577,541


	For the Nine Months Ended September 30,
	2022			2021
Numerator:
Net income	$	1,044,031		$	450,096
Non-controlling interests’ share in net income		(960	)		(611	)
Participating securities’ share in earnings		(1,035	)		(1,088	)
Net income, less participating securities’ share in earnings	$	1,042,036		$	448,397
Denominator:
Basic weighted-average units		598,828			586,291
Dilutive potential units		271			1,680
Diluted weighted-average units		599,099			587,971

9.10. Commitments and Contingencies

Commitments

On ~~September 15, 2021,~~August 26, 2022, a subsidiary of LifePoint Health, Inc. ("LifePoint") agreed to acquire a majority interest in Springstone Health Opco, LLC (the "LifePoint Transaction") based on an enterprise value of $250 million. Pursuant to the anticipated closing of this transaction in the first half of 2023, we expect to be paid approximately $200 million in full satisfaction of our initial acquisition loan to Springstone. We will retain our minority equity interest in the operations of Springstone and will continue to own and lease Springstone's behavioral hospitals. As part of the LifePoint Transaction, LifePoint has agreed to extend the current lease with us on eight existing general acute care hospitals by five years to 2041. The consummation of the LifePoint Transaction is subject to customary closing conditions, and no assurances can be given that the transaction will be consummated as described or at all.

As disclosed in previous filings, we entered into a definitive ~~agreements to lease~~agreement that would result in the leasing of 5five general acute care hospitals ~~representing~~ ~~5.7% of our total assets at March 31, 2022,~~ located in Utah to HCA ~~following an~~Healthcare ("HCA") if the agreement by HCA to purchase the operations of these 5five facilities from ~~Steward. Upon completion of the transaction between HCA~~Steward occurred. This agreement was terminated in June 2022 following a regulatory ruling, and ~~Steward, we will enter into a new master lease with~~

~~HCA for~~ these 5five ~~facilities (the “HCA Transaction”). The consummation of the HCA Transaction, which is subject~~hospitals continue to ~~regulatory approval, is expected in the first half of 2022.~~be leased to Steward.

Contingencies

We are a party to various legal proceedings incidental to our business. 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.~~11. Subsequent Events

On ~~May 6,~~October 9, 2022, ~~we received commitments from certain~~the board of ~~our credit facility syndicate members~~directors of the Company authorized a stock repurchase program (the "Stock Repurchase Program") for up to ~~increase the amount of our revolving credit facility by~~ $500 million ~~by exercising~~of common stock, par value $0.001 per share. Through November 4, 2022, we repurchased 1.3 million shares of common stock for approximately $14 million. The Stock Repurchase Program expires on October 10, 2023.

On October 5, 2022, we entered into definitive agreements to sell three Prospect facilities located in Connecticut to Yale New Haven Health ("Yale") for approximately $457 million. This transaction is expected to close in 2023 subject to certain regulatory approvals and the ~~accordion feature~~completion of our Credit Facility. Additionally, our revolver and U.S. dollar term loan were modified with SOFR as a replacement reference rate to U.S. dollar LIBOR. The remaining terms of our Credit Facility were unchanged. With the closingYale's acquisition of the ~~accordion, our Credit Facility includes a $1.8~~ ~~billion unsecured revolving loan facility and a $200~~ ~~million unsecured term loan facility.~~hospital operations from Prospect. No assurances can be given that this transaction will be consummated as described or at all.

2428

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, 2021.

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 political, economic, business, real estate, and other market conditions in the U.S. (both national and local), Europe (in particular the United Kingdom, Germany, Switzerland, Spain, Italy, Finland, and Portugal), Australia, South America (in particular Colombia), and other foreign jurisdictions where we may own healthcare facilities or transact business, which may have a negative effect on the following, among other things:

the financial condition of our tenants, our lenders, or institutions that hold our cash balances or are counterparties to certain hedge agreements, which may expose us to increased risks of default by these parties;

our ability to obtain equity or debt financing on attractive terms or at all, which may adversely impact our ability to pursue acquisition and development opportunities, refinance existing debt, and our future interest expense; and

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

•

the impact of COVID-19 on our business, our joint ventures, and the business of our tenants/borrowers and the economy in general, as well as the impact of other factors that may affect our business, our joint ventures or ~~that~~the business of our tenants/borrowers that are beyond our control, including natural disasters, health crises, or other pandemics and subsequent government actions in reaction to such matters;

•

the risk that a condition to closing under the agreements governing any or all of our pending transactions ~~(including the transaction disclosed in~~ ~~Note 9~~) that have not closed as of the date hereof may not be satisfied;

•

the possibility that the anticipated benefits from any or all of the transactions we have entered into or will enter into may take longer to realize than expected or will not be realized at all;

•

the competitive environment in which we operate;

•

the execution of our business plan;

•

financing risks, including due to rising inflation;

•

acquisition and development risks;

•

potential environmental contingencies and other liabilities;

•

adverse developments affecting the financial health of one or more of our tenants, including insolvency;

•

other 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 U.S. federal and state income tax purposes;

•

our ability to attract and retain qualified personnel;

•

changes in foreign currency exchange rates;

•

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

•

healthcare and other regulatory requirements of the U.S., Europe, Australia, South America, and other foreign countries; and

2529

•

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)~~pandemic, rising inflation, etc.) 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, Australia, 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;

•

tenants’ free cash flow;

•

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

•

the potential impact of any legal, regulatory, or compliance proceedings with our tenants;

•

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, 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 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 2021 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~~nine months ended ~~March 31,~~September 30, 2022, 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. We also make mortgage loans to healthcare operators collateralized by their real estate assets. From time-to-time, we may make noncontrolling investments in our tenants, typically in conjunction with larger real estate transactions with the tenant, that ~~gives~~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 ~~recapitalization,~~recapitalizations, and allows operators of healthcare facilities to unlock the value of their real estate assets to fund facility improvements, technology upgrades, and other investments in operations.

At ~~March 31,~~September 30, 2022, our portfolio consisted of ~~440~~437 properties leased or loaned to 5355 operators, of which ~~two~~six are under development and four are in the form of mortgage loans. We manage our business as a single business segment.

At ~~March 31,~~September 30, 2022, all of our investments are located in the U.S., Europe, Australia, and South America. Our total assets are made up of the following (dollars in thousands):


	As of September 30, 2022			% of Total			As of December 31, 2021			% of Total
Real estate assets - at cost	$	15,353,817			80.6	%	$	17,425,765			84.9	%
Accumulated real estate depreciation and amortization		(1,088,912	)		-5.7	%		(993,100	)		-4.8	%
Cash and cash equivalents		299,171			1.6	%		459,227			2.2	%
Investments in unconsolidated real estate joint ventures		1,422,010			7.5	%		1,152,927			5.6	%
Investments in unconsolidated operating entities		1,428,061			7.5	%		1,289,434			6.3	%
Other		1,629,269			8.5	%		1,185,548			5.8	%
Total assets	$	19,043,416			100.0	%	$	20,519,801			100.0	%

As of
March 31,
2022

% of
Total

As of
December 31,
2021

% of
Total

Real estate assets - at cost

$
16,316,567

82.3
%

$
17,425,765

84.9
%
Accumulated real estate depreciation and amortization

(1,054,361
)

-5.3
%

(993,100
)

-4.8
%
Cash and cash equivalents

248,846

1.3
%

459,227

2.2
%
Investments in unconsolidated real estate joint ventures

1,534,514

7.7
%

1,152,927

5.6
%
Investments in unconsolidated operating entities

1,455,842

7.3
%

1,289,434

6.3
%
Other

1,316,426

6.7
%

1,185,548

5.8
%
Total assets

$
19,817,834

100.0
%

$
20,519,801

100.0
%

Additional Concentration Details

On ~~a pro forma~~an adjusted gross asset basis (as defined in the “Reconciliation of Non-GAAP Financial Measures” section of Item 2 of this Quarterly Report on Form 10-Q), our concentration as of ~~March 31,~~September 30, 2022 as compared to December 31, 2021 is as follows (dollars in thousands):

Total ~~Pro Forma~~Adjusted Gross Assets by Operator


	As of March 31, 2022					As of December 31, 2021					As of September 30, 2022					As of December 31, 2021
Operators	Total Pro Forma Gross Assets		Percentage of Total Pro Forma Gross Assets			Total Pro Forma Gross Assets		Percentage of Total Pro Forma Gross Assets			Total Adjusted Gross Assets		Percentage of Total Adjusted Gross Assets			Total Adjusted Gross Assets		Percentage of Total Adjusted Gross Assets
Steward
Florida market	$	1,337,192		6.0	%	$	1,334,834		6.0	%	$	1,379,515		6.5	%	$	1,304,353		5.8	%
Utah market(1)												1,311,322		6.2	%		1,310,645		5.9	%
Massachusetts market		1,173,852		5.3	%		1,177,914		5.3	%		1,166,357		5.5	%		1,145,493		5.1	%
Texas/Arkansas/Louisiana market		983,344		4.4	%		1,129,624		5.1	%		1,143,074		5.4	%		1,112,664		5.0	%
Arizona market		338,873		1.5	%		338,612		1.5	%		354,681		1.7	%		330,880		1.5	%
Ohio/Pennsylvania market		141,615		0.7	%		141,506		0.6	%		138,345		0.7	%		138,274		0.6	%
Circle		2,408,716		10.8	%		2,481,001		11.1	%		2,044,259		9.7	%		2,481,001		11.1	%
Prospect		1,639,588		7.4	%		1,631,691		7.3	%
LifePoint(2)												1,405,194		6.7	%		658,084		2.9	%
Prospect(2)												1,266,565		6.0	%		1,631,691		7.3	%
Swiss Medical Network		1,299,524		5.8	%		1,300,431		5.8	%		1,215,813		5.8	%		1,300,431		5.8	%
HCA(1)		1,240,264		5.6	%		1,240,546		5.6	%
Other operators		10,643,938		47.9	%		10,632,605		47.6	%		8,049,413		38.1	%		9,995,248		44.9	%
Other assets		1,028,068		4.6	%		920,573		4.1	%		1,615,504		7.7	%		920,573		4.1	%
Total	$	22,234,974		100.0	%	$	22,329,337		100.0	%	$	21,090,042		100.0	%	$	22,329,337		100.0	%

(1)

~~Shown pro forma for the transactions~~The 2021 columns reflect Steward's concentration post termination of their agreement with HCA as discussed in Note 910 to Item 1 of this Form 10-Q.

(2)

See Note 10 and

Note 11 to Item 1 of this Form 10-Q along with the footnotes to the total adjusted gross assets reconciliation table on page 39 for additional information on expected transactions that have resulted in adjustments made in this table for this operator.

Total ~~Pro Forma~~Adjusted Gross Assets by U.S. State and Country


	As of March 31, 2022					As of December 31, 2021					As of September 30, 2022					As of December 31, 2021
U.S. States and Other Countries	Total Pro Forma Gross Assets		Percentage of Total Pro Forma Gross Assets			Total Pro Forma Gross Assets		Percentage of Total Pro Forma Gross Assets			Total Adjusted Gross Assets		Percentage of Total Adjusted Gross Assets			Total Adjusted Gross Assets		Percentage of Total Adjusted Gross Assets
Texas	$	1,995,890		9.0	%	$	2,172,882		9.7	%	$	2,119,353		10.1	%	$	2,158,797		9.7	%
California		1,641,873		7.4	%		1,650,038		7.4	%		1,524,532		7.2	%		1,650,038		7.4	%
Florida		1,337,191		6.0	%		1,334,835		6.0	%		1,379,515		6.5	%		1,304,353		5.8	%
Utah		1,255,334		5.6	%		1,255,545		5.6	%		1,346,968		6.4	%		1,346,372		6.0	%
Massachusetts		1,179,252		5.3	%		1,183,313		5.4	%		1,171,757		5.6	%		1,150,893		5.3	%
All other states		5,141,829		23.1	%		5,131,596		23.0	%		4,250,059		20.1	%		5,117,756		22.9	%
Other domestic assets		730,743		3.3	%		692,280		3.1	%		1,240,358		5.9	%		692,280		3.1	%
Total U.S.	$	13,282,112		59.7	%	$	13,420,489		60.2	%	$	13,032,542		61.8	%	$	13,420,489		60.2	%
United Kingdom	$	4,362,100		19.6	%	$	4,492,918		20.1	%	$	3,709,224		17.6	%	$	4,492,918		20.1	%
Switzerland		1,299,524		5.9	%		1,300,431		5.8	%		1,215,813		5.8	%		1,300,431		5.8	%
Germany		1,222,002		5.5	%		1,257,482		5.6	%		1,098,247		5.2	%		1,257,482		5.6	%
Australia		986,926		4.4	%		1,043,399		4.7	%		857,766		4.1	%		1,043,399		4.7	%
Spain		258,343		1.2	%		264,965		1.2	%		304,960		1.4	%		264,965		1.2	%
All other countries		526,642		2.4	%		321,360		1.4	%		496,344		2.3	%		321,360		1.4	%
Other international assets		297,325		1.3	%		228,293		1.0	%		375,146		1.8	%		228,293		1.0	%
Total international	$	8,952,862		40.3	%	$	8,908,848		39.8	%	$	8,057,500		38.2	%	$	8,908,848		39.8	%
Grand total	$	22,234,974		100.0	%	$	22,329,337		100.0	%	$	21,090,042		100.0	%	$	22,329,337		100.0	%

On an individual property basis, we had no investment in any single property greater than 3% of our total ~~pro forma~~adjusted gross assets as of ~~March 31,~~September 30, 2022.

On an adjusted revenues basis (as defined in the “Reconciliation of Non-GAAP Financial Measures” section of Item 2 of this Quarterly Report on Form 10-Q), concentration for the three months ended ~~March 31,~~September 30, 2022 as compared to the prior year is as follows (dollars in thousands):

Total Adjusted Revenues by Operator


	For the Three Months Ended March 31,										For the Three Months Ended September 30,
	2022					2021					2022					2021
Operators	Total Adjusted Revenues		Percentage of Total Adjusted Revenues			Total Adjusted Revenues		Percentage of Total Adjusted Revenues			Total Adjusted Revenues		Percentage of Total Adjusted Revenues			Total Adjusted Revenues		Percentage of Total Adjusted Revenues
Steward
Utah market											$	34,192		8.6	%	$	31,879		7.5	%
Florida market												26,079		6.6	%		16,929		4.0	%
Massachusetts market	$	35,818		8.0	%	$	34,543		8.8	%		22,688		5.7	%		35,965		8.5	%
Utah market(1)		32,763		7.4	%		31,705		8.0	%
Florida market		25,304		5.7	%		4,985		1.3	%
Texas/Arkansas/Louisiana market		18,612		4.2	%		22,671		5.7	%		22,027		5.5	%		21,740		5.1	%
Arizona market		8,532		1.9	%		8,187		2.1	%		8,826		2.2	%		8,126		1.9	%
Ohio/Pennsylvania market		3,565		0.8	%		3,300		0.8	%		3,589		0.9	%		3,236		0.8	%
Circle		51,212		11.5	%		53,192		13.5	%		45,531		11.5	%		52,612		12.4	%
Prospect		38,684		8.7	%		38,066		9.7	%		44,505		11.2	%		37,864		8.9	%
Prime		30,132		6.8	%		30,415		7.7	%
Springstone												21,960		5.5	%		—		—
MEDIAN		22,866		5.1	%		24,049		6.1	%		20,605		5.2	%		23,689		5.6	%
Other operators		177,288		39.9	%		143,304		36.3	%		147,334		37.1	%		191,868		45.3	%
Total	$	444,776		100.0	%	$	394,417		100.0	%	$	397,336		100.0	%	$	423,908		100.0	%

~~(1)~~

~~See~~ ~~Note 9~~ ~~to Item 1 of this Form 10-Q for a potential transaction involving this market.~~

Total Adjusted Revenues by U.S. State and Country


	For the Three Months Ended September 30,
	2022					2021
U.S. States and Other Countries	Total Adjusted Revenues		Percentage of Total Adjusted Revenues			Total Adjusted Revenues		Percentage of Total Adjusted Revenues
Texas	$	41,572		10.5	%	$	38,007		9.0	%
Utah		34,701		8.7	%		32,837		7.7	%
Florida		25,572		6.4	%		17,479		4.1	%
Massachusetts		22,776		5.7	%		36,123		8.5	%
Pennsylvania		19,450		4.9	%		19,972		4.7	%
All other states		116,871		29.5	%		128,038		30.3	%
Total U.S.	$	260,942		65.7	%	$	272,456		64.3	%
United Kingdom	$	76,191		19.2	%	$	90,141		21.3	%
Germany		22,414		5.6	%		25,755		6.1	%
All other countries		37,789		9.5	%		35,556		8.3	%
Total international	$	136,394		34.3	%	$	151,452		35.7	%
Grand total	$	397,336		100.0	%	$	423,908		100.0	%

For the Three Months Ended March 31,

2022

2021

U.S. States and Other Countries

Total Adjusted
Revenues

Percentage of
Total Adjusted
Revenues

Total Adjusted
Revenues

Percentage of
Total Adjusted
Revenues

California

$
41,291

9.3
%

$
34,004

8.6
%
Massachusetts

35,981

8.1
%

34,702

8.8
%
Texas

34,844

7.8
%

39,128

9.9
%
Utah

33,768

7.6
%

32,677

8.3
%
Florida

25,305

5.7
%

5,547

1.4
%
All other states

125,907

28.3
%

111,102

28.2
%
Total U.S.

$
297,096

66.8
%

$
257,160

65.2
%
United Kingdom

$
83,906

18.9
%

$
76,560

19.4
%
Germany

24,883

5.6
%

26,162

6.6
%
All other countries

38,891

8.7
%

34,535

8.8
%
Total international

$
147,680

33.2
%

$
137,257

34.8
%
Grand total

$
444,776

100.0
%

$
394,417

100.0
%

Total Adjusted Revenues by Facility Type


	For the Three Months Ended March 31,										For the Three Months Ended September 30,
	2022					2021					2022					2021
Facility Types	Total Adjusted Revenues		Percentage of Total Adjusted Revenues			Total Adjusted Revenues		Percentage of Total Adjusted Revenues			Total Adjusted Revenues		Percentage of Total Adjusted Revenues			Total Adjusted Revenues		Percentage of Total Adjusted Revenues
General acute care hospitals	$	334,858		75.3	%	$	315,434		80.0	%	$	290,627		73.1	%	$	334,239		78.8	%
Behavioral health facilities		50,897		11.4	%		19,754		5.0	%		50,243		12.7	%		32,843		7.8	%
Inpatient rehabilitation hospitals		45,043		10.1	%		45,303		11.5	%
Inpatient rehabilitation facilities												42,566		10.7	%		44,825		10.6	%
Long-term acute care hospitals		8,302		1.9	%		8,186		2.1	%		7,950		2.0	%		8,120		1.9	%
Freestanding ER/urgent care facilities		5,676		1.3	%		5,740		1.4	%		5,950		1.5	%		3,881		0.9	%
Total	$	444,776		100.0	%	$	394,417		100.0	%	$	397,336		100.0	%	$	423,908		100.0	%

Results of Operations

Three Months Ended ~~March 31,~~September 30, 2022 Compared to ~~March 31,~~September 30, 2021

Net income for the three months ended ~~March 31,~~September 30, 2022, was ~~$631.7~~$221.8 million ($0.37 per diluted share) compared to ~~$163.8~~$171.1 million ($0.29 per diluted share) for the three months ended ~~March 31,~~September 30, 2021. This ~~286%~~30% increase in net income is primarily due to the gain on sale of real estate from the Prime repurchase transaction, net of straight-line rent write-offs; the Watsonville Community Hospital recovery, net of income tax expense; reduced interest expense, and increased earnings from equity interests. Normalized funds from operations (“FFO”), after adjusting for certain items (as more fully described in the “Reconciliation of Non-GAAP Financial Measures” section of Item 2 of this Quarterly Report on Form 10-Q), was $272.3 million for the 2022 third quarter, or $0.45 per diluted share, as compared to $262.8 million, or $0.44 per diluted share, for the 2021 third quarter. This 4% increase in Normalized FFO is primarily due to increased earnings in equity interests and reduced interest expense.

A comparison of revenues for the three month periods ended September 30, 2022 and 2021 is as follows (dollar amounts in thousands):


	2022		% of Total			2021		% of Total			Year over Year Change
Rent billed	$	232,418		66.0	%	$	242,211		62.0	%		-4.0	%
Straight-line rent		26,552		7.5	%		64,637		16.5	%		-58.9	%
Income from financing leases		51,011		14.5	%		50,667		13.0	%		0.7	%
Interest and other income		42,358		12.0	%		33,264		8.5	%		27.3	%
Total revenues	$	352,339		100.0	%	$	390,779		100.0	%		-9.8	%

Our total revenues for the 2022 third quarter are down $38.4 million, or 10%, 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 $47.9 million over the prior year of which approximately $72.7 million of lower revenues is from disposals in 2021 and the first ~~quarter~~nine months of 2022 (including a $31.1 million decrease from the properties disposed of in the Macquarie Transaction as described in Note 3 to the condensed consolidated financial statements, along with lower revenues due to Prime's repurchase transaction, including approximately $35 million of straight-line rent and other write-offs) and $13.9 million of unfavorable foreign currency fluctuations. This decrease is partially offset by approximately $29 million in incremental revenue from acquisitions made in 2021 (including approximately $17.5 million from Springstone) and 2022 (primarily our Finland acquisition). In addition, rent revenues are up approximately $7 million quarter-over-quarter from increases in CPI above the contractual minimum escalations in our leases, $0.2 million from capital additions in 2022, and $1.4 million from the commencement of rent on a development property in the first quarter of 2022.

•

Income from financing leases – up $0.3 million as 2022 annual rent escalations exceeded lease contractual minimums due to the increase in CPI, partially offset by $1.2 million of lower revenues from the disposal of two financing leases related to the Prime repurchase transaction.

•

Interest and other income – up $9.1 million from the prior year due to the following:

Interest from loans – up $7.5 million over the prior year due to $14.1 million of incremental revenue earned on new investments, including Springstone in the 2021 fourth quarter, the Priory syndicated loan in February 2022, and the Prospect and Steward loans made in the 2022 second quarter, along with annual escalations due to increases in CPI. This increase is partially offset by $5.0 million from loan payoffs, including less interest revenue earned on the Priory loans from the conversion of the £800 million mortgage loan to fee simple assets in the second quarter of 2021 and the repayment of the £250 million acquisition loan in the 2021 fourth quarter as described in Note 3 to the condensed consolidated financial statements, and $1.8 million of unfavorable foreign currency fluctuations.

Other income – up $1.6 million from the prior year as we received more direct reimbursements from our tenants for ground leases, property taxes, and insurance.

Interest expense for the quarters ended September 30, 2022 and 2021 totaled $88.1 million and $94.1 million, respectively. This decrease is related to lowering the interest rate on our €500 million senior unsecured notes tranche in October 2021 from 4.000% to 0.993%, the payoff of our July 2021 Interim Credit Facility (which resulted in $1.6 million of interest expense in the 2021 third quarter) in March 2022 with proceeds from the Macquarie Transaction, and foreign currency fluctuations, partially offset by an increase in interest rates on our Credit Facility compared to the prior year. Our weighted-average interest rate of 3.4% for the quarter ended September 30, 2022 is similar to the weighted-average interest rate for the same period in 2021.

Real estate depreciation and amortization during the third quarter of 2022 decreased to $81.9 million from $85.0 million in 2021 due to foreign currency fluctuations and property sales in 2022 as described in Note 3 to the condensed consolidated financial statements, partially offset by new investments made after September 30, 2021.

Property-related expenses totaled $8.3 million and $7.1 million for the quarters ended September 30, 2022 and 2021, respectively. Of the property expenses in the third quarter of 2022 and 2021, approximately $5.6 million and $4.0 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.

As a percentage of revenue, general and administrative expenses represented 10.6% for the 2022 third quarter, slightly higher than 9.4% in the prior year due to lower revenues from the property sales in 2022 (including $35 million of write-offs of straight-line rent) as described in Note 3 to the condensed consolidated financial statements. On a dollar basis, general and administrative expenses totaled $37.3 million for the 2022 third quarter, basically flat with the prior year third quarter.

During the three months ended September 30, 2022, we disposed of 11 facilities as part of the Prime repurchase transaction and three ancillary properties resulting in a net gain of $68.8 million. During the three months ended September 30, 2021, we sold four facilities resulting in a net gain of $9.3 million.

Earnings from equity interests was $11.5 million for the quarter ended September 30, 2022, up $4.3 million from the same period in 2021, primarily due to $3.6 million of income generated on our Massachusetts-based partnership with MAM entered into during March 2022 (part of the Macquarie Transaction) and approximately $2.0 million of dividend income we received in the third quarter of 2022 from our equity interest in Swiss Medical Network. These earnings were partially offset by the loss of equity interest income from the remaining 50% interest of the IMED joint venture that we acquired during December 2021 and the impact from foreign currency fluctuations.

Other income for the 2022 third quarter included a credit loss recovery of approximately $20 million related to loans repaid by Watsonville Community Hospital (see Note 3 for more detail). In addition, we recorded a favorable non-cash fair value adjustment of $3.6 million on our investment in Aevis compared to a $0.8 million favorable adjustment for the same period in 2021.

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 $18.6 million income tax expense for the three months ended September 30, 2022 is primarily based on the income generated by our investments in the United Kingdom, Colombia, and Australia, as well as approximately $5 million of income tax expense associated with the Watsonville loan repayment in the third quarter of 2022 (see Note 3 and Note 5 to the condensed consolidated financial statements for more detail). In comparison, we incurred $10.6 million in income tax expense in the third quarter of 2021.

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 $74.1 million should be reflected against certain of our international and domestic net deferred tax assets at September 30, 2022. 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 incur higher income tax expense in future periods as income is earned.

Nine Months Ended September 30, 2022 Compared to September 30, 2021

Net income for the nine months ended September 30, 2022, was $1.0 billion ($1.74 per diluted share) compared to $449.5 million ($0.76 per diluted share) for the nine months ended September 30, 2021. This 132% increase in net income is primarily due to gains on sales of real estate in 2022 (including the Macquarie Transaction as described in Note 3 to the condensed consolidated financial statements), incremental revenue from new investments, and lower tax expense due to the unfavorable adjustment in the 2021 second quarter to recognize an increase in the United Kingdom corporate income tax rate, partially offset by higher ~~interest expense,~~ depreciation expense and general and administrative costs. Normalized funds from operations (“FFO”), after adjusting for certain items (as more fully described in the “Reconciliation of Non-GAAP Financial Measures” section of Item 2 of this Quarterly Report on Form 10-Q), was ~~$282.5~~$829.5 million for the first nine months of 2022, ~~first quarter,~~ or ~~$0.47~~$1.38 per diluted share, as compared to ~~$243.9~~$757.3 million, or ~~$0.42~~$1.29 per diluted share, for the ~~2021~~ first ~~quarter.~~nine months of 2021. This ~~16%~~10% increase in Normalized FFO is primarily due to incremental revenue from new investments made in 2021 and the first ~~quarter~~nine months of 2022.

A comparison of revenues for the ~~three~~nine month periods ended ~~March 31,~~September 30, 2022 and 2021 is as follows (dollar amounts in thousands):

2022

% of
Total

2021

% of
Total

Year over
Year
Change

Rent billed

$
263,402

64.3
%

$
213,344

58.9
%

23.5
%
Straight-line rent

61,044

14.9
%

54,873

15.1
%

11.2
%
Income from financing leases

51,776

12.6
%

50,894

14.0
%

1.7
%
Interest and other income

33,578

8.2
%

43,654

12.0
%

-23.1
%
Total revenues

$
409,800

100.0
%

$
362,765

100.0
%

13.0
%


	2022		% of Total			2021		% of Total			Year over Year Change
Rent billed	$	737,029		63.4	%	$	672,425		59.2	%		9.6	%
Straight-line rent		146,114		12.6	%		174,975		15.4	%		-16.5	%
Income from financing leases		154,660		13.3	%		151,898		13.4	%		1.8	%
Interest and other income		124,562		10.7	%		136,038		12.0	%		-8.4	%
Total revenues	$	1,162,365		100.0	%	$	1,135,336		100.0	%		2.4	%

Our total ~~revenue~~revenues for the first nine months of 2022 ~~first quarter is~~are up ~~$47.0~~$27.0 million, or ~~13%~~2%, over the prior year. This increase is made up of the following:

•

Operating lease revenue (includes rent billed and straight-line rent) – up ~~$56.2~~$35.7 million over the prior year of which approximately ~~$67.5~~$160 million is incremental revenue from acquisitions made in 2021 (including approximately ~~$18.0~~$50 million ~~each~~ from ~~Springstone, Steward's South Florida operations,~~Springstone) and ~~Priory Group Transaction as described in~~ ~~Note 3~~ to the ~~condensed consolidated financial statements) and early~~first nine months of 2022 (primarily our Finland acquisition). In addition, rent revenues are up ~~due to~~ approximately $5$18 million period-over-period from increases in CPI above the contractual minimum ~~increases~~escalations in ~~the lease, $0.2~~our leases, $1.2 million from capital additions in 2022, and ~~$0.5~~$3.3 million from the commencement of rent on a development property in the first quarter of 2022. This increase is partially offset by approximately ~~$15.1~~$127.4 million of lower revenues from disposals in 2021 and ~~early~~the first nine months of 2022 (including a ~~$4.1~~$65.7 million decrease from the properties disposed of in the Macquarie Transaction as described in Note 3 to the condensed consolidated financial statements and ~~$4.5~~approximately $42 million of straight-line rent and other write-offs associated with non-Macquarie Transaction disposals in the first ~~quarter~~nine months of 2022) and ~~$2.9~~$23.6 million of unfavorable foreign currency fluctuations.

•

Income from financing leases – up ~~$0.9~~$2.8 million ~~primarily due to~~as 2022 annual rent escalations ~~from~~exceeded lease contractual minimums due to the increase in CPI, partially offset by $1.2 million of lower revenues from the disposal of two financing leases related to the Prime repurchase transaction in the ~~first quarter of 2022.~~2022 third quarter.

•

Interest and other income – down ~~$10.1~~$11.5 million from the prior year due to the following:

Interest from loans – down ~~$12.9~~$18.7 million over the prior year due to ~~$15.9~~approximately $40.4 million from loan payoffs, including $36.7 million of less interest revenue earned on the Priory loans from the conversion of the £800 million mortgage loan to fee simple assets in the second quarter of 2021 and the repayment of the £250 million acquisition loan in the 2021 fourth quarter as described in Note 3, ~~lower revenues from loans that were paid off since the first quarter of 2021,~~ and ~~$1.0~~approximately $6 million of unfavorable foreign currency fluctuations. This decrease is partially offset by ~~$5.6~~$27.2 million of incremental

revenue earned on new investments including Springstone in the 2021 ~~(primarily Springstone)~~fourth quarter and ~~early~~the Priory syndicated loan in February 2022 ~~(Priory syndicated loan)~~ and ~~$0.6 million of~~higher income from annual escalations due to increases in CPI.

Other income – up ~~$2.8~~$7.2 million from the prior year as we received more direct reimbursements from our tenants for ground ~~lease,~~leases, property taxes, and insurance.

Interest expense for the ~~quarters~~nine months ended ~~March 31,~~September 30, 2022 and 2021 totaled ~~$91.2~~$267.0 million and ~~$87.0~~$273.4 million, respectively. This ~~increase~~decrease is ~~primarily~~ related to ~~new debt issuances~~lowering the interest rate on our €500 million senior unsecured notes tranche in October 2021 from 4.000% to ~~fund new investments, as~~0.993% and foreign currency fluctuations, partially offset by increasing interest rates on our Credit Facility during 2022. Overall, our weighted-average interest rate of ~~3.1%~~3.3% for the ~~quarter~~nine months ended ~~March 31,~~September 30, 2022 is lower than the 3.4% in the same period in 2021.

Real estate depreciation and amortization during the first ~~quarter~~nine months of 2022 increased to ~~$85.3~~$251.5 million from ~~$75.6~~$237.1 million in the same period of 2021 due to new investments made after ~~March 31, 2021.~~September 30, 2021, partially offset by a decrease due to property sales in 2022 as described in

30Note 3

to the condensed consolidated financial statements and foreign currency fluctuations.

Property-related expenses totaled ~~$8.6~~$38.0 million and ~~$5.5~~$31.3 million for the ~~quarters~~nine months ended ~~March 31,~~September 30, 2022 and 2021, respectively. Of the property expenses in the first ~~three~~nine months of 2022 and 2021, approximately ~~$6.3~~$30.2 million and ~~$3.5~~$23.1 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.

As a percentage of revenue, general and administrative expenses represented 10.1% for the ~~2022~~ first ~~quarter,~~nine months of 2022, slightly higher than ~~9.9%~~9.5% in the prior year. On a dollar basis, general and administrative expenses totaled ~~$41.4~~$117.6 million for the ~~2022~~ first ~~quarter,~~nine months of 2022, which is a ~~$5.4~~$10.3 million increase from the ~~prior year first quarter~~same period in 2021. This increase reflects continued ESG efforts in additional charitable giving, further board diversification, and ~~reflective~~additional benefits to our employees, along with higher professional expenses. Compensation expense was slightly lower overall compared to 2021 as the cost of ~~the growth of the company,~~additional non-executive headcount and benefits were more than offset by a reduction in ~~particular higher~~stock compensation ~~to non-executive employees (partially due to an increase in employee head count) and approximately $1 million of more charitable giving.~~expense from adjusting our payout expectations on certain performance awards.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, we ~~completed~~realized $536.8 million from the sales of real estate, including the completion of the partnership with MAM in which we sold the real estate of eight Massachusetts-based general acute care hospitals, resulting in a gain on real estate of approximately $600 million, partially offset by approximately $125 million of write-offs of non-cash straight-line rent receivables. We also disposed of ~~two~~11 facilities related to the Prime repurchase transaction, resulting in a gain on real estate of approximately $67 million. In addition, we disposed of four other facilities and anfive ancillary properties, resulting in a net gain of $33 million. During the nine months ended September 30, 2021, we sold nine facilities and one ancillary property resulting in a net gain of ~~$15 million. During the three months ended March 31, 2021, we sold one facility and an ancillary property resulting in a net gain of $1.0~~$9.0 million.

Earnings from equity interests was ~~$7.3~~$33.6 million for the ~~quarter~~nine months ended ~~March 31,~~September 30, 2022, up ~~$0.2~~$12.0 million from the same period in ~~2021,~~2021. This increase is primarily due to ~~$1.2~~$10.1 million of income generated on our Massachusetts-based partnership with MAM entered into during March 2022 (part of the Macquarie Transaction) and approximately $4 million of dividend income we received in 2022 from our Switzerland investments, partially offset by the loss of equity interest income from the remaining 50% interest of the IMED joint venture that we acquired ~~the remaining 50% interest of~~ during December ~~2021.~~2021 and the impact from foreign currency fluctuations.

Debt refinancing and unutilized financing costs were ~~$8.8~~$9.5 million and $2.3 million for the ~~quarters~~nine months ended ~~March 31,~~September 30, 2022 and 2021, respectively. The costs incurred in ~~the first quarter of~~ 2022 were a result of the termination of our $1 billion interim credit facility in March 2022 and the amendment of our Credit Facility in the second quarter of 2022 (see Note 4 to the condensed consolidated financial statements for more detail). The costs incurred in 2021 were primarily the result of the early termination of our $900 million interim credit facility (see Note 4 to the condensed consolidated financial statements for more detail). ~~In 2021, these costs were a result of the early termination of our January 2021 Interim Credit Facility and the amendment to our Credit Facility.~~

InOther income for the first ~~quarter~~nine months of 2022 was $35.5 million and included a credit loss recovery of approximately $20 million related to loans repaid by Watsonville Community Hospital (see Note 3 to the condensed consolidated financial statements for more detail). In addition, we recorded a favorable non-cash fair value adjustment of ~~$8.0~~$12.6 million on our investment in Aevis and other investments marked to fair value during 2022 compared to a ~~$4.1~~$2.8 million favorable adjustment for the same period in 2021.

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 ~~$11.4~~$40.6 million income tax expense for the ~~three~~nine months ended~~March 31,~~ September 30, 2022 is primarily based on the income generated by our investments in the United Kingdom, Colombia, and ~~Australia.~~Australia, as well as tax expense associated with the Watsonville loan repayment (see Note 3 and Note 5 to the condensed consolidated financial statements for more detail). In comparison, we incurred ~~$8.4~~$69.1 million in income tax expense in the ~~first quarter~~ same period

of ~~2021. This $3.0~~2021, including an adjustment to our net deferred tax liabilities of approximately $43 million ~~increase is primarily due~~ to ~~the Priory transaction~~reflect an increase in the ~~first quarter of 2021 and our investment in Springstone in the fourth quarter of 2021.~~United Kingdom corporate tax rate from 19% to 25%.

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 ~~$77.5~~$74.1 million should be reflected against certain of our international and domestic net deferred tax assets at ~~March 31,~~September 30, 2022. 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 incur higher income ~~taxes~~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 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 necessary 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 income attributable to MPT common stockholders to FFO and Normalized FFO for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021 (amounts in thousands except per share data):


	For the Three Months Ended						For the Three Months Ended							For the Nine Months Ended
	March 31, 2022			March 31, 2021			September 30, 2022				September 30, 2021			September 30, 2022			September 30, 2021
FFO information:
Net income attributable to MPT common stockholders	$	631,681		$	163,783		$	221,793			$	171,137		$	1,043,071		$	449,485
Participating securities’ share in earnings		(402	)		(370	)		(288	)			(328	)		(1,035	)		(1,088	)
Net income, less participating securities’ share in earnings	$	631,279		$	163,413		$	221,505			$	170,809		$	1,042,036		$	448,397
Depreciation and amortization		99,459			88,536			99,296				98,492			300,731			277,089
Gain on sale of real estate and other, net		(451,638	)		(989	)		(68,795	)			(9,294	)		(536,788	)		(8,896	)
Funds from operations	$	279,100		$	250,960		$	252,006			$	260,007		$	805,979		$	716,590
Write-off (recovery) of straight-line rent and other		2,604			(5,238	)
Write-off (recovery) of straight-line rent and other, net of tax								23,863		(1)		3,650			27,444			(1,601	)
Non-cash fair value adjustments		(8,023	)		(4,065	)		(3,597	)			(819	)		(12,563	)		(2,763	)
Tax rate changes								—				—			(825	)		42,746
Debt refinancing and unutilized financing costs		8,816			2,269			17				—			9,452			2,339
Normalized funds from operations	$	282,497		$	243,926		$	272,289			$	262,838		$	829,487		$	757,311
Per diluted share data:
Net income, less participating securities’ share in earnings	$	1.05		$	0.28		$	0.37			$	0.29		$	1.74		$	0.76
Depreciation and amortization		0.17			0.15			0.16				0.17			0.50			0.48
Gain on sale of real estate and other, net		(0.75	)		—			(0.11	)			(0.02	)		(0.90	)		(0.02	)
Funds from operations	$	0.47		$	0.43		$	0.42			$	0.44		$	1.34		$	1.22
Write-off (recovery) of straight-line rent and other		—			(0.01	)
Write-off (recovery) of straight-line rent and other, net of tax								0.04				—			0.04			—
Non-cash fair value adjustments		(0.01	)		—			(0.01	)			—			(0.02	)		—
Tax rate changes								—				—			—			0.07
Debt refinancing and unutilized financing costs		0.01			—			—				—			0.02			—
Normalized funds from operations	$	0.47		$	0.42		$	0.45			$	0.44		$	1.38		$	1.29

(1)

Includes the write-off of non-cash rent related to the Prime repurchase transaction, partially offset by the credit loss recovery on the loans made to the Watsonville Community Hospital, net of income tax expense.

Total ~~Pro Forma~~Adjusted Gross Assets

Total ~~pro forma~~adjusted gross assets is total assets before accumulated depreciation/amortization (adjusted for our investments in unconsolidated real estate joint ventures) ~~and~~, assumes material ~~real estate~~transaction commitments ~~on new investments~~ are ~~fully funded,~~completed, and assumes cash ~~on-hand~~on hand at period-end and cash generated from or to be generated from transaction commitments or financing activities subsequent to period-end are either used in these ~~transactions.~~transactions or used to reduce debt. We believe total ~~pro forma~~adjusted gross assets is useful to investors as it provides a more current view of our portfolio and allows for a better understanding of our concentration levels as our commitments close. The following table presents a reconciliation of total assets to total ~~pro forma~~adjusted gross assets (in thousands):

As of

As of

March 31, 2022

December 31, 2021

Total assets

$
19,817,834

$
20,519,801

Add:

Accumulated depreciation and amortization

1,054,361

993,100

Incremental gross assets of our joint ventures and other(1)

1,611,625

1,713,603

Less:

Cash on hand(2)

(248,846
)

(897,167
)
Total pro forma gross assets

$
22,234,974

$
22,329,337


	As of			As of
	September 30, 2022			December 31, 2021
Total assets	$	19,043,416		$	20,519,801
Add: Accumulated depreciation and amortization		1,088,912			993,100
Add: Incremental gross assets of our Investments in Unconsolidated Real Estate Joint Ventures(1)		1,604,762			1,713,603
Net: Reclassification between operators(2)		—			—

Less: Gross book value of the transactions, net(3)		(686,057	)		(437,940	)
Increase (decrease) in cash from the transactions(4)		39,009			(459,227	)
Total adjusted gross assets	$	21,090,042		$	22,329,337

(1)

~~Adjustment~~Reflects an addition to ~~reflect~~total assets to present our total share of each joint venture's gross assets. See below for details of the calculation. While we do not control any of our unconsolidated real estate joint ~~ventures’~~venture arrangements and do not have direct legal claim to the underlying assets of the unconsolidated real estate joint ventures, we believe this adjustment allows investors to view certain concentration information on a basis comparable to the remainder of our real estate

portfolio. This presentation is also consistent with how our management team reviews our portfolio (dollar amounts in thousands):


	As of			As of
	September 30, 2022			December 31, 2021
Real estate joint venture total gross real estate and other assets	$	5,519,058		$	5,898,342
Weighted-average equity ownership percentage		55	%		55	%
		3,026,772			3,242,505
Investments in Unconsolidated Real Estate Joint Ventures (including $0.4 billion for the Macquarie Transaction for the 2021 column)		(1,422,010	)		(1,528,902	)
Incremental gross assets of our Investments in Unconsolidated Real Estate Joint Ventures	$	1,604,762		$	1,713,603

(2)

The 2022 column reflects a reclass of $0.8 billion of gross assets between Springstone and ~~certain lease intangible assets.~~LifePoint as part of the commitment described in Note 10 to the condensed consolidated financial statements.

~~(2)~~(3)

~~Includes cash available on-hand plus cash generated~~Represents the gross book value of assets sold or written off due to the committed transactions, partially offset by the addition of new gross assets from ~~activities subsequent to period-end such as loan repayments, issuances of debt or equity, or dispositions.~~the committed transactions. See detail below (in thousands):


	As of			As of
	September 30, 2022			December 31, 2021
Gross book value of assets in transactions as described in Notes 10 and 11	$	(659,168	)	$	—
Book value of Massachusetts assets held-for-sale		—			(1,096,505	)
Expected book value of our 50% interest in the Massachusetts joint venture		—			375,975
Unfunded amounts on development deals and commenced capital improvement projects		—			480,132
Non-cash rent write-offs related to disposals		(26,889	)		(197,542	)
Gross book value of the transactions, net	$	(686,057	)	$	(437,940	)

(4)

Represents cash expected from the proceeds generated by the transactions along with cash on hand to fund the transactions or reduce debt as detailed below (in thousands):


	As of			As of
	September 30, 2022			December 31, 2021
Expected cash proceeds generated by the transactions as described in Notes 3, 10 and 11	$	677,000		$	1,280,000
Paydown of July 2021 Interim Credit Facility		—			(869,606	)
Reduction of revolver balance		(637,991	)		(389,489	)
Unfunded amounts on development deals and commenced capital improvement projects		—			(480,132	)
Increase (decrease) in cash from the transactions	$	39,009		$	(459,227	)

Total Adjusted Revenues

Total adjusted revenues are total revenues adjusted for our pro rata portion of similar revenues in our unconsolidated real estate joint venture arrangements. We believe total adjusted revenues are useful to investors as it provides a more complete view of revenues across all of our investments and allows for better understanding of our revenue concentration. The following table presents a reconciliation of total revenues to total adjusted revenues (in thousands):


	For the Three Months Ended March 31,				For the Three Months Ended September 30,
	2022		2021		2022		2021
Total revenues	$	409,800	$	362,765	$	352,339	$	390,779
Revenues from real estate properties owned through joint venture arrangements		34,976		31,652
Revenues from investments in unconsolidated real estate joint ventures						44,997		33,129
Total adjusted revenues	$	444,776	$	394,417	$	397,336	$	423,908

LIQUIDITY AND CAPITAL RESOURCES

2022 Cash Flow Activity

During the ~~2022~~ first ~~quarter,~~nine months of 2022, we generated approximately ~~$179.4~~$560 million of cash flows from operating activities, primarily consisting of rent and interest from mortgage and other ~~loans. We~~loans, of which we used ~~these operating cash flows~~$525 million to fund our ~~dividends of $176.5 million and certain investment activities. During the quarter,~~dividends. In addition, we received approximately ~~$1.3~~$2.2 billion of proceeds from disposals (including the Macquarie Transaction ~~and obtained a 50% interest~~as described in ~~the partnership valued at approximately $400 million (see~~ Note 3 to Item 1 of this Form ~~10-Q for further details).~~10-Q) and approximately $360 million from the property sales to Prime. We used these proceeds to pay off our July 2021 Interim Credit Facility, partially pay down the outstanding balance on our ~~revolving credit facility,~~Credit Facility, fund $1.0 billion of new acquisitions, and ~~along with cash on-hand and cash from~~make other ~~disposal transactions, to invest in new real estate and other assets.~~

~~Subsequent to quarter-end, we~~investments. We exercised the $500 million accordion feature to our revolving credit ~~facility-~~facility during the first nine months of 2022 and extended the term on both the revolver and term loan portions of our Credit Facility - see Note 104 to Item 1 of this Form 10-Q for additional details.

2021 Cash Flow Activity

During the ~~2021~~ first ~~quarter,~~nine months of 2021, we generated approximately ~~$188.7~~$577 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 $11 million received from Steward as a return of capital distribution, to fund our dividends of ~~$147.7~~$476 million and certain investment activities. In addition, we invested approximately ~~$1.8~~$3.2 billion in real estate and other assets, including the £1.1 billion Priory Group Transaction in January 2021 (as more fully described in Note 3 to Item 1 of this Form 10-Q), using a combination of cash on-hand and cash generated from the ~~$779.2 million~~$1.0 billion of net proceeds from the sales of stock during the ~~quarter, £500~~first nine months of 2021, £850 million ~~of proceeds~~ from ~~an interim credit facility, and proceeds from our revolving facility. In late March 2021, we issued £850 million~~the issuance of senior unsecured notes, approximately $140 million in loan principal repayments, and ~~used such proceeds to pay off our interim credit facility~~$650 million in ~~full and reduce our revolving credit facility balance to less than $200 million outstanding.~~borrowings under the July 2021 Interim Credit Facility.

Short-term Liquidity Requirements:

At ~~May 6,~~November 4, 2022, ~~and after the exercise of the $500 million accordion under our unsecured revolving loan facility (as discussed in~~ ~~Note 10~~ ~~to Item 1 of this Form 10-Q),~~ our liquidity approximates ~~$1.1~~$1.2 billion. We believe this liquidity, along with our current monthly cash receipts from rent and loan interest and regular distributions from our joint venture arrangements, is sufficient to fund our operations, dividends in order to comply with REIT requirements, our current firm commitments (capital expenditures and expected funding requirements on development projects), share repurchases, if any, and debt service obligations for the next twelve months (including contractual interest payments). We expect that other capital recycling transactions (that could include sales of single facilities) will further improve our liquidity and our leverage ratio, although no assurances can be given that our capital recycling efforts will be successful.

~~Long-term Liquidity Requirements~~:

~~As of May 6, 2022 and after~~If the ~~exercise of the $500 million accordion under our unsecured revolving loan facility~~LifePoint Transaction (as ~~discussed~~more fully described in Note 10 to Item 1 of this Form 10-Q), and the sale of three Prospect facilities (as more fully described in Note 11 to Item 1 of this Form 10-Q) are consummated in 2023, we would have approximately $650 million of additional liquidity.

Long-term Liquidity Requirements:

As of November 4, 2022, our liquidity approximates ~~$1.1~~$1.2 billion. We believe that ~~our~~this liquidity, along with ~~our current~~ monthly cash receipts from rent and loan interest (of which 99% of such leases and mortgage loans include escalation provisions that compound annually) and regular distributions from our joint venture arrangements, is sufficient to fund our operations, debt and interest obligations (including our December 2023 debt maturity of approximately $450 million), our firm commitments, share repurchases, if any, and dividends in order to comply with REIT requirements for the foreseeable future.

However, in order to make additional investments, to fund debt maturities coming due inafter 2023, ~~and beyond (as outlined below), to strategically refinance any existing debt in order to reduce interest rates,~~ or to further improve our leverage ratios, we may need to access one or a combination of the following sources of capital:

•

strategic property sales or joint ~~ventures;~~ventures (including the LifePoint Transaction as described in Note 10 and the sale of three Prospect facilities as described in Note 11);

•

sale of equity securities;

•

new bank term loans;

•

new USD, EUR, or GBP denominated debt securities, including senior unsecured notes; and/or

•

new secured loans on real estate.

However, there is no assurance that conditions will be favorable for such possible transactions or that our plans will be successful.

Principal payments due on our debt (which exclude the effects of any discounts, premiums, or debt issue costs recorded) as of ~~May 6,~~November 4, 2022 are as follows (in thousands):


2022	$	—	$	—
2023		493,920		455,160
2024		1,706,611		776,400
2025		1,391,910		1,294,380
2026		1,844,950		2,388,712
Thereafter		4,773,060		4,881,005
Total	$	10,210,451	$	9,795,657

Contractual Commitments

We presented our contractual commitments in our 2021 Annual Report on Form ~~10-K. Except~~10-K and provided an update in our Quarterly Reports on Form 10-Q for ~~changes to our purchase obligations~~the periods ended June 30, 2022 and ~~operating lease commitments, there~~March 31, 2022. There have been no other significant changes through ~~May 6,~~November 4, 2022.

~~The following table updates our contractual commitments schedule for these updates as of May 6, 2022 (in thousands):~~

Contractual Commitments

2022(1)

2023

2024

2025

2026

Thereafter

Total

Purchase obligations

$
269,883

$
288,935

$
99,237

$
62,506

$
42,456

$
80,322

$
843,339

Operating lease commitments

4,964

8,933

9,020

8,381

7,883

247,907

287,088

~~(1)~~

~~This column represents obligations post May 6, 2022.~~

Distribution Policy

The table below is a summary of our distributions declared during the two year period ended ~~March 31,~~September 30, 2022:

Declaration Date

Record Date

Date of Distribution

Distribution
per Share

Record Date

Date of Distribution

Distribution
per Share

August 18, 2022

September 15, 2022

October 13, 2022

0.29

May 26, 2022

June 16, 2022

July 14, 2022

0.29

February 17, 2022

March 17, 2022

April 14, 2022

0.29

March 17, 2022

April 14, 2022

0.29

November 11, 2021

December 9, 2021

January 13, 2022

0.28

December 9, 2021

January 13, 2022

0.28

August 19, 2021

September 16, 2021

October 14, 2021

0.28

September 16, 2021

October 14, 2021

0.28

May 26, 2021

June 17, 2021

July 8, 2021

0.28

June 17, 2021

July 8, 2021

0.28

February 18, 2021

March 18, 2021

April 8, 2021

0.28

March 18, 2021

April 8, 2021

0.28

November 12, 2020

December 10, 2020

January 7, 2021

0.27

December 10, 2020

January 7, 2021

0.27

August 13, 2020

September 10, 2020

October 8, 2020

0.27

May 21, 2020

June 18, 2020

July 16, 2020

0.27

It is our policy to make sufficient cash 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 pay- see Note 4 in Item 1 to this Form 10-Q 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,~~September 30, 2022, our outstanding debt totaled ~~$10.1~~$9.5 billion, which consisted of fixed-rate debt of approximately ~~$9.4~~$8.7 billion (after considering interest rate swaps in-place) and variable rate debt of ~~$0.7~~$0.8 billion. If market interest rates increase by 10%, the fair value of our debt at ~~March 31,~~September 30, 2022 would decrease by approximately ~~$145~~$218.1 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 ~~$1.2~~$2.8 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 ~~$1.2~~$2.8 million per year. This assumes that the average amount outstanding under our variable rate debt for a year is ~~$0.7~~$0.8 billion, the balance of such variable rate debt at ~~March 31,~~September 30, 2022.

Foreign Currency Sensitivity

With our investments in the United Kingdom, Germany, Spain, Italy, Portugal, Switzerland, Finland, Australia, and Colombia, we are subject to fluctuations in the British pound, euro, Swiss franc, Australian dollar, 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 2022 operating results to-date and on an annualized basis, a 5%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		Net Income Impact		FFO Impact		NFFO Impact
British pound (£)	$	4,725	$	9,432	$	9,587	$	9,504	$	18,293	$	18,390
Euro (€)		915		2,884		2,884		2,028		6,151		6,167
Swiss franc (CHF)		3,571		4,719		1,622		4,197		6,411		3,664
Australian dollar (A$)		686		1,710		1,710		1,285		3,357		3,357
Colombian peso (COP)		562		562		562		1,147		1,163		1,163

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.

3643

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

The information contained in Note 910 “Commitments and Contingencies” to the condensed consolidated financial statements is incorporated by reference into this Item 1.

Item 1A. Risk Factors.

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, 2021.

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

(a)

None.

(b)

Not applicable.

(c)

Stock repurchase:

Period

Total number of
shares purchased(1)

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

Total number of
shares purchased(1)

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

January 1-January 31, 2022

1,179,272

23.67

—

N/A

July 1-July 31, 2022

41,141

15.46

—

N/A

(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. None of these share purchases were part of a publicly announced program to purchase common stock of the Company. MPT Operating Partnership, L.P. ~~purchased 1.2 million~~redeemed 41,141 units of limited partnership interest from the Company in ~~direct response to~~connection with the tendered shares of common ~~stock purchases above.~~stock.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

(a)

None.

(b)

None.

3744

Item 6. Exhibits


Exhibit Number		Description

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 Document

Exhibit 101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

Exhibit 101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

Exhibit 101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

Exhibit 101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

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

* Filed herewith.

** Furnished herewith.

3845

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
		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
		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 10,~~November 9, 2022

3946



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)


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


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	☐


	Page
PART I — FINANCIAL INFORMATION	3
Item 1 Financial Statements	3
Medical Properties Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets at ~~March 31,~~September 30, 2022 and December 31, 2021	3
Condensed Consolidated Statements of Net Income for the Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021	4
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021	5
Condensed Consolidated Statements of Equity for the Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021	6
Condensed Consolidated Statements of Cash Flows for the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2022 and 2021	78
MPT Operating Partnership, L.P. and Subsidiaries
Condensed Consolidated Balance Sheets at ~~March 31,~~September 30, 2022 and December 31, 2021	89
Condensed Consolidated Statements of Net Income for the Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021	910
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended ~~March 31, 2022 and 2021~~	10
~~Condensed Consolidated Statements of Capital for the Three Months Ended March 31,~~September 30, 2022 and 2021	11
Condensed Consolidated Statements of ~~Cash Flows~~Capital for the Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021	12
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	14
Medical Properties Trust, Inc. and MPT Operating Partnership, L.P. and Subsidiaries
Notes to Condensed Consolidated Financial Statements	1315
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	2529
Item 3 Quantitative and Qualitative Disclosures about Market Risk	3542
Item 4 Controls and Procedures	3643
PART II — OTHER INFORMATION	3744
Item 1 Legal Proceedings	3744
Item 1A Risk Factors	3744
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds	3744
Item 3 Defaults Upon Senior Securities	3744
Item 4 Mine Safety Disclosures	3744
Item 5 Other Information	3744
Item 6 Exhibits	3845
SIGNATURE	3946


	March 31, 2022			December 31, 2021			September 30, 2022			December 31, 2021
(In thousands, except per share amounts)	(Unaudited)			(Note 2)			(Unaudited)			(Note 2)
Assets
Real estate assets
Land, buildings and improvements, intangible lease assets, and other	$	14,029,059		$	14,062,722		$	13,083,292		$	14,062,722
Investment in financing leases		2,063,227			2,053,327			1,965,021			2,053,327
Real estate held for sale		—			1,096,505			—			1,096,505
Mortgage loans		224,281			213,211			305,504			213,211
Gross investment in real estate assets		16,316,567			17,425,765			15,353,817			17,425,765
Accumulated depreciation and amortization		(1,054,361	)		(993,100	)		(1,088,912	)		(993,100	)
Net investment in real estate assets		15,262,206			16,432,665			14,264,905			16,432,665
Cash and cash equivalents		248,846			459,227			299,171			459,227
Interest and rent receivables		65,933			56,229			117,555			56,229
Straight-line rent receivables		660,421			728,522			710,082			728,522
Investments in unconsolidated real estate joint ventures		1,534,514			1,152,927			1,422,010			1,152,927
Investments in unconsolidated operating entities		1,455,842			1,289,434			1,428,061			1,289,434
Other loans		66,963			67,317			200,245			67,317
Other assets		523,109			333,480			601,387			333,480
Total Assets	$	19,817,834		$	20,519,801		$	19,043,416		$	20,519,801
Liabilities and Equity
Liabilities
Debt, net	$	10,117,989		$	11,282,770		$	9,476,144		$	11,282,770
Accounts payable and accrued expenses		595,026			607,792			569,017			607,792
Deferred revenue		18,834			25,563			18,569			25,563
Obligations to tenants and other lease liabilities		166,626			158,005			146,438			158,005
Total Liabilities		10,898,475			12,074,130			10,210,168			12,074,130
Equity
Preferred stock, $0.001 par value. Authorized 10,000 shares; 0 shares outstanding		—			—
Common stock, $0.001 par value. Authorized 750,000 shares; issued and outstanding — 598,676 shares at March 31, 2022 and 596,748 shares at December 31, 2021		599			597
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 — 598,983 shares at September 30, 2022 and 596,748 shares at December 31, 2021								599			597
Additional paid-in capital		8,547,892			8,564,009			8,537,145			8,564,009
Retained earnings (deficit)		369,972			(87,691	)		433,339			(87,691	)
Accumulated other comprehensive loss		(5,010	)		(36,727	)		(139,301	)		(36,727	)
Total Medical Properties Trust, Inc. stockholders’ equity		8,913,453			8,440,188			8,831,782			8,440,188
Non-controlling interests		5,906			5,483			1,466			5,483
Total Equity		8,919,359			8,445,671			8,833,248			8,445,671
Total Liabilities and Equity	$	19,817,834		$	20,519,801		$	19,043,416		$	20,519,801


	Preferred				Common
(In thousands, except per share amounts)	Shares		Par Value		Shares			Par Value			Additional Paid-in Capital			Retained Earnings (Deficit)			Accumulated Other Comprehensive Loss			Non- Controlling Interests			Total Equity
Balance at December 31, 2021		—	$	—		596,748		$	597		$	8,564,009		$	(87,691	)	$	(36,727	)	$	5,483		$	8,445,671
Net income		—		—		—			—			—			631,681			—			266			631,947
Unrealized gain on interest rate swaps, net of tax		—		—		—			—			—			—			44,932			—			44,932
Foreign currency translation loss		—		—		—			—			—			—			(13,215	)		—			(13,215	)
Stock vesting and amortization of stock-based compensation		—		—		3,107			3			11,801			—			—			—			11,804
Stock vesting - satisfaction of tax withholdings		—		—		(1,179	)		(1	)		(27,918	)		—			—			—			(27,919	)
Acquisition of non-controlling interest		—		—		—			—			—			—			—			929			929
Distributions to non-controlling interests		—		—		—			—			—			—			—			(772	)		(772	)
Dividends declared ($0.29 per common share)		—		—		—			—			—			(174,018	)		—			—			(174,018	)
Balance at March 31, 2022		—	$	—		598,676		$	599		$	8,547,892		$	369,972		$	(5,010	)	$	5,906		$	8,919,359


	��	General						Limited Partners						Accumulated									General						Limited Partners						Accumulated
		Partner						Common						Other			Non-						Partner						Common						Other			Non-
(In thousands, except per unit amounts)		Units			Unit Value			Units			Unit Value			Comprehensive Loss			Controlling Interests			Total Capital			Units			Unit Value			Units			Unit Value			Comprehensive Loss			Controlling Interests			Total Capital
Balance at December 31, 2021			5,968		$	84,847			590,780		$	8,392,458		$	(36,727	)	$	5,483		$	8,446,061			5,968		$	84,847			590,780		$	8,392,458		$	(36,727	)	$	5,483		$	8,446,061
Net income			—			6,317			—			625,364			—			266			631,947			—			6,317			—			625,364			—			266			631,947
Unrealized gain on interest rate swaps, net of tax			—			—			—			—			44,932			—			44,932			—			—			—			—			44,932			—			44,932
Foreign currency translation loss			—			—			—			—			(13,215	)		—			(13,215	)		—			—			—			—			(13,215	)		—			(13,215	)
Unit vesting and amortization of unit-based compensation			31			118			3,076			11,686			—			—			11,804			31			118			3,076			11,686			—			—			11,804
Unit vesting - satisfaction of tax withholdings			(12	)		(279	)		(1,167	)		(27,640	)		—			—			(27,919	)		(12	)		(279	)		(1,167	)		(27,640	)		—			—			(27,919	)
Issuance of non-controlling interest																								—			—			—			—			—			929			929
Distributions to non-controlling interests																								—			—			—			—			—			(772	)		(772	)
Distributions declared ($0.29 per unit)																								—			(1,740	)		—			(172,278	)		—			—			(174,018	)
Balance at March 31, 2022																								5,987		$	89,263			592,689		$	8,829,590		$	(5,010	)	$	5,906		$	8,919,749
Net income																								—			1,896			—			187,701			—			467			190,064
Unrealized gain on interest rate swaps, net of tax																								—			—			—			—			25,920			—			25,920
Foreign currency translation loss																								—			—			—			—			(104,341	)		—			(104,341	)
Unit vesting and amortization of unit-based compensation																								2			101			202			10,007			—			—			10,108
Unit vesting - satisfaction of tax withholdings																								(1	)		(9	)		(40	)		(871	)		—			—			(880	)
Distributions to non-controlling interests																								—			—			—			—			—			(335	)		(335	)
Distributions declared ($0.29 per unit)																								—			(1,740	)		—			(172,284	)		—			—			(174,024	)
Balance at June 30, 2022																								5,988		$	89,511			592,851		$	8,854,143		$	(83,431	)	$	6,038		$	8,866,261
Net income																								—			2,218			—			219,575			—			227			222,020
Unrealized gain on interest rate swaps, net of tax																								—			—			—			—			52,975			—			52,975
Foreign currency translation loss																								—			—			—			—			(108,845	)		—			(108,845	)
Unit vesting and amortization of unit-based compensation																								2			111			183			10,978			—			—			11,089
Unit vesting - satisfaction of tax withholdings																								—			(6	)		(41	)		(630	)		—			—			(636	)
Acquisition of non-controlling interest			—			—			—			—			—			929			929			—			(304	)		—			(30,124	)		—			(4,594	)		(35,022	)
Distributions to non-controlling interests			—			—			—			—			—			(772	)		(772	)		—			—			—			—			—			(205	)		(205	)
Distributions declared ($0.29 per unit)			—			(1,740	)		—			(172,278	)		—			—			(174,018	)		—			(1,740	)		—			(172,259	)		—			—			(173,999	)
Balance at March 31, 2022			5,987		$	89,263			592,689		$	8,829,590		$	(5,010	)	$	5,906		$	8,919,749
Balance at September 30, 2022																								5,990		$	89,790			592,993		$	8,881,683		$	(139,301	)	$	1,466		$	8,833,638


Property	Commitment		Costs Incurred as of March 31, 2022		Estimated Rent Commencement Date
Ernest (Stockton, California)	$	47,700	$	37,104	3Q 2022
Steward (Texarkana, Texas)		169,408		56,890	2Q 2024
	$	217,108	$	93,994


2022	$	0
2023		525,520
2024		1,429,259
2025		1,473,010
2026		1,910,250
Thereafter		4,848,110
Total	$	10,186,149


	As of September 30, 2022							As of December 31, 2021
Asset (Liability)	Book Value				Fair Value			Book Value				Fair Value
Interest and rent receivables	$	117,555			$	115,426		$	56,229			$	56,564
Loans(1)		1,274,424		(2)		1,231,734			991,609		(2)		991,954
Debt, net		(9,476,144	)			(8,095,633	)		(11,282,770	)			(11,526,388	)


	As of March 31, 2022			% of Total			As of December 31, 2021			% of Total
Real estate assets - at cost	$	16,316,567			82.3	%	$	17,425,765			84.9	%
Accumulated real estate depreciation and amortization		(1,054,361	)		-5.3	%		(993,100	)		-4.8	%
Cash and cash equivalents		248,846			1.3	%		459,227			2.2	%
Investments in unconsolidated real estate joint ventures		1,534,514			7.7	%		1,152,927			5.6	%
Investments in unconsolidated operating entities		1,455,842			7.3	%		1,289,434			6.3	%
Other		1,316,426			6.7	%		1,185,548			5.8	%
Total assets	$	19,817,834			100.0	%	$	20,519,801			100.0	%


Contractual Commitments	2022(1)		2023		2024		2025		2026		Thereafter		Total
Purchase obligations	$	269,883	$	288,935	$	99,237	$	62,506	$	42,456	$	80,322	$	843,339
Operating lease commitments		4,964		8,933		9,020		8,381		7,883		247,907		287,088

Basis Point Change in Marketability Discount

Estimated
Increase
(Decrease)
In Fair Value

+100 basis points

(~~244~~43

- 100 basis points