Maryland

Delaware

~~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

~~1000 URBAN CENTER DRIVE, SUITE 501~~

~~BIRMINGHAM, AL~~

~~35242~~

(Address of principal executive offices)

(Zip Code)

~~(205) 969-3755~~

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

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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 ofRegulation S-T ~~(§232.405 of this chapter)~~ during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

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


Large accelerated filer	☒	(Medical Properties Trust, Inc. only)	Accelerated filer	☐

Non-accelerated filer	☒	(MPT Operating Partnership, L.P. only)	Smaller reporting company	☐

		~~(Do not check if a smaller reporting company)~~	Emerging growth company	☐

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November~~May 3, ~~2017,~~2021, Medical Properties Trust, Inc. had ~~364,156,080~~588.2 million shares of common stock, par value $0.001, outstanding.

EXPLANATORY NOTE

This report combines the Quarterly Reports on Form 10-Q for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2021 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,” ~~“our company,”~~ “Medical Properties,” “MPT,” or ~~“the company”~~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 ~~“our operating partnership” or “the operating~~“operating partnership” refer to MPT Operating Partnership, L.P. together with its consolidated subsidiaries.

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

AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER 30, 2017~~March 31, 2021

Table of Contents


	Page
PART I — FINANCIAL INFORMATION				4	3
Item 1 Financial Statements				4	3
Medical Properties Trust, Inc. and Subsidiaries
	Condensed Consolidated Balance Sheets at ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~2020			4	3
	Condensed Consolidated Statements of Net Income for the Three Months Ended March 31, 2021 and ~~Nine Months Ended September 30, 2017 and 2016~~2020			5	4
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2021 and ~~Nine~~2020		5
	Condensed Consolidated Statements of Equity for the Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020			6
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020			7
MPT Operating Partnership, L.P. and Subsidiaries
	Condensed Consolidated Balance Sheets at ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~2020			8
	Condensed Consolidated Statements of Net Income for the Three Months Ended March 31, 2021 and ~~Nine Months Ended September 30, 2017 and 2016~~2020			9
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2021 and ~~Nine~~2020		10
	Condensed Consolidated Statements of Capital for the Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020			10	11
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020			11	12
Medical Properties Trust, Inc. and MPT Operating Partnership, L.P.
	Notes to Condensed Consolidated Financial Statements			12	13
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations				30	23
Item 3 Quantitative and Qualitative Disclosures about Market Risk				41	33
Item 4 Controls and Procedures				42	34
PART II — OTHER INFORMATION				43	35
Item 1 Legal Proceedings				43	35
Item 1A Risk Factors				43	35
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds				44	35
Item 3 Defaults Upon Senior Securities				44	35
Item 4 Mine Safety Disclosures				44	35
Item 5 Other Information				44	35
Item 6 Exhibits				45
~~INDEX TO EXHIBITS~~		46	36
SIGNATURE				47	37

PART I — FINANCIAL INFORMATION

~~Item 1.~~

~~Financial Statements.~~

Item 1. Financial Statements.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets


	September 30, 2017			December 31, 2016			March 31, 2021			December 31, 2020
(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	$	5,795,286		$	4,317,866		$	12,107,170		$	12,078,927
Investment in financing leases								2,021,480			2,010,922
Mortgage loans		1,777,555			1,060,400			1,324,865			248,080
Net investment in direct financing leases		695,829			648,102

Gross investment in real estate assets		8,268,670			6,026,368			15,453,515			14,337,929
Accumulated depreciation and amortization		(418,880	)		(325,125	)		(903,798	)		(833,529	)

Net investment in real estate assets		7,849,790			5,701,243			14,549,717			13,504,400
Cash and cash equivalents		188,224			83,240			746,753			549,884
Interest and rent receivables		105,817			57,698			44,558			46,208
Straight-line rent receivables		166,142			116,861			545,385			490,462
Equity investments								1,080,214			1,123,623
Other loans		151,709			155,721			1,522,666			858,368
Other assets		465,358			303,773			256,382			256,069

Total Assets	$	8,927,040		$	6,418,536		$	18,745,675		$	16,829,014

Liabilities and Equity
Liabilities
Debt, net	$	4,832,264		$	2,909,341		$	9,999,538		$	8,865,458
Accounts payable and accrued expenses		180,631			207,711			445,595			438,750
Deferred revenue		18,906			19,933			21,533			36,177
Lease deposits and other obligations to tenants		54,035			28,323

Obligations to tenants and other lease liabilities								158,799			144,772
Total Liabilities		5,085,836			3,165,308			10,625,465			9,485,157
Equity
Preferred stock, $0.001 par value. Authorized 10,000 shares; no shares outstanding		—			—
Common stock, $0.001 par value. Authorized 500,000 shares; issued and outstanding — 364,084 shares at September 30, 2017 and 320,514 shares at December 31, 2016		364			321
Additional paid in capital		4,330,495			3,775,336
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 — 583,109 shares at March 31, 2021 and 541,419 shares at December 31, 2020								583			541
Additional paid-in capital								8,252,966			7,461,503
Distributions in excess of net income		(468,473	)		(434,114	)		(71,071	)		(71,411	)
Accumulated other comprehensive loss		(35,165	)		(92,903	)		(66,720	)		(51,324	)
Treasury shares, at cost		(777	)		(262	)		(777	)		(777	)

Total Medical Properties Trust, Inc. Stockholders’ Equity		3,826,444			3,248,378
Total Medical Properties Trust, Inc. stockholders’ equity								8,114,981			7,338,532
Non-controlling interests		14,760			4,850			5,229			5,325

Total Equity		3,841,204			3,253,228			8,120,210			7,343,857

Total Liabilities and Equity	$	8,927,040		$	6,418,536		$	18,745,675		$	16,829,014

See accompanying notes to condensed consolidated financial statements.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Net Income

(Unaudited)

   For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
(In thousands, except per share amounts)    2017 2016 2017 2016
Revenues

Rent billed
   $ 110,930 $ 82,387 $ 311,140 $ 234,408
Straight-line rent
   17,505 9,741 46,561 26,509
Income from direct financing leases
   19,115 14,678 55,307 47,181
Interest and fee income
   29,030 19,749 86,776 79,756


Total revenues
   176,580 126,555 499,784 387,854
Expenses

Real estate depreciation and amortization
   31,915 23,876 88,994 67,850
Impairment charges
   —   (80 ) —   7,295
Property-related
   1,519 (93 ) 4,000 1,592
Acquisition expenses
   7,434 2,677 20,996 6,379
General and administrative
   15,011 12,305 43,287 35,821


Total operating expenses
   55,879 38,685 157,277 118,937


Operating income
   120,701 87,870 342,507 268,917
Other income (expense)

Interest expense
   (42,759 ) (40,262 ) (120,498 ) (121,132 )
Gain on sale of real estate and other asset dispositions, net
   18 44,616 7,431 61,294
Earnings (loss) from equity and other interests
   3,384 1,245 7,898 (2,556 )
Unutilized financing fees/debt refinancing costs
   (4,414 ) (22,535 ) (18,794 ) (22,539 )
Other income (expense)
   481 99 1,101 (118 )
Income tax expense
   (530 ) (490 ) (783 ) (1,173 )


Net other expense
   (43,820 ) (17,327 ) (123,645 ) (86,224 )


Income from continuing operations
   76,881 70,543 218,862 182,693
Loss from discontinued operations
   —   —   —   (1 )


Net income
   76,881 70,543 218,862 182,692
Net income attributable to non-controlling interests
   (417 ) (185 ) (1,013 ) (683 )


Net income attributable to MPT common stockholders
   $ 76,464 $ 70,358 $ 217,849 $ 182,009


Earnings per common share — basic

Income from continuing operations attributable to MPT common stockholders
   $ 0.21 $ 0.29 $ 0.63 $ 0.75
Loss from discontinued operations attributable to MPT common stockholders
   —   —   —   —


Net income attributable to MPT common stockholders
   $ 0.21 $ 0.29 $ 0.63 $ 0.75


Weighted average shares outstanding — basic
   364,315 246,230 345,076 240,607


Earnings per common share — diluted

Income from continuing operations attributable to MPT common stockholders
   $ 0.21 $ 0.28 $ 0.63 $ 0.75
Loss from discontinued operations attributable to MPT common stockholders
   —   —   —   —


Net income attributable to MPT common stockholders
   $ 0.21 $ 0.28 $ 0.63 $ 0.75


Weighted average shares outstanding — diluted
   365,046 247,468 345,596 241,432


Dividends declared per common share
   $ 0.24 $ 0.23 $ 0.72 $ 0.68

	For the Three Months Ended March 31,
(In thousands, except per share amounts)	2021			2020
Revenues
Rent billed	$	213,344		$	171,767
Straight-line rent		54,873			31,421
Income from financing leases		50,894			52,436
Interest and other income		43,654			38,508
Total revenues		362,765			294,132
Expenses
Interest		86,972			80,899
Real estate depreciation and amortization		75,642			60,921
Property-related		5,453			5,412
General and administrative		36,073			33,385
Total expenses		204,140			180,617
Other income (expense)
Gain on sale of real estate		989			1,325
Real estate impairment charges		—			(19,006	)
Earnings from equity interests		7,101			4,079
Debt refinancing and unutilized financing costs		(2,269	)		(611	)
Other (including mark-to-market adjustments on equity securities)		7,794			(14,135	)
Total other income (expense)		13,615			(28,348	)

Income before income tax		172,240			85,167
Income tax expense		(8,360	)		(4,010	)

Net income		163,880			81,157
Net income attributable to non-controlling interests		(97	)		(165	)
Net income attributable to MPT common stockholders	$	163,783		$	80,992

Earnings per common share — basic and diluted
Net income attributable to MPT common stockholders	$	0.28		$	0.15

Weighted-average shares outstanding — basic		576,240			521,076
Weighted-average shares outstanding — diluted		577,541			522,179

Dividends declared per common share	$	0.28		$	0.27

See accompanying notes to condensed consolidated financial statements.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended March 31,
(In thousands)	2017			2016			2017			2016			2021			2020
Net income	$	76,881		$	70,543		$	218,862		$	182,692		$	163,880		$	81,157
Other comprehensive income:
Unrealized gain on interest rate swap		—			854			—			2,494
Foreign currency translation gain		17,426			4,450			57,738			10,354

Unrealized gain (loss) on interest rate swap, net of tax														15,504			(25,103	)
Foreign currency translation loss														(30,900	)		(23,272	)
Total comprehensive income		94,307			75,847			276,600			195,540			148,484			32,782
Comprehensive income attributable to non-controlling interests		(417	)		(185	)		(1,013	)		(683	)		(97	)		(165	)

Comprehensive income attributable to MPT common stockholders	$	93,890		$	75,662		$	275,587		$	194,857		$	148,387		$	32,617

See accompanying notes to condensed consolidated financial statements.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Equity

(Unaudited)

	Preferred				Common
(In thousands, except per share amounts)	Shares		Par Value		Shares		Par Value		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Shares			Non- Controlling Interests			Total Equity
Balance at December 31, 2019		—	$	—		517,522	$	518	$	7,008,199	$	83,012		$	(62,905	)	$	(777	)	$	107		$	7,028,154
Net income		—		—		—		—		—		80,992			—			—			165			81,157
Cumulative effect of change in accounting principles		—		—		—		—		—		(8,399	)		—			—			—			(8,399	)
Unrealized loss on interest rate swap, net of tax		—		—		—		—		—		—			(25,103	)		—			—			(25,103	)
Foreign currency translation loss		—		—		—		—		—		—			(23,272	)		—			—			(23,272	)
Stock vesting and amortization of stock-based compensation		—		—		2,312		2		10,034		—			—			—			—			10,036
Distributions to non-controlling interests		—		—		—		—		—		—			—			—			(165	)		(165	)
Proceeds from offering (net of offering costs)		—		—		2,601		2		61,680		—			—			—			—			61,682
Dividends declared ($0.27 per common share)		—		—		—		—		—		(141,580	)		—			—			—			(141,580	)
Balance at March 31, 2020		—	$	—		522,435	$	522	$	7,079,913	$	14,025		$	(111,280	)	$	(777	)	$	107		$	6,982,510

	Preferred				Common
	Shares		Par Value		Shares		Par Value		Additional Paid-in Capital		Distributions in Excess of Net Income			Accumulated Other Comprehensive Loss			Treasury Shares			Non- Controlling Interests			Total Equity
Balance at December 31, 2020		—	$	—		541,419	$	541	$	7,461,503	$	(71,411	)	$	(51,324	)	$	(777	)	$	5,325		$	7,343,857
Net income		—		—		—		—		—		163,783			—			—			97			163,880
Unrealized gain on interest rate swap, net of tax		—		—		—		—		—		—			15,504			—			—			15,504
Foreign currency translation loss		—		—		—		—		—		—			(30,900	)		—			—			(30,900	)
Stock vesting and amortization of stock-based compensation		—		—		1,741		2		12,262		—			—			—			—			12,264
Distributions to non-controlling interests		—		—		—		—		—		—			—			—			(193	)		(193	)
Proceeds from offering (net of offering costs)		—		—		39,949		40		779,201		—			—			—			—			779,241
Dividends declared ($0.28 per common share)		—		—		—		—		—		(163,443	)		—			—			—			(163,443	)
Balance at March 31, 2021		—	$	—		583,109	$	583	$	8,252,966	$	(71,071	)	$	(66,720	)	$	(777	)	$	5,229		$	8,120,210

See accompanying notes to condensed consolidated financial statements.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

							For the Three Months Ended March 31,
	For the Nine Months Ended September 30,						2021			2020
(In thousands)	2017			2016
							(In thousands)
Operating activities
Net income	$	218,862		$	182,692		$	163,880		$	81,157
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		93,805			69,720			78,606			63,833
Amortization of deferred financing costs and debt discount		4,748			5,799			3,817			3,210
Direct financing lease interest accretion		(7,276	)		(6,757	)
Straight-line rent revenue		(47,678	)		(27,009	)
Straight-line rent revenue and other								(65,333	)		(47,846	)
Share-based compensation		7,148			5,832			12,264			10,036
Gain from sale of real estate and other asset dispositions, net		(7,431	)		(61,294	)
Gain from sale of real estate								(989	)		(1,325	)
Impairment charges		—			7,295			—			19,006
Straight-line rent and other write-off		1,117			3,063
Unutilized financing fees/debt refinancing costs		18,794			22,539
Straight-line rent and other (recovery) write-off								(5,238	)		7,717
Debt refinancing and unutilized financing costs								2,269			611
Pre-acquisition rent collected - Circle Transaction								—			(35,020	)
Other adjustments		(7,152	)		(8,398	)		(3,575	)		(421	)
Changes in:
Interest and rent receivables		(14,613	)		(12,790	)		13,396			2,137
Accounts payable and accrued expenses		(40,378	)		(12,403	)		5,062			(4,221	)

Deferred revenue								(15,429	)		8,040
Net cash provided by operating activities		219,946			168,289			188,730			106,914
Investing activities
Cash paid for acquisitions and other related investments		(2,152,069	)		(213,100	)		(1,778,417	)		(1,973,661	)
Net proceeds from sale of real estate		64,362			198,767			10,905			9,597
Principal received on loans receivable		6,760			804,809			40,937			—
Investment in loans receivable		(18,574	)		(102,909	)		(23,935	)		(2,307	)
Construction in progress and other		(52,953	)		(139,336	)
Investment in unsecured senior notes		—			(50,000	)
Proceeds from sale of unsecured senior notes		—			50,000
Other investments, net		(73,982	)		(52,701	)

Net cash (used for) provided by investing activities		(2,226,456	)		495,530
Return of equity investment								11,000			63,122
Capital additions and other investments, net								(42,050	)		8,460
Net cash used for investing activities								(1,781,560	)		(1,894,789	)
Financing activities
Proceeds from term debt		2,355,280			1,000,000
Proceeds from term debt, net of discount								1,839,735			915,950
Payments of term debt		(688,221	)		(515,221	)		(689,450	)		—
Revolving credit facilities, net		155,089			(1,100,000	)		8,910			—
Distributions paid		(239,211	)		(160,060	)
Dividends paid								(147,666	)		(138,074	)
Lease deposits and other obligations to tenants		(7,467	)		13,784			12,900			2,348
Proceeds from sale of common shares, net of offering costs		548,055			1,024,088			779,241			61,682
Debt issuance costs paid and other financing activities		(27,167	)		(31,317	)
Payment of debt refinancing, deferred financing costs, and other financing activities								(18,479	)		(6,687	)
Net cash provided by financing activities								1,785,191			835,219
Increase (decrease) in cash, cash equivalents, and restricted cash for period								192,361			(952,656	)
Effect of exchange rate changes								4,356			(9,157	)
Cash, cash equivalents, and restricted cash at beginning of period								556,369			1,467,991
Cash, cash equivalents, and restricted cash at end of period							$	753,086		$	506,178
Interest paid							$	82,471		$	80,721
Supplemental schedule of non-cash financing activities:
Dividends declared, unpaid							$	163,443		$	141,667
Cash, cash equivalents, and restricted cash are comprised of the following:
Beginning of period:
Cash and cash equivalents							$	549,884		$	1,462,286
Restricted cash, included in Other assets								6,485			5,705
							$	556,369		$	1,467,991
Net cash provided by financing activities		2,096,358			231,274
End of period:
Cash and cash equivalents							$	746,753		$	500,213
Restricted cash, included in Other assets								6,333			5,965
							$	753,086		$	506,178
Increase in cash and cash equivalents for period		89,848			895,093
Effect of exchange rate changes		15,136			4,283
Cash and cash equivalents at beginning of period		83,240			195,541

Cash and cash equivalents at end of period	$	188,224		$	1,094,917

Interest paid	$	131,708		$	120,374
Supplemental schedule of non-cash investing activities:
(Decrease) increase in development project construction costs incurred, not paid	$	(9,036	)	$	17,458
Supplemental schedule of non-cash financing activities:
Distributions declared, not paid	$	87,519		$	58,333

See accompanying notes to condensed consolidated financial statements.

MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets


	September 30, 2017			December 31, 2016			March 31, 2021			December 31, 2020
(In thousands)	(Unaudited)			(Note 2)			(Unaudited)			(Note 2)
Assets
Real estate assets
Land, buildings and improvements, intangible lease assets, and other	$	5,795,286		$	4,317,866		$	12,107,170		$	12,078,927
Investment in financing leases								2,021,480			2,010,922
Mortgage loans		1,777,555			1,060,400			1,324,865			248,080
Net investment in direct financing leases		695,829			648,102

Gross investment in real estate assets		8,268,670			6,026,368			15,453,515			14,337,929
Accumulated depreciation and amortization		(418,880	)		(325,125	)		(903,798	)		(833,529	)

Net investment in real estate assets		7,849,790			5,701,243			14,549,717			13,504,400
Cash and cash equivalents		188,224			83,240			746,753			549,884
Interest and rent receivables		105,817			57,698			44,558			46,208
Straight-line rent receivables		166,142			116,861			545,385			490,462
Equity investments								1,080,214			1,123,623
Other loans		151,709			155,721			1,522,666			858,368
Other assets		465,358			303,773			256,382			256,069

Total Assets	$	8,927,040		$	6,418,536		$	18,745,675		$	16,829,014

Liabilities and Capital
Liabilities
Debt, net	$	4,832,264		$	2,909,341		$	9,999,538		$	8,865,458
Accounts payable and accrued expenses		92,793			132,868			281,762			290,757
Deferred revenue		18,906			19,933			21,533			36,177
Lease deposits and other obligations to tenants		54,035			28,323
Obligations to tenants and other lease liabilities								158,799			144,772
Payable due to Medical Properties Trust, Inc.		87,448			74,453			163,443			147,603

Total Liabilities		5,085,446			3,164,918			10,625,075			9,484,767
Capital
General Partner — issued and outstanding — 3,641 units at September 30, 2017 and 3,204 units at December 31, 2016		38,639			33,436
Limited Partners:
Common units — issued and outstanding — 360,443 units at September 30, 2017 and 317,310 units at December 31, 2016		3,823,360			3,308,235
LTIP units — issued and outstanding — 292 units at September 30, 2017 and December 31, 2016		—			—
General Partner — issued and outstanding — 5,830 units at March 31, 2021 and 5,414 units at December 31, 2020								81,896			73,977
Limited Partners — issued and outstanding — 577,279 units at March 31, 2021 and 536,005 units at December 31, 2020								8,100,195			7,316,269
Accumulated other comprehensive loss		(35,165	)		(92,903	)		(66,720	)		(51,324	)

Total MPT Operating Partnership, L.P. Capital		3,826,834			3,248,768
Total MPT Operating Partnership, L.P. capital								8,115,371			7,338,922
Non-controlling interests		14,760			4,850			5,229			5,325

Total Capital		3,841,594			3,253,618			8,120,600			7,344,247

Total Liabilities and Capital	$	8,927,040		$	6,418,536		$	18,745,675		$	16,829,014

See accompanying notes to condensed consolidated financial statements.

MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Net Income

(Unaudited)

   For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
(In thousands, except per unit amounts)    2017 2016 2017 2016
Revenues

Rent billed
   $ 110,930 $ 82,387 $ 311,140 $ 234,408
Straight-line rent
   17,505 9,741 46,561 26,509
Income from direct financing leases
   19,115 14,678 55,307 47,181
Interest and fee income
   29,030 19,749 86,776 79,756


Total revenues
   176,580 126,555 499,784 387,854
Expenses

Real estate depreciation and amortization
   31,915 23,876 88,994 67,850
Impairment charges
   —   (80 ) —   7,295
Property-related
   1,519 (93 ) 4,000 1,592
Acquisition expenses
   7,434 2,677 20,996 6,379
General and administrative
   15,011 12,305 43,287 35,821


Total operating expenses
   55,879 38,685 157,277 118,937


Operating income
   120,701 87,870 342,507 268,917
Other income (expense)

Interest expense
   (42,759 ) (40,262 ) (120,498 ) (121,132 )
Gain on sale of real estate and other asset dispositions, net
   18 44,616 7,431 61,294
Earnings (loss) from equity and other interests
   3,384 1,245 7,898 (2,556 )
Unutilized financing fees/debt refinancing costs
   (4,414 ) (22,535 ) (18,794 ) (22,539 )
Other income (expense)
   481 99 1,101 (118 )
Income tax expense
   (530 ) (490 ) (783 ) (1,173 )


Net other expense
   (43,820 ) (17,327 ) (123,645 ) (86,224 )


Income from continuing operations
   76,881 70,543 218,862 182,693
Loss from discontinued operations
   —   —   —   (1 )


Net income
   76,881 70,543 218,862 182,692
Net income attributable to non-controlling interests
   (417 ) (185 ) (1,013 ) (683 )


Net income attributable to MPT Operating Partnership partners
   $ 76,464 $ 70,358 $ 217,849 $ 182,009


Earnings per unit — basic

Income from continuing operations attributable to MPT Operating Partnership partners
   $ 0.21 $ 0.29 $ 0.63 $ 0.75
Loss from discontinued operations attributable to MPT Operating Partnership partners
   —   —   —   —


Net income attributable to MPT Operating Partnership partners
   $ 0.21 $ 0.29 $ 0.63 $ 0.75


Weighted average units outstanding — basic
   364,315 246,230 345,076 240,607


Earnings per unit — diluted

Income from continuing operations attributable to MPT Operating Partnership partners
   $ 0.21 $ 0.28 $ 0.63 $ 0.75
Loss from discontinued operations attributable to MPT Operating Partnership partners
   —   —   —   —


Net income attributable to MPT Operating Partnership partners
   $ 0.21 $ 0.28 $ 0.63 $ 0.75


Weighted average units outstanding — diluted
   365,046 247,468 345,596 241,432


Dividends declared per unit
   $ 0.24 $ 0.23 $ 0.72 $ 0.68

	For the Three Months Ended March 31,
(In thousands, except per unit amounts)	2021			2020
Revenues
Rent billed	$	213,344		$	171,767
Straight-line rent		54,873			31,421
Income from financing leases		50,894			52,436
Interest and other income		43,654			38,508
Total revenues		362,765			294,132
Expenses
Interest		86,972			80,899
Real estate depreciation and amortization		75,642			60,921
Property-related		5,453			5,412
General and administrative		36,073			33,385
Total expenses		204,140			180,617
Other income (expense)
Gain on sale of real estate		989			1,325
Real estate impairment charges		—			(19,006	)
Earnings from equity interests		7,101			4,079
Debt refinancing and unutilized financing costs		(2,269	)		(611	)
Other (including mark-to-market adjustments on equity securities)		7,794			(14,135	)
Total other income (expense)		13,615			(28,348	)

Income before income tax		172,240			85,167
Income tax expense		(8,360	)		(4,010	)

Net income		163,880			81,157
Net income attributable to non-controlling interests		(97	)		(165	)
Net income attributable to MPT Operating Partnership partners	$	163,783		$	80,992

Earnings per unit — basic and diluted
Net income attributable to MPT Operating Partnership partners	$	0.28		$	0.15

Weighted-average units outstanding — basic		576,240			521,076
Weighted-average units outstanding — diluted		577,541			522,179

Dividends declared per unit	$	0.28		$	0.27

See accompanying notes to condensed consolidated financial statements.

MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended March 31,
(In thousands)	2017			2016			2017			2016			2021			2020
Net income	$	76,881		$	70,543		$	218,862		$	182,692		$	163,880		$	81,157
Other comprehensive income:
Unrealized gain on interest rate swap		—			854			—			2,494
Foreign currency translation gain		17,426			4,450			57,738			10,354

Unrealized gain (loss) on interest rate swap, net of tax														15,504			(25,103	)
Foreign currency translation loss														(30,900	)		(23,272	)
Total comprehensive income		94,307			75,847			276,600			195,540			148,484			32,782
Comprehensive income attributable to non-controlling interests		(417	)		(185	)		(1,013	)		(683	)		(97	)		(165	)

Comprehensive income attributable to MPT Operating Partnership Partners	$	93,890		$	75,662		$	275,587		$	194,857

Comprehensive income attributable to MPT Operating Partnership partners													$	148,387		$	32,617

See accompanying notes to condensed consolidated financial statements.

MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Capital

(Unaudited)

	General					Limited Partners									Accumulated
	Partner					Common					LTIPs				Other			Non-
(In thousands, except per unit amounts)	Units		Unit Value			Units		Unit Value			Units		Unit Value		Comprehensive Loss			Controlling Interests			Total Capital
Balance at December 31, 2019		5,176	$	70,939			512,346	$	7,020,403			232	$	—	$	(62,905	)	$	107		$	7,028,544
Net income		—		810			—		80,182			—		—		—			165			81,157
Cumulative effect of change in accounting principles		—		(84	)		—		(8,315	)		—		—		—			—			(8,399	)
Unrealized loss on interest rate swap, net of tax		—		—			—		—			—		—		(25,103	)		—			(25,103	)
Foreign currency translation loss		—		—			—		—			—		—		(23,272	)		—			(23,272	)
Unit vesting and amortization of unit-based compensation		23		100			2,289		9,936			—		—		—			—			10,036
Distributions to non-controlling interests		—		—			—		—			—		—		—			(165	)		(165	)
Proceeds from offering (net of offering costs)		26		617			2,575		61,065			—		—		—			—			61,682
Distributions declared ($0.27 per unit)		—		(1,416	)		—		(140,164	)		—		—		—			—			(141,580	)
Balance at March 31, 2020		5,225	$	70,966			517,210	$	7,023,107			232	$	—	$	(111,280	)	$	107		$	6,982,900

	General					Limited Partners					Accumulated
	Partner					Common					Other			Non-
	Units		Unit Value			Units		Unit Value			Comprehensive Loss			Controlling Interests			Total Capital
Balance at December 31, 2020		5,414	$	73,977			536,005	$	7,316,269		$	(51,324	)	$	5,325		$	7,344,247
Net income		—		1,638			—		162,145			—			97			163,880
Unrealized gain on interest rate swap, net of tax		—		—			—		—			15,504			—			15,504
Foreign currency translation loss		—		—			—		—			(30,900	)		—			(30,900	)
Unit vesting and amortization of unit-based compensation		17		123			1,724		12,141			—			—			12,264
Distributions to non-controlling interests		—		—			—		—			—			(193	)		(193	)
Proceeds from offering (net of offering costs)		399		7,792			39,550		771,449			—			—			779,241
Distributions declared ($0.28 per unit)		—		(1,634	)		—		(161,809	)		—			—			(163,443	)
Balance at March 31, 2021		5,830	$	81,896			577,279	$	8,100,195		$	(66,720	)	$	5,229		$	8,120,600

See accompanying notes to condensed consolidated financial statements.

MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

							For the Three Months Ended March 31,
	For the Nine Months Ended September 30,						2021			2020
(In thousands)	2017			2016
							(In thousands)
Operating activities
Net income	$	218,862		$	182,692		$	163,880		$	81,157
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		93,805			69,720			78,606			63,833
Amortization of deferred financing costs and debt discount		4,748			5,799			3,817			3,210
Direct financing lease interest accretion		(7,276	)		(6,757	)
Straight-line rent revenue		(47,678	)		(27,009	)
Straight-line rent revenue and other								(65,333	)		(47,846	)
Unit-based compensation		7,148			5,832			12,264			10,036
Gain from sale of real estate and other asset dispositions, net		(7,431	)		(61,294	)
Gain from sale of real estate								(989	)		(1,325	)
Impairment charges		—			7,295			—			19,006
Straight-line rent and other write-off		1,117			3,063
Unutilized financing fees/debt refinancing costs		18,794			22,539
Straight-line rent and other (recovery) write-off								(5,238	)		7,717
Debt refinancing and unutilized financing costs								2,269			611
Pre-acquisition rent collected - Circle Transaction								—			(35,020	)
Other adjustments		(7,152	)		(8,398	)		(3,575	)		(421	)
Changes in:
Interest and rent receivables		(14,613	)		(12,790	)		13,396			2,137
Accounts payable and accrued expenses		(40,378	)		(12,403	)		5,062			(4,221	)

Deferred revenue								(15,429	)		8,040
Net cash provided by operating activities		219,946			168,289			188,730			106,914
Investing activities
Cash paid for acquisitions and other related investments		(2,152,069	)		(213,100	)		(1,778,417	)		(1,973,661	)
Net proceeds from sale of real estate		64,362			198,767			10,905			9,597
Principal received on loans receivable		6,760			804,809			40,937			—
Investment in loans receivable		(18,574	)		(102,909	)		(23,935	)		(2,307	)
Construction in progress and other		(52,953	)		(139,336	)
Investment in unsecured senior notes		—			(50,000	)
Proceeds from sale of unsecured senior notes		—			50,000
Other investments, net		(73,982	)		(52,701	)

Net cash (used for) provided by investing activities		(2,226,456	)		495,530
Return of equity investment								11,000			63,122
Capital additions and other investments, net								(42,050	)		8,460
Net cash used for investing activities								(1,781,560	)		(1,894,789	)
Financing activities
Proceeds from term debt		2,355,280			1,000,000
Proceeds from term debt, net of discount								1,839,735			915,950
Payments of term debt		(688,221	)		(515,221	)		(689,450	)		—
Revolving credit facilities, net		155,089			(1,100,000	)		8,910			—
Distributions paid		(239,211	)		(160,060	)		(147,666	)		(138,074	)
Lease deposits and other obligations to tenants		(7,467	)		13,784			12,900			2,348
Proceeds from sale of units, net of offering costs		548,055			1,024,088			779,241			61,682
Debt issuance costs paid and other financing activities		(27,167	)		(31,317	)
Payment of debt refinancing, deferred financing costs, and other financing activities								(18,479	)		(6,687	)
Net cash provided by financing activities								1,785,191			835,219
Increase (decrease) in cash, cash equivalents, and restricted cash for period								192,361			(952,656	)
Effect of exchange rate changes								4,356			(9,157	)
Cash, cash equivalents, and restricted cash at beginning of period								556,369			1,467,991
Cash, cash equivalents, and restricted cash at end of period							$	753,086		$	506,178
Interest paid							$	82,471		$	80,721
Supplemental schedule of non-cash financing activities:
Distributions declared, unpaid							$	163,443		$	141,667
Cash, cash equivalents, and restricted cash are comprised of the following:
Beginning of period:
Cash and cash equivalents							$	549,884		$	1,462,286
Restricted cash, included in Other assets								6,485			5,705
							$	556,369		$	1,467,991
Net cash provided by financing activities		2,096,358			231,274
End of period:
Cash and cash equivalents							$	746,753		$	500,213
Restricted cash, included in Other assets								6,333			5,965
							$	753,086		$	506,178
Increase in cash and cash equivalents for period		89,848			895,093
Effect of exchange rate changes		15,136			4,283
Cash and cash equivalents at beginning of period		83,240			195,541

Cash and cash equivalents at end of period	$	188,224		$	1,094,917

Interest paid	$	131,708		$	120,374
Supplemental schedule of non-cash investing activities:
(Decrease) increase in development project construction costs incurred, not paid	$	(9,036	)	$	17,458
Supplemental schedule of non-cash financing activities:
Distributions declared, not paid	$	87,519		$	58,333

See accompanying notes to condensed consolidated financial statements.

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

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization

Medical Properties Trust, Inc., a Maryland corporation, was formed on August 27, 2003, under the Maryland General Corporation Law for the purpose of engaging in the business of investing in, owning, and leasing ~~commercial~~healthcare real estate. Our operating partnership subsidiary, MPT Operating Partnership, L.P., (the “Operating Partnership”) through which we conduct all of our operations, was formed in September 2003. ~~Through another wholly-owned subsidiary, Medical Properties Trust, LLC, we are the sole general partner of the Operating Partnership.~~ At present, we ~~directly~~ own ~~substantially~~ all of the limited 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 ~~have operated~~operate as a real estate investment trust (“REIT”) ~~since April 6, 2004, and accordingly, elected REIT status upon the filing in September 2005 of the calendar year 2004 federal income tax return.~~. Accordingly, we will generally not be subject to ~~federal income tax in the~~ 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 ~~must be~~are conducted by entities which we elected to be treated as taxable REIT subsidiaries (“~~TRSs”~~TRS”). Our ~~TRSs~~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;~~taxes of the jurisdictions where our properties reside and/or legal entities are domiciled; however, we do not expect to incur additional taxes in the U.S. from foreign-based income as the majority of such income ~~will flow~~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, inpatient physical rehabilitation hospitals, behavioral health facilities, long-term acute care hospitals, ~~surgery centers, centers for treatment of specific conditions such as cardiac, pulmonary, cancer,~~ and ~~neurological hospitals, and other healthcare-oriented~~freestanding ER/urgent care facilities. We also make mortgage and other loans to operators of similar facilities. In addition, we may obtain profits or equity interests in our tenants, from ~~time to time,~~time-to-time, in order to enhance our overall return.

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, 2021, we have investments in approximately 425 facilities in 33 states in the U.S., in 6 countries in Europe, 1 country in South America, and across Australia. We manage our business as a single business segment. ~~All of our properties are located in the U.S. and Europe.~~

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.~~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 ~~presentation~~statement have been included. Operating results for the three ~~and nine month periods~~months ended ~~September 30, 2017,~~March 31, 2021, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~2021. The condensed consolidated balance sheet at December 31, ~~2016~~2020 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 us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of 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, 2021 (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). Although COVID-19 vaccines continue to roll out worldwide and hospitals around the world have generally returned to their normal operations, the ultimate impact to our tenants’ results of operations and liquidity and their ability to pay our rent and interest due to the impact of COVID-19 cannot be predicted with 100% confidence. This makes any estimates and assumptions as of March 31, 2021 inherently less certain than they would be absent the potential impact of COVID-19. Actual results may ultimately differ from our estimates.

For information about significant accounting policies, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2016. During the nine months ended September 30, 2017, there were~~2020. There have been no material changes to these ~~policies.~~significant accounting policies other than the following:

Recent Accounting ~~Developments:~~Developments

~~Revenue from Contracts with Customers~~Reference Rate Reform

In ~~May 2014,~~March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers.” Under the new standard, revenue is recognized at the time a good or service is transferred to a customer for the amount of consideration received for that specific good or service. This standard is effective for us beginning January 1, 2018, and we plan to adopt under the modified retrospective approach. We do not expect this standard to have a significant impact on our financial results upon adoption, as a substantial portion of our revenue consists of rental income from leasing arrangements and interest income from loans, which are specifically excluded from ASU No. ~~2014-09. Under~~ 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU ~~No. 2014-09, we do expect more transactions~~2020-04”) to ~~qualify as sales of real estate with gains on sales being recognized earlier than under current~~simplify the accounting ~~guidance, as the new guidance is based on transfer of control versus whether~~for contract modifications made to replace LIBOR or not the seller has continuing involvement. Thus, we expect to record an approximate $2 million adjustment to retained earnings upon adoption of ASU No. 2014-09 to fully recognize a gain on real estate sold in prior yearsother reference rates that ~~was required~~are expected to be ~~deferred under existing accounting guidance.~~

~~Clarifying the Definition~~discontinued because of ~~a Business~~

Inreference 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 ~~2017,~~7, 2021, the FASB issued ASU No. ~~2017-01, “Clarifying~~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 ~~Definition of a Business” (“ASU 2017-01”). The amendments in ASU 2017-01 provide an initial screen~~transition. We have evaluated our contracts that are referenced to ~~determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset~~LIBOR or a group of similar identifiable assets, in which case, the transaction would be accounted for as an asset acquisition rather than as a business combination. In addition, ASU 2017-01 clarifies the requirements for a set of activitiesother reference rates expected to be ~~considered~~discontinued. We expect our British pound sterling term loan and corresponding interest rate swap to be modified with a ~~business~~replacement reference rate during 2021, and narrows the definition of an output. A reporting entity must apply the amendments in ASU 2017-01 using a prospective approach. We will adopt ASU 2017-01 on January 1, 2018 for our 2018 fiscal year. Upon adoption, we expect to recognize a majority of our real estate acquisitions as asset transactions rather than business combinations, which will result in the capitalization of third party transaction costs that are directly related to an acquisition. Indirect and internal transaction costs will continue to be expensed, but we do not expect to include these costs as an adjustment in deriving normalized funds from operations in the future. We expect this change in accounting, once adopted, may decrease our normalized funds from operations by $1 million to $2 million per quarter.

~~Leases~~

In February 2016, the FASB issued ASU 2016-02, “Leases”, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for ~~leases~~such modifications using ~~an approach that is substantially equivalent to existing guidance~~the expedients and exceptions provided for ~~sales-type leases, direct financing leases~~in ASU 2020-04 and ~~operating leases.~~

~~We expect to adopt this new standard on January 1, 2019.~~ASU 2021-01. We are continuing to evaluate ~~this standard and~~ the need to modify our U.S. dollar LIBOR contracts, such as our unsecured credit facility, as the requirement to replace the U.S. dollar LIBOR has been extended to June 30, 2023. Moreover, we do not expect any impact to ~~us from both a lessor~~our Australian dollar term loan and ~~lessee perspective. However, we do have leases in which we~~corresponding interest rate swap, as these contracts are ~~the lessee, including ground leases, on which certain of our facilities reside, along with corporate office and equipment leases,~~not referenced to rates that ~~will be required~~are expected to be recorded on our balance sheet upon adoption of this standard. From a lessor perspective, we do expect certain non-lease components (including property taxes, insurance and other operating expenses thatdiscontinued.

Reclassifications

Certain amounts in the ~~tenants of our facilities are required~~consolidated financial statements for prior periods have been reclassified to ~~pay pursuant~~conform to ~~our “triple-net” leases) to be recorded gross versus net of~~ the ~~respective expenses upon adoption of this standard in 2019 in accordance with ASU No. 2014-09.~~

current period presentation.

Variable Interest Entities

At ~~September 30, 2017,~~March 31, 2021, we had loans to and/or equity investments in certain variable interest entities ~~(“VIEs”),~~approximating $350 million, which ~~are also tenants of~~represents our ~~facilities. We have determined that we are not the primary beneficiary of these VIEs. The carrying value and classification of the related assets and~~ maximum exposure to loss as a result of our involvement ~~with these VIEs at September 30, 2017 are presented below (in thousands):~~

VIE Type
   Maximum Loss
Exposure(1)    Asset Type
Classification    Carrying
Amount(2)
Loans, net
   $ 331,857    Mortgage and other loans    $ 235,287
Equity investments
   $ 13,242    Other assets    $ —

~~(1)~~

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

~~(2)~~

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

~~For the VIE types above, we do not consolidate the VIE~~ because we do not ~~have the ability to~~ control the activities (such as the day-to-day ~~healthcare operations of our borrower or investees)~~operations) that most significantly impact the ~~VIE’s~~ economic ~~performance. As~~performance of September 30, 2017, we were not required to provide any material financial support through a liquidity arrangement or otherwise to our unconsolidated VIEs, including circumstances in which it could be exposed to further losses (e.g., cash short falls).

Typically, our loans are collateralized by assets of the borrower (some assets of which are on the premises of facilities owned by us) and further supported by limited guarantees made by certain principals of the borrower.

~~See Note 3 and 7 for additional description of the nature, purpose and activities of our more significant VIEs and interests therein, such as Ernest Health, Inc. (“Ernest”).~~these entities.

3. Real Estate and ~~Lending~~Other Activities

~~Acquisitions~~New Investments

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

   Nine Months
Ended September 30,
   2017    2016
Assets Acquired

Land and land improvements
   $ 196,094    $ 13,602
Building
   987,442    125,744
Intangible lease assets — subject to amortization (weighted average useful life 28.7 years for 2017 and 19.4 years for 2016)
   128,961    10,754
Net investments in direct financing leases
   40,450    63,000
Mortgage loans
   700,000    —
Equity investments
   100,000    —
Liabilities assumed
   (878 )    —




Total assets acquired
   $ 2,152,069    $ 213,100
Loans repaid (1)
   —      (93,262 )




Total net assets acquired
   $ 2,152,069    $ 119,838

	For the Three Months Ended March 31,
	2021		2020

Land and land improvements	$	—	$	265,991
Buildings		—		1,608,771
Intangible lease assets — subject to amortization (weighted- average useful life 30.8 years for 2020)		—		231,774
Mortgage loans		1,090,400		—
Other loans and assets		688,017		1,328
Liabilities assumed		—		(134,203	)
Total net assets acquired	$	1,778,417	$	1,973,661

~~(1)~~

~~$93.3 million loans advanced to Capella (now RCCH Healthcare Partners (“RCCH”)) in 2015 and repaid in 2016 as a part of the Capella Transaction discussed below.~~

2021 Activity

Priory Group Transaction

~~The purchase price allocations attributable to~~On January 19, 2021, we completed the ~~2017 acquisitions and certain acquisitions made~~first of two phases in the ~~last quarter~~Priory Group (“Priory”) transaction in which we funded an£800 million interim mortgage loan on an identified portfolio of ~~2016 are preliminary. When all relevant information is obtained, resulting changes, if any, to our provisional purchase price allocation~~Priory real estate assets. In phase two, in a series of transactions we expect will be ~~adjusted to reflect new information obtained about~~completed during the ~~facts and circumstances that existed as of the respective acquisition dates that, if known, would have affected the measurement of the amounts recognized as of those dates.~~

~~2017 Activity~~

~~Steward Transactions~~

~~On September 29, 2017,~~2021 second quarter, we ~~acquired from IASIS Healthcare LLC (“IASIS”)~~will acquire a portfolio of ~~ten acute care hospitals~~select real estate assets from Priory (now owned by Waterland Private Equity Fund VII C.V. (“Waterland VII”)) in individual sale-and-leaseback transactions, subject to customary real estate and ~~one behavioral health~~other closing conditions. As all conditions to closing for a particular asset are satisfied, the applicable purchase price for the asset will be paid by us by proportionally converting and reducing the principal balance of the interim mortgage loan we made to Waterland VII in phase one. The aggregate purchase price for the real estate assets we acquire from Priory is thus expected to be approximately £800 million, plus customary stamp duty, tax, and other transaction costs.

In addition, we agreed to provide Waterland VII with a 364-day £250 million acquisition loan, which we funded on January 19, 2021, in connection with the closing of Waterland VII’s acquisition of Priory. The loan is secured by the same security assets securing the £800 million interim mortgage loan.

In connection with these transactions, we also acquired a 9.9% passive equity interest in the Waterland VII affiliate that indirectly owns Priory for a nominal amount.

We funded this investment using £500 million from a new $900 million interim credit facility ~~along with ancillary land~~as described in Note 4, £350 million from our revolving facility, and ~~buildings, that are located in Arizona, Utah, Texas, and Arkansas. The portfolio is now operated by~~the remainder from cash on-hand.

Other

On January 8, 2021, we made a $335 million loan to Steward Health Care System LLC (“Steward”), which ~~separately completed its acquisition~~was used to redeem a similarly sized convertible loan from Steward’s former private equity sponsor.

2020 Activity

Circle Transaction

On January 8, 2020, we acquired a portfolio of ~~IASIS on September 29, 2017. Our investment in the portfolio includes the acquisition of eight~~30 acute care hospitals ~~and one behavioral health facility for approximately $700 million,~~located throughout the ~~making of $700 million in mortgage loans on two acute care hospitals, and a $100 million minority equity contribution in Steward,~~United Kingdom for a combined investment of approximately $1.5 billion. The nine facilities acquired are being leased to Steward pursuant to the original long-term master lease agreement entered into in October 2016 that had an initial 15-year term with three 5-year extension options, plus annual inflation-based escalators. The terms of the mortgage loan are substantially similar to the master lease.

On May 1, 2017, we acquired eight hospitals previously affiliated with Community Health Systems, Inc. in Florida, Ohio, and Pennsylvania for an aggregate purchase price of $301.3 million. These facilities are leased to Steward, pursuant to the original long-term master lease with Steward.

~~MEDIAN Transactions~~

During the third quarter of 2017, we acquired two rehabilitation hospitals in Germany for an aggregate purchase price of €39.2 million, in addition to 11 rehabilitation hospitals in Germany that we acquired in the second quarter of 2017 for an aggregate purchase price of €127 million. These 13 properties are leased to affiliates of Median Kliniken S.a.r.l. (“MEDIAN”), pursuant to a third master lease that has a fixed term ending in August 2043 with annual escalators at the greater of one percent or 70% of German consumer price index. These acquisitions are the final properties of the portfolio of 20 properties in Germany that we agreed to acquire in July 2016 for €215.7 million, of which seven properties totaling €49.5 million closed in December 2016.

On June 22, 2017, we acquired an acute care hospital in Germany for a purchase price of €19.4 million of which €18.6 million was paid upon closing with the remainder being paid over four years. This property is leased to affiliates of MEDIAN, pursuant to an existing master lease agreement that ends in December 2042 with annual escalators at the greater of one percent or 70% of the German consumer price index.

On January 30, 2017, we acquired an inpatient rehabilitation hospital in Germany for €8.4 million. This acquisition was the final property to close as part of the six hospital portfolio that we agreed to buy in September 2016 for an aggregate amount of €44.1 million. This property is leased to affiliates of MEDIAN pursuant to the original long-term master lease agreement reached with MEDIAN in 2015.

~~Other Transactions~~

On June 1, 2017, we acquired the real estate assets of Ohio Valley Medical Center, a 218-bed acute care hospital located in Wheeling, West Virginia, and the East Ohio Regional Hospital, a 139-bed acute care hospital in Martins Ferry, Ohio, from Ohio Valley Health Services, a not-for-profit entity in West Virginia, for an aggregatenet purchase price of approximately ~~$40 million. We simultaneously leased the facilities~~£1.5 billion from affiliates of BMI Healthcare, Inc. (“BMI”), as part of a share purchase in which we also inherited certain deferred income tax liabilities and £27.6 million of unearned rent revenue. In a related transaction, affiliates of Circle Health Ltd. (“Circle”) entered into definitive agreements to ~~Alecto Healthcare Services LLC (“Alecto”), the current operator~~acquire BMI and assume operations of ~~three~~its 52 facilities in the United Kingdom. As part of our ~~portfolio, pursuant~~acquisition, we inherited 30 existing leases with the operator that had initial fixed terms ending in 2050, with no renewal options but with annual inflation-based escalators. Once final regulatory approval was received in the 2020 second quarter, these 30 leases with Circle were amended (effective June 16, 2020) to ~~a lease with a 15-year initial term with 2%~~include 2 five-year renewal options and improve the annual ~~minimum rent increases and three 5-year extension options. The facilities~~inflation-based escalators. These 30 leases are cross-defaulted and ~~cross-collateralized with our other hospitals currently operated~~guaranteed by ~~Alecto. We also agreed to provide up to $20.0 million in capital improvement funding~~Circle.

Development Activities

During the 2020 first quarter, we completed construction and began recording rental income on ~~these two facilities - none of which has been funded to date. With these acquisitions, we also obtained~~ a ~~20% interest in the operator of these facilities.~~

On May 1, 2017, we acquired the real estate of St. Joseph Regional Medical Center, a 145-bed acute care hospital in Lewiston, Idaho for $87.5 million. This facility is leased to RCCH, pursuant to the existing long-term master lease entered into with RCCH in April 2016.

From the respective acquisition dates, the properties acquired in 2017 contributed $16.7 million of revenue and $12.7 million of income (excluding related acquisition expenses and taxes) for the three months ended September 30, 2017, and $25.1 million of revenue and $18.8 million of income (excluding related acquisition expenses and taxes) for the nine months ended September 30, 2017. In addition, we expensed $5.4 million and $15.6 million of acquisition-related costs on these 2017 acquisitions for the three and nine months ended September 30, 2017, respectively.

~~2016 Activity~~

~~On July 22, 2016, we acquired an~~general acute care facility located in ~~Olympia, Washington in exchange for a $93.3 million loan~~Idaho Falls, Idaho. This facility commenced rent on January 21, 2020 and ~~an additional $7 million in cash. The property has been~~is being leased to ~~RCCH on terms substantially similar to those of the existing long-term master lease entered into with RCCH in April 2016.~~

On June 22, 2016, we closed on the last property of the €688 million MEDIAN transaction, that was announced on April 29, 2015, for a purchase price of €41.6 million. Upon acquisition, this property became subject to an existing master lease between us and affiliates of MEDIAN that has a lease term ending December 2042 and annual escalators at the greater of one percent or 70% of the German consumer price index.

~~On May 2, 2016, we acquired an acute care hospital in Newark, New Jersey for an aggregate purchase price of $63 million leased to Prime Healthcare Services,~~Surgery Partners, Inc. (“Prime”) pursuant to a new fifth master lease, which had a 15-year term with three five-year extension options, plus consumer price-indexed increases, limited to a 2% floor. Furthermore, we committed to advance an additional $30 million to Prime over a three-year period to be used solely for capital additions to the real estate; any such additions will be added to the basis upon which the lessee will pay us rents. None of the additional $30 million has been funded to date.

From the respective acquisition dates, the properties acquired during the nine months ended September 30, 2016, contributed $4.6 million and $3.8 million of revenue and income (excluding related acquisition expenses), respectively, for the three months ended September 30, 2016. From the respective acquisition dates, the properties acquired during the nine months ended September 30, 2016 contributed $5.7 million and $4.9 million of revenue and income (excluding related acquisition expenses), respectively, for the nine months ended September 30, 2016. In addition, we incurred $2.4 million of acquisition-related costs on the 2016 acquisitions for the nine months ended September 30, 2016.

~~Pro Forma Information~~

The following unaudited supplemental pro forma operating data is presented for the three and nine months ended September 30, 2017 and 2016, as if each acquisition was completed on January 1, 2016 and January 1, 2015 for the period ended September 30, 2017 and 2016, respectively. Supplemental pro forma earnings were adjusted to exclude acquisition-related costs on consummated deals incurred. The unaudited supplemental pro forma operating data is not necessarily indicative of what the actual results of operations would have been assuming the transactions had been completed as set forth above, nor do they purport to represent our results of operations for future periods (in thousands, except per share/unit amounts).

   For the Three Months    For the Nine Months
   Ended September 30,    Ended September 30,
   2017    2016    2017    2016
Total revenues
   $ 209,368    $ 207,898    $ 623,635    $ 622,798
Net income
   $ 102,112    $ 107,863    $ 311,306    $ 307,645
Net income per share/unit — diluted
   $ 0.28    $ 0.30    $ 0.85    $ 0.84

~~Development Activities~~

~~During the first nine months of 2017, we completed construction on the following facilities:~~

~~Adeptus Health, Inc. (“Adeptus Health”) – We completed four acute care facilities for this tenant during 2017 totaling approximately $68 million in development costs. These facilities are leased~~ pursuant to an existing long-term ~~master~~ lease.

IMED Group (“IMED”) – Our general acute facility located in Valencia, Spain opened on March 31, 2017, and is being leased to IMED pursuant to a 30-year lease that provides for quarterly fixed rent payments beginning six months from the lease start date with annual increases of 1% beginning April 1, 2020. Our ownership in this facility is effected through a joint venture between us and clients of AXA Real Estate, in which we own a 50% interest. Our share of the aggregate purchase and development cost of this facility is approximately €21 million.

In April 2017, we completed the acquisition of the long leasehold interest of a development site in Birmingham, England from the Circle Health Group (“Circle”) (the tenant of our existing site in Bath, England) for a purchase price of £2.7 million. Simultaneously with the acquisition, we entered into contracts with the property landlord and the Circle committing us to construct an acute care hospital on the site. Our total development costs are anticipated to be approximately £30 million. Circle is contracted to enter into a lease of the hospital following completion of construction for an initial 15-year term with rent to be calculated based on our total development costs.

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

Property
   Commitment    Costs
Incurred
as of
September 30, 2017    Estimated
Completion
Date
Ernest (Flagstaff, Arizona)
   $ 28,067    $ 16,619    1Q 2018
Circle (Birmingham, England)
   43,221    11,389    1Q 2019





   $ 71,288    $ 28,008

Property	Commitment		Costs Incurred as of March 31, 2021		Estimated Rent Commencement Date
Ernest Health, Inc. ("Ernest") (Bakersfield, California)	$	47,929	$	28,502	4Q 2021
Ernest (Stockton, California)		47,700		13,539	1Q 2022
	$	95,629	$	42,041

~~Disposals~~

~~2017~~Disposals

2021 Activity

~~On March 31, 2017,~~During the first three months of 2021, we ~~sold~~completed the ~~EASTAR Health System real estate located in Muskogee, Oklahoma, which was leased to RCCH. Total proceeds from this transaction were approximately $64 million resulting in a gain~~sale of ~~$7.4 million, partially offset by a $0.6 million non-cash charge to revenue to write-off related straight-line rent receivables on this property.~~

~~2016 Activity~~

~~Capella Transaction~~

Effective April 30, 2016, our investment in the operator of Capella Healthcare, Inc. (“Capella”) merged with Regional Care Hospital Partners, Inc. (“Regional Care”) (an affiliate of certain funds managed by affiliates of Apollo Global Management, LLC. (“Apollo”)) to form RCCH. As part of the transaction, we received net proceeds of approximately $550 million including approximately $492 million for our equity investment and loans made as part of the original Capella transaction that closed on August 31, 2015. In addition, we received $210 million in prepayment of two mortgage loans for hospitals in Russellville, Arkansas, and Lawton, Oklahoma, that we made in connection with the original Capella transaction. We made a new $93.3 million loan for a hospital property in Olympia, Washington that was subsequently converted to real estate on July 22, 2016. Additionally, we1 facility and an Apollo affiliate invested $50 million each in unsecured senior notes issued by RegionalCare, which we sold to a large institution on June 20, 2016 at par. The proceeds from this transaction represented the recoverability of our investment in full, exceptancillary property for ~~transaction costs incurred of $6.3 million.~~

We maintained our ownership of five hospitals in Hot Springs, Arkansas; Camden, South Carolina; Hartsville, South Carolina; Muskogee, Oklahoma; and McMinnville, Oregon. Pursuant to the transaction described above, the underlying leases, one of which is a master lease covering all but one property, was amended to shorten the initial fixed lease term, increase the security deposit, and

eliminate the lessees’ purchase option provisions. Due to this lease amendment, we reclassified the lease of the properties under the master lease from a direct finance lease (“DFL”) to an operating lease. This reclassification resulted in a write-off of $2.6 million in unbilled DFL rent in the 2016 second quarter.

~~Post Acute Transaction~~

On May 23, 2016, we sold five properties (three of which were in Texas and two in Louisiana) that were leased and operated by Post Acute Medical (“Post Acute”). As part of this transaction, our outstanding loans of $4 million were paid in full, and we recovered our investment in the operations. Total proceeds from this transaction were $71approximately $11 million, resulting in a net gain of approximately ~~$15~~$1.0 million.

~~Corinth Transaction~~2020 Activity

~~On June 17, 2016,~~During the first three months of 2020, we sold the Atrium Medical Center real estate located in Corinth, Texas, which was leased and operated by Corinth Investor Holdings. Total proceeds from the transaction were $28 million resulting in a gain on real estate of approximately $8 million. This gain on real estate was offset by approximately $9 million of non-cash charges that included the write-off of our investment in the operations of the facility, straight-line rent receivables, and a lease intangible.

~~HealthSouth Transaction~~

~~On July 20, 2016, we sold three inpatient rehabilitation hospitals located in Texas and operated by HealthSouth Corporation (“HealthSouth”) for $111.5 million,~~4 ancillary properties resulting in a net gain of ~~approximately $45~~$1.3 million.

~~The sales~~15

Leasing Operations (Lessor)

We acquire and develop healthcare facilities and lease the facilities to healthcare operating companies under long-term net leases (typical initial fixed terms of 15 years) and most include renewal options at the election of our tenants, generally in ~~2017 and 2016 were not strategic shifts~~five year increments. Approximately 99% of our leases provide annual rent escalations based on increases in the Consumer Price Index (or similar index outside the U.S.) and/or fixed minimum annual rent escalations ranging from 0.5% to 3.0%. Many of our ~~operations, and therefore the results~~domestic leases contain purchase options with pricing set at various terms but in no case less than our total investment. For 5 properties with a carrying value of ~~operations related to these facilities were not reclassified as discontinued operations.~~

~~Summary of Operations for Assets Disposed in 2016~~

~~The following represents the operating results (excluding gain on sale, transaction costs, and impairment or other non-cash charges)~~$230 million, 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 ~~which sold during 2016 (excluding loans repaid in~~including repair/maintenance, property taxes, and insurance. We routinely inspect our properties to ensure the ~~Capella Transaction)~~residual value of each of our assets is being maintained. Except for ~~the periods presented (in thousands):~~

   For the Three Months
Ended September 30,    For the Nine Months
Ended September 30,
   2017    2016    2017    2016
Revenues
   $ —      $ 244    $ —      $ 7,851
Real estate depreciation and amortization
   —      —      —      (1,754 )
Property-related expenses
   —      —      —      (114 )
Other income (expense)
   —      45    —      (23 )








Income from real estate dispositions, net
   $ —      $ 289    $ —      $ 5,960

~~Leasing Operations~~leases classified as financing leases as noted below, all of our leases are classified as operating leases.

At ~~September 30, 2017,~~March 31, 2021, leases on ~~two Alecto facilities, 15~~13 Ernest facilities and 105 Prime Healthcare Services, Inc. (“Prime”) facilities are accounted for as ~~DFLs.~~direct financing leases and leases on 13 of our Prospect Medical Holdings, Inc. (“Prospect”) facilities and 5 of our Ernest facilities are accounted for as a financing. The components of our ~~net~~total investment in ~~DFLs~~financing leases consisted of the following (in thousands):


	As of September 30, 2017			As of December 31, 2016			As of March 31, 2021			As of December 31, 2020
Minimum lease payments receivable	$	2,312,621		$	2,207,625		$	1,217,689		$	1,228,966
Estimated residual values		448,098			407,647			203,818			203,818
Less: Unearned income		(2,064,890	)		(1,967,170	)

Less: Unearned income and allowance for credit loss								(956,490	)		(969,061	)
Net investment in direct financing leases	$	695,829		$	648,102			465,017			463,723

Other financing leases (net of allowance for credit loss)								1,556,463			1,547,199
Total investment in financing leases							$	2,021,480		$	2,010,922

~~Adeptus Health~~COVID-19 Rent Deferrals

~~On April 4, 2017,~~In the first quarter of 2021, we ~~announced that we had agreed in principle with Deerfield Management Company, L.P. (“Deerfield”), a healthcare-only investment firm,~~collected $0.8 million of rent previously deferred due to the ~~restructuring~~COVID-19 pandemic. Pursuant to our agreements with certain tenants, we expect the remaining outstanding deferred rent balance of approximately $10.6 million as of March 31, 2021, to be paid over specified periods in ~~bankruptcy~~the future, with interest.

Adeptus Health

As discussed in previous filings, our original real estate portfolio of approximately 60 properties leased to Adeptus Health, Inc. (“Adeptus”) has gone through significant changes starting with Adeptus filing for Chapter 11 bankruptcy in 2017. During 2020, we transitioned the remaining facilities away from Adeptus, which resulted in impairment charges including approximately $9.9 million in the first quarter of 2020, along with a ~~current~~charge to write-off straight-line rent and other receivables, partially offset by a draw on a $9.1 million letter of credit. However, these transition measures have also provided for new tenant relationships being formed with strong credit worthy operators like Ochsner Health System, Dignity Health, UC Health, and ~~operator~~HCA Healthcare, that are now leasing approximately 40 of these transitional facilities under long-term leases. At March 31, 2021, 17 of these transitional properties, representing less than 5%1% of our total ~~gross assets. In furtherance~~assets, remain vacant, and each of ~~the restructuring, Adeptus Health and certain~~these properties are in various stages of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code on April 19, 2017. Funds advised by Deerfield acquired Adeptus Health’s outstanding bank debt and Deerfield agreed to provide additional financing, along with operational and managerial support, to Adeptus Health as part of the restructuring.

~~The Adeptus Health restructuring and terms of~~being re-leased or sold. At March 31, 2021, we believe our agreement with Deerfield provided for the payment to us of 100% of the rent payable during the restructuring and the assumption by Deerfield of all our master leases and related agreements with Adeptus Health at current rental rates. Through November 3, 2017, Adeptus Health is current on its rent obligations to us.

On September 29, 2017, the United States Bankruptcy Court for the Northern District of Texas, Dallas Division, entered an order confirming the Debtors’ Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code (the “Plan”). The Plan became effective on October 2, 2017 (the “Confirmation Effective Date”). In connection with the confirmation of the Plan, Deerfield agreed that it would assume all of the master leases and related agreements between us and Adeptus Health, cure all defaults that had arisen prior to the commencement of the bankruptcy proceedings with respect to all properties, and continue to pay rent with respect to allinvestment in these real estate assets are fully recoverable, but 16 of the 56 Adeptus Health properties according to the terms of the master leases and related agreements. Rent will remain the same, and a previously disclosed rent concession was removed from the terms. We plan to re-lease or sell the remaining 16 properties, and Adeptus Health will continue to pay rent with respect to those 16 properties until the earlier of (a) transition to a new operator is complete, (b) two years following the Confirmation Effective Date (for one facility), (c) one year following the Confirmation Effective Date (for seven facilities), (d) six months following the Confirmation Effective Date (for three facilities), and (e) three months following the Confirmation Effective Date (for five facilities). These lease or sale transactions are expected to be completed by the end of 2019. Although no assurances can be ~~made~~given that we will not ~~recognize~~have any further impairments in future periods.

Alecto Facilities

As noted in previous filings, we originally leased 4 acute care facilities to and had a ~~loss~~mortgage loan on a fifth property (Olympia Medical Center) with Alecto Healthcare Services LLC (“Alecto”). During the first quarter of 2020, we donated the Wheeling facility to a local municipality, resulting in ~~the future,~~a $9.1 million real estate impairment charge. In addition, we ~~believe the sale or re-leasing of the assets related~~re-leased 1 acute care facility to ~~these 16 facilities will not result~~West Virginia University and sold another facility in ~~any material loss or impairment.~~

On April 4, 2017, we announced that our Louisiana freestanding emergency facilities then-operated by Adeptus Health (with a total budgeted investment of approximately $24.5 million) had been re-leased to Ochsner Clinic Foundation (“Ochsner”), a health care system in the New Orleans area. We incurred a non-cash charge of $0.5 million to write-off the straight-line rent receivables associated with the previous Adeptus Health lease on these properties. On October 18, 2017, Ochsner agreed to an amended and restated lease that provided for initial terms of 15 years with a 9.2% average minimum lease rate based on our total development and construction cost, as well as the addition of three five-year renewal options.

~~Hoboken Facility~~

2020. In the first ~~half~~quarter of ~~2017, a subsidiary~~2021, Alecto completed the sale of Olympia Medical Center to the ~~operator~~UCLA Health System. Our proceeds of approximately $51 million from this sale were used to payoff the mortgage and working capital loans in full, with the remaining proceeds used to recover certain past due amounts. At March 31, 2021, we continue to lease 1 acute care facility to Alecto approximating 0.1% of our Hoboken facility acquired 20% of our subsidiary that owns the real estate for $10 million, which increased its interest in our real estate entity to 30%. This transaction is reflected in the non-controlling interest line of our condensed consolidated balance sheets.total assets.

Loans

The following is a summary of our loans (net of allowance for credit loss) (in thousands):


	As of September 30, 2017		As of December 31, 2016		As of March 31, 2021		As of December 31, 2020
Mortgage loans	$	1,777,555	$	1,060,400	$	1,324,865	$	248,080
Acquisition loans		119,256		121,464		682,665		338,273
Working capital and other loans		32,453		34,257

	$	1,929,264	$	1,216,121

Other loans						840,001		520,095
Total					$	2,847,531	$	1,106,448

~~As of September 30, 2017, our~~The increase in mortgage and acquisition loans ~~consist of~~relates to the £800 million and £250 million loans ~~made to four operators that are secured by~~funded in connection with the ~~real estate of 14 properties, and include the $700 million investment made on September 29, 2017, as part of the Steward Transaction. Our non-mortgage~~Priory Group Transaction (as more fully described above in this Note 3).

Other loans ~~typically~~ consist of loans to our tenants for ~~acquisitions and~~ working capital ~~purposes. At September 30, 2017, acquisition~~and other purposes and include our shareholder loan made to the joint venture with Primotop Holdings S.à.r.l. (“Primotop”) in the amount of €297 million. The increase in other loans ~~includes $114.4~~is primarily related to the $335 million loan to Steward (as more fully described above in ~~loans~~this Note 3).

Other Investment Activities

Pursuant to ~~Ernest.~~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.

Pursuant to our 4.9% stake in Aevis Victoria SA (“Aevis”), we recorded a $4.1 million favorable non-cash fair value adjustment to mark our investment in Aevis stock to market during the first quarter of 2021; whereas, this was a $10.4 million unfavorable non-cash fair value adjustment in the 2020 first quarter.

Concentrations of Credit Risk

~~Our revenue~~We monitor concentration ~~for the nine months ended September 30, 2017 as compared~~risk in several ways due to the ~~prior year is as follows (dollars~~nature of our real estate assets that are vital to the communities in ~~thousands):~~which they are located and given our history of being able to replace inefficient operators of our facilities, if needed, with more effective operators:

~~Revenue by Operator~~

   For the Nine Months Ended
September 30, 2017 For the Nine Months Ended
September 30, 2016
Operators
   Total
Revenue    Percentage of
Total Revenue Total
Revenue    Percentage of
Total Revenue
Steward (1)
   $ 114,776    23.0 % $ 20,969    5.4 %
Prime
   94,644    18.9 % 89,389    23.1 %
MEDIAN
   73,793    14.8 % 70,242    18.1 %
Ernest
   53,007    10.6 % 50,564    13.0 %
Adeptus Health
   39,638    7.9 % 25,873    6.7 %
RCCH
   30,668    6.1 % 42,776    11.0 %
Other operators
   93,258    18.7 % 88,041    22.7 %






Total
   $ 499,784    100.0 % $ 387,854    100.0 %

Facility concentration – At March 31, 2021, our largest single property represented approximately 3% of our total assets, similar to December 31, 2020.

~~(1)~~

~~Includes approximately $21.6 million~~

Operator concentration – For the three months ended March 31, 2021, revenue from Steward, Circle, and ~~$21 million~~Prospect, individually, represented more than 10% of ~~revenue~~our total revenues. In comparison, Steward, Circle, Prospect, and Prime, individually, represented more than 10% of our total revenues for the ~~nine~~2020 first quarter.

Geographic concentration – At March 31, 2021, investments in the U.S., Europe, Australia, and South America represented approximately 63%, 31%, 5%, and 1%, respectively, of our total assets, compared to 65%, 28%, 6%, and 1%, respectively, at December 31, 2020.

Facility type concentration – For the three months ended ~~September 30, 2017~~March 31, 2021, approximately 83% of our revenues are from our general acute care facilities, while rehabilitation and ~~2016,~~long-term acute care facilities make up 8% and 2%, respectively. Freestanding ER/urgent care facilities and behavioral health facilities combined to make up the remaining 7%. In comparison, general acute care, rehabilitation, and long-term acute care facilities made up 86%, 9%, and 3%, respectively, ~~from~~of our total revenues for the three months ended March 31, 2020, while freestanding ER/urgent care facilities ~~leased~~and behavioral health facilities combined to ~~IASIS prior to it being acquired by Steward on September 29, 2017.~~make up the remaining 2%.

~~Revenue by U.S. State and Country~~17

   For the Nine Months Ended
September 30, 2017 For the Nine Months Ended
September 30, 2016
U.S. States and Other Countries
   Total
Revenue    Percentage of
Total Revenue Total
Revenue    Percentage of
Total Revenue
Massachusetts
   $ 79,741    16.0 % $ —      —
Texas
   74,489    14.9 % 72,811    18.8 %
California
   49,681    9.9 % 49,724    12.8 %
New Jersey
   32,756    6.6 % 28,398    7.3 %
Arizona
   23,902    4.8 % 17,678    4.6 %
All other states
   147,606    29.5 % 143,289    36.9 %






Total U.S.
   $ 408,175    81.7 % $ 311,900    80.4 %
Germany
   $ 88,525    17.7 % $ 72,718    18.8 %
United Kingdom, Italy, and Spain
   3,084    0.6 % 3,236    0.8 %






Total International
   $ 91,609    18.3 % $ 75,954    19.6 %






Grand Total
   $ 499,784    100.0 % $ 387,854    100.0 %

On a total gross asset basis, which is total assets before accumulated depreciation/amortization, assumes all real estate binding commitments on new investments and unfunded amounts on development deals and commenced capital improvement projects are fully funded (see Notes 9 and 10 of Item 1 on this Form 10-Q), and assumes cash on hand is fully used in these transactions, our concentration as of September 30, 2017 as compared to December 31, 2016 is as follows (dollars in thousands):

~~Gross Assets by Operator~~

   As of September 30, 2017 As of December 31, 2016
Operators
   Total
Gross Assets    Percentage of
Total
Gross Assets Total
Gross Assets    Percentage of
Total
Gross Assets
Steward (1)
   $ 3,445,379    36.8 % $ 1,609,583    22.5 %
MEDIAN
   1,209,767    12.9 % 993,677    13.9 %
Prime
   1,118,070    12.0 % 1,144,055    16.0 %
Ernest
   631,501    6.7 % 627,906    8.8 %
RCCH
   506,265    5.4 % 566,600    7.9 %
Other operators
   1,992,448    21.3 % 1,900,397    26.7 %
Other assets
   452,505    4.9 % 300,903    4.2 %






Total
   $ 9,355,935    100.0 % $ 7,143,121    100.0 %

~~(1)~~

~~Includes approximately $360 million of gross assets as of December 31, 2016 related to facilities leased to IASIS prior to it being acquired by Steward on September 29, 2017.~~

~~Gross Assets by U.S. State and Country~~

   As of September 30, 2017 As of December 31, 2016
U.S. States and Other Countries
   Total
Gross Assets    Percentage of
Total
Gross Assets Total
Gross Assets    Percentage of
Total
Gross Assets
Massachusetts
   $ 1,284,156    13.7 % $ 1,250,000    17.5 %
Texas
   1,275,784    13.6 % 947,443    13.3 %
Utah
   1,035,793    11.1 % 107,151    1.5 %
California
   542,879    5.8 % 542,889    7.6 %
Arizona
   498,844    5.3 % 331,834    4.6 %
All other states
   2,506,538    26.8 % 2,234,332    31.3 %
Other domestic assets
   397,850    4.3 % 264,215    3.7 %






Total U.S.
   $ 7,541,844    80.6 % $ 5,677,864    79.5 %
Germany
   $ 1,556,392    16.6 % $ 1,281,649    17.9 %
United Kingdom, Italy, and Spain
   203,044    2.2 % 146,920    2.1 %
Other international assets
   54,655    0.6 % 36,688    0.5 %






Total International
   $ 1,814,091    19.4 % $ 1,465,257    20.5 %






Grand Total
   $ 9,355,935    100.0 % $ 7,143,121    100.0 %

~~On an individual property basis, we had no investment of any single property greater than 3.8% of our total gross assets as of September 30, 2017.~~

4. Debt

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

As of September 30, 2017 As of December 31, 2016
Revolving credit facility^(A)
$ 445,359 $ 290,000
Term loans
200,000 263,101
6.375% Senior Unsecured Notes due 2022:

Principal amount
350,000 350,000
Unamortized premium
1,549 1,814

351,549 351,814
5.750% Senior Unsecured Notes due 2020^(B)
—   210,340
4.000% Senior Unsecured Notes due 2022^(B)
590,700 525,850
5.500% Senior Unsecured Notes due 2024
300,000 300,000
6.375% Senior Unsecured Notes due 2024
500,000 500,000
3.325% Senior Unsecured Notes due 2025^(B)
590,700 —
5.250% Senior Unsecured Notes due 2026
500,000 500,000
5.000% Senior Unsecured Notes due 2027
1,400,000 —

$ 4,878,308 $ 2,941,105
Debt issue costs, net
(46,044 ) (31,764 )

$ 4,832,264 $ 2,909,341

	As of March 31, 2021			As of December 31, 2020
Revolving credit facility(A)	$	179,179		$	165,407
Term loan		200,000			200,000
British pound sterling term loan(B)		964,810			956,900
Australian term loan facility(B)		911,760			923,280
4.000% Senior Unsecured Notes due 2022(B)		586,500			610,800
2.550% Senior Unsecured Notes due 2023(B)		551,320			546,800
3.325% Senior Unsecured Notes due 2025(B)		586,500			610,800
2.500% Senior Unsecured Notes due 2026(B)		689,150			—
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)		826,980			820,200
4.625% Senior Unsecured Notes due 2029		900,000			900,000
3.375% Senior Unsecured Notes due 2030(B)		482,405			—
3.500% Senior Unsecured Notes due 2031		1,300,000			1,300,000
	$	10,078,604		$	8,934,187
Debt issue costs and discount, net		(79,066	)		(68,729	)
	$	9,999,538		$	8,865,458

~~(A)~~

(A)

Includes £4£130 million and £121 million of GBP-denominated borrowings that reflect the exchange rate at ~~September 30, 2017.~~March 31, 2021 and December 31, 2020, respectively.

~~(B)~~

~~These notes are Euro-denominated and reflect~~

(B)

Non-U.S. dollar denominated debt that reflects the exchange rate at ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, respectively.

As of ~~September 30, 2017,~~March 31, 2021, principal payments due on our debt (which exclude the effects of any discounts, premiums, or debt issue costs recorded) are as follows ~~(in~~(amounts in thousands):

2017
   $ 350,000 (A)
2018
   —
2019
   —
2020
   —
2021
   445,359
Thereafter
   4,081,400


Total
   $ 4,876,759

2021	$	—
2022		586,500
2023		551,320
2024		1,090,939
2025		1,551,310
Thereafter		6,298,535
Total	$	10,078,604

~~(A)~~

~~The $350 million 6.375% Senior Unsecured Notes due 2022 were redeemed on October 7, 2017 with proceeds from our $1.4 billion 5.000% Senior Unsecured Notes due 2027.~~

~~2017~~2021 Activity

Interim Credit Facility

As previously discussed in Note 3, we entered into a $900 million interim credit facility on January 15, 2021, of which we borrowed £500 million. We paid off and terminated this facility on March 26, 2021.

Credit Facility Amendment

On ~~February 1, 2017,~~January 15, 2021, we ~~replaced~~amended our unsecured credit facility ~~with a new revolving credit and term loan agreement~~ (“Credit Facility”). The ~~new agreement includes a~~amendment extended the maturity of our $1.3 billion ~~unsecured~~ revolving ~~loan~~ facility ~~a $200 million unsecured term loan facility, and a €200 million unsecured term loan facility. The new unsecured revolving loan facility matures in~~to February ~~2021~~1, 2024 and can be extended for an additional 12 months at our option. The maturity date of our $200 million unsecured term loan facility ~~matures on~~was extended to February 1, ~~2022, and~~

2026.

In addition to extending the ~~€200 million unsecured term loan facility had a~~ maturity date, ~~of January 31, 2020; however, it was paid off on March 30, 2017 – see below. The commitment fee on~~ the ~~revolving loan facility is paid~~amendment improved interest rate pricing for both facilities. Under the amended Credit Facility and at ~~a rate of 0.25%. The term loan and/or revolving loan commitments may be increased in an aggregate amount not to exceed $500 million.~~

At our election, loans ~~under the Credit Facility~~ may be made as either ABR Loans or ~~Eurodollar~~Eurocurrency Loans. The applicable margin for term loans that are ABR Loans is adjustable on a sliding scale from 0.00% to ~~0.95%~~0.85% based on our current credit rating. The applicable margin for term loans that are ~~Eurodollar~~Eurocurrency Loans is adjustable on a sliding scale from ~~0.90%~~0.85% to ~~1.95%~~1.85% based on our current credit rating. The applicable margin for revolving loans that are ABR Loans is adjustable on a sliding scale from 0.00% to ~~0.65%~~0.55% based on our current credit rating. The applicable margin for revolving loans that are ~~Eurodollar~~Eurocurrency Loans is adjustable on a sliding scale from ~~0.875%~~0.825% to ~~1.65%~~1.55% based on our current credit rating. The ~~commitment~~amended Credit Facility retained the facility fee that is adjustable on a sliding scale from 0.125% to 0.30% based on our current credit rating and is payable on the revolving loan facility. ~~At September 30, 2017, the interest rate in effect on our term loan and revolver was 2.74% and 2.48%, respectively.~~

On March 30, 2017, we prepaid and extinguished the €200 million of outstanding term loans under the euro term loan facility portion of our Credit Facility. To fund such prepayment, including accrued and unpaid interest thereon, we used part of the proceeds of the 3.325% Senior Unsecured Notes ~~due 2025 – see discussion below.~~

~~5.750% Senior Unsecured Notes due 2020~~

On March 4, 2017, we redeemed the €200 million aggregate principal amount of our 5.750% Senior Unsecured Notes due 2020 and incurred a redemption premium of approximately $9 million. We funded this redemption, including the premium and accrued interest, with the proceeds of the new euro term loan (see discussion above) together with cash on hand.

~~3.325% Senior Unsecured Notes due 2025~~

On March 24, ~~2017,~~2021, we completed ~~a €500~~an £850 million senior unsecured notes offering ~~(“3.325%~~in two tranches. See below for details of each tranche:

2.500% Senior Unsecured Notes due ~~2025”). Interest~~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.~~year, commencing on March 24, 2022. The notes pay interest in cash at a rate of ~~3.325% per year. The notes~~2.500% and mature on March 24, ~~2025. We may redeem some or all of the 3.325%~~2026.

3.375% Senior Unsecured Notes due 2025 at any time. If the notes are redeemed prior to 90 days before maturity, the redemption price will be equal to 100% of their principal amount, plus a make-whole premium, plus accrued and unpaid interest up to, but excluding, the applicable redemption date. Within the period beginning on or after 90 days before maturity, the notes may be redeemed, in whole or in part, at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest to, but excluding, the applicable redemption date. The 3.325% Senior Unsecured Notes due 2025 are fully and unconditionally guaranteed on a senior unsecured basis by us. In the event of a change of control, each holder of the notes may require us to repurchase some or all of our notes at a repurchase price equal to 101% of the aggregate principal amount of the notes plus accrued and unpaid interest up to, but excluding, the date of the purchase.

~~5.000% Senior Unsecured Notes due 2027~~2030

On ~~September 7, 2017,~~March 24, 2021, we completed a ~~$1.4 billion~~£350 million senior unsecured notes ~~offering (“5.000% Senior Unsecured Notes due 2027”). Interest~~offering. The notes were issued at 99.448% of par value, and interest on the notes is payable annually on April ~~15 and October 15~~24 of each year, commencing on April ~~15, 2018.~~24, 2022. The notes pay interest in cash at a rate of ~~5.000% per year. The notes~~3.375% and mature on October 15, 2027. We may redeem some or all of the notes at any time prior to October 15, 2022 at a “make whole” redemption price. On or after October 15, 2022, we may redeem some or all of the notes at a premium that will decrease over time. In addition, at any time prior to October 15, 2020, we may redeem up to 40% of the notes at a redemption price equal to 105% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, using proceeds from one or more equity offerings. In the event of a change in control, each holder of the notes may require us to repurchase some or all of the notes at a repurchase price equal to 101% of the aggregate principal amount of the notes plus accrued and unpaid interest to the date of purchase.April 24, 2030.

We used ~~a portion of the net~~ proceeds from the 5.000% Senior Unsecured Notes due 2027 offering to redeem the $350 million aggregate principal amount of our 6.375% Senior Unsecured Notes due 2022. The notes were repaid on October 7, 2017, and we will incur a debt refinancing charge of approximately $14 million in the fourth quarter of 2017, consisting of an $11.2 million redemption premium along with the write-off of the unamortized premium and deferred debt issuance costs associated with the redeemed notes.

Furthermore, the completion of the 5.000% Senior Unsecured Notes due 2027 offering resulted in the cancellation of the $1.0 billion term loan facility commitment from JP Morgan Chase Bank, N.A. that we received to assist in funding the September 2017 Steward transaction. With this commitment, we paid $5.2 million of underwriting and other fees, which we fully expensed upon the cancellation of the commitment.

~~Other~~

On September 29, 2017, we prepaid the principal amount of the mortgage loan on our property in Kansas City, Missouri at par in the amount of $12.9 million. To fund such prepayment, including accrued and unpaid interest thereon, we used borrowings from the revolving credit facility portion of our Credit Facility.

With the replacement of our old credit facility, the redemption of the 5.750% Senior Unsecured Notes due 2020, the payoff of our €200 million euro term loan, the cancellation of the $1.0 billion term loan facility commitment, and the payment of our $12.9 million mortgage loan, we incurred a debt refinancing charge of $18.8 million in the first nine months of 2017.

~~2016 Activity~~

~~5.250% Senior Unsecured Notes due 2026~~

~~On July 22, 2016, we completed a $500~~£850 million senior unsecured notes offering ~~(“5.250% Senior Unsecured Notes due 2026”). Interest~~to payoff the interim credit facility and reduce our revolving facility by £341 million on March 26, 2021.

2020 Activity

British Pound Sterling Term Loan

On January 6, 2020, we entered into a £700 million unsecured sterling-denominated term loan with Bank of America, N.A., as administrative agent, and several lenders from time-to-time are parties thereto. The term loan matures on January 15, 2025. The applicable margin under the ~~notes~~term loan is ~~payable~~adjustable based on ~~February 1 and August 1~~a pricing grid from 0.85% to 1.65% dependent on our current credit rating. On March 4, 2020, we entered into an interest rate swap transaction (effective March 6, 2020) to fix the interest rate to approximately 0.70% for the duration of ~~each year. Interest~~the loan. The current applicable margin for the pricing grid (which can vary based on ~~the notes~~our credit rating) is ~~to be paid in cash at a~~1.25% for an all-in fixed rate of ~~5.25% per year. The notes mature on August 1, 2026. We may redeem some or all~~1.95%.

Debt Refinancing and Unutilized Financing Costs

With the amendment of our Credit Facility and the ~~notes at any time prior to August 1, 2021 at a “make whole” redemption price. On or after August 1, 2021,~~termination of our $900 million interim credit facility, we ~~may redeem some or all~~incurred approximately $2.3 million of the notes at a premium that will decrease over time. In addition, at any time prior to August 1, 2019, we may redeem up to 35% of the notes at a redemption price equal to 105.25% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, using proceeds from one or more equity offerings. In the event of a change in control, each holder of the notes may require us to repurchase some or all of the notes at a repurchase price equal to 101% of the aggregate principal amount of the notes plus accrued and unpaid interest to the date of purchase.

~~We used the net proceeds from the 5.250% Senior Unsecured Notes due 2026 offering to redeem our $450 million 6.875% Senior Unsecured Notes due 2021. This redemption resulted in a $22.5 million~~ debt refinancing ~~charge during~~costs in the ~~2016 third~~first quarter ~~consisting~~ of ~~a $15.5 million redemption premium along with the write-off of deferred debt issuance costs associated with the redeemed notes.~~2021.

~~6.375% Senior Unsecured Notes due 2024~~

On February 22, 2016, we completed a $500 million senior unsecured notes offering (“6.375% Senior Unsecured Notes due 2024”). Interest on the notes is payable on March 1 and September 1 of each year. Interest on the notes is paid in cash at a rate of 6.375% per year. The notes mature on March 1, 2024. We may redeem some or all of the notes at any time prior to March 1, 2019 at a “make whole” redemption price. On or after March 1, 2019, we may redeem some or all of the notes at a premium that will decrease over time. In addition, at any time prior to March 1, 2019, we may redeem up to 35% of the notes at a redemption price equal to 106.375% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, using proceeds from one or more equity offerings. In the event of a change in control, each holder of the notes may require us to repurchase some or all of the notes at a repurchase price equal to 101% of the aggregate principal amount of the notes plus accrued and unpaid interest to the date of purchase.

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 (“~~FFO”~~NAFFO”), as defined in the agreements, on a rolling four quarter basis. At ~~September 30, 2017,~~March 31, 2021, the dividend restriction was 95% of ~~normalized adjusted FFO.~~NAFFO. The indentures governing our senior unsecured notes also limit the amount of dividends we can pay based on the sum of 95% of ~~FFO,~~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. ~~This~~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 ~~September 30, 2017,~~March 31, 2021, we were in compliance with all such financial and operating covenants.

5. Common Stock/Partners’ Capital

Medical Properties Trust, Inc.

~~2017 Activity~~

On ~~May 1, 2017,~~January 11, 2021, we completed an underwritten public offering of ~~approximately 43.1~~36.8 million shares ~~(including the exercise of the underwriters’ 30-day option to purchase an additional 5.6 million shares)~~ of our common stock, resulting in net proceeds of approximately ~~$548~~$711 million, after deducting underwriting discounts and commissions and offering expenses.

~~2016 Activity~~

On September 30, 2016, we completed an underwritten public offering of 57.5 million shares (including the exercise of the underwriters’ 30-day option to purchase an additional 7.5 million shares) of our common stock, resulting in net proceeds of $799.5 million, after deducting estimated offering expenses.

~~During the nine months ended September 30, 2016,~~In addition, we sold ~~approximately 15~~3.1 million shares of common stock under anour at-the-market equity offering program during the 2021 first quarter, resulting in net proceeds of approximately $67.6 million; while in the 2020 first quarter, we sold 2.6 million shares of common stock under our at-the-market equity offering program, resulting in net proceeds of approximately ~~$224~~$62 million.

Subsequent to March 31, 2021, we sold an additional 4.9 million ~~after deducting approximately $2.8 million~~shares of ~~commissions. There is no availability~~common stock under ~~this~~our at-the-market equity offering program, ~~at September 30, 2017.~~resulting in net proceeds of approximately $105.5 million.

MPT Operating Partnership, L.P.

At ~~September 30, 2017,~~March 31, 2021, 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 ~~99.89%~~100% ownership interest in the ~~Operating Partnership with the remainder owned by three other partners, two of whom are employees and one of whom is the estate of a former director.~~operating partnership. During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, the ~~Operating Partnership~~operating partnership issued approximately ~~43.1~~39.9 million ~~units~~ and ~~approximately 72.5~~2.6 million units, respectively, in direct response to the common stock offerings by Medical Properties Trust, Inc. during the same periods.

6. Stock Awards

We adopted the ~~2013~~2019 Equity Incentive Plan (the “Equity Incentive Plan”) during the second quarter of ~~2013,~~2019, which authorizes the issuance of common stock options, restricted stock, restricted stock units, deferred stock units, stock appreciation rights, performance units, and ~~awards of interests in our Operating Partnership.~~other stock-based awards. The Equity Incentive Plan is administered by the Compensation Committee of the Board of ~~Directors. We~~Directors, and we have reserved ~~8,196,770~~12.9 million shares of common stock for awards, ~~under the Equity Incentive Plan for~~out of which ~~3.3~~6.2 million shares remain available for future stock awards as of ~~September 30, 2017.~~March 31, 2021. Share-based compensation expense totaled ~~$7.1~~$12.3 million and ~~$5.8~~$10.0 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016, respectively, of which $0.4 million relates to the acceleration of vestings on time-based awards previously granted to three former board members.~~2020, respectively.

7. Fair Value of Financial Instruments

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

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

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


	September 30, 2017						December 31, 2016
	Book			Fair			Book			Fair			As of March 31, 2021						As of December 31, 2020
Asset (Liability)	Value			Value			Value			Value			Book Value			Fair Value			Book Value			Fair Value
Interest and rent receivables	$	105,817		$	105,803		$	57,698		$	57,707		$	44,558		$	43,729		$	46,208		$	45,381
Loans (1)		1,698,866			1,722,912			986,987			1,017,428
Loans(1)														2,501,480			2,501,963			751,341			756,608
Debt, net		(4,832,264	)		(5,032,821	)		(2,909,341	)		(2,966,759	)		(9,999,538	)		(10,219,474	)		(8,865,458	)		(9,226,564	)

~~(1)~~

~~Excludes loans related to Ernest since they are recorded at fair value and discussed below.~~

(1)

Excludes the $205 million acquisition loan made in May 2020 to our international joint venture and related investment in the real estate of 3 hospitals in Colombia.

Items Measured at Fair Value on a Recurring Basis

Our equity ~~interest~~investment and related loan to the international joint venture and our loan investment in ~~Ernest along with their related loans~~the real estate of 3 hospitals operated by subsidiaries of the international joint venture in Colombia are measured at fair value on a recurring basis as we elected to account for these investments using the fair value option ~~method.~~at the point of initial investment during 2020. We ~~have~~ elected to account for these investments at fair value due to the size of the investments and because we believe this method iswas more reflective of current values. ~~We have not made a similar election for other existing equity interests or loans.~~

At ~~September 30, 2017, these~~March 31, 2021 and December 31, 2020, the amounts recorded under the fair value option method were as follows (in thousands):

   Fair       Asset Type
Asset Type
   Value    Cost    Classification
Mortgage loans
   $ 115,000    $ 115,000    Mortgage loans
Acquisition and other loans
   115,398    115,398    Other loans
Equity investments
   3,300    3,300    Other assets





   $ 233,698    $ 233,698

	As of March 31, 2021				As of December 31, 2020
Asset (Liability)	Fair Value		Original Cost		Fair Value		Original Cost		Asset Type Classification
Mortgage loans	$	127,564	$	127,564	$	136,332	$	136,332	Mortgage loans
Equity investment and other loans		218,487		218,487		218,775		218,775	Equity investments/Other loans

Our ~~mortgage~~loans to the international joint venture and ~~other loans with Ernest~~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. Our equity investment in ~~Ernest~~the international joint venture is 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 ~~forecast~~forecasted assumptions associated with the investee. We classify the equity investment as Level 3, as we use certain unobservable inputs to the valuation methodology that are significant to the fair value measurement, and the valuation requires management judgment due to ~~the~~ absence of quoted market prices. For ~~the~~this cash flow model, our observable inputs include use of a capitalization rate and discount rate (which is based on a weighted-average cost of capital)~~, market interest rates,~~ and our unobservable input includes an adjustment for a marketability discount (“DLOM”) ~~on our equity investment of 40% at September 30, 2017.~~.

In regards to the underlying ~~projection of revenues and expenses~~projections used in the discounted cash flow model, such projections are provided by ~~Ernest.~~the investee. However, we will modify such projections ~~(including underlying assumptions used)~~ as needed based on our review and analysis of ~~Ernest’s~~ historical results, meetings with key members of management, and our understanding of trends and developments within the healthcare industry.

~~In arriving at the DLOM, we started with~~ Given our equity investment is in an entity that was a DLOM range based on the results of studies supporting valuation discounts for other transactions or structures without a public market. To select the appropriate DLOM within the range, we then considered many qualitative factors including the percent of control, the nature of the underlying investee’s business along with our rights as an investor pursuant to the operating agreement, the size of investment, expected holding period, number of shareholders, access to capital marketplace, etc. To illustrate the effect of movementsstart-up company in ~~the DLOM, we performed a sensitivity analysis below by using basis point variations (dollars in thousands):~~

Basis Point Change in Marketability Discount
   Estimated Increase (Decrease)
In Fair Value
+100 basis points
   $ (51 )
- 100 basis points
   51

~~Because the fair value of Ernest investments noted above approximate their original cost, we did not recognize any unrealized gains/losses during the first nine months of 2017 or 2016. To date,~~2020, we have not ~~received~~recognized any ~~distribution payments from our equity~~unrealized gain/loss on such investment in ~~Ernest.~~2020 or 2021.

Items Measured at Fair Value on a Nonrecurring Basis

In addition to items that are measured at fair value on a recurring basis, we have assets and liabilities that are measured, from time-to-time, at fair value on a nonrecurring basis, such as for long-lived asset impairment purposes. In these cases, fair value is based on estimated cash flows discounted at a risk-adjusted rate of interest by using Level 2 inputs.

8. Earnings Per Share/~~Common~~ Unit

Medical Properties Trust, Inc.

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

   For the Three Months
Ended September 30,
   2017    2016
Numerator:

Net income
   $ 76,881    $ 70,543
Non-controlling interests’ share in net income
   (417 )    (185 )
Participating securities’ share in earnings
   (82 )    (154 )




Net income, less participating securities’ share in earnings
   $ 76,382    $ 70,204




Denominator:

Basic weighted-average common shares
   364,315    246,230
Dilutive potential common shares
   731    1,238




Dilutive weighted-average common shares
   365,046    247,468




   For the Nine Months
Ended September 30,
   2017    2016
Numerator:

Income from continuing operations
   $ 218,862    $ 182,693
Non-controlling interests’ share in continuing operations
   (1,013 )    (683 )
Participating securities’ share in earnings
   (307 )    (430 )




Income from continuing operations, less participating securities’share in earnings
   217,542    181,580
Loss from discontinued operations attributable to MPT common stockholders
   —      (1 )




Net income, less participating securities’ share in earnings
   $ 217,542    $ 181,579




Denominator:

Basic weighted-average common shares
   345,076    240,607
Dilutive potential common shares
   520    825




Dilutive weighted-average common shares
   345,596    241,432

	For the Three Months Ended March 31,
	2021			2020
Numerator:
Net income	$	163,880		$	81,157
Non-controlling interests’ share in net income		(97	)		(165	)
Participating securities’ share in earnings		(370	)		(464	)
Net income, less participating securities’ share in earnings	$	163,413		$	80,528
Denominator:
Basic weighted-average common shares		576,240			521,076
Dilutive potential common shares		1,301			1,103
Diluted weighted-average common shares		577,541			522,179

MPT Operating Partnership, L.P.

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


	For the Three Months Ended September 30,						For the Three Months Ended March 31,
	2017			2016			2021			2020
Numerator:
Net income	$	76,881		$	70,543		$	163,880		$	81,157
Non-controlling interests’ share in net income		(417	)		(185	)		(97	)		(165	)
Participating securities’ share in earnings		(82	)		(154	)		(370	)		(464	)

Net income, less participating securities’ share in earnings	$	76,382		$	70,204		$	163,413		$	80,528

Denominator:
Basic weighted-average units		364,315			246,230			576,240			521,076
Dilutive potential units		731			1,238			1,301			1,103

Dilutive weighted-average units		365,046			247,468

Diluted weighted-average units								577,541			522,179

   For the Nine Months
Ended September 30,
   2017    2016
Numerator:

Income from continuing operations
   $ 218,862    $ 182,693
Non-controlling interests’ share in continuing operations
   (1,013 )    (683 )
Participating securities’ share in earnings
   (307 )    (430 )




Income from continuing operations, less participating securities’ share in earnings
   217,542    181,580
Loss from discontinued operations attributable to MPT Operating Partnership partners
   —      (1 )




Net income, less participating securities’ share in earnings
   $ 217,542    $ 181,579




Denominator:

Basic weighted-average units
   345,076    240,607
Dilutive potential units
   520    825




Dilutive weighted-average units
   345,596    241,432

9. ~~Commitments and~~ Contingencies

~~Commitments~~

On September 28, 2016, we entered into a definitive agreement to acquire one acute care hospital in Washington for a purchase price of approximately $17.5 million. Upon closing, this facility will be leased to RCCH, pursuant to the current long-term master lease. Closing of the transaction, which is expected to be completed no later than the first quarter of 2018, is subject to customary real estate, regulatory and other closing conditions.

~~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. Subsequent Events

On ~~October 5, 2017,~~April 16, 2021, we ~~entered into definitive agreements~~made a CHF 145 million investment in Swiss Medical Network, our tenant via our Infracore equity investment.

Subsequent to ~~acquire three rehabilitation hospitals~~March 31, 2021, we received approximately $75 million in ~~Germany for an aggregate purchase price to us of approximately €80 million. Upon closing, the facilities will be leased to MEDIAN, pursuant to a newlong-term~~ master lease. The lease will begin on the day the first property is funded, and the term will be 27 years from the funding date of the third property. The lease provides for increases of the greater of 1% or 70% of the change in German CPI. Closing of the transaction, which is expected to begin during the fourth quarter of 2017, is subject to customary real estate, regulatory and other closing conditions.

loan principal repayments.

~~Item 2.~~

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

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.

~~The following~~Such discussion and analysis ~~of the consolidated financial condition and consolidated results of operations~~ 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, ~~2016.~~2020.

As the economy continues to recover from the downturn caused by COVID-19 and vaccines continue to roll out, we expect to receive substantially all rent and interest payments in the future, and we are collecting rent, as expected, that we previously deferred in 2020 (less than 2% of our 2020 annual rent), with interest. However, no assurances can be made that if the pandemic continues for an extended period of time that our rent and interest payments will not be delayed into the future until our tenants can recover.

Forward-Looking Statements.

This ~~report~~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. 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 ~~Securities and Exchange Commission (SEC)~~SEC under the Securities Exchange Act of ~~1934.~~1934, as amended. Such factors include, among others, the following:

~~U.S. (both national and local) and European (in particular Germany, the United Kingdom, Spain, and Italy) political, economic, business, real estate and other market conditions;~~

•

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, 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 other factors that may affect our business, our joint ventures or that of our tenants/borrowers that are beyond our control, including natural disasters, health crises, or 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 phase two of the Priory Group Transaction disclosed in Note 3) 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 enter into will 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;

•

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 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; and

•

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

~~the competitive environment in which we operate;~~

~~the execution of our business plan;~~

~~financing risks;~~

the risk that a condition to closing under the agreements governing any or all of our outstanding transactions that have not closed as of the date hereof (including the RCCH and MEDIAN transactions described in Notes 9 and 10) may not be satisfied;

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

~~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 and willingness to maintain our status as a real estate investment trust, or REIT, for U.S. federal and state income tax purposes (particularly in light of current tax reform considerations);

~~our ability to attract and retain qualified personnel;~~

~~changes in foreign currency exchange rates;~~

~~U.S. (both federal and state) and European (in particular Germany, the United Kingdom, Spain, and Italy) healthcare and other regulatory requirements; and~~

U.S. national and local economic conditions, as well as conditions in Europe and any other foreign jurisdictions where we own or will own healthcare facilities, which may have a negative effect on the following, among other things:

the financial condition of our tenants, our lenders, counterparties to interest rate swaps and other hedged transactions and institutions that may hold our cash balances, which may expose us to increased risks of default by these parties;

~~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 properties or on an unsecured basis.~~

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 ~~rehabilitative~~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 ~~market~~other conditions (such as the impact caused by COVID-19) that may affect their profitability, which could impact our results. Accordingly, we monitor certain key ~~factors, changes to which~~performance indicators that we believe ~~may provide~~provides us with early indications of conditions that ~~may~~could affect the level of risk in our portfolio.

Key factors that we consider in underwriting prospective tenants and ~~borrowers and~~ in our ongoing monitoring ~~the~~of our tenants’ (and guarantors’) performance ~~of existing tenants and borrowers~~ include the following:

•

admission levels and surgery/procedure/diagnosis volumes by type;

~~the current, historical and prospective operating margins~~

•

the current, historical, and prospective operating profit (measured by earnings before interest, taxes, depreciation, amortization, and facility rent) of each tenant or borrower and at each facility;

•

the ratio of our tenants’ or borrowers’ operating earnings both to facility rent and to facility rent plus other fixed costs, including debt costs;

•

changes in revenue sources of our tenants’ or borrowers’ revenue, including the relative mix of public payors (including Medicare, Medicaid/MediCal, and managed care in the U.S., pension funds in Germany, and National Health Services in the United Kingdom) and private payors (including commercial insurance and private pay patients);

•

trends in tenants’ cash collections, including comparison to recorded net patient service revenues;

•

tenants’ free cash flows;

•

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

•

the competition and demographics of the local and surrounding areas in which our ~~tenants’ and borrowers’ operating earnings both to facility rent and to facility rent plus other fixed costs, including debt costs;~~

trends in the source of our tenants’ or borrowers’ revenue, including the relative mix of public payors (including Medicare, Medicaid/MediCal, managed care in the U.S. and pension funds in Germany) and private payors (including commercial insurance and private pay patients);

~~the effect of evolving healthcare regulations on our tenants’ and borrowers’ profitability; and~~

~~the competition and demographics of the local and surrounding areas in which the~~ tenants or borrowers operate.

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

•

trends in the cost and availability of capital, including market interest rates, that our prospective tenants may use for their real estate assets instead of financing their real estate assets through lease structures;

•

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 lease rates;

•

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 ~~2016~~2020 Annual Report on Form 10-K for a discussion of our critical accounting policies, which include ~~revenue recognition, investment~~investments in real estate, purchase price allocation, loans, credit losses, losses from rent and interest receivables, ~~stock-based compensation, our fair value option election,~~ and our accounting policy on consolidation. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2021, there were no material changes to these policies.

Overview

We are a self-advised ~~real estate investment trust (“REIT”)~~REIT focused on investing in and owning net-leased healthcare facilities across the U.S. and selectively in foreign jurisdictions. ~~We have operated as a REIT since April 6, 2004, and accordingly, elected REIT status upon the filing of our calendar year 2004 federal income tax return.~~ 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. In addition, we selectively make loans to certain of our operators through our ~~TRSs,~~taxable REIT subsidiaries, the proceeds of which are typically used for acquisitions and working capital. Finally, from ~~time to time,~~time-to-time, we acquire a profits or other equity interest in our tenants that gives us a right to share in such tenant’s profits and losses.

At ~~September 30, 2017,~~March 31, 2021, our portfolio consisted of ~~271~~425 properties leased or loaned to 3050 operators, of which two are under development and 1440 are in the form of mortgage loans.

Our investments in healthcare real estate, including mortgage and other loans, as well as any equity investments in our tenants are considered a single reportable segment. ~~All~~At March 31, 2021, all of our investments are ~~currently~~ located in the U.S., Europe, Australia, and ~~Europe.~~South America. Our total assets are made up of the following (dollars in thousands):

   As of
September 30, 2017    % of
Total As of
December 31, 2016    % of
Total
Real estate owned (gross)
   $ 6,463,107    72.4 % $ 4,912,320    76.6 %
Mortgage loans
   1,777,555    19.9 % 1,060,400    16.5 %
Other loans
   151,709    1.7 % 155,721    2.4 %
Construction in progress
   28,008    0.3 % 53,648    0.8 %
Other assets
   506,661    5.7 % 236,447    3.7 %






Total assets (1)
   $ 8,927,040    100.0 % $ 6,418,536    100.0 %

	As of March 31, 2021			% of Total			As of December 31, 2020			% of Total
Real estate assets - at cost	$	15,453,515			82.4	%	$	14,337,929			85.2	%
Accumulated real estate depreciation and amortization		(903,798	)		-4.8	%		(833,529	)		-5.0	%
Cash and cash equivalents		746,753			4.0	%		549,884			3.3	%
Equity investments		1,080,214			5.8	%		1,123,623			6.7	%
Other loans		1,522,666			8.1	%		858,368			5.1	%
Other		846,325			4.5	%		792,739			4.7	%
Total assets	$	18,745,675			100.0	%	$	16,829,014			100.0	%

~~(1)~~

~~Includes $1.8 billion and $1.3 billion of healthcare real estate assets in Europe at September 30, 2017 and December 31, 2016, respectively.~~

~~The following~~Additional Concentration Details

On a pro forma 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, 2021 as compared to December 31, 2020 is ~~our revenue by operating type (dollar amounts~~as follows (dollars in thousands):

Total Pro Forma Gross Assets by Operator

	As of March 31, 2021					As of December 31, 2020
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
Steward
Massachusetts market	$	1,487,064		7.1	%	$	1,500,915		7.3	%
Utah market		1,261,507		6.1	%		1,260,147		6.2	%
Texas/Arkansas/Louisiana market		1,043,913		5.0	%		1,045,982		5.1	%
Arizona market		330,734		1.6	%		332,239		1.6	%
Florida market		218,123		1.0	%		215,105		1.1	%
Ohio/Pennsylvania market		149,122		0.7	%		151,785		0.7	%
Circle		2,541,334		12.2	%		2,520,019		12.3	%
Prospect		1,606,433		7.7	%		1,597,950		7.8	%
Priory		1,582,689		7.6	%		1,566,087		7.7	%
Swiss Medical Network		1,252,642		6.0	%		1,177,520		5.8	%
Other operators		8,185,843		39.2	%		8,269,093		40.5	%
Other assets		1,201,275		5.8	%		792,739		3.9	%
Total	$	20,860,679		100.0	%	$	20,429,581		100.0	%

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

	As of March 31, 2021					As of December 31, 2020
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
Texas	$	1,926,283		9.2	%	$	1,923,440		9.4	%
Massachusetts		1,492,464		7.2	%		1,506,315		7.4	%
California		1,397,169		6.7	%		1,382,663		6.8	%
Utah		1,296,754		6.2	%		1,295,329		6.4	%
Pennsylvania		864,709		4.1	%		864,273		4.2	%
All other states		3,974,527		19.1	%		3,984,113		19.5	%
Other domestic assets		1,065,687		5.1	%		680,678		3.3	%
Total U.S.	$	12,017,593		57.6	%	$	11,636,811		57.0	%
United Kingdom	$	4,679,097		22.4	%	$	4,636,634		22.7	%
Germany		1,306,250		6.3	%		1,361,019		6.6	%
Switzerland		1,252,642		6.0	%		1,177,520		5.7	%
Australia		985,427		4.7	%		997,878		4.9	%
Spain		211,036		1.0	%		221,134		1.1	%
All other countries		273,046		1.3	%		286,524		1.4	%
Other international assets		135,588		0.7	%		112,061		0.6	%
Total international	$	8,843,086		42.4	%	$	8,792,770		43.0	%
Grand total	$	20,860,679		100.0	%	$	20,429,581		100.0	%

On an individual property basis, we had no investment in any single property greater than 3% of our total pro forma gross assets as of March 31, 2021.

On an adjusted revenue 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, 2021 as compared to the prior year is as follows (dollars in thousands):

Total AdjustedRevenue by ~~property type:~~Operator

   For the Three
Months Ended
September 30, 2017    % of
Total For the Three
Months Ended
September 30, 2016    % of
Total
General Acute Care Hospitals (1)
   $ 119,572    67.7 % $ 78,622    62.1 %
Rehabilitation Hospitals
   46,485    26.3 % 37,075    29.3 %
Long-term Acute Care Hospitals
   10,523    6.0 % 10,858    8.6 %






Total revenue
   $ 176,580    100.0 % $ 126,555    100.0 %






   For the Nine
Months Ended
September 30, 2017    % of
Total For the Nine
Months Ended
September 30, 2016    % of
Total
General Acute Care Hospitals (1)
   $ 341,640    68.4 % $ 238,600    61.5 %
Rehabilitation Hospitals
   125,829    25.2 % 113,463    29.3 %
Long-term Acute Care Hospitals
   32,315    6.4 % 35,791    9.2 %






Total revenue
   $ 499,784    100.0 % $ 387,854    100.0 %

	For the Three Months Ended March 31,
	2021					2020
Operators	Total Adjusted Revenue		Percentage of Total Adjusted Revenue			Total Adjusted Revenue		Percentage of Total Adjusted Revenue
Steward
Massachusetts market	$	34,543		8.8	%	$	34,615		10.9	%
Utah market		31,705		8.0	%		21,781		6.8	%
Texas/Arkansas/Louisiana market		22,671		5.7	%		18,046		5.7	%
Arizona market		8,187		2.1	%		8,191		2.6	%
Florida market		4,985		1.3	%		3,626		1.1	%
Ohio/Pennsylvania market		3,300		0.8	%		5,000		1.6	%
Circle		53,192		13.5	%		32,342		10.1	%
Prospect		38,066		9.7	%		37,916		11.9	%
Prime		30,415		7.7	%		32,162		10.1	%
LifePoint Health, Inc.		26,688		6.8	%		26,594		8.3	%
Other operators		140,665		35.6	%		98,394		30.9	%
Total	$	394,417		100.0	%	$	318,667		100.0	%

~~(1)~~

~~Includes three medical office buildings.~~

Total AdjustedRevenue by U.S. State and Country

	For the Three Months Ended March 31,
	2021					2020
U.S. States and Other Countries	Total Adjusted Revenue		Percentage of Total Adjusted Revenue			Total Adjusted Revenue		Percentage of Total Adjusted Revenue
Texas	$	39,128		9.9	%	$	26,431		8.3	%
Massachusetts		34,702		8.8	%		34,773		10.9	%
California		34,004		8.6	%		34,946		11.0	%
Utah		32,677		8.3	%		22,748		7.1	%
Pennsylvania		20,100		5.1	%		21,669		6.8	%
All other states		96,549		24.5	%		92,766		29.1	%
Total U.S.	$	257,160		65.2	%	$	233,333		73.2	%
United Kingdom	$	76,560		19.4	%	$	38,875		12.2	%
Germany		26,162		6.6	%		23,804		7.5	%
All other countries		34,535		8.8	%		22,655		7.1	%
Total international	$	137,257		34.8	%	$	85,334		26.8	%
Grand total	$	394,417		100.0	%	$	318,667		100.0	%

We have 62 employees as of November 3, 2017. We believe that any foreseeable increase in the number of our employees will have only immaterial effects on our operations and general and administrative expenses. We believe that our relations with our employees are good. None of our employees are members of any labor union.

Total Adjusted Revenue by Facility Type

	For the Three Months Ended March 31,
	2021					2020
Facility Types	Total Adjusted Revenue		Percentage of Total Adjusted Revenue			Total Adjusted Revenue		Percentage of Total Adjusted Revenue
General acute care hospitals	$	315,434		80.0	%	$	263,742		82.8	%
Inpatient rehabilitation hospitals		45,303		11.5	%		40,631		12.7	%
Behavioral health facilities		19,754		5.0	%		1,422		0.5	%
Long-term acute care hospitals		8,186		2.1	%		8,575		2.7	%
Freestanding ER/urgent care facilities		5,740		1.4	%		4,297		1.3	%
Total	$	394,417		100.0	%	$	318,667		100.0	%

Results of Operations

Three Months Ended ~~September 30, 2017~~March 31, 2021 Compared to ~~September 30, 2016~~March 31, 2020

Net income for the three months ended ~~September 30, 2017,~~March 31, 2021, was ~~$76.5~~$163.8 million compared to ~~$70.4~~$81.0 million for the three months ended ~~September 30, 2016.~~March 31, 2020. This 102% increase in net income is primarily due to ~~additional~~incremental revenue from ~~the Steward and MEDIAN~~new investments made in ~~the fourth quarter of 2016~~2020 and ~~during the first nine months of 2017,~~in early 2021, partially offset by ~~increased~~higher interest expense (from additional debt to partially finance these new investments), depreciation expense, general and ~~acquisition expense~~administrative costs and ~~$44.6~~income taxes due to the growth of the company. In addition, our return on our equity investments were greater in the 2021 first quarter compared to the prior year, and we incurred approximately $19 million of ~~gains on~~ real estate ~~and other asset dispositions~~impairment charges in ~~the 2016 third quarter. Funds~~2020. Normalized funds from operations (“FFO”), after adjusting for certain items (as more fully described in ~~Reconciliation~~the “Reconciliation of Non-GAAP Financial ~~Measures)~~Measures”), was ~~$120.6~~$243.9 million for the 2021 first quarter, or $0.42 per diluted share, as compared to $191.2 million, or ~~$0.33~~$0.37 per diluted share, for the ~~2017 third quarter as compared~~2020 first quarter. Similar to ~~$75.1 million, or $0.30 per diluted share for the 2016 third quarter. This 61%~~net income, this 28% increase in Normalized FFO ~~per share~~ is primarily due to ~~the increase in~~incremental revenue from ~~our~~ new investments ~~made since September 2016, partially offset by more shares outstanding~~ in ~~2017 from the May 2017 equity offering.~~2020 and early 2021.

A comparison of revenues for the three month periods ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 is as follows (dollar amounts in thousands):


	2017		% of Total			2016		% of Total			Year over Year Change			2021		% of Total			2020		% of Total			Year over Year Change
Rent billed	$	110,930		62.8	%	$	82,387		65.1	%		34.6	%	$	213,344		58.9	%	$	171,767		58.4	%		24.2	%
Straight-line rent		17,505		9.9	%		9,741		7.7	%		79.7	%		54,873		15.1	%		31,421		10.7	%		74.6	%
Income from direct financing leases		19,115		10.8	%		14,678		11.6	%		30.2	%
Interest and fee income		29,030		16.5	%		19,749		15.6	%		47.0	%

Income from financing leases															50,894		14.0	%		52,436		17.8	%		(2.9)	%
Interest and other income															43,654		12.0	%		38,508		13.1	%		13.4	%
Total revenues	$	176,580		100.0	%	$	126,555		100.0	%		39.5	%	$	362,765		100.0	%	$	294,132		100.0	%		23.3	%

Our total revenue for the ~~2017 third~~2021 first quarter is up ~~$50.0~~$68.6 million, or ~~39.5%~~23%, over the prior year. This increase is made up of the following:

Operating lease revenue (including rent billed and straight-line rent) – up $36.3 million over the prior year of which $32.6 million is incremental revenue from acquisitions made after September 30, 2016, $4.2 million is incremental revenue from development properties that were completed and put into service in late 2016 and 2017, $1.3 million is incremental revenue from capital additions made to existing facilities in late 2016 and 2017, and $2.0 million is due to an increase in exchange rates. These increases were partially offset by $1.8

•

Operating lease revenue (includes rent billed and straight-line rent) – up $65.0 million over the prior year of which approximately $48.3 million is incremental revenue from acquisitions made in 2020 (including $16.4 million from the Circle transactions and $24.7 million from the two Steward properties in Utah that were acquired from proceeds of the mortgage loan conversions in the third quarter), $6.0 million is from the reclassification of properties from deferred financing leases to operating leases due to certain lease modifications in the fourth quarter of 2020, $3.5 million is from the commencement of rent on three development properties, $1.7 million is from capital additions in 2021, and approximately $5.6 million is from favorable foreign currency fluctuations. This increase is partially offset by $2.1 million of lower revenue from disposals in 2020.

•

Income from financing leases – down $1.5 million due to the impact from the reclassification of properties from deferred financing leases to operating leases due to certain lease modifications in the fourth quarter of 2020, partially offset by revenue from new financing leases in the 2020 fourth quarter as part of the conversion of Ernest mortgage loans to fee simple asset ownership.

•

Interest and other income – up $5.1 million from the prior year due to the following:

Interest from loans – up $3.4 million over the prior year due to $29.7 million of incremental revenue earned on loan investments in 2020 and early 2021, including $15.9 million earned on the two loans made to Priory in 2021 and $6.9 million from the loans made to the international joint venture and for the three Colombia properties in 2020, along with $0.5 million of favorable foreign currency fluctuations. This increase is partially offset by $14.7 million of lower interest revenue related to Steward mortgage loans converted to fee simple assets in the third quarter of 2020, $3.0 million of lower interest revenue related to Ernest mortgage loans converted to fee simple assets in the fourth quarter of 2020, and $9.2 million related to the repayment of Prime loans in the fourth quarter of 2020.

Other income – up $1.7 million from the prior year with the addition of new properties, whereby we received more direct reimbursements from our tenants for ground lease, property taxes, and insurance. Also, other income is higher in 2021 due to an approximate $1 million write-off of straight-line rent related to ground leases on certain Adeptus facilities in the 2020 first quarter.

Interest expense for the quarters ended March 31, 2021 and 2020, totaled $87.0 million and $80.9 million, respectively.This increase is primarily related to ~~dispositions.~~

~~Income from direct financing leases – up $4.4 million over~~new debt issuances in 2020 and 2021. Our weighted-average interest rate was 3.4% for the ~~prior year of which $0.3 million is from our annual escalation provisions~~three months ended March 31, 2021, as compared to 4.0% in ~~our leases, $1.1 million is incremental revenue from acquisitions made after September 30, 2016, and $3.0 million relates to~~ the ~~conversion of certain Prime facilities, valued at approximately $100 million,~~same period in ~~2016 from mortgage loans into direct financing leases.~~

2020.

Interest from loans – up $9.3 million over the prior year of which $0.4 million is from our annual escalation provisions in our loans, $11.5 million is incremental revenue from new loans (primarily Steward mortgage loans) made after September 30, 2016. This increase was partially offset by $0.5 million of lower revenue from loans that were repaid in 2016 and $2.2 million of lower revenue related to the conversion of certain Prime facilities, valued at approximately $100 million, from mortgage loans to direct financing leases post September 30, 2016.

Real estate depreciation and amortization during the ~~third~~first quarter of ~~2017~~2021 increased to ~~$31.9~~$75.6 million from ~~$23.9~~$60.9 million in ~~2016,~~2020 due to ~~the incremental depreciation from the properties acquired since September 30, 2016 and the development properties completed in 2016 and 2017.~~

new investments made after March 31, 2020.

Property expenses for the 2017 third quarter increased $1.6 million from the prior year quarter as the 2016 third quarter included $0.9 million reimbursement for property expenses incurred in multiple previous periods from the tenant of our Twelve Oaks facility.

Acquisition expenses increased from $2.7 million in 2016 to $7.4 million in 2017 primarily as a result of the Steward and MEDIAN acquisitions in 2017, including approximately $2.3 million of real estate transfer taxes.

~~General and administrative~~Property-related expenses totaled ~~$15.0~~$5.5 million for the ~~2017 third~~ quarter ended March 31, 2021, which is ~~8.5%~~consistent with the prior year. Of the $5.5 million of ~~total revenues, down from 9.7%~~property expenses in the first three months of ~~total revenues~~2021, approximately $3.5 million represents costs that were reimbursed by our tenants and included in ~~prior year third quarter. The drop in~~“Interest and other income” line on our condensed consolidated statements of net income.

As a percentage of revenue, general and administrative expenses ~~as a percentage of revenue is primarily due~~represent 9.9% for the 2021 first quarter compared to ~~our business model as we can generally increase our revenue significantly without increasing our head count and related expenses at~~11.4% in the ~~same rate.~~prior year. On a dollar basis, general and administrative expenses ~~were up~~totaled $36.1 million for the 2021 first quarter, which is a $2.7 million increase from the prior year ~~third~~first quarter ~~due primarily to~~and reflective of the growth of the company, in particular our ~~company, including increases in travel,~~continued international ~~administration, costs associated with opening a European office, and compensation related to increased headcount.~~

Interest expense, for the quarters ended September 30, 2017 and 2016, totaled $42.8 million and $40.3 million, respectively. This increase is primarily related to the higher average debt balance for the 2017 quarter compared to the prior year to fund our acquisition activity. The impact on interest expense from the higher debt balance was partially offset by lower interest rates year-over-year. Our weighted-average interest rate was 4.6% for the quarter ended September 30, 2017, compared to 5.2% in 2016.

With the redemption of the $450 million in senior unsecured notes during the quarter ended September 30, 2016, we incurred $22.5 million in debt refinancing charges ($15.5 million of which was a redemption premium). During the 2017 third quarter, we incurred $4.4 million of charges primarily related to structuring and underwriting fees associated with the termination of the~~short-term~~ ~~loan commitment we made in anticipation of the Steward acquisition.~~expansion.

During the three months ended ~~September 30, 2016,~~March 31, 2021, we sold ~~three HealthSouth~~one facility and an ancillary property resulting in a net gain of $1.0 million. In the first quarter of 2020, we sold four ancillary properties resulting in a net gain of $1.3 million. In addition, we made a $19.0 million adjustment to lower the carrying value of the real estate on ~~sale of approximately $45 million~~certain assets previously leased to Adeptus and Alecto in the 2020 first quarter (see Note 3 to Item 1 of this Form 10-Q for further details).

Earnings from ~~our~~ equity interests was ~~$3.4~~$7.1 million for the ~~2017 third quarter,~~first three months of 2021, up ~~$2.1~~$3.0 million from the ~~prior year~~same period in 2020, primarily ~~related~~due to more income generated on our investment in Infracore, which we increased our share in during the 2020 fourth quarter.

Debt refinancing and unutilized financing costs were $2.3 million in the 2021 first quarter as a result of the early termination of our $900 million interim credit facility and the amendment to our ~~increased ownership~~Credit Facility (see Note 4 to the condensed consolidated financial statements for more detail). In the first quarter of 2020, we incurred $0.6 million of accelerated commitment fee amortization expense associated with our GBP term loan facility.

In the first quarter of 2021, we recorded a favorable non-cash fair value adjustment of more than $4 million to mark our investment in ~~and the improved operating results of the operator~~Aevis Victoria SA stock to market. We acquired this stock as part of our ~~Hoboken facility, along with~~overall Switzerland investment in May 2019.

This adjustment (reflected in the “Other” line of our ~~first quarter to generate income on our IMED investment.~~condensed consolidated statements of net income) was a loss of more than $10 million in the prior year.

Income tax expense ~~typically~~ includes U.S. federal and state income taxes on our domestic TRS entities, as well as non-U.S. income based or withholding taxes on certain investments located in jurisdictions outside the U.S. ~~Income~~The $8.4 million income tax expense ~~of $0.5 million~~ for the three months ended ~~September 30, 2017, was primarily due to $1.1~~March 31, 2021 is from the income generated by our investments in the United Kingdom, Colombia, and Australia, as well as income from lending activities of our domestic TRS entities. In comparison, we incurred a $4.0 million ~~of foreign~~income tax expense in the first quarter of 2020. This increase in income tax expense is primarily related to ~~our German~~higher foreign taxable income generated from investments ~~offset partially by $0.6 million of tax benefit recognized on approximately $2 million of acquisition costs incurred on our European investments.~~made in 2020 and early 2021.

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 cumulativepre-tax book loss position in ~~many~~certain entities, we concluded that a ~~full~~ valuation allowance of approximately $38 million should ~~continue to~~ be ~~recorded~~reflected against ~~the majority of our U.S and~~ certain of our international and domestic net deferred tax assets at ~~September 30, 2017.~~March 31, 2021. In the future, if we determine that it is more likely than not that we will realize our ~~U.S. and foreign~~ 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 in future ~~periods.~~

~~Nine Months Ended September 30, 2017 Compared to September 30, 2016~~

~~Net~~periods as income for the nine months ended September 30, 2017, was $217.8 million compared to net income of $182.0 million for the nine months ended September 30, 2016, primarily due to additional revenue from the MEDIAN, Steward, and RCCH investments made in the fourth quarter of 2016 and the first nine months of 2017, incremental revenue from completed development projects and

increased income from our equity investments, partially offset by higher depreciation expense from investments made subsequent to September 30, 2016, increased acquisition and travel expense due to more foreign investments, and approximately $54 million in higher gains on sale of properties in the first nine months of 2016. FFO, after adjusting for certain items (as more fully described in Reconciliation of Non-GAAP Financial Measures), was $340.1 million, or $0.98 per diluted share for the first nine months in 2017 as compared to $234.1 million, or $0.97 per diluted share for the first nine months of 2016. This 45.3% increase in FFO is primarily due to the increase in revenue from acquisitions and completed development projects made since September 2016, while FFO per share is only slightly higher in the first nine months of 2017 compared to prior year due to more shares outstanding from the September 2016 and May 2017 equity offerings.

~~A comparison of revenues for the nine month periods ended September 30, 2017 and 2016 is as follows (dollar amounts in thousands):~~

   2017    % of
Total 2016    % of
Total Year over
Year
Change
Rent billed
   $ 311,140    62.3 % $ 234,408    60.4 % 32.7 %
Straight-line rent
   46,561    9.3 % 26,509    6.8 % 75.6 %
Income from direct financing leases
   55,307    11.1 % 47,181    12.2 % 17.2 %
Interest and fee income
   86,776    17.3 % 79,756    20.6 % 8.8 %






Total revenues
   $ 499,784    100.0 % $ 387,854    100.0 % 28.9 %

~~Our total revenue for the first nine months of 2017 is up $111.9 million or 28.9% over the prior year. This increase is made up of the following:~~

Operating lease revenue (including rent billed and straight-line rent) – up $96.8 million over the prior year of which $0.4 million is from our annual escalation provisions in our leases, $83.1 million is incremental revenue from acquisitions made after September 30, 2016, $16.2 million is incremental revenue from development properties that were completed and put into service in 2016 and 2017, $2.7 million is incremental revenue from capital additions made to existing facilities in 2017 and 2016, $5.6 million relates to the conversion of certain RCCH facilities in 2016 from direct financing leases into operating leases, and a $0.5 million straight-line rent write-off related to our Corinth facility in the 2016 second quarter. These increases are partially offset by $8.5 million of lower revenue related to dispositions, $1.1 million of straight-line rent write-offs in 2017 related to three Adeptus facilities re-leased to Ochsner and the sale of our Muskogee property, and foreign currency fluctuations.

Income from direct financing leases – up $8.1 million over the prior year of which $0.6 million is from our annual escalation provisions in our leases, $3.7 million is incremental revenue from acquisitions made after September 30, 2016, $9.0 million relates to the conversion of certain Prime facilities in 2016 from mortgage loans to direct financing leases, and a $2.6 million write-off in 2016 related to the RCCH facilities that converted from direct financing leases into operating leases. These increases were partially offset by $7.8 million of lower revenue related to those RCCH facilities that converted from direct financing leases into operating leases in the first half of 2016.

Interest from loans – up $7.0 million over the prior year of which $1.1 million is from annual escalation provisions and $34.0 million is incremental revenue from new loans (primarily Steward mortgage loans) made after September 30, 2016. These increases were partially offset by $21.6 million in less interest revenue earned in 2017 from loans that were repaid in 2016 (primarily from Capella Transaction) and $6.5 million of lower interest revenue related to the conversion of certain Prime facilities, valued at approximately $100 million, from mortgage loans to direct financing leases post September 30, 2016.

Real estate depreciation and amortization during the first nine months of 2017 increased to $89.0 million from $67.9 million in the same period of 2016, primarily due to the incremental depreciation from the properties acquired and the development properties completed in 2016 and 2017. In the 2016 second quarter, we accelerated the amortization of the lease intangible asset related to our Corinth facility resulting in $1.1 million of additional expense.

Property expenses for the first nine months of 2017 increased $2.4 million compared to 2016. This increase is primarily due to the reimbursement to us in the 2016 third quarter of $0.8 million by the tenant of our Twelve Oaks facility for property expenses incurred in previous periods.

Acquisition expenses increased from $6.4 million in 2016 to $21.0 million in 2017 primarily as a result of the MEDIAN and Steward acquisitions in 2017, including $11.7 million of real estate transfer taxes incurred on the MEDIAN acquisitions.

General and administrative expenses in the first nine months of 2017 totaled $43.3 million, which is 8.7% of revenues down from 9.2% of revenues in the prior year. The decline in general and administrative expenses as a percentage of revenues is primarily due to our business model as we can generally increase our revenues significantly without increasing our head count and related expense at the same rate. On a dollar basis, general and administrative expenses were up $7.5 million from the prior year first nine months due primarily to increases in travel, international administration, costs associated with opening a European office, compensation related to increased headcount and public company board expenses.

During the nine months ended September 30, 2017, we sold the Muskogee, Oklahoma facility resulting in a net gain on sale of real estate of $7.4 million, while in the first nine months of 2016, we had various dispositions resulting in a net gain on sale of real estate and other asset dispositions of $61.3 million and impairment charges of $7.3 million (see Note 3 to Item 1 of this Form 10-Q for further details).

Earnings from our equity interests increased from a loss of $2.6 million in 2016 to a gain of $7.9 million in 2017. The loss in 2016 includes $5.3 million of acquisition expenses, representing our share of such expenses incurred by our Italian joint venture to acquire its eight hospital properties. In addition, 2017 includes $4.7 million of additional income related to our increased ownership in and improved operating results of the operator of our Hoboken facility, along with additional income from our IMED investment in the 2017 third quarter.

Interest expense remained relatively flat year-over-year as we incurred $120.5 million for the first nine months of 2017 compared to $121.1 million for the first nine months of 2016. Our average debt balance for 2017 has been higher than 2016 due to continued growth of the company; however, its impact on interest expense has been more than offset by lower interest rates. Our weighted-average interest rate for the first nine months of 2017 was 4.6% versus 4.9% in the same period for 2016.

With the redemption of the $450 million in senior unsecured notes, we incurred $22.5 million in debt refinancing charges ($15.5 million of which was a redemption premium) during the first nine months of 2016. During the first nine months of 2017, we incurred $18.8 million of debt refinancing charges related to the replacement of our credit facility, the payoff of our €200 million euro loan, the prepayment of our $12.9 million term loan, and structuring and underwriting fees associated with the termination of the short-term loan commitment we made in anticipation of the Steward acquisition (see Note 4 to Item 1 of this Form 10-Q for further details).

Income tax expense for the nine months ended September 30, 2017 decreased by $390 thousand from the same period in 2016 primarily due to $1.7 million of benefit recognized on approximately $10.7 million of acquisition costs incurred on our European investments in 2017. This tax benefit recognized in 2017 was offset by additional tax expense from our international investments, which were not realized in 2016 due to a valuation allowance position. These valuation allowances were released in the 2016 fourth quarter.earned.

Reconciliation of Non-GAAP Financial Measures

~~Funds From Operations~~

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,~~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~~Nareit definition, we also 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 ~~September 30, 2017~~March 31, 2021 and ~~2016 (in~~2020 (amounts in thousands except per share data):

   For the Three Months Ended For the Nine Months Ended
   September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
FFO information:

Net income attributable to MPT common stockholders
   $ 76,464 $ 70,358 $ 217,849 $ 182,009
Participating securities’ share in earnings
   (82 ) (154 ) (307 ) (430 )


Net income, less participating securities’ share in earnings
   $ 76,382 $ 70,204 $ 217,542 $ 181,579
Depreciation and amortization
   32,618 24,374 90,744 69,181
Gain on sale of real estate
   (18 ) (44,515 ) (7,431 ) (67,168 )


Funds from operations
   $ 108,982 $ 50,063 $ 300,855 $ 183,592
Write-off of straight line rent and other
   — — 1,117 3,063
Transaction costs from non-real estate dispositions .
   — (101 ) — 5,874
Acquisition expenses, net of tax benefit
   7,166 2,689 19,350 11,723
Impairment charges
   — (80 ) — 7,295
Unutilized financing fees / debt refinancing costs
   4,414 22,535 18,794 22,539


Normalized funds from operations
   $ 120,562 $ 75,106 $ 340,116 $ 234,086


Per diluted share data:

Net income, less participating securities’ share in earnings
   $ 0.21 $ 0.28 $ 0.63 $ 0.75
Depreciation and amortization
   0.09 0.10 0.26 0.29
Gain on sale of real estate
   — (0.18 ) (0.02 ) (0.28 )


Funds from operations
   $ 0.30 $ 0.20 $ 0.87 $ 0.76
Write-off of straight line rent and other
   — — — 0.01
Transaction costs from non-real estate dispositions .
   — — — 0.03
Acquisition expenses, net of tax benefit
   0.02 0.01 0.06 0.05
Impairment charges
   — — — 0.03
Unutilized financing fees / debt refinancing costs
   0.01 0.09 0.05 0.09


Normalized funds from operations
   $ 0.33 $ 0.30 $ 0.98 $ 0.97

	For the Three Months Ended
	March 31, 2021			March 31, 2020
FFO information:
Net income attributable to MPT common stockholders	$	163,783		$	80,992
Participating securities’ share in earnings		(370	)		(464	)
Net income, less participating securities’ share in earnings	$	163,413		$	80,528
Depreciation and amortization		88,536			70,502
Gain on sale of real estate		(989	)		(1,325	)
Real estate impairment charges		—			19,006
Funds from operations	$	250,960		$	168,711
Write-off (recovery) of straight-line rent and other		(5,238	)		6,740
Non-cash fair value adjustments		(4,065	)		14,195
Tax rate change		—			977
Debt refinancing and unutilized financing costs		2,269			611
Normalized funds from operations	$	243,926		$	191,234
Per diluted share data:
Net income, less participating securities’ share in earnings	$	0.28		$	0.15
Depreciation and amortization		0.15			0.13
Gain on sale of real estate		—			—
Real estate impairment charges		—			0.04
Funds from operations	$	0.43		$	0.32
Write-off (recovery) of straight-line rent and other		(0.01	)		0.02
Non-cash fair value adjustments		—			0.03
Tax rate change		—			—
Debt refinancing and unutilized financing costs		—			—
Normalized funds from operations	$	0.42		$	0.37

Total Pro Forma Gross Assets

~~Total~~Pro forma gross assets is total assets before accumulated depreciation/amortization (adjusted for our unconsolidated joint ventures) and assumes all real estate ~~binding~~ commitments on new investments and unfunded amounts on development deals and commenced capital improvement projects as of the applicable reporting periods are fully funded, and assumes cash on hand is ~~fully~~ used in these transactions. We believe total pro forma 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 ~~binding~~ commitments close and our other commitments are fully funded. The following table presents a reconciliation of total assets to total pro forma gross assets (in thousands):

   As of September 30, 2017    As of December 31, 2016
Total Assets
   $ 8,927,040    $ 6,418,536
Add:

Binding real estate commitments on new investments⁽¹⁾
   112,012    288,647
Unfunded amounts on development deals and commenced capital improvement projects⁽²⁾
   86,227    194,053
Accumulated depreciation and amortization
   418,880    325,125
Less:

Cash and cash equivalents
   (188,224 )    (83,240 )




Total Gross Assets
   $ 9,355,935    $ 7,143,121

	As of			As of
	March 31, 2021			December 31, 2020
Total assets	$	18,745,675		$	16,829,014
Add:
Real estate commitments on new investments(1)		157,630			1,901,087
Unfunded amounts on development deals and commenced capital improvement projects(2)		114,129			166,258
Accumulated depreciation and amortization		903,798			833,529
Incremental gross assets of our joint ventures(3)		1,211,206			1,287,077
Proceeds from new debt and equity subsequent to period-end		—			1,479,961
Less:
Cash used for funding the transactions above(4)		(271,759	)		(2,067,345	)
Total pro forma gross assets	$	20,860,679		$	20,429,581

(1)

~~Reflects post September 30, 2017 commitments,~~

The 2021 column reflects our investment in Swiss Medical Network on April 16, 2021. The 2020 column reflects investments made in early 2021, including ~~one RCCH facility and three facilities in Germany, and post December 31, 2016 transactions and commitments, including two RCCH facilities and 14 facilities in Germany.~~the Priory transaction that was funded on January 19, 2021.

(2)

Includes ~~$63.9~~$53.6 million and ~~$109.1~~$65.5 million of unfunded amounts on ongoing development projects and ~~$22.3~~$60.5 million and ~~$84.9~~$100.8 million of unfunded amounts on capital improvement projects and development projects that have commenced rent, as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, respectively.

(3)	Adjustment to reflect our share of our joint ventures’ gross assets.

(4)	Includes cash available on-hand plus cash generated from activities subsequent to period-end including proceeds from new debt, equity, or loan repayments, if any.

Adjusted revenue

Adjusted revenues are total revenues adjusted for our pro rata portion of similar revenues in our real estate joint venture arrangements. We believe adjusted revenue is useful to investors as it provides a more complete view of revenue 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,
	2021		2020
Total revenues	$	362,765	$	294,132
Revenue from real estate properties owned through joint venture arrangements		31,652		24,535
Total adjusted revenue	$	394,417	$	318,667

LIQUIDITY AND CAPITAL RESOURCES

~~2017~~2021 Cash Flow Activity

During the ~~nine months ended September 30, 2017,~~2021 first quarter, we generated ~~$219.9~~approximately $188.7 million of cash flows from operating activities, primarily consisting of rent and interest from mortgage and other loans. We used these operating cash flows, along with ~~cash on-hand~~$11 million received from Steward as a return of capital distribution, to fund our dividends of ~~$239.2 million.~~

~~Certain investing~~$147.7 million and ~~financing activities~~certain investment activities. In addition, we invested approximately $1.8 billion in ~~2017 included:~~

~~a) On February~~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 ~~2017, we replaced our~~of this Form 10-Q), using a combination of cash on-hand generated from the $779.2 million of net proceeds from the sales of stock during the quarter, £500 million of proceeds from an interim credit facility, ~~with a new facility resulting in a $50 million reduction in our U.S. dollar term loan~~ and ~~a new €200 million term loan;~~

~~b) On March 4, 2017, we redeemed our 5.750% Senior Unsecured Notes due 2020 for €200 million plus a redemption premium using~~ proceeds from our ~~€200~~revolving facility. In late March 2021, we issued £850 million ~~term loan and cash on hand;~~

~~c) On March 24, 2017, we completed a €500 million~~of senior unsecured notes ~~offering~~ and used ~~a portion of the~~such proceeds to pay off our ~~€200~~interim credit facility in full and reduce our revolving credit facility balance to less than $200 million ~~term loan, and the remaining proceeds were used~~outstanding.

Subsequent to ~~acquire 12 facilities leased to MEDIAN for €146.4 million;~~

~~d) On March 31, 2017,~~quarter-end, we sold ~~the EASTAR Health System real estate in Muskogee, Oklahoma for approximately $64 million;~~

~~e) On May 1, 2017, we completed~~ an ~~underwritten public offering of 43.1~~additional 4.9 million shares under our at-the-market equity program, resulting in net proceeds of approximately ~~$548 million. We used a portion of these proceeds to acquire eight facilities for $301.3~~$105.5 million, ~~(leased to Steward), a facility in Idaho for $87.5~~and received approximately $75 million ~~(leased to RCCH) and two other facilities for $40 million (leased to Alecto);~~from loan principal prepayments.

f) On September 7, 2017, we completed a senior unsecured notes offering for $1.4 billion and used a portion of the proceeds to redeem our 6.375% Senior Unsecured Notes due 2022 in October 2017 for $350 million plus a redemption premium, and the remaining proceeds, along with borrowings from our revolving credit facility, were used to acquire 11 facilities and ancillary properties leased to Steward for $1.4 billion and to make a $100 million equity investment in Steward; and

~~g) On September 29, 2017, we prepaid our Northland mortgage loan in the amount of $12.9 million.~~

~~2016~~2020 Cash Flow Activity

During the ~~nine months ended September 30, 2016,~~2020 first quarter, we generated ~~$168.3~~$106.9 million of cash flows from operating activities, primarily consisting of rent and interest from mortgage and other loans. Operating cash flows for the 2020 first quarter did not include approximately $35 million of revenue earned on the new Circle/BMI transaction, as such rent was prepaid before the closing of the acquisition. We used ~~these~~our operating cash flows in the 2020 first quarter, along with ~~cash on-hand~~approximately $63 million of distributions from our HM Hospitales joint venture investment in the form of a return of capital, to fund our dividends of ~~$160.1~~$138.1 million and certain investing activities including the additional funding of our development activities.

In ~~regards to other financing activities, to, delever~~addition, we funded the £1.5 billion Circle acquisition of 30 properties in January 2020 with a combination of cash on-hand and ~~finance the Steward acquisition in October 2016, we did the following:~~

~~a) On February 22, 2016, we completed a senior unsecured notes offering for $500 million.~~

b) On April 30, 2016, we closed on the Capella Transaction (as further discussed in Note 3 to Item 1 of this Form 10-Q) resulting in net proceeds of $550 million along with an additional $50 million once we sold our investment in RegionalCare bonds in June 2016.

~~c) On May 23, 2016, we sold our investment in five properties leased and operated by Post Acute for $71 million.~~

~~d) On June 17, 2016, we sold our investment in one property leased and operated by Corinth Investor Holdings for $28 million.~~

e) On July 13, 2016, we completed a new $500 million senior unsecured notes offering. We used the net proceeds from this offering to redeem our $450 million 6.875% Senior Unsecured Notes due 2021, which was completed on August 12, 2016. Net proceeds from the ~~notes offering after redemption approximated $19~~£700 million ~~and we incurred a one-time charge of $22.5 million related to the redemption (see Note 4 to Item 1 of this Form 10-Q for further details).~~British pound sterling term loan.

~~f) On July 20, 2016, we sold three facilities leased to HealthSouth for $111.5 million, and~~

g) We sold 82.7 million shares (including 10.3 million sold to Cerberus affiliates on October 7, 2016) through our at-the-market equity offering program, a public equity offering and a private placement generating proceeds of approximately $1.2 billion.

Short-term Liquidity Requirements:

As of ~~November~~May 3, ~~2017 (and after the redemption of the $350 million 6.375% Senior Unsecured~~

~~Notes due 2022 on October 7, 2017),~~2021, we ~~do not~~ have ~~any~~no debt principal payments due ~~until~~in the ~~revolving credit facility comes due in~~

~~2021, which we can extend for an additional 12~~next twelve months — see debt maturity schedule below. In January 2021, we extended the maturity of our revolving credit facility to February 2024. At ~~November~~May 3, ~~2017, our~~2021, availability under our revolving credit facility plus cash on-hand approximated ~~$0.7~~$1.8 billion. We believe this liquidity ~~and our current monthly cash receipts from rent and loan interest is sufficient to fund our operations, debt and interest obligations, the expected funding~~

~~requirements on our development projects, and dividends in order to comply with REIT requirements for the next twelve months.~~

~~Long-term Liquidity Requirements~~~~: Exclusive of the revolving credit facility (which we can extend for an additional year to February~~

2022) and after the redemption of the $350 million 6.375% Senior Unsecured Notes due 2022, we do not have any debt principal payments due over the next five years (see debt maturity schedule below). With our liquidity at November 3, 2017 of approximately $0.7 billion along with our current monthly cash receipts from rent and loan interest, ~~we believe we have~~regular distributions from our joint venture arrangements, approximately $400 million of availability under our at-the-market equity program, and approximately £250 million expected to be repaid by Waterland pursuant to the ~~liquidity available to us~~Priory acquisition loan is sufficient to fund our operations, ~~debt and interest obligations,~~ dividends in order to comply with REIT requirements, and our current firm commitments and debt service obligations for the ~~expected funding~~next twelve months.

Long-term Liquidity Requirements:

As of May 3, 2021, our liquidity approximates $1.8 billion and we believe our liquidity, along with our current monthly cash receipts from rent and loan interest, regular distributions from our joint venture arrangements, and approximately $400 million of availability under our at-the-market equity program, is sufficient to fund our operations, debt and interest obligations, our firm commitments, and dividends in order to comply with REIT requirements ~~on our development projects currently.~~for the foreseeable future.

However, in order to fund ~~our investment strategies, while maintaining a prudent leverage ratio, and~~additional investments, to fund debt maturities coming due starting in 2022 and ~~later years, additional capital will be needed, and~~beyond, or to strategically refinance any existing debt in order to reduce interest rates, we ~~believe the following sources of capital are generally available in the market and we~~ may need to access one or a combination of ~~them:~~

the following sources of capital:

~~entering into joint venture arrangements,~~

•

sale of equity securities;

~~proceeds from strategic property sales,~~

•

issuance of new USD, EUR, or GBP denominated debt securities, including senior unsecured notes;

~~sale of equity securities,~~

•

entering into new bank term loans;

~~amending or entering into new bank term~~

•

placing new secured loans on real estate located outside the U.S.; and/or

~~issuing of new USD or EUR denominated debt securities, including senior unsecured notes, and/or~~

~~placing new secured loans on real estate located in the U.S. and/or Europe.~~

•

proceeds from strategic property sales or joint ventures.

However, there is no assurance that conditions will be favorable for such possible transactions (particularly in light of the ongoing COVID-19 pandemic) or that our plans will be successful.

~~As of September 30, 2017, principal~~Principal payments due on our debt (which exclude the effects of any discounts, premiums, or debt issue costs recorded) as of May 3, 2021 are as follows (in thousands):

2017
   $ 350,000 (A)
2018
   —
2019
   —
2020
   —
2021
   445,359
Thereafter
   4,081,400


Total
   $ 4,876,759

2021	$	—
2022		603,200
2023		556,440
2024		1,112,403
2025		1,576,970
Thereafter		6,317,095
Total	$	10,166,108

~~(A)~~

~~The $350 million 6.375% Senior Unsecured Notes due 2022 were redeemed on October 7, 2017 with proceeds from our $1.4 billion 5.000% Senior Unsecured Notes due 2027.~~

~~Disclosure of~~ Contractual ~~Obligations~~Commitments

We presented our contractual ~~obligations~~commitments in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016. For the nine months ended September 30, 2017,~~2020. Except for changes to our debt, ~~related contractual obligations included~~there have been no other significant changes during the issuance of our new Credit Facility, the 3.325% Senior Unsecured Notes due 2025, and the 5.000% Senior Unsecured Notes due 2027, along with redemption of our 5.750% Senior Unsecured Notes due 2020 and prepayment of our $12.9 million term loan. Subsequent to September 30, 2017, we redeemed our 6.375% Senior Unsecured Notes due 2022. See Note 4 of Item 1 of this Form 10-Q for more detailed information.three months ended March 31, 2021.

The following table updates our contractual ~~obligations~~commitments schedule for ~~the debt activity, described above, for the nine months ended September 30, 2017 along with the post September 30, 2017 early redemption~~these updates as of ~~our 6.375% Senior Unsecured Notes due 2022~~May 3, 2021 (in thousands):

Contractual Obligations
   Less Than
1 Year    1-3 Years    3-5 Years    After
5 Years    Total
Revolving credit facility (1)
   $ 14,287    $ 28,574    $ 450,122    $ —      $ 492,983
Term loan
   5,556    11,127    207,444    —      224,127
3.325% Senior Unsecured Notes due 2025
   19,641    39,282    39,282    649,622    747,827
5.750% Senior Unsecured Notes due 2020
   —      —      —      —      —
6.375% Senior Unsecured Notes due 2022
   364,381    —      —      —      364,381
5.000% Senior Unsecured Notes due 2027
   39,667    140,000    140,000    1,785,000    2,104,667

	2021(1)		2022		2023		2024		2025		Thereafter		Total
2.500% Senior Unsecured Notes due 2026	$	—	$	17,389	$	17,389	$	17,389	$	17,389	$	712,939	$	782,495
3.375% Senior Unsecured Notes due 2030		—		17,828		16,432		16,432		16,432		569,047		636,171

~~(1)~~

As of September 30, 2017, we have a $1.3 billion revolving credit facility. However, this table assumes the balance outstanding under the revolver and rate in effect at September 30, 2017 remain in effect through maturity.

(1)

This column represents obligations post May 3, 2021.

Distribution Policy

The table below is a summary of our distributions declared during the two year period ended ~~September 30, 2017:~~March 31, 2021:

Declaration Date
   Record Date    Date of Distribution    Distribution per Share
August 17, 2017
   September 14, 2017    October 12, 2017    $ 0.24
May 25, 2017
   June 15, 2017    July 14, 2017    $ 0.24
February 16, 2017
   March 16, 2017    April 13, 2017    $ 0.24
November 10, 2016
   December 8, 2016    January 12, 2017    $ 0.23
August 18, 2016
   September 15, 2016    October 13, 2016    $ 0.23
May 19, 2016
   June 16, 2016    July 14, 2016    $ 0.23
February 19, 2016
   March 17, 2016    April 14, 2016    $ 0.22
November 12, 2015
   December 10, 2015    January 14, 2016    $ 0.22

Declaration Date	Record Date	Date of Distribution	Distribution per Share
February 18, 2021	March 18, 2021	April 8, 2021	$	0.28
November 12, 2020	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
February 14, 2020	March 12, 2020	April 9, 2020	$	0.27
November 21, 2019	December 12, 2019	January 9, 2020	$	0.26
August 15, 2019	September 12, 2019	October 10, 2019	$	0.26
May 23, 2019	June 13, 2019	July 11, 2019	$	0.25

We intend to pay to our stockholders, within the time periods prescribed by the Internal Revenue Code of 1986, as amended (“Code”), all or substantially all of our annual taxable income, including taxable gains ~~(if any)~~ from the sale of real estate and recognized gains on the sale of securities. It is our policy to make sufficient cash distributions to stockholders in order for us to maintain our status as a REIT under the Code and to avoid corporate income and excise taxes on undistributed income. ~~See~~ However, our Credit Facility limits the amount of dividends we can pay - see Note 4 ~~to our condensed consolidated financial statements~~ in Item 1 to this Form 10-Q for ~~any restrictions placed on dividends by our existing credit facility.~~further information.

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk.~~

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 ~~our variable rate~~ 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, all of which may affect our ability to refinance our debt, if necessary.~~profits. The changes in the value of our facilities would be impacted also by changes in “cap” rates, which is measured by the current base rent divided by the current market value of a facility.

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.~~conditions (such as the impact caused by COVID-19). 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 ~~September 30, 2017,~~March 31, 2021, our outstanding debt totaled ~~$4.8~~$10.0 billion, which consisted of fixed-rate debt of ~~$4.2~~approximately $9.6 billion (after considering interest rate swaps in-place) and variable rate debt of ~~$0.6~~$0.4 billion. If market interest rates increase by 1%, the fair value of our debt at ~~September 30, 2017~~March 31, 2021 would decrease by ~~$8.0~~approximately $11.6 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 1%, the increase in annual interest expense on our variable rate debt would decrease future earnings and cash flows by ~~$0.2~~$0.1 million per year. If market rates of interest on our variable rate debt decrease by 1%, the decrease in interest expense on our variable rate debt would increase future earnings and cash flows by ~~$0.2~~$0.1 million per year. This assumes that the average amount outstanding under our variable rate debt for a year is ~~$0.6~~$0.4 billion, the balance of such variable rate debt at ~~September 30, 2017.~~March 31, 2021.

Foreign Currency Sensitivity

With our investments in the United Kingdom, Germany, Spain, Italy, Portugal, Switzerland, Australia, and ~~throughout Europe,~~Colombia, we are subject to fluctuations in the ~~euro and~~ British pound, euro, Swiss franc, Australian dollar, and Colombian peso to U.S. dollar currency exchange rates. ~~Increases~~Although we generally deem investments in these countries to be of a long-term nature, are 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 ~~euro to U.S.~~respective non-U.S. dollar ~~and the British pound~~currencies to U.S. dollar exchange rates may impact our financial condition and/or our results of operations. Based solely on our 2021 operating results ~~to-date in 2017~~ and on an annualized basis, ifa 5% change to the ~~euro~~following exchange ~~rate were to change~~rates would have impacted our net income and FFO by ~~5%, our FFO would change by approximately $4.0 million. Based solely on operating results to-date in 2017 and on an annualized basis, if~~ the ~~British pound exchange rate were to change by 5%, our FFO would change by less than $0.2 million.~~amounts below (in thousands):

	Net Income Impact		FFO Impact
British pound (£)	$	5,930	$	9,478
Euro (€)		125		2,048
Swiss franc (CHF)		488		1,448
Australian dollar (A$)		665		1,751
Colombian peso (COP)		537		537

~~Item 4.~~

~~Controls and Procedures.~~

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 ~~timely alerting them to material~~providing reasonable assurance that information required to be disclosed by us in the reports that we file ~~with~~under the ~~SEC.~~Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

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

PART II — OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings.~~

Item 1. Legal Proceedings.

The information contained in Note 9 “Contingencies” ~~of Part I, Item 1 of this Quarterly Report on Form 10-Q~~to the condensed consolidated financial statements is incorporated by reference into this Item 1.

~~Item 1A.~~

~~Risk Factors.~~

~~Except to the extent set forth below or as otherwise disclosed in this Quarterly Report on Form 10-Q, there~~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, ~~2016.~~2020.

~~Our revenues are dependent upon our relationship with and success of our largest tenants, Steward, Prime, MEDIAN, Ernest, RCCH and Adeptus Health.~~

As of September 30, 2017, affiliates of Steward, MEDIAN, Prime, Ernest, RCCH and Adeptus Health represented 36.8%, 12.9%, 12.0%, 6.7%, 5.4% and 4.5%, respectively, of our total gross assets (which consist primarily of real estate leases and mortgage loans).

Our relationships with these operators and their financial performance and resulting ability to satisfy their lease and loan obligations to us are material to our financial results and our ability to service our debt and make distributions to our stockholders. We are dependent upon the ability of these operators to make rent and loan payments to us, and any failure to meet these obligations could have a material adverse effect on our financial condition and results of operations.

Our tenants operate in the healthcare industry, which is highly regulated by federal, state, and local laws and changes in regulations may negatively impact our tenants’ operations until they are able to make the appropriate adjustments to their business. For example, recent modifications to regulations concerning patient criteria and reimbursement for long-term acute care hospitals, or LTACHs, have resulted in volume and profitability declines in certain facilities operated by Ernest.

We are aware of various federal and state inquiries, investigations and other proceedings currently affecting several of our tenants and would expect such government compliance and enforcement activities to be ongoing at any given time with respect to one or more of our tenants, either on a confidential or public basis. During the second quarter of 2016, the Department of Justice joined a lawsuit against Prime alleging irregular admission practices intended to increase the number of inpatient care admissions of Medicare patients, including unnecessarily classifying some patients as “inpatient” rather than “observation”. Other large acute hospital operators have also recently defended similar allegations, sometimes resulting in financial settlements and agreements with regulators to modify admission policies, resulting in lower reimbursements for those patients.

Our tenants experience operational challenges from time-to-time, and this can be even more of a risk for those tenants that grow via acquisitions in a short time frame like Steward, Prime, Adeptus Health and others.

In May 2017, Prime advised that it would be delayed in furnishing its 2016 financial statements to its lenders and that it would take a significant write-down to its accounts receivables. Prime has received a notice of default from its lenders related to its failure to furnish its 2016 financials on a timely basis. As a result of these developments, S&P has downgraded Prime’s corporate credit rating and senior secured term loan credit rating. These financial and operational setbacks affecting Prime may adversely impact its ability to make required lease and interest payments to us.

The ability of our tenants and operators to integrate newly acquired businesses into their existing operational, financial reporting and collection systems is critical towards ensuring their continued success. If such integration is not successfully implemented in a timely manner, operators can be negatively impacted whether it be through write-offs of uncollectible accounts receivable (similar to Prime’s expected write-offs) or even insolvency in certain extreme cases.

Any further adverse result to any of Steward, Prime, MEDIAN, Ernest, RCCH or Adeptus Health in regulatory proceedings or financial or operational setbacks may have a material adverse effect on the relevant tenant’s operations and financial condition and on its ability to make required lease and loan payments to us. If any further one of these tenants files for bankruptcy protection, we may not be able to collect any pre-filing amounts owed to us by such tenant. In addition, in a bankruptcy proceeding, such tenant may terminate our lease(s), in which case we would have a general unsecured claim that would likely be for less than the full amount owed to us. Any secured claims we have against such tenant may only be paid to the extent of the value of the collateral, which may not cover any or all of our losses. If we are ultimately required to find one or more tenant-operators to lease one or more properties currently leased by such tenant, we may face delays and increased costs in locating a suitable replacement tenant. The protections that we have in place to protect against such failure or delay, which can include letters of credit, cross default provisions, parent guarantees, repair reserves and the right to exercise remedies including the termination of the lease and replacement of the operator, may prove to be insufficient, in whole or in part, or may entail further delays. In instances where we have an equity investment in our tenant’s operations, in addition to the effect on these tenants’ ability to meet their financial obligation to us, our ownership and investment interests may also be negatively impacted.

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

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds.~~

(a)

None.

(b)

Not applicable.

~~(a)~~

(c)

None.

~~(b)~~

~~Not applicable.~~

~~(c)~~

~~None.~~

~~Item 3.~~

~~Defaults Upon Senior Securities.~~

Item 3. Defaults Upon Senior Securities.

None.

~~Item 4.~~

~~Mine Safety Disclosures.~~

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

~~Item 5.~~

~~Other Information.~~

(a)

None.

~~(a)~~

(b)

None.

Item 6. Exhibits

~~(b)~~

~~None.~~

~~Item 6.~~ ~~Exhibits.~~


Exhibit Number		Description

4.1* 4.1		~~Twelfth~~ Seventeenth Supplemental Indenture, dated as of ~~September 21, 2017,~~March 24, 2021, by and among MPT Operating Partnership, L.P. and MPT Finance Corporation, as issuers, Medical Properties Trust, Inc., as parent and guarantor, ~~and~~ Wilmington Trust, National Association, as ~~trustee.~~trustee, and Elavon Financial Services DAC, as initial paying agent, registrar and transfer agent (incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K of Medical Properties Trust, Inc. and MPT Operating Partnership, L.P. filed with the Securities and Exchange Commission on March 29, 2021)

10.1* 4.2		~~Joinder~~ Form of 2026 Note (incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K of Medical Properties Trust, Inc. and ~~Amendment to Master Lease Agreement,~~MPT Operating Partnership, L.P. filed with the Securities and Exchange Commission on March 29, 2021)

4.3		Eighteenth Supplemental Indenture, dated as of ~~September 29, 2017,~~March 24, 2021, by and among ~~certain Affiliates of~~ MPT Operating Partnership, L.P. and ~~certain Affiliates~~MPT Finance Corporation, as issuers, Medical Properties Trust, Inc., as parent and guarantor, Wilmington Trust, National Association, as trustee, and Elavon Financial Services DAC as initial paying agent, registrar and transfer agent (incorporated by reference to Exhibit 4.4 of ~~Steward Health Care System LLC.~~the Current Report on Form 8-K of Medical Properties Trust, Inc. and MPT Operating Partnership, L.P. filed with the Securities and Exchange Commission on March 29, 2021)

10.2* 4.4		~~Joinder~~ Form of 2030 Note (incorporated by reference to Exhibit 4.4 of the Current Report on Form 8-K of Medical Properties Trust, Inc. and ~~Amendment to Real Estate~~MPT Operating Partnership, L.P. filed with the Securities and Exchange Commission on March 29, 2021)

10.1*		Amended and Restated Revolving Credit and Term Loan Agreement, dated as of ~~September 29, 2017, by and~~January 15, 2021, among ~~certain Affiliates of~~Medical Properties Trust, Inc., MPT Operating Partnership, L.P., the several lenders from time to time party thereto, Bank of America, N.A., as syndication agent, and ~~certain Affiliates of Steward Health Care System LLC.~~JPMorgan Chase Bank, N.A., as administrative agent

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~~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~~101.SCH*		Inline XBRL Taxonomy Extension Schema Document

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

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

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

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

*	~~Filed herewith.~~

**	~~Furnished herewith.~~

~~INDEX TO EXHIBITS~~


~~Exhibit~~ ~~Number~~		~~Description~~
Exhibit 104*
4.1*		~~Twelfth Supplemental Indenture, dated~~ Cover Page Interactive Data File (formatted as of September 21, 2017, by and among MPT Operating Partnership, L.P. and MPT Finance Corporation, as issuers, Medical Properties Trust, Inc., as parent and guarantor, and Wilmington Trust, National Association, as trustee.

10.1*		Joinder and Amendment to Master Lease Agreement, dated as of September 29, 2017, by and among certain Affiliates of MPT Operating Partnership, L.P. and certain Affiliates of Steward Health Care System LLC.

10.2*		Joinder and Amendment to Real Estate Loan Agreement, dated as of September 29, 2017, by and among certain Affiliates of MPT Operating Partnership, L.P. and certain Affiliates of Steward Health Care System LLC.

31.1*		~~Certification of Chief Executive Officer pursuant to Rule13a-14(a)~~ ~~under the Securities Exchange Act of 1934. (Medical Properties Trust, Inc.)~~

31.2*		~~Certification of Chief Financial Officer pursuant to Rule13a-14(a)~~ ~~under the Securities Exchange Act of 1934. (Medical Properties Trust, Inc.)~~

31.3*		~~Certification of Chief Executive Officer pursuant to Rule13a-14(a)~~ ~~under the Securities Exchange Act of 1934. (MPT Operating Partnership, L.P.)~~

31.4*		~~Certification of Chief Financial Officer pursuant to Rule13a-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 Rule13a-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 Rule13a-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~~		Inline XBRL ~~Instance Document~~

~~Exhibit 101.SCH~~		~~XBRL Taxonomy Extension Schema Document~~

~~Exhibit 101.CAL~~		~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~Exhibit 101.DEF~~		~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~Exhibit 101.LAB~~		~~XBRL Taxonomy Extension Label Linkbase Document~~

~~Exhibit 101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase Document~~with applicable taxonomy extension information contained in Exhibits 101.*)

*	Filed herewith.

**	Furnished herewith.

SIGNATURE

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

MEDICAL PROPERTIES TRUST, INC.


~~By:~~
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:~~
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: ~~November 9, 2017~~

May 10, 2021

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