UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2025
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-32559
Commission file number 333-177186
MEDICAL PROPERTIES TRUST, INC.
MPT OPERATING PARTNERSHIP, L.P.
(Exact Name of Registrant as Specified in Its Charter)
maryland
delaware
20-0191742
20-0242069
(State or other jurisdiction of
incorporation or organization)
(I. R. S. Employer
Identification No.)
1000 URBAN CENTER DRIVE, SUITE 501
BIRMINGHAM, AL
35242
(Address of principal executive offices)
(Zip Code)
REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (205) 969-3755
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.001 per share, of Medical Properties Trust, Inc.
MPW
The New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒ (Medical Properties Trust, Inc. only)
Accelerated filer
☐
Non-accelerated filer
☒ (MPT Operating Partnership, L.P. only)
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 4, 2025, Medical Properties Trust, Inc. had 601.5 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, 2025 of Medical Properties Trust, Inc., a Maryland corporation, and MPT Operating Partnership, L.P., a Delaware limited partnership, through which Medical Properties Trust, Inc. conducts substantially all of its operations. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” “Medical Properties,” “MPT,” or the “Company” refer to Medical Properties Trust, Inc. together with its consolidated subsidiaries, including MPT Operating Partnership, L.P. Unless otherwise indicated or unless the context requires otherwise, all references to “operating partnership” refer to MPT Operating Partnership, L.P. together with its consolidated subsidiaries.
MEDICAL PROPERTIES TRUST, INC. AND MPT OPERATING PARTNERSHIP, L.P.
AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED September 30, 2025
Table of Contents
Page
PART I — FINANCIAL INFORMATION
3
Item 1 Financial Statements
Medical Properties Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets at September 30, 2025 and December 31, 2024
Condensed Consolidated Statements of Net Income for the Three and Nine Months Ended September 30, 2025 and 2024
4
Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2025 and 2024
5
Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2025 and 2024
6
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024
8
MPT Operating Partnership, L.P. and Subsidiaries
9
10
11
Condensed Consolidated Statements of Capital for the Three and Nine Months Ended September 30, 2025 and 2024
12
14
Medical Properties Trust, Inc. and MPT Operating Partnership, L.P. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
15
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations
35
Item 3 Quantitative and Qualitative Disclosures about Market Risk
47
Item 4 Controls and Procedures
48
PART II — OTHER INFORMATION
49
Item 1 Legal Proceedings
Item 1A Risk Factors
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
Item 3 Defaults Upon Senior Securities
Item 4 Mine Safety Disclosures
Item 5 Other Information
Item 6 Exhibits
50
SIGNATURE
51
2
Item 1. Financial Statements.
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
September 30,2025
December 31,2024
(In thousands, except per share amounts)
(Unaudited)
(Note 2)
Assets
Real estate assets
Land, buildings and improvements, intangible lease assets, and other
$
11,748,943
11,259,842
Investment in financing leases
943,750
1,057,770
Real estate held for sale
—
34,019
Mortgage loans
127,926
119,912
Gross investment in real estate assets
12,820,619
12,471,543
Accumulated depreciation and amortization
(1,633,531
)
(1,422,948
Net investment in real estate assets
11,187,088
11,048,595
Cash and cash equivalents
396,577
332,335
Interest and rent receivables
25,142
36,327
Straight-line rent receivables
851,749
700,783
Investments in unconsolidated real estate joint ventures
1,379,600
1,156,397
Investments in unconsolidated operating entities
319,192
439,578
Other loans
245,535
109,175
Other assets
519,312
471,404
Total Assets
14,924,195
14,294,594
Liabilities and Equity
Liabilities
Debt, net
9,616,176
8,848,112
Accounts payable and accrued expenses
475,938
454,209
Deferred revenue
22,113
29,445
Obligations to tenants and other lease liabilities
148,605
129,045
Total Liabilities
10,262,832
9,460,811
Equity
Preferred stock, $0.001 par value. Authorized 10,000 shares; no shares outstanding
Common stock, $0.001 par value. Authorized 750,000 shares; issued and outstanding — 601,136 shares at September 30, 2025 and 600,403 shares at December 31, 2024
601
600
Additional paid-in capital
8,602,994
8,584,917
Retained deficit
(4,097,973
(3,658,516
Accumulated other comprehensive income (loss)
154,687
(94,272
Total Medical Properties Trust, Inc. stockholders’ equity
4,660,309
4,832,729
Non-controlling interests
1,054
Total Equity
4,661,363
4,833,783
Total Liabilities and Equity
See accompanying notes to condensed consolidated financial statements.
Condensed Consolidated Statements of Net Income
For the Three MonthsEnded September 30,
For the Nine MonthsEnded September 30,
2025
2024
Revenues
Rent billed
181,001
169,721
524,051
552,784
Straight-line rent
36,405
36,602
116,197
119,719
Income from financing leases
9,944
9,798
29,772
53,832
Interest and other income
10,172
9,706
31,660
37,368
Total revenues
237,522
225,827
701,680
763,703
Expenses
Interest
132,395
106,243
377,905
316,358
Real estate depreciation and amortization
66,993
204,875
198,282
382,701
Property-related
8,993
4,994
26,891
17,475
General and administrative
37,734
36,625
105,842
105,300
Total expenses
246,115
352,737
708,920
821,834
Other (expense) income
(Loss) gain on sale of real estate
(9,115
91,795
4,156
475,196
Real estate and other impairment charges, net
(81,761
(607,922
(159,284
(1,438,429
Earnings (loss) from equity interests
34,403
21,643
73,713
(369,565
Debt refinancing and unutilized financing costs
(14
(713
(3,629
(3,677
Other (including fair value adjustments on securities)
(1,498
(169,790
(171,138
(566,821
Total other expense
(57,985
(664,987
(256,182
(1,903,296
Loss before income tax
(66,578
(791,897
(263,422
(1,961,427
Income tax expense
(10,872
(9,032
(30,112
(34,538
Net loss
(77,450
(800,929
(293,534
(1,995,965
Net income attributable to non-controlling interests
(280
(234
(828
(1,458
Net loss attributable to MPT common stockholders
(77,730
(801,163
(294,362
(1,997,423
Earnings per common share — basic and diluted
(0.13
(1.34
(0.49
(3.33
Weighted average shares outstanding — basic
601,136
600,229
600,867
600,197
Weighted average shares outstanding — diluted
Dividends declared per common share
0.08
0.24
0.38
Condensed Consolidated Statements of Comprehensive Loss
(In thousands)
Other comprehensive income (loss):
Unrealized loss on interest rate hedges, net of tax
(9,823
(4,208
(16,099
Reclassification of interest rate swap gain from AOCI to earnings, net of tax
(13,349
(17,354
Foreign currency translation (loss) gain
(51,081
114,196
253,167
48,066
Total comprehensive loss
(128,531
(709,905
(44,575
(1,981,352
Comprehensive income attributable to non-controlling interests
Comprehensive loss attributable to MPT common stockholders
(128,811
(710,139
(45,403
(1,982,810
Condensed Consolidated Statements of Equity
Preferred
Common
Shares
ParValue
AdditionalPaid-inCapital
RetainedDeficit
AccumulatedOtherComprehensiveIncome (Loss)
Non-ControllingInterests
TotalEquity
Balance at December 31, 2024
600,403
Net (loss) income
(118,275
259
(118,016
(4,015
Foreign currency translation gain
93,467
Stock vesting and amortization of stock-based compensation
267
5,794
Stock vesting - satisfaction of tax withholdings
(75
(289
Distributions to non-controlling interests
(259
Dividends declared ($0.08 per common share)
(48,387
Balance at March 31, 2025
600,595
8,590,422
(3,825,178
(4,820
4,762,078
(98,357
289
(98,068
(193
210,781
Offering costs
(101
306
1
8,346
8,347
(87
(456
(48,289
Balance at June 30, 2025
600,814
8,598,211
(3,971,824
205,768
4,833,810
280
Foreign currency translation loss
(543
491
6,059
(169
(733
(48,419
Balance at September 30, 2025
Balance at December 31, 2023
598,991
599
8,560,309
(971,809
42,501
2,265
7,633,865
(875,625
248
(875,377
(2,797
(58,542
1,370
7,173
7,174
(57
(283
(245
Dividends declared adjustment
572
Balance at March 31, 2024
600,304
8,567,199
(1,846,862
(18,838
2,268
6,704,367
(320,635
976
(319,659
(3,479
Reclassification of interest rate swap gain to earnings, net of tax
(4,005
(7,588
270
7,013
(517
(2,550
(349
Dividends declared ($0.30 per common share)
(180,673
Balance at June 30, 2024
600,057
8,571,662
(2,348,170
(33,910
2,895
6,193,077
234
Reclassification of interest rate hedges gain to earnings, net of tax
266
7,112
(94
(419
(594
(48,172
Balance at September 30, 2024
8,578,355
(3,197,505
57,114
2,535
5,441,099
7
Condensed Consolidated Statements of Cash Flows
Operating activities
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
203,145
387,545
Amortization of deferred financing costs and debt discount
19,364
12,266
Straight-line rent revenue from operating and finance leases
(120,674
(127,326
Stock-based compensation
30,864
30,581
Gain on sale of real estate
(4,156
(475,196
167,132
1,441,275
Equity interest real estate impairment
410,790
3,629
3,677
Tax rate changes and other
(10,970
4,596
Non-cash fair value adjustments
123,370
511,472
Other adjustments
(9,724
12,406
Changes in:
8,305
4,147
6,756
(18,884
(45,719
(20,869
(7,085
(11,719
Net cash provided by operating activities
70,703
168,796
Investing activities
Cash paid for acquisitions and other related investments
(110,089
(105,618
Net proceeds from sale of real estate
96,961
1,761,661
Proceeds received from sale and repayment of loans receivable
10,049
214,416
Investment in loans receivable
(158,974
(392,241
Construction in progress and other
(60,747
(63,535
Proceeds from sale and return of equity investments
11,656
Capital additions and other investments, net
(34,069
(199,735
Net cash (used for) provided by investing activities
(256,869
1,226,604
Financing activities
Proceeds from term debt
2,512,970
804,188
Payments of term debt
(2,252,731
(662,968
Revolving credit facility, net
171,530
(1,119,312
Dividends paid
(144,840
(272,909
Lease deposits and other obligations to tenants
2,475
(726
(644
(1,478
(3,252
Payment of debt refinancing and deferred financing costs and other financing activities
(50,218
(124,595
Net cash provided by (used for) financing activities
237,064
(1,379,574
Increase in cash, cash equivalents, and restricted cash for period
50,898
15,826
Effect of exchange rate changes
13,562
7,969
Cash, cash equivalents, and restricted cash at beginning of period
335,173
255,952
Cash, cash equivalents, and restricted cash at end of period
399,633
279,747
Interest paid
393,100
349,608
Supplemental schedule of non-cash financing activities:
Dividends declared, unpaid
48,419
48,172
Cash, cash equivalents, and restricted cash are comprised of the following:
Beginning of period:
250,016
Restricted cash, included in Other assets
2,838
5,936
End of period:
275,616
3,056
4,131
MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
Liabilities and Capital
427,129
405,655
Payable due to Medical Properties Trust, Inc.
48,164
10,262,442
9,460,421
Capital
General Partner — issued and outstanding — 6,013 units at September 30, 2025 and 6,006 units at December 31, 2024
45,134
49,348
Limited Partners — issued and outstanding — 595,123 units at September 30, 2025 and 594,397 units at December 31, 2024
4,460,878
4,878,043
Total MPT Operating Partnership, L.P. capital
4,660,699
4,833,119
Total Capital
4,661,753
4,834,173
Total Liabilities and Capital
(In thousands, except per unit amounts)
Net loss attributable to MPT Operating Partnership partners
Earnings per unit — basic and diluted
Weighted average units outstanding — basic
Weighted average units outstanding — diluted
Dividends declared per unit
Comprehensive loss attributable to MPT Operating Partnership partners
Condensed Consolidated Statements of Capital
General
Accumulated
Partner
Limited Partners
Other
Non-
Units
UnitValue
ComprehensiveIncome (Loss)
ControllingInterests
TotalCapital
6,006
594,397
(1,183
(117,092
Unit vesting and amortization of unit-based compensation
58
264
5,736
Unit vesting - satisfaction of tax withholdings
(1
(3
(74
(286
Distributions declared ($0.08 per unit)
(484
(47,903
6,008
47,736
594,587
4,718,498
4,762,468
(984
(97,373
(100
83
303
8,264
(5
(86
(451
(483
(47,806
6,010
46,346
594,804
4,581,032
4,834,200
(777
(76,953
(538
61
486
5,998
(2
(7
(167
(47,935
6,013
595,123
5,991
75,969
593,000
7,513,520
7,634,255
(8,756
(866,869
72
1,356
7,102
(56
Distributions declared adjustment
566
6,004
67,288
594,300
6,654,039
6,704,757
(3,206
(317,429
Reclassification of interest rate swap gain to earnings net of tax
70
6,943
(25
(512
(2,525
Distributions declared ($0.30 per unit)
(1,807
(178,866
6,002
62,320
594,055
6,162,162
6,193,467
(8,012
(793,151
Reclassification of interest rate hedge gain to earnings net of tax
71
263
7,041
(4
(93
(415
(482
(47,690
53,893
594,225
5,327,947
5,441,489
13
Unit-based compensation
Distributions paid
-
Distributions declared, unpaid
1. Organization
Medical Properties Trust, Inc., a Maryland corporation, was formed on August 27, 2003, under the Maryland General Corporation Law for the purpose of engaging in the business of investing in, owning, and leasing healthcare real estate. Our operating partnership subsidiary, MPT Operating Partnership, L.P. (the “Operating Partnership”), through which we conduct substantially all of our operations, was formed in September 2003. At present, we own, directly and indirectly, all of the partnership interests in the Operating Partnership and have elected to report our required disclosures and that of the Operating Partnership on a combined basis, except where material differences exist.
We operate as a real estate investment trust (“REIT”). Accordingly, we are generally not subject to United States (“U.S.”) federal income tax on our REIT taxable income, provided that we continue to qualify as a REIT and our distributions to our stockholders equal or exceed such taxable income. Similarly, the majority of our real estate operations in the United Kingdom ("U.K.") operate as a REIT and generally are subject only to a withholding tax on earnings upon distribution out of the U.K. REIT. Certain non-real estate activities we undertake in the U.S. are conducted by entities which we elected to be treated as taxable REIT subsidiaries (“TRS”). Our TRS entities are subject to both U.S. federal and state income taxes. For our properties located outside the U.S. (excluding those assets that are in the U.K. REIT), we are subject to the local income taxes of the jurisdictions where our properties reside and/or legal entities are domiciled; however, we do not expect to incur additional taxes, of a significant nature, in the U.S. from foreign-based income as the majority of such income flows through our REIT.
Our primary business strategy is to acquire and develop healthcare facilities and lease the facilities to healthcare operating companies under long-term net leases, which require the tenant to bear most of the costs associated with the property. The majority of our leased assets are owned 100%; however, we do own some leased assets through joint ventures with other partners that share our view that healthcare facilities are part of the infrastructure of any community, which we refer to as investments in unconsolidated real estate joint ventures. We also may make mortgage loans to healthcare operators collateralized by their real estate. In addition, we may make noncontrolling investments in our tenants (which we refer to as investments in unconsolidated operating entities), from time-to-time, typically in conjunction with larger real estate transactions with the tenant, which may enhance our overall return and provide for certain minority rights and protections.
Our business model facilitates acquisitions and recapitalizations, and allows operators of healthcare facilities to unlock the value of their real estate to fund facility improvements, technology upgrades, and other investments in operations. At September 30, 2025, we have investments in 388 facilities in 31 states in the U.S., in seven countries in Europe, and one country in South America. Our properties consist of general acute care hospitals, behavioral health facilities, post acute care facilities (including inpatient physical rehabilitation facilities and long-term acute care hospitals), and freestanding ER/urgent care facilities.
2. Summary of Significant Accounting Policies
Unaudited Interim Condensed Consolidated Financial Statements: The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. for interim financial information, including rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the three and nine months ended September 30, 2025, are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. The condensed consolidated balance sheet at December 31, 2024 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements.
The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We believe the estimates and assumptions underlying our condensed consolidated financial statements are reasonable and supportable based on the information available as of September 30, 2025, (particularly as it relates to our assessments of the recoverability of our real estate, the ability of our tenants/borrowers to make lease/loan payments in accordance with their respective
agreements, the fair value of our equity and loan investments, and the adequacy of our credit loss reserves on loans and financing receivables).
For information about significant accounting policies, and how actual results could differ from estimates, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to these significant accounting policies.
Reclassifications
Certain amounts in the condensed consolidated financial statements for prior periods have been reclassified to conform to the current period presentation.
Variable Interest Entities
At September 30, 2025, we had loans and/or equity investments in certain variable interest entities ("VIEs"), which may also be tenants of our facilities. We have determined that we were not the primary beneficiary of these VIEs. The carrying value and classification of the related assets and maximum exposure to loss as a result of our involvement with these VIEs at September 30, 2025 are presented below (in thousands):
VIE Type
Carrying Amount(1)
Asset TypeClassification
Maximum LossExposure(2)
Loans, net and equity investments
Investments in UnconsolidatedOperating Entities
Loans, net
120,556
Mortgage and other loans
For the VIE types above, we do not consolidate the VIEs because we do not have the ability to control the activities (such as the day-to-day healthcare operations of our borrowers or investees) that most significantly impact the VIE's economic performance. As of September 30, 2025, we were not required to provide financial support through a liquidity arrangement or otherwise to our unconsolidated VIEs, including circumstances in which they could be exposed to further losses (e.g. cash short falls).
Recent Accounting Developments
Income Taxes
In December 2023, the Financial Standards Accounting Board ("FASB") issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09") which focuses on income tax disclosures regarding effective tax rates and cash income taxes paid. This standard requires public entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit disaggregated by domestic and foreign, and (3) provide additional information for certain reconciling items at or above a quantitative threshold of 5% of the statutory tax. Additionally, this standard requires disclosure of income taxes paid (net of refunds), separated by international, federal, state, and local jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. We are prepared to adopt and include the necessary additional required disclosures in our annual filing in 2025.
Disaggregation of Income Statement Expenses
In November 2024, FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" ("ASU 2024-03") to improve the disclosures about a public company's expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. FASB further clarified the effective date in January 2025 with the issuance of ASU 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods
16
beginning after December 15, 2027. We are currently evaluating the potential impact of the adoption of this standard on our consolidated financial statements.
3. Real Estate and Other Activities
New Investments
We acquired or invested in the following net assets (in thousands):
Land and land improvements
23,375
Buildings and other
23,699
63,015
107,908
Liabilities assumed
(2,290
Total net assets acquired
110,089
105,618
2025 Activity
In April 2025, we invested approximately CHF 50 million (CHF 25 million of which is a short-term loan) in the SwissMedical Network real estate joint venture, proceeds of which, along with fundings from our joint venture partner, were used to facilitate the acquisition of a general acute care facility.
In 2025, we funded approximately $47 million to Steward Health Care System's ("Steward") secured lender to obtain control over certain real estate assets. As part of these transactions, Steward and its secured lenders agreed for Quorum Health ("Quorum"), one of the new tenants of the former Steward operated facilities as discussed below, to take over as manager of the transition services (effective March of 2025) for the former Steward operated properties, including some that we do not own.
2024 Activity
On April 12, 2024, we sold our interests in five Utah hospitals for an aggregate agreed valuation of approximately $1.2 billion to a newly formed joint venture (the "Utah partnership") with an institutional asset manager (the "Fund"), which we call the Utah Transaction, and we recognized a gain on real estate of approximately $380 million, partially offset by a $20 million write-off of unbilled straight-line rent receivables. We retained an approximately 25% interest in the Utah partnership valued initially at approximately $108 million, which is being accounted for on the equity method on a quarterly lag basis and included in the "Investments in unconsolidated real estate joint ventures" line of the condensed consolidated balance sheets. The Fund purchased an approximate 75% interest in the Utah partnership for $886 million. In conjunction with this transaction closing, the Utah partnership placed new non-recourse secured financing, providing $190 million of additional cash to us. In total, the Utah Transaction generated $1.1 billion of cash to us. The Utah lessee (an affiliate of CommonSpirit Health ("CommonSpirit")) may acquire the leased real estate at a price equal to the greater of fair market value and the approximate $1.2 billion lease base at the fifth or tenth anniversary of the 2023 master lease commencement. We granted the Fund certain limited and conditional preferences based on the possible execution of the purchase option, which we accounted for as a derivative liability with an initial value of approximately $2.3 million.
Development and Capital Addition Activities
See table below for a status summary of our current development and capital addition projects (in thousands):
Property
Commitment
CostsPaid as of September 30, 2025
Cost Remaining
IMED Hospitales ("IMED") (Spain)
57,196
33,884
23,312
IMED (Spain)
42,246
37,608
4,638
Healthcare Systems of America (Florida)
37,000
551
36,449
Lifepoint Behavioral (Arizona)
10,659
6,623
4,036
Other (Various)
554
210
344
147,655
78,876
68,779
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We have two other development projects ongoing in Texas (Texarkana development) and Massachusetts (Norwood redevelopment). These are not highlighted above; however, we are presently completing construction to the stage where the building is "weathered in" and environmentally secure so as to physically protect our investment while we actively market the hospitals for sale or lease. As of September 30, 2025, we estimate that the cost to complete construction to this stage, plus costs of additional construction that we believe will be more efficient if completed in the near-term (such as electing to accelerate completion of a parking structure at one hospital), approximates between $35 million and $40 million.
During the third quarter of 2025, we completed construction and began recording rental income on two projects totaling approximately $36 million, one of which is leased to Lifepoint Behavioral Health ("Lifepoint Behavioral") and the other to Surgery Partners.
During the first quarter of 2025, we completed construction and began recording rental income on a $10.5 million capital addition project at an Arizona facility leased to Lifepoint Behavioral.
During the first quarter of 2024, we completed construction and began recording rental income on a $35.4 million behavioral health facility located in McKinney, Texas, that is leased to Lifepoint Behavioral. We also completed construction and began recording rental income on a €46 million (approximately $49.0 million) general acute care facility located in Spain that is leased to IMED.
Disposals
During the first nine months of 2025, we completed the sale of five facilities (including two former Steward-operated facilities that were being leased to College Health for nominal rent) and an ancillary facility for aggregate proceeds of approximately $100 million, resulting in a gain on real estate of approximately $4 million.
During the first nine months of 2024, we had the following disposal activities:
Leasing Operations (Lessor)
We acquire and develop healthcare facilities and lease the facilities to healthcare operating companies. The initial fixed lease terms of these infrastructure-type assets are typically at least 15 years, and most include renewal options at the election of our tenants, generally in five year increments. Over 99% of our leases provide annual rent escalations based on increases in the Consumer Price
18
Index ("CPI") (or similar indices outside the U.S.) and/or fixed minimum annual rent escalations. Many of our domestic leases contain purchase options with pricing set at various terms but in no case less than our total initial investment. Our leases typically require the tenant to handle and bear most of the costs associated with our properties including repair/maintenance, property taxes, and insurance.
For all of our properties subject to lease, we are the legal owner of the property and the tenant's right to use and possess such property is guided by the terms of a lease. At September 30, 2025, we account for all of these leases as operating leases, except where GAAP requires alternative classification, including leases on certain Ernest Health, Inc. ("Ernest") and Prospect Medical Holdings, Inc. ("Prospect") facilities that are accounted for as either direct financing or other financing type leases. The components of our total investment in financing leases consisted of the following (in thousands):
As of September 30, 2025
As of December 31, 2024
Minimum lease payments receivable
575,398
591,142
Estimated unguaranteed residual values
203,818
Less: Unearned income and allowance for credit loss
(529,826
(547,770
Net investment in direct financing leases
249,390
247,190
Other financing leases (net of allowance for credit loss)
694,360
810,580
Total investment in financing leases
Other Leasing Activities
At September 30, 2025, our vacant properties represented less than 1% of total assets. We are in various stages of either re-leasing or selling these vacant properties.
Our tenants’ financial performance and resulting ability to satisfy their lease and loan obligations to us are material to our financial results and our ability to service our debt and make distributions to our stockholders. Our tenants operate in the healthcare industry, which is highly regulated, and changes in regulation (or delays in enacting regulation) may temporarily impact our tenants’ operations until they are able to make the appropriate adjustments to their business. In addition, our tenants may experience operational challenges from time-to-time as a result of many factors, including those external to them, such as cybersecurity attacks, public health crises, economic issues resulting in high inflation and spikes in labor costs, extreme or severe weather and climate-related events, and adverse market and political conditions. We monitor our tenants' operating results and the potential impact from these challenges. We may elect to provide support to our tenants from time-to-time in the form of short-term rent abatements or rent deferrals to be paid back in full, or in the form of temporary loans. See below for an update on some of our current and former tenants.
Steward
As discussed in previous filings, Steward filed for Chapter 11 bankruptcy on May 6, 2024 with the United States Bankruptcy Court for the Southern District of Texas. On September 11, 2024, the bankruptcy court entered an interim order, subsequently made final on September 18, 2024, approving a global settlement between Steward, its lenders, the unsecured creditors committee, and the Company. The order provided for the following: a) termination of our master lease with Steward; b) the release of claims against 23 of our properties (including the release of claims by the secured lender over its liens on equipment, inventory, and licenses), allowing us to begin the process of re-tenanting or selling these properties; and c) a full release of claims against us from all parties. In return, we consented to the sale of the operations and our real estate in three facilities in the Space Coast region of Florida, along with a full release of our claims in Steward including claims to past due rent and interest, outstanding loans, and our equity investment.
In regard to our real estate partnership with Macquarie that owned and leased eight properties in Massachusetts to Steward, the bankruptcy court approved the termination of the master lease with Steward during the 2024 third quarter. We and Macquarie entered into an agreement with the mortgage lender of the joint venture to transition the eight properties to them along with cash proceeds of approximately $40 million (representing our share), in return for full payment of the underlying mortgage debt and a release of claims against each party.
Due to the events discussed above and in previous filings, we recorded various impairment and negative fair value charges during 2024, including approximately $600 million and $1.6 billion of charges for the three and nine months ended September 30, 2024, respectively, to fully reserve our equity and certain loan investments in Steward and our equity investment in the Massachusetts joint venture. In addition with the lease termination discussed above, we accelerated the amortization on the related in-place lease intangibles resulting in $115 million and $149 million of amortization expense in the three and nine months ended September 30, 2024, as reflected in the "Real estate depreciation and amortization" line of our condensed consolidated statements of net income.
With this global settlement and termination of the joint venture master lease, our relationship with Steward effectively ended.
Steward Rent Collections
Despite the bankruptcy, we received and recorded rent and interest revenue from Steward of $10 million and $40 million for the three and nine month periods, respectively, ending September 30, 2024. In addition, rent paid by Steward to the Massachusetts joint
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venture was approximately $10 million ($5 million representing our share) and $76 million ($38 million representing our share) for the three and nine months ended September 30, 2024, respectively.
Re-tenanting Activity
Subsequent to the release of claims on the 23 properties as part of the global settlement on September 18, 2024, we reached definitive agreements with six operators (Healthcare Systems of America, Honor Health, Insight Health ("Insight"), Quorum, College Health, and Tenor Health ("Tenor")) to lease 18 of these facilities in 2024 and early 2025. These leases included a rent ramp up period. In the 2025 first quarter, cash rents from these operators were approximately $3.4 million, ramping up to $11 million in the 2025 second quarter, and approximately $12 million in the 2025 third quarter (excluding the September rent for Healthcare Systems of America as discussed below). Based on these lease contracts (adjusted for the sale of the two properties to College Health), rent payments are to increase to approximately 58% of contractual rent by the fourth quarter of 2025, 79% of contractual rent by second quarter 2026, and 100% of contractual rent starting October 2026. As of September 30, 2025, all of these new operators have paid the rent due under their respective leases, except for cash-basis tenants Insight/Tenor who owe us approximately $1.2 million and Healthcare Systems of America, who paid their September rent of approximately $4 million on October 1, 2025 and such revenue will be recognized in the 2025 fourth quarter.
As of September 30, 2025, we have provided approximately $130 million in short-term working capital loans to these operators to assist in the takeover of these operations and the transition of certain services (such as revenue cycle management). Except for certain information technology services, the new tenants are operating independently and no longer using the transition services as of September 30, 2025.
The remaining five former Steward properties (with a net book value of approximately 3% of our total assets), including two developments (see "Development and Capital Addition Activities" above), are in various stages of being re-tenanted or sold.
Prospect
As discussed in previous filings, Prospect’s operating losses in multiple East Coast markets, including Pennsylvania and Rhode Island (a state in which we have no investment), adversely impacted Prospect’s overall liquidity. Prospect filed for Chapter 11 bankruptcy on January 11, 2025 with the United States Bankruptcy Court for the Northern District of Texas. Prospect’s bankruptcy filing constituted a default under the terms of our master leases and loan agreements with Prospect, and imposed a stay on our ability to exercise contractual rights with respect to these defaults. The bankruptcy filing barred us from collecting pre-bankruptcy debts from Prospect unless we received an order permitting us to do so from the bankruptcy court. The bankruptcy court has the power to approve and direct the sale of Prospect’s property free and clear of any associated mortgages and loans, whether or not there are sufficient net proceeds to repay them, in whole or in part. For that reason, we may recover none or substantially less than the full value of our claims.
On March 20, 2025, the bankruptcy court approved a global settlement (including a recovery waterfall) between us, Prospect, and other stakeholders.
Our investments in Prospect include leased real estate assets in California and Connecticut (which we account for as other financing type leases), a mortgage loan secured by hospital real estate operated by Prospect in Pennsylvania, and a $75 million asset-backed loan outstanding. In addition, in May 2023, we acquired a non-controlling ownership interest in PHP Holdings. In 2025, we funded approximately $100 million in new loans to Prospect, including approximately $90 million in the 2025 third quarter, net of repayments.
Due to the events discussed above, we recorded more than $400 million of impairment charges and negative fair value adjustments associated with our investments in Prospect in the 2024 fourth quarter, resulting in a full reserve of the asset-backed loan and our Pennsylvania mortgage loan, along with a decrease in the value in our Connecticut properties. No charge was recorded on our California properties. In accordance with the global settlement (and related recovery waterfall) discussed above, we recorded approximately $110 million of additional impairment charges in 2025, including $65 million in the 2025 third quarter. In determining the 2025 impairment charges, we compared the carrying value of our investments to our current estimate of expected proceeds (net of any possible future cash outlays) to be received under the bankruptcy court approved recovery waterfall, factoring in an estimated recovery of Prospect assets (including our real estate assets) and applying the priority of claims associated with the bankruptcy. In estimating the fair value of the California, Pennsylvania, and Connecticut real estate in the first and second quarters of 2025, we, along with assistance from a third party independent valuation firm, used a combination of cost, market, and income approaches using Level 3 inputs. The cost approach used comparable sales to value the land and cost manuals to value the improvements. The value derived from the market approach was based on sales prices of similar properties. For the income approach, we divided the expected operating income from the property by an estimated market capitalization rate (ranging from 8.25% to 8.5%). For the third quarter of 2025, we estimated the fair value of California real estate similar to previous quarters, using an 8.5% estimated market capitalization rate from the income approach. For the 2025 third quarter, we estimated the fair value of the Pennsylvania and Connecticut real estate based on received bids for these properties.
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Prospect's bankruptcy proceedings are continuing, and the ultimate outcome of such proceedings is uncertain. At this time, we are unable to predict the timing of any of the foregoing matters or the timing for a resolution of the Prospect bankruptcy proceeding. We cannot assure you that we will be able to recover or preserve the remaining approximately $660 million of our investment in Prospect (including the expected receipt of cash proceeds that we are currently projecting to be in excess of the current outstanding loans) as of September 30, 2025, in whole or in part. On November 4, 2025, we received $45 million of Yale proceeds through the recovery waterfall that will be used to reduce our outstanding loan balance.
Possible Additional Funding
On August 4, 2025, the bankruptcy court approved, among other things, an interim order for up to $30 million in the form of a backstop facility to cover administrative and priority claims. This possible loan advance is conditioned on other events occurring including further bankruptcy court approvals. Any funds advanced under the backstop facility will be secured by recoveries, if any, from causes of actions owned by the debtor.
We have agreed in principle to a lease agreement with NOR Healthcare Systems Corporation ("NOR") as a result of their successful bid to acquire the operations of the Prospect-operated California facilities. Terms of the lease include an initial annualized rent almost identical to the previous rent amount due from Prospect in 2025 and annual inflation-based escalators, starting in the 2027 first quarter. All rent is to be deferred for six months, and 50% of rent is to be deferred for an additional six months, after which the aggregate deferred rent will be paid over the remaining lease term. We have committed to fund up to $60 million in seismic improvements that may be required by California regulators over the next four years, which will increase the lease base and result in additional rent.
Prospect Rent Collections
Starting January 1, 2023, we began accounting for our leases and loans to Prospect on a cash basis. We received and recorded approximately $25 million of revenue for the nine months ended September 30, 2024 on our California properties (none in the 2024 third quarter). Prospect has not made any scheduled rent or interest payments in 2025.
PHP Investment
In regard to our investment in PHP Holdings, we accounted for this investment using the fair value option method. Each quarter, we marked such investment to fair value as more fully described in Note 8 to the condensed consolidated financial statements. In the first nine months of 2025, we recorded an approximate $147 million negative fair value adjustment (none in the 2025 third quarter), whereas this adjustment was approximately $498 million in the first nine months of 2024 ($134 million of which was recorded in the third quarter of 2024). The adjustment in 2025 was made based on changes to the purchase agreement between PHP Holdings and Astrana Health and updates to PHP Holdings' working capital position. On July 1, 2025, we received $2.3 million from the sale of PHP Holdings to Astrana Health.
International Joint Venture
As discussed in previous filings, we placed our loan to the international joint venture on the cash basis of accounting in 2023, as we determined that it was no longer probable that the borrower would pay its future interest in full. This loan, accounted for under the fair value option method, was collateralized by the equity of Steward held by an investor in both Steward and the international joint venture. Consistent with the discussion above on Steward, we recorded a $225 million unfavorable fair value adjustment in the 2024 first quarter to fully reserve for the loan and related equity investment. These investments were adjusted for after comparing our carrying value to an updated fair value analysis of the underlying collateral, with assistance from a third-party, independent valuation firm.
Other Tenant Matters
In the 2023 third quarter, we moved to cash basis of accounting for a tenant that comprised approximately 1% of our total assets due to declines in operating results. During the 2024 third quarter, we terminated the lease with this tenant, resulting in the acceleration of lease intangible amortization of $22 million, and we entered into a forbearance and restructuring agreement. This forbearance and restructuring agreement has since been amended to, among other things, give the former tenant more time to complete their capital restructuring. The substantive terms of our latest agreement include: a) repayment of $10 million of unpaid rent in cash, which we received on December 31, 2024; b) acquisition by this former tenant of certain of our facilities, one of which closed in early January 2025 for approximately $3 million and we received a $20 million deposit in March 2025 in advance of another closing, and c) entering into a new 20 year triple-net lease agreement of the remaining properties, among other things.
We received and recorded approximately $5 million and $15 million of rent as required by the amended forbearance and restructuring agreement for the three and nine month periods ended September 30, 2025, respectively. At this time, the former tenant has not completed its restructuring plan but continues to make its required payments under the amended forbearance and restructuring agreement.
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Investments in Unconsolidated Entities
Investments in Unconsolidated Real Estate Joint Ventures
Our primary business strategy is to acquire real estate and lease to providers of healthcare services. Typically, we directly own 100% of such investments. However, from time-to-time, we will co-invest with other investors that share a similar view that hospital real estate is a necessary infrastructure-type asset in communities. In these types of investments, we will own undivided interests of less than 100% of the real estate through unconsolidated real estate joint ventures. The underlying real estate and leases in these unconsolidated real estate joint ventures are generally structured similarly and carry a similar risk profile to the rest of our real estate portfolio.
The following is a summary of our investments in unconsolidated real estate joint ventures by operator (amounts in thousands):
Operator
Ownership Percentage
Swiss Medical Network
70%
603,933
483,770
Median Kliniken S.á.r.l ("MEDIAN")
50%
490,512
431,964
CommonSpirit (Utah partnership)
25%
147,165
113,202
Policlinico di Monza
85,110
77,592
HM Hospitales
45%
52,880
49,869
Total
The Utah partnership applies specialized accounting and reporting for investment companies under Topic 946, which measures the underlying investments at fair value. For the three and nine months ended September 30, 2025, our share of the Utah partnership's income included a favorable fair value adjustment of approximately $13 million and $34 million, respectively, primarily related to an unrealized gain on investments in real estate.
For our unconsolidated real estate joint venture that leases more than 70 healthcare facilities to MEDIAN, we, along with ourjoint venture partner, finalized a refinancing of the €655 million secured debt on June 17, 2025, that was due on June 30, 2025. The new €702.5 million non-recourse, 10-year non-amortizing secured debt has an approximately 5.1% fixed rate, and the majority of the proceeds were used to fund the repayment of the prior €655 million secured loan that carried a lower rate. In the 2025 third quarter, Germany enacted legislation that will reduce future income tax rates by 5%, which was the primary driver for a $13 million (our share) deferred income tax benefit in the period.
On October 31, 2025, we received approximately $23 million in distributions from the Swiss Medical Network joint venture.
Investments in Unconsolidated Operating Entities
Our investments in unconsolidated operating entities are noncontrolling investments that are typically made in conjunction with larger real estate transactions in which the operators are vetted as part of our overall underwriting process. In many cases, we would not be able to acquire the larger real estate portfolio without such investments in operators. These investments also offer the opportunity to enhance our overall return and provide for certain minority rights and protections.
The following is a summary of our investments in unconsolidated operating entities (amounts in thousands):
196,537
172,453
Aevis Victoria SA ("Aevis")
62,858
63,409
Priory Group ("Priory")
43,877
38,739
Aspris Children's Services ("Aspris")
15,920
15,950
PHP Holdings
149,027
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For our investments marked to fair value (including our investments in PHP Holdings, Aevis and the international joint venture), we recorded approximately $156 million in unfavorable non-cash fair value adjustments during the first nine months of 2025 ($0.7 million of which was recorded in the 2025 third quarter); whereas, this was a $739 million unfavorable non-cash fair value adjustment for the same period of 2024 ($144 million of which was recorded in the 2024 third quarter).
In the first quarter of 2024, we sold our interest in the Priory syndicated term loan for £90 million (approximately $115 million), resulting in an approximate £6 million ($7.8 million) economic loss.
Credit Loss Reserves
We apply a forward-looking "expected loss" model to our financing receivables, including financing leases and loans, based on historical credit losses of similar instruments.
The following table summarizes the activity in our credit loss reserves (in thousands):
Balance at beginning of the period
564,796
538,534
Provision for credit loss, net (1)
85,111
438,154
Expected credit loss reserve written off or related to financial instruments sold, repaid, or satisfied
(825,548
(2)
Balance at end of the period
649,907
151,140
Balance at beginning of the year
511,473
96,001
138,434
880,687
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Concentrations of Credit Risk
We monitor concentration risk in several ways due to the nature of our real estate assets that are vital to the communities in which they are located and given our history of being able to replace inefficient operators of our facilities, if needed, with more effective operators. See below for our concentration details (dollars in thousands):
Total Assets by Operator
Operators
Total Assets (1)
Percentage ofTotal Assets
Circle Health Ltd ("Circle")
2,135,280
14.3
%
2,026,778
14.2
Priory
1,306,202
8.8
1,233,462
8.6
Healthcare Systems of America
1,202,187
8.1
1,187,006
8.3
863,329
5.8
719,632
5.1
Lifepoint Behavioral
814,878
5.5
813,584
5.7
Other operators
6,809,539
45.5
6,624,256
46.3
1,792,780
12.0
1,689,876
11.8
100.0
Total Assets by U.S. State and Country (1)
U.S. States and Other Countries
Texas
1,429,105
9.6
1,394,296
9.8
California
1,032,272
6.9
935,470
6.4
Florida
838,271
5.6
840,876
5.9
Ohio
332,436
2.2
327,577
2.3
Arizona
330,494
379,801
2.7
All other states
2,548,691
17.1
2,636,587
18.5
Other domestic assets
949,691
951,486
6.6
Total U.S.
7,460,960
50.0
7,466,093
52.2
United Kingdom
4,204,908
28.2
3,985,672
27.9
Switzerland
863,328
5.0
Germany
757,239
672,343
4.7
Spain
289,878
1.9
247,996
1.7
All other countries
504,793
3.4
464,468
3.3
Other international assets
843,089
738,390
5.2
Total international
7,463,235
6,828,501
47.8
Grand total
Total Assets by Facility Type (1)
Facility Types
General acute care hospitals
8,912,538
59.7
8,493,331
59.4
Behavioral health facilities
2,456,058
16.5
2,376,460
16.7
Post acute care facilities
1,647,940
11.0
1,617,596
11.3
Freestanding ER/urgent care facilities
114,879
0.8
117,331
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On an individual property basis, our largest investment in any single property was less than 2% of our total assets as of September 30, 2025.
On a revenue basis, concentration in 2025 compared to the same periods of 2024 is as follows:
Total Revenues by Geographic Location
For the Three Months Ended September 30,
Geographic Location
Total Revenues
Percentage ofTotal Revenues
120,650
50.8
115,640
51.2
95,713
40.3
91,776
40.6
21,159
8.9
18,411
8.2
Total Revenues by Facility Type
144,760
60.9
139,075
61.6
54,726
23.1
52,799
23.4
36,097
15.2
30,278
13.4
1,939
3,675
1.6
The following shows those tenants that represented 10% or more of our total revenues for the three and nine months ended September 30, 2025 and 2024:
Circle
54,228
22.8
52,427
23.2
27,481
11.6
25,934
11.5
155,813
65.6
147,466
65.3
For the Nine Months Ended September 30,
158,664
22.6
153,994
20.2
78,878
11.2
76,449
10.0
464,138
66.2
533,260
69.8
25
4. Debt
The following is a summary of debt (dollar amounts in thousands):
Secured revolving credit facility(A)
567,631
361,726
Secured term loan
200,000
British pound sterling term loan due 2025(B)
617,039
British pound sterling secured term loan due 2034(B)
848,953
790,234
3.325% Senior Unsecured Notes due 2025(B)
517,700
0.993% Senior Unsecured Notes due 2026(B)
586,700
2.500% Senior Unsecured Notes due 2026(B)
625,800
5.250% Senior Unsecured Notes due 2026
500,000
5.000% Senior Unsecured Notes due 2027
1,400,000
3.692% Senior Unsecured Notes due 2028(B)
806,760
750,960
4.625% Senior Unsecured Notes due 2029
900,000
3.375% Senior Unsecured Notes due 2030(B)
470,610
438,060
3.500% Senior Unsecured Notes due 2031
1,300,000
7.000% Senior Secured Notes due 2032(B)
1,173,400
8.500% Senior Secured Notes due 2032
1,500,000
9,754,054
8,919,219
Debt issue costs and discount, net
(137,878
(71,107
As of September 30, 2025, principal payments due on our debt (which exclude the effects of any discounts, premiums, or debt issue costs recorded) are as follows (amounts in thousands):
2026
1,154,331
(1)
2027
1,600,000
2028
2029
Thereafter
5,292,963
Credit Facility
We have a multi-currency denominated revolver and a $200 million term loan that make up our Credit Facility (the "Credit Facility"). After a series of amendments in 2024, maximum borrowings under the revolving portion of the Credit Facility is $1.28 billion.
On February 13, 2025 and concurrent with the closing of the Senior Secured Notes due 2032 discussed below, we amended the Credit Facility to among other things: (i) provide for the facility to be secured and guaranteed ratably with the senior notes issued concurrently, (ii) provide notice that we plan to exercise both of our maturity extension options such that the maturity of the revolving portion would move from June 30, 2026 to June 30, 2027, the same maturity date as our term loan facility (subject to the satisfaction of other conditions), (iii) reset the interest rate to the Secured Overnight Financing Rate ("SOFR") plus 225 basis points (which had previously been moved to SOFR plus 300 basis points in August 2024), (iv) permanently remove financial covenants regarding minimum consolidated tangible net worth, maximum unsecured indebtedness to unencumbered asset value and minimum unsecured net operating income to unsecured interest expense, (v) amend certain definitions used in the financial covenant regarding maximum
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total indebtedness to total asset value to conform to corresponding definitions in our existing unsecured indentures and the secured notes issued concurrently and set the covenant level at 60%, (vi) set the maximum secured leverage ratio at 40%, and (vii) add mandatory prepayments of senior debt or additional collateral in connection with any failure to (x) maintain a 65% maximum ratio of secured first lien debt to the undepreciated real estate value of the secured pool properties or (y) maintain a minimum senior secured debt service coverage ratio of 1.15:1.00 (increasing to 1.30:1.00 in 12 months).
British Pound Sterling Term Loan due 2025
On January 15, 2025, we paid off the remaining £493 million balance of our British pound sterling term loan due 2025. With this payoff, we also terminated the sterling-denominated term loan interest rate swap.
Senior Secured Notes due 2032
On February 13, 2025, we closed on a private offering that consisted of $1.5 billion aggregate principal amount of senior secured notes due 2032 (the "USD Notes") and €1.0 billion aggregate principal amount of senior secured notes due 2032 (the "Euro Notes"). Interest on the notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2025. The USD Notes were issued at 98.710% of par value, pay interest at a rate of 8.500% per year and mature on February 15, 2032. The Euro Notes were issued at 98.645% of par value, pay interest at a rate of 7.000% per year and mature on February 15, 2032. We may redeem some or all of the notes at any time prior to February 15, 2028, at a redemption price equal to 100% of the principal amount, plus an applicable “make whole” premium and accrued and unpaid interest. On or after February 15, 2028, we may redeem some or all of the notes at a premium that will decrease over time. In addition, at any time prior to February 15, 2028, we may redeem up to 40% of the notes at a redemption price equal to 108.500% and 107.000% for the USD Notes and Euro Notes, respectively, 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 notes to fund the early redemption of our 3.325% Senior Unsecured Notes due 2025, 2.500% Senior Unsecured Notes due 2026, and 5.250% Senior Unsecured Notes due 2026. We used the remaining net proceeds to pay down the revolving portion of our Credit Facility.
Australian Term Loan Facility
On April 18, 2024, we paid off and terminated the remainder of the A$470 million ($306 million) Australian term loan facility with a portion of the proceeds from the Utah Transaction described in Note 3 to the condensed consolidated financial statements.
British Pound Sterling Secured Term Loan due 2034
On May 24, 2024, we completed a secured loan facility with a consortium of institutional investors that provides for a term loan in aggregate principal amount of approximately £631 million (approximately $800 million) secured by a portfolio of 27 properties located in the U.K. currently leased to affiliates of Circle. The facility carries a fixed rate of 6.877% over its 10-year term, excluding fees and expenses, and is interest-only (payable quarterly in advance) through the maturity date. The facility is secured by first priority mortgages or similar security instruments on the relevant properties, including assignments of rents and security over accounts, and is non-recourse to us.
Other Activity
During the nine months ended September 30, 2024, we used proceeds from asset sales and debt refinancings to pay down the British Pound Sterling Term Loan due 2025 by approximately £177 million in the period and pay off the British Pound Sterling Term Loan due 2024 of approximately £105 million.
Debt Refinancing and Unutilized Financing Costs
In the first nine months of 2025, we incurred $3.6 million of debt refinancing and unutilized financing costs. These costs were incurred primarily as a result of the early redemption of our 3.325% Senior Unsecured Notes due 2025, 2.500% Senior Unsecured Notes due 2026, and 5.250% Senior Unsecured Notes due 2026.
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In the first nine months of 2024, we incurred $3.7 million of debt refinancing and unutilized financing costs. These costs were incurred as a result of the reduction in revolving commitments under our Credit Facility and partial paydown of our British pound sterling term loan due 2025.
Covenants and Restrictions
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 the Credit Facility limit the amount of dividends we can pay as a percentage of normalized adjusted funds from operations (“NAFFO”), as defined in the agreements, on a rolling four quarter basis to 95% of NAFFO. The indentures governing our senior unsecured notes also limit the amount of dividends we can pay based on the sum of 95% of NAFFO, proceeds of equity issuances, and certain other net cash proceeds. Finally, our senior 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, unsecured leverage ratio, and unsecured interest coverage ratio.
In addition to the covenants and restrictions discussed above, our Credit Facility 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, 2025, we were in compliance with all financial and operating covenants.
5. Income Taxes
In the 2025 third quarter, we incurred approximately $1 million of higher tax expense on our German entities (outside of the MEDIAN real estate joint venture) due to various matters including the impact from the lowering of German tax rates (in future years) on certain deferred tax asset positions.
In connection with closing the secured term loan facility in the U.K. on May 24, 2024, we realized a gain, for U.K. tax purposes, on the interest rate swap associated with the internal restructuring of the British pound sterling term loan due 2025. This gain resulted in a tax expense of approximately $5 million in the 2024 second quarter.
6. Common Stock
On August 11, 2025, we entered into an at-the-market equity offering program (the "ATM Program"), which provides for the sale, from time to time, of up to $500 million of our common stock with a commission rate up to 2%. As of September 30, 2025, we had not sold any shares under the ATM Program.
7. Stock Awards
During the second quarter of 2022, we amended the 2019 Equity Incentive Plan (the “Equity Incentive Plan”), which authorizes the issuance of common stock options, restricted stock, restricted stock units, deferred stock units, stock appreciation rights, performance units, and awards of interests in our Operating Partnership. Our Equity Incentive Plan is administered by the Compensation Committee of the Board of Directors, and we have reserved 28.9 million shares of common stock for awards, of which 7.3 million shares remain available for future stock awards as of September 30, 2025. Share-based compensation expense totaled $30.9 million and $30.6 million for the nine months ended September 30, 2025 and 2024, respectively. Of this expense, $10.6 million and $9.3 million for the nine months ended September 30, 2025 and 2024, respectively, are from performance award grants that contain cash-settlement features and are marked to fair value quarterly. None of the cash-settled performance awards have been earned or vested at September 30, 2025, and will not begin to earn/vest until, for 20 consecutive days, our stock price reaches $7.00 for the 2024 performance award and our total shareholder return reaches 20% (based on the April 15, 2025 grant date) for our 2025 performance award.
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8. Fair Value of Financial Instruments
We have various assets and liabilities that are considered financial instruments. We estimate that the carrying value of cash and cash equivalents and accounts payable and accrued expenses approximate their fair values. We estimate the fair value of our interest and rent receivables using Level 2 inputs such as discounting the estimated future cash flows using the current rates at which similar receivables would be made to others with similar credit ratings and for the same remaining maturities. The fair value of our mortgage loans and other loans are estimated by using Level 2 inputs such as discounting the estimated future cash flows using the current rates which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. We determine the fair value of our senior notes using Level 2 inputs such as quotes from securities dealers and market makers. We estimate the fair value of our revolving credit facility and term loans using Level 2 inputs based on the present value of future payments, discounted at a rate which we consider appropriate for such debt.
Fair value estimates are made at a specific point in time, are subjective in nature, and involve uncertainties and matters of significant judgment. Settlement of such fair value amounts may not be a prudent management decision.
The following table summarizes fair value estimates for our financial instruments (in thousands):
Asset (Liability)
BookValue
FairValue
25,716
36,432
Loans(1)
686,606
686,672
467,120
470,380
(9,616,176
(8,890,324
(8,848,112
(7,301,395
Items Measured at Fair Value on a Recurring Basis
Our equity investment and related loan to the international joint venture, our loan investment in the real estate of three hospitals operated by subsidiaries of the international joint venture in Colombia, and our investment in PHP Holdings (fully settled in July 2025) are measured at fair value on a recurring basis as we elected to account for these investments using the fair value option at the point of initial investment. We elected to account for these investments at fair value due to the size of the investments and because we believed this method was more reflective of current values.
At September 30, 2025 and December 31, 2024, the amounts recorded under the fair value option method were as follows (in thousands):
Fair Value
Original Cost
Asset Type Classification
114,298
146,024
111,985
129,968
Equity investment and other loans
6,258
266,398
154,229
910,594
Investments in unconsolidated operating entities/Other loans
Our loans to the international joint venture and its subsidiaries are recorded at fair value by discounting the estimated future contractual cash flows using a credit-adjusted rate of return, which is derived from market rates of return on similar loans with similar credit quality and remaining maturity. Our equity investment in the international joint venture and our investment in PHP Holdings (as of December 31, 2024 only) are recorded at fair value by using a market approach (for our equity investment in the international joint venture) and a market approach based on the agreed upon price in the transaction (for our investment in PHP Holdings), which requires significant estimates of our investee, such as projected revenue, expenses, and working capital, and appropriate consideration
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of the underlying risk profile of the forecasted assumptions associated with the investee. We classify our valuations of these investments as Level 3, as we use certain unobservable inputs to the valuation methodology that are significant to the fair value measurement, and the valuations require management judgment due to the absence of quoted market prices. For the market approach model used for our investment in PHP Holdings (as of December 31, 2024 only), our unobservable inputs included purchase price adjustments related to expected balance sheet values at the time of the transaction close, and an adjustment for a marketability discount ("DLOM") of 14.2%. In regard to the underlying projections used in the discounted cash flow model, such projections are provided by the investees. However, we may modify such projections as needed based on our review and analysis of historical results, meetings with key members of management, and our understanding of trends and developments within the healthcare industry.
The sale of our investment in PHP Holdings closed on July 1, 2025, and we received cash proceeds of $2.3 million as previously discussed in Note 3 to the condensed consolidated financial statements.
In the first nine months of 2025, we recorded a net unfavorable adjustment to the investments accounted for under the fair value option method of approximately $167 million, primarily related to our investment in three hospitals in Colombia and our investment in PHP Holdings as further discussed in Note 3 to the condensed consolidated financial statements. In the first nine months of 2024, we recorded a net unfavorable adjustment to the investments accounted for under the fair value option method of approximately $720 million, primarily related to the loan to the international joint venture of $225 million (see further discussion below under "Impairment and Fair Value Adjustments of Non-Real Estate Investments") and our investment in PHP Holdings of $498 million.
Items Measured at Fair Value on a Nonrecurring Basis
In addition to items that are measured at fair value on a recurring basis, we have assets and liabilities that are measured, from time-to-time, at fair value on a nonrecurring basis, such as for impairment purposes of our real estate, financial instruments, and for certain equity investments without a readily determinable fair value.
Impairment and Fair Value Adjustments of Non-Real Estate Investments
Prior to the global settlement in September 2024 (as described in Note 3 to the condensed consolidated financial statements) in which our claims were released, our non-real estate investments in Steward and related affiliates included our 9.9% equity investment, working capital and other secured loans, and a loan made to a Steward affiliate in 2021, proceeds of which were used to redeem a similarly sized convertible loan held by Steward’s former private equity sponsor. In addition, the loan to the international joint venture was collateralized by the equity of Steward held by an investor in both Steward and the international joint venture. To assess recovery of these investments in the 2024 first quarter, we performed a valuation of Steward’s business at March 31, 2024, with assistance from a third-party, independent valuation firm. The valuation utilized the cost, market, and income approaches. The fair value analysis was performed under a non-going concern, orderly liquidation premise of value and assumed normal exposure to market participants at that time. We utilized this premise of value due to Steward’s financial distress and subsequent filing of bankruptcy. The valuation approaches used Level 3 inputs, and such approaches were based on the financial performance of the Steward assets. For profitable hospitals, Level 3 inputs included a weighted average EBITDA multiple of 6.48x from a selected range of 5x to 7x in reference to comparable transactions. We also used a weighted average discount rate of 15.03% from a selected range of 15% to 16%. For unprofitable hospitals, Level 3 inputs included a weighted average net revenue multiple of 0.275x from a selected range of 0.25x to 0.30x in reference to comparable transactions. We also considered the reported book values inclusive of various adjustments for unprofitable hospitals. After reducing the derived fair value of Steward's business for Steward's secured debt and their working capital deficit, we arrived at only a nominal remaining value that could not support the carrying value of the loan to a Steward affiliate from 2021 or our remaining 9.9% equity investment. In addition, the value of the investor's share of the remaining 90.1% of Steward's equity that collateralized the loan to the international joint venture was deemed insufficient to support recovery of this investment. As a result, we recorded impairment charges and negative fair value adjustments in the 2024 first quarter of more than $600 million. In the third quarter of 2024, as a result of the Company’s global settlement with Steward (as discussed further in Note 3 to the condensed consolidated financial statements), we recorded impairment charges of approximately $425 million for the working capital loans and other secured loans previously advanced to Steward.
Impairment of Real Estate Investments
See the Prospect subheading under "Leasing Operations (Lessor)" in Note 3 to the condensed consolidated financial statements for a discussion around the use of fair value and related assumptions in the impairment of our real estate investments.
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In the 2024 third quarter, we recognized a real estate impairment charge of approximately $180 million related to the Space Coast facilities and certain excess properties previously leased to Steward that were deemed held for sale at September 30, 2024. The charge was needed to adjust our net book value to align with fair value less cost to sell based on expected proceeds, including from a binding agreement for the Space Coast properties. In the 2024 second quarter, we recognized approximately $500 million of real estate impairment charges, primarily involving the eight Massachusetts properties in the Macquarie partnership. In our assessment, we first made a comparison of the carrying value of our real estate to projected undiscounted cash flows. For those properties in which the carrying value was not deemed recoverable, we recorded an impairment charge to the extent our carrying value was greater than its estimated fair value. In estimating fair value for these properties, we, along with assistance from a third-party, independent valuation firm, used a combination of cost, market, and income approaches using Level 3 inputs. The cost approach used comparable sales to value the land and cost manuals to value the improvements. The value derived from the market approach was based on sale prices of similar properties. For the income approach, we divided the expected operating income (i.e. revenue less expenses, if any) from the property by a market capitalization rate (range from 7% to 10%). Our share of the real estate impairment charge in the Macquarie partnership exceeded the remaining equity amount in the joint venture, which resulted in a write down of our equity interest to zero and such charge is reflected in the "Earnings (loss) from equity interests" line on the condensed consolidated statements of net income.
9. Earnings Per Share/Unit
Medical Properties Trust, Inc.
Our earnings per share were calculated based on the following (in thousands):
Numerator:
Non-controlling interests’ share in net income
Participating securities’ share in earnings
(256
(153
Net loss, less participating securities’ share in earnings
(77,986
(801,316
Denominator:
Basic weighted-average common shares
Dilutive potential common shares(1)
Diluted weighted-average common shares
(597
(807
(294,959
(1,998,230
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MPT Operating Partnership, L.P.
Our earnings per unit were calculated based on the following (in thousands):
Basic weighted-average units
Dilutive potential units(1)
Diluted weighted-average units
10. Contingencies
As part of the global settlement with Steward discussed in Note 3, upon completion of the transfers to the new operators and satisfaction of certain other conditions, in addition to approval by relevant state and local regulators, we and Steward agreed, subject to specified exceptions, to the mutual release of claims against each other. In connection with the global settlement and reciprocal release of claims, we have established an approximate $16 million reserve at September 30, 2025, for certain obligations due to third parties associated with properties formerly leased to Steward.
We are party to various lawsuits as described below:
Securities and Derivative Litigation
On April 13, 2023, we and certain of our executives were named as defendants in a putative federal securities class action lawsuit alleging false and/or misleading statements and/or omissions resulted in artificially inflated prices for our common stock, filed by a purported stockholder in the United States District Court for the Northern District of Alabama (Case No. 2:23-cv-00486). The complaint seeks class certification on behalf of purchasers of our common stock between July 15, 2019 and February 22, 2023 and unspecified damages including interest and an award of reasonable costs and expenses. This class action complaint was amended on September 22, 2023 and alleges that we made material misstatements or omissions relating to the financial health of certain of our tenants. On September 26, 2024, the Court dismissed the amended complaint with prejudice, and the plaintiff thereafter moved the Court to alter its judgment. On August 14, 2025, the Court denied the plaintiff's motion and dismissed the amended complaint with prejudice.
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Members of our Board of Directors were also named as defendants in two related shareholder derivative lawsuits filed by purported stockholders in the United States District Court for the Northern District of Alabama on October 19, 2023 (Case No. 2:23- cv-01415) and December 7, 2023 (Case No. 2:23-cv-01667). The Company was named as a nominal defendant in both complaints. These shareholder derivative complaints both make allegations similar to those made in the Alabama securities lawsuit described above relating to purported material misstatements or omissions relating to the financial health of certain of our tenants. These derivative actions were consolidated and stayed pending further developments in the Alabama securities lawsuit and remain stayed at this time. Members of our Board of Directors were also named as defendants in three related shareholder derivative lawsuits filed by purported stockholders in the United States District Court for the District of Maryland on February 16, 2024 (Case No. 1:24-cv-00471), June 28, 2024 (Case No. 1:24-cv-01899), and July 26, 2024 (Case No. 1 24-cv-02173). The Company was named as a nominal defendant. These shareholder derivative complaints make allegations similar to those made in the Alabama securities and derivative lawsuits described above relating to purported material misstatements or omissions relating to the financial health of certain of our tenants. Defendants were not required to respond to these complaints pending further developments in the Alabama securities lawsuit and no response date has been set at this time.
On September 29, 2023, we and certain of our executives were named as defendants in a putative federal securities class action lawsuit filed by a purported stockholder in the United States District Court for the Southern District of New York (Case No. 1:23-cv- 08597). The complaint seeks class certification on behalf of purchasers of our common stock between May 23, 2023 and August 17, 2023 and alleges false and/or misleading statements and/or omissions in connection with certain transactions involving Prospect. This class action complaint was amended on October 30, 2024 and alleges that we made material misstatements or omissions in connection with certain transactions involving Prospect. Defendants filed a motion to dismiss the amended complaint on January 14, 2025. That motion has been fully briefed and is currently pending before the Court.
Members of our Board of Directors were also named as defendants in two related shareholder derivative lawsuits filed by purported stockholders in the United States District Court for the Southern District of New York on December 18, 2023 (Case No. 1:23-cv- 10934) and March 1, 2024 (Case No. 1:24-cv-01589). The Company was named as a nominal defendant in both complaints. These shareholder derivative complaints both make allegations similar to those made in the New York securities lawsuit described above relating to purported false and/or misleading statements and/or omissions in connection with certain transactions involving Prospect. The two cases have been consolidated and stayed pending further developments in the New York securities lawsuit described above. On February 21, 2024, members of our Board of Directors were named as defendants in a shareholder derivative lawsuit filed by a purported stockholder in the United States District Court for the District of Maryland (Case No. 1:24-cv-00527). The Company was named as a nominal defendant. This shareholder derivative complaint makes allegations similar to those made in the New York securities and derivative lawsuits described above relating to purported false and/or misleading statements and/or omissions in connection with certain transactions involving Prospect. This action has been stayed pending further developments in the New York securities action described above.
We believe these claims are without merit and intend to defend the remaining open cases vigorously. We have not recorded a liability related to the lawsuits above because, at this time, we are unable to determine whether an unfavorable outcome is probable or to estimate reasonably possible losses.
From time-to-time, we are a party to other legal proceedings, claims, or regulatory inquiries and investigations arising out of, or incidental to, our business. While we are unable to predict with certainty the outcome of any particular matter, in the opinion of management, after consultation with legal counsel, the ultimate liability, if any, with respect to those proceedings is not presently expected to materially affect our financial position, results of operations, or cash flows.
11. Segment Disclosures
We manage our business and report financial results as one business segment. This is consistent with the manner in which our chief operating decision maker ("CODM"), our executive team made up of our Chief Executive Officer and Chief Financial Officer, evaluates performance and makes resource and operating decisions for the business.
Our primary business strategy and source of revenue is from the acquisition and development of healthcare facilities that are leased to healthcare operating companies under long-term net leases, which require the tenant to bear most of the costs associated with the property. The majority of our leased assets are owned 100%; however, we do own some leased assets through joint ventures with other partners. We also may make mortgage loans to healthcare operators collateralized by their real estate. In addition, we may make noncontrolling investments in our tenants, from time-to-time, typically in conjunction with larger real estate transactions with the tenant, which may enhance our overall return and provide for certain minority rights and protections. Although we generate our revenues from these investments in the U.S. and eight other countries across multiple property types, we centrally manage these business activities on a consolidated basis. The accounting policies of our business segment are the same as those described in the summary of significant accounting policies.
The CODM evaluates performance and makes resource and operating decisions for the business on a consolidated basis using consolidated net income from our consolidated statements of net income as our primary GAAP profit measure supplemented by
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consolidated funds from operations ("FFO"). We use net income and FFO to monitor expected versus actual results to assess performance. The measure of segment assets is total assets as reported on our consolidated balance sheets. We compute FFO in accordance with the definition provided by the National Association of Real Estate Investment Trusts, which represents consolidated net income (loss) (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairment charges on real estate assets, plus real estate depreciation and amortization, including amortization related to in-place lease intangibles, and after adjustments for unconsolidated partnerships and joint ventures.
Given FFO excludes real estate related depreciation and amortization expense by definition and due to our typical net lease structure which requires our tenants to bear most of the costs associated with our properties (including property taxes, insurance, etc.), the primary expenses reviewed by the CODM include general and administrative and interest expenses from our consolidated statements of net income. See "Concentration of Credit Risks" in Note 3 to our condensed consolidated financial statements for entity-wide disclosures around major customers, geographic areas, and property types.
12. Subsequent Events
On October 22, 2025, we committed to the acquisition of one property in Germany for approximately €23 million to be leased to MEDIAN with closing and funding expected in the 2025 fourth quarter, subject to customary closing conditions.
On October 28, 2025, the Board of Directors approved a stock repurchase program for up to $150 million of our common stock. Under the program, we may repurchase shares of our common stock from time to time in the open market or in privately negotiated transactions.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the consolidated financial condition and consolidated results of operations are presented on a combined basis for Medical Properties Trust, Inc. and MPT Operating Partnership, L.P. as there are no material differences between these two entities. Such discussion and analysis should be read together with the condensed consolidated financial statements and notes thereto contained in this Form 10-Q and the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2024.
Forward-Looking Statements.
This Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements can generally be identified by the use of forward-looking words such as "may", "will", "would", "could", "expect", "intend", "plan", "estimate", "target", "anticipate", "believe", "objectives", "outlook", "guidance", or other similar words, and include statements regarding our strategies, objectives, asset sales and other liquidity transactions (including the use of proceeds thereof), expected returns on investments and financial performance, expected trends and performance across our various markets, and expected outcomes from Prospect's bankruptcy process. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or future performance, achievements or transactions or events to be materially different from those expressed or implied by such forward-looking statements, including, but not limited to, the risks described in our Annual Report on Form 10-K and as updated in our quarterly reports on Form 10-Q for future periods, and current reports on Form 8-K as we file them with the SEC under the Exchange Act. Such factors include, among others, the following:
Key Factors that May Affect Our Operations
Our revenue is derived from rents we earn pursuant to the lease agreements with our tenants, from interest income from loans to our tenants and other facility owners, and from profits or equity interests in certain of our tenants’ operations. Our tenants operate in the healthcare industry, generally providing medical, surgical, rehabilitative, and behavioral health care to patients. The capacity of our tenants to pay our rents and interest is dependent upon their ability to conduct their operations at profitable levels. We believe that the business environment of the industry segments in which our tenants operate is generally positive for efficient operators. However, our tenants’ operations are subject to economic, regulatory, market, and other conditions that may affect their profitability, which could impact our results. Accordingly, we monitor certain key performance indicators that we believe provide us with early indications of conditions that could affect the level of risk in our portfolio.
Key factors that we may consider in underwriting prospective deals and in our ongoing monitoring of our tenants’ (and guarantors’) performance, as well as the condition of our properties, include, but are not limited to, the following:
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Certain business factors, in addition to those described above that may directly affect our tenants and borrowers, will likely materially influence our future results of operations. These factors include:
CRITICAL ACCOUNTING POLICIES
Refer to our 2024 Annual Report on Form 10-K for a discussion of our critical accounting policies, which include investments in real estate, purchase price allocation, loans, credit losses, losses from rent and interest receivables, investments accounted for under the fair value option election, and our accounting policy on consolidation. During the nine months ended September 30, 2025, there were no material changes to these policies.
Overview
We are a self-advised REIT focused on investing in and owning net-leased healthcare facilities across the U.S. and selectively in foreign jurisdictions. Medical Properties Trust, Inc. was incorporated under Maryland law on August 27, 2003, and MPT Operating Partnership, L.P. was formed under Delaware law on September 10, 2003. We conduct substantially all of our business through MPT Operating Partnership, L.P. We acquire and develop healthcare facilities and lease the facilities to healthcare operating companies under long-term net leases, which require the tenant to bear most of the costs associated with the property. The majority of our leased assets are owned 100%; however, we do own some leased assets through joint ventures with other partners that share our view that healthcare facilities are part of the infrastructure of any community, which we refer to as investments in unconsolidated real estate joint ventures. We also make mortgage loans to healthcare operators collateralized by their real estate assets. In addition, we may make loans to certain of our operators through our TRS, the proceeds of which are typically used for working capital and other purposes. From time-to-time, we may make noncontrolling investments in our tenants, which we refer to as investments in unconsolidated operating entities. These investments are typically made in conjunction with larger real estate transactions with the tenant that give us a right to share in such tenant’s profits and losses, and provide for certain minority rights and protections. Our business model facilitates acquisitions and recapitalizations, and allows operators of healthcare facilities to serve their communities by unlocking the value of their real estate assets to fund facility improvements, technology upgrades, and other investments in operations.
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At September 30, 2025, our portfolio consisted of 388 properties leased or loaned to 51 operators, and all of our investments are located in the U.S., Europe, and South America. Our total assets are made up of the following (dollars in thousands):
% ofTotal
As of December 31,2024
Real estate assets - at cost
85.9
87.2
Accumulated real estate depreciation and amortization
(10.9
)%
(10.0
75.0
77.2
9.2
2.1
3.1
1,641,738
1,317,689
9.3
Total assets
Results of Operations
Three Months Ended September 30, 2025 Compared to September 30, 2024
Net loss for the three months ended September 30, 2025, was ($77.7) million, or ($0.13) per share compared to a net loss of ($801.2) million, or ($1.34) per share, for the three months ended September 30, 2024. This decrease in net loss is primarily driven by (i) approximately $608 million of impairment charges primarily related to the global settlement reached with Steward and its lenders as described in Note 3 to the condensed consolidated financial statements, (ii) approximately $134 million unfavorable fair value adjustment to our investment in PHP Holdings, and (iii) approximately $137 million of accelerated amortization of in-place lease intangibles, all in the third quarter of 2024. These decreases were partially offset by approximately $100 million of additional gains on sales of real estate in the third quarter of 2024 compared to the 2025 third quarter. Normalized FFO, after adjusting for certain items (as more fully described in the section titled “Reconciliation of Non-GAAP Financial Measures” in Item 2 of this Quarterly Report on Form 10-Q), was $77.2 million for the 2025 third quarter, or $0.13 per diluted share, as compared to $93.9 million, or $0.16 per diluted share, for the 2024 third quarter. This 17.7% decrease in Normalized FFO is primarily due to higher interest expense from our recent refinancing activities.
A comparison of revenues for the three months ended September 30, 2025 and 2024 is as follows (dollar amounts in thousands):
Year overYearChange
76.2
75.2
15.3
16.2
(0.5
4.2
4.3
1.5
4.8
Our total revenues for the 2025 third quarter increased $11.7 million, or 5%, over the same period in the prior year. This increase is made up of the following:
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We currently have several tenants on the cash basis from a revenue recognition perspective, which can result in variability of our lease revenue. For example, one of our tenants, Healthcare Systems of America, paid their September rent of approximately $4 million on October 1, 2025, which will be recorded in the 2025 fourth quarter.
Interest Expense
Interest expense for the quarters ended September 30, 2025 and 2024 totaled $132.4 million and $106.2 million, respectively. This increase is primarily related to higher interest from our February 2025 debt refinancing activities (see Note 4 to the condensed consolidated financial statements for further details), partially offset by lower interest expense from the decrease in average borrowings on our Credit Facility in the third quarter of 2025, compared to the same period of 2024 and the payoff of our £493 million British pound sterling term loan in the first quarter of 2025. Overall, our weighted-average interest rate was 5.4% for the quarter ended September 30, 2025, compared to 4.3% for the same period in 2024.
Real Estate Depreciation and Amortization
Real estate depreciation and amortization during the third quarter of 2025 decreased to $67.0 million from $204.9 million in 2024. This decrease is primarily related to the $137 million of additional amortization expense recorded in the third quarter of 2024 to fully amortize the intangibles associated with two terminated master leases, including the Steward master lease that was terminated effective September 11, 2024 as part of the global settlement discussed in Note 3 to the condensed consolidated financial statements.
Property-related expenses totaled $9.0 million and $5.0 million for the quarters ended September 30, 2025 and 2024, respectively. Of the property expenses in the third quarter of 2025 and 2024, approximately $2.3 million and $2.6 million, respectively, represents costs that were reimbursed by our tenants and included in the “Interest and other income” line of the condensed consolidated statements of net income. Net of reimbursement, our property-related expenses are higher than prior year as we have additional vacant properties following the Steward bankruptcy. We are in various stages of re-tenanting or selling our vacant properties, which make up less than 1% of our total assets.
General and Administrative
General and administrative expenses were $37.7 million for the 2025 third quarter, compared to $36.6 million for the 2024 third quarter. The increase quarter-over-quarter is due to higher travel and professional fees, partially offset by lower share-based compensation expenses. Share-based compensation expense was $12.3 million for the third quarter of 2025, compared to $14.4 million in the 2024 third quarter, primarily due to the decrease in fair value of the 2024 performance awards that contain a cash-settlement feature and are marked to fair value quarterly, partially offset by additional expense from stock awards granted in 2025.
With certain performance awards granted in 2025 and 2024 having cash-settlement features, we expect there will be volatility in our stock compensation expense quarter-to-quarter. As of September 30, 2025, none of the 2025 or 2024 performance shares have been earned/vested and will not begin to earn/vest until, for 20 consecutive days, our total shareholder return reaches 20% (based on the April 15, 2025 grant date) for the 2025 performance award and our stock price reaches $7.00 per share for the 2024 performance award.
Gain (Loss) on Sale of Real Estate
During the three months ended September 30, 2025, the loss on sale of real estate was ($9.1) million primarily related to the sale of two facilities. During the three months ended September 30, 2024, the gain on sale of real estate of $91.8 million primarily relates to the sale of eight Dignity Health facilities and 11 UCHealth facilities as more fully described in Note 3 to the condensed consolidated financial statements.
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Real Estate and Other Impairment Charges, Net
In the 2025 third quarter, we recognized $81.8 million of real estate and other impairment charges, primarily associated with our Prospect investments and non-real estate impairment charges for property taxes and other obligations not paid by our cash-basis tenants. In the same period of 2024, we recognized $607.9 million of real estate and other impairment charges. Of these charges, approximately $425 million consisted of the impairment of working capital loans and other secured loans advanced to Steward, and $180 million was related to real estate, including the Space Coast facilities and certain excess properties previously leased to Steward (as more fully described in Note 3 to the condensed consolidated financial statements).
Earnings (Loss) from Equity Interests
Earnings from equity interests was $34.4 million for the quarter ended September 30, 2025, compared to earnings of $21.6 million for the same period in 2024. This increase is primarily due to our share of income in the MEDIAN joint venture from a deferred income tax benefit recognized in the third quarter of 2025 related to the lowering of German tax rates. Our share of income in the Utah partnership included a $12.8 million positive fair value adjustment in the third quarter of 2025, primarily related to a favorable fair value adjustment on its investments in real estate (as further described in Note 3 to the condensed consolidated financial statements), compared to $13.5 million in the same period last year.
Other (Including Fair Value Adjustments on Securities)
Other expense for the third quarter of 2025 was $1.5 million, compared to expense of $169.8 million in the prior year. For the 2024 third quarter, we recognized approximately $140 million in unfavorable adjustments to our investment in PHP Holdings and Aevis. The remaining expense in the 2024 third quarter included approximately $29 million of legal and other professional expenses associated with, among other things, responding to certain defamatory statements published by certain parties.
With certain investments accounted for at fair value, we may have positive or negative fair value adjustments from quarter-to-quarter.
Income Tax Expense
Income tax expense includes U.S. federal and state income taxes on our TRS entities, as well as non-U.S. income based or withholding taxes on certain investments located in jurisdictions outside the U.S. The $10.9 million income tax expense for the three months ended September 30, 2025, is primarily based on the income generated by our investments in the U.K. and Germany and is higher than the $9.0 million income tax expense in the third quarter of 2024 due to various matters including the impact from the lowering of German tax rates (in future years) on certain deferred tax asset positions on our non-joint venture German entities.
We utilize the asset and liability method of accounting for income taxes. Deferred tax assets are recorded to the extent we believe these assets will more likely than not be realized. In making such determination, all available positive and negative evidence is considered, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Based upon our review of all positive and negative evidence, including our three-year cumulative pre-tax book loss position in certain entities, we concluded that a valuation allowance of approximately $486 million should be reflected against certain of our international and domestic net deferred tax assets at September 30, 2025. In the future, if we determine that it is more likely than not that we will realize our net deferred tax assets, we will reverse the applicable portion of the valuation allowance, recognize an income tax benefit in the period in which such determination is made, and potentially incur higher income tax expense in future periods as income is earned.
40
Nine Months Ended September 30, 2025 Compared to September 30, 2024
Net loss for the nine months ended September 30, 2025, was ($294.4) million, or ($0.49) per share compared to a net loss of ($2.0) billion, or ($3.33) per share, for the nine months ended September 30, 2024. This decrease in net loss was primarily driven by the $1.4 billion of impairment charges and negative fair value adjustments in 2024 primarily related to Steward and the international joint venture (all included in "Real estate and other impairment charges, net" line of the condensed consolidated statements of net income), whereas, we incurred only $81.8 million in the first nine months of 2025, primarily related to Prospect. In addition, we had an approximate $498 million unfavorable fair value adjustment to our investment in PHP Holdings in the first nine months of 2024 (compared to $147 million in the same period of 2025) as reflected in "Other (including fair value adjustments on securities)" line of the condensed consolidated statements of net income, and the $410 million of impairment charges related to our Massachusetts-based partnership in the second quarter of 2024 reflected in "Earnings (loss) from equity interests" line of the condensed consolidated statements of net income. Normalized FFO, after adjusting for certain items (as more fully described in the section titled “Reconciliation of Non-GAAP Financial Measures” in Item 2 of this Quarterly Report on Form 10-Q), was $239.7 million for the first nine months of 2025, or $0.40 per diluted share, as compared to $375.0 million, or $0.62 per diluted share, for the same period of 2024. This 36% decrease in Normalized FFO is primarily due to lower revenues as a result of various disposals in 2024 and 2025, along with less cash revenue received from Steward and Prospect, and higher interest expense from our recent refinancing activities.
A comparison of revenues for the nine months ended September 30, 2025 and 2024 is as follows (dollar amounts in thousands):
74.7
72.4
(5.2
16.6
15.7
(2.9
7.0
(44.7
4.5
4.9
(15.3
(8.1
Our total revenues for the first nine months of 2025 decreased $62 million, or 8%, over the same period in the prior year. This decrease is made up of the following:
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Interest expense for the nine months ended September 30, 2025 and 2024 totaled $377.9 million and $316.4 million, respectively. This increase is primarily related to higher interest from our February 2025 debt refinancing activities (see Note 4 to the condensed consolidated financial statements for further details), partially offset by lower interest expense from the decrease in average borrowings on our Credit Facility in the first nine months of 2025, compared to the same period of 2024, along with the payoff of our £493 million British pound sterling term loan in the first quarter of 2025. Overall, our weighted-average interest rate was 5.2% for the nine months ended September 30, 2025, compared to 4.3% for the same period in 2024.
Real estate depreciation and amortization for the first nine months of 2025 decreased to $198.3 million from $382.7 million for the same period of the prior year. This decrease is primarily due to $170 million of additional amortization expense recorded in 2024 primarily to fully amortize the intangibles associated with two master leases, including the Steward master lease that was terminated effective September 11, 2024. The remaining decrease is due to the sale of various properties in 2024 and 2025.
Property-related expenses totaled $26.9 million and $17.5 million for the nine months ended September 30, 2025 and 2024, respectively. Of the property expenses in the first nine months of 2025 and 2024, approximately $9.3 million and $9.8 million, respectively, represents costs that were reimbursed by our tenants and included in the “Interest and other income” line on our condensed consolidated statements of net income. Net of reimbursement, our property-related expenses are higher than prior year due to having additional vacant properties post Steward bankruptcy. We are in various stages of re-tenanting or selling our vacant properties, which make up less than 1% of our total assets.
General and administrative expenses were $105.8 million for the first nine months of 2025, compared to $105.3 million for the same period of 2024. Share-based compensation expense was $30.9 million for the first nine months of 2025, compared to $30.6 million for the same period of 2024.
Gain on Sale of Real Estate
During the nine months ended September 30, 2025, the net gain on sale of real estate of $4.2 million primarily relates to the sale of five facilities as more fully described in Note 3 to the condensed consolidated financial statements. During the nine months ended September 30, 2024, the gain on sale of real estate of $475.2 million primarily related to the sale of five Prime facilities, a 75% interest in five Utah facilities as part of the Utah Transaction, and the sale of eight Dignity Health and 11 UCHealth facilities, each as more fully described in Note 3 to the condensed consolidated financial statements.
In the first nine months of 2025, we recognized $159.3 million of real estate and other impairment charges, primarily associated with our investments in Prospect and three hospitals in Colombia, as well as ongoing property taxes and other obligations not paid by our cash-basis tenants. In the same period of 2024, we recognized $1.4 billion of real estate and other impairment charges and fair value adjustments, primarily associated with our investments in Steward and the international joint venture as further described in Note 3 to the condensed consolidated financial statements.
Earnings from equity interests was $73.7 million for the nine months ended September 30, 2025, compared to a loss of ($369.6) million for the same period in 2024. This increase is primarily due to the $410 million charge in the second quarter of 2024 associated with the real estate impairment in our Massachusetts-based partnership with Macquarie. In addition, our share of income increased year-over-year in the Utah partnership that was formed in the 2024 second quarter by approximately $27.0 million, as prior year only included three months of activity versus a full nine months in 2025 plus the nine months ended September 30, 2025 included approximately $34 million of positive fair value adjustments (primarily real estate related) compared to $13.5 million in 2024. Finally, our share of income in the MEDIAN joint venture increased by approximately $8.8 million primarily driven by the deferred tax benefit disclosed previously in Note 3 to the condensed consolidated financial statements.
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Debt refinancing and unutilized financing costs were $3.6 million for the first nine months of 2025. These costs were incurred primarily as a result of the early redemption of our 3.325% Senior Unsecured Notes due 2025, 2.500% Senior Unsecured Notes due 2026, and 5.250% Senior Unsecured Notes due 2026. For the same period of 2024, these costs were $3.7 million and were incurred as a result of the reduction in revolving commitments under our Credit Facility and partial paydown of our British pound sterling term loan due 2025.
Other expense for the first nine months of 2025 was $171.1 million, compared to expense of $566.8 million in the same period of the prior year. For 2025, we recognized approximately $156 million in unfavorable non-cash fair value adjustments from our investments marked to fair value, primarily due to an approximate $147 million unfavorable adjustment to our investment in PHP Holdings and approximately $8.3 million related to our investment in Aevis. For the first nine months of 2024, we recognized an approximate $498 million unfavorable adjustment to our investment in PHP Holdings. The remaining expense in the first nine months of 2024 included a $7.8 million economic loss from the sale of our interest in the Priory syndicated term loan and approximately $46.5 million of legal and other professional expenses associated with, among other things, responding to certain defamatory statements published by certain parties.
Income tax expense includes U.S. federal and state income taxes on our TRS entities, as well as non-U.S. income based or withholding taxes on certain investments located in jurisdictions outside the U.S. The $30.1 million income tax expense for the nine months ended September 30, 2025, is primarily based on the income generated by our investments in the U.K. and Germany and less than the $34.5 million income tax expense in the first nine months of 2024 due to a $5 million additional tax expense in the second quarter of 2024 as a result of the gain on the interest rate swap associated with the internal restructuring of the British pound sterling term loan due 2025.
Reconciliation of Non-GAAP Financial Measures
Investors and analysts following the real estate industry utilize funds from operations, or FFO, as a supplemental performance measure. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets, which assumes that the value of real estate diminishes predictably over time. We compute FFO in accordance with the definition provided by the National Association of Real Estate Investment Trusts, or Nareit, which represents net income (loss) (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairment charges on real estate assets, plus real estate depreciation and amortization, including amortization related to in-place lease intangibles, and after adjustments for unconsolidated partnerships and joint ventures.
In addition to presenting FFO in accordance with the Nareit definition, we disclose normalized FFO, which adjusts FFO for items that relate to unanticipated or non-core events or activities or accounting changes that, if not noted, would make comparison to prior period results and market expectations less meaningful to investors and analysts.
We believe that the use of FFO, combined with the required GAAP presentations, improves the understanding of our operating results among investors and the use of normalized FFO makes comparisons of our operating results with prior periods and other companies more meaningful. While FFO and normalized FFO are relevant and widely used supplemental measures of operating and
43
financial performance of REITs, they should not be viewed as a substitute measure of our operating performance since the measures do not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs (if any are not paid by our tenants) to maintain the operating performance of our properties, which can be significant economic costs that could materially impact our results of operations. FFO and normalized FFO should not be considered an alternative to net income (loss) (computed in accordance with GAAP) as indicators of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.
The following table presents a reconciliation of net loss attributable to MPT common stockholders to FFO and Normalized FFO for the three and nine months ended September 30, 2025 and 2024 (in thousands except per share data):
For the Three Months Ended
For the Nine Months Ended
September 30, 2025
September 30, 2024
FFO information:
82,242
218,646
240,465
430,128
Loss (gain) on sale of real estate
9,115
(91,795
Real estate impairment charges
78,677
179,952
126,645
679,276
Funds from operations
92,048
(494,513
67,995
(1,364,022
Other impairment charges, net
6,976
427,811
40,487
1,172,789
Litigation, bankruptcy and other (recoveries) costs
(1,125
28,899
11,078
46,507
Share-based compensation (fair value adjustments) (1)
3,457
3,444
(12,066
130,949
(12,091
713
4,273
Normalized funds from operations
77,213
93,867
239,677
375,019
Per diluted share data:
0.14
0.37
0.40
0.72
0.01
(0.15
(0.01
(0.79
0.13
0.30
0.21
1.13
0.15
(0.82
0.11
(2.27
0.71
0.06
1.94
0.05
0.02
(0.02
0.22
0.85
0.16
0.62
LIQUIDITY AND CAPITAL RESOURCES
2025 Cash Flow Activity
During the first nine months of 2025, we generated approximately $70 million of cash flows from operating activities, which were lower than the first nine months of 2024 primarily due to approximately $55 million of less cash rent received due to property
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sales in 2024 and 2025, approximately $43 million less cash rent and interest received from tenants accounted for on a cash basis, and an approximate $43 million increase in interest paid for the first nine months of 2025 compared to the same period of 2024, partially offset by increases in cash received due to inflation based escalators in our leases and less cash paid for litigation, bankruptcy, and other costs. We used these operating cash flows, proceeds from our Credit Facility, and proceeds from asset sales to fund our dividends and other investing activities. During the first nine months of 2025, we repaid the remaining outstanding balance of the British pound sterling term loan due 2025 of £493 million, with a combination of cash on hand and available capacity under our Credit Facility. We also completed a private offering of $1.5 billion in aggregate principal amount of senior secured notes due 2032 and €1.0 billion aggregate principal amount of senior secured notes due 2032. The net proceeds from the offering were approximately $2.5 billion after deducting discounts, commissions, and other offering related expenses. We used the net proceeds from the offering to fund the redemption of our 3.325% Senior Unsecured Notes due 2025, 2.500% Senior Unsecured Notes due 2026, and 5.250% Senior Unsecured Notes due 2026, with the remainder of net proceeds used to paydown our Credit Facility by approximately $800 million.
In the third quarter of 2025 (and as noted in Note 3 to the condensed consolidated financial statements), the bankruptcy court handling the Prospect bankruptcy approved, among other things, an interim order for additional loan advances to be made by us to the debtor including: a) up to $55 million, which we funded in full in the 2025 third quarter to cover forecasted cash shortfalls by the debtor as it completes the sales of hospital operations and sales/leases of related real estate; b) approximately $25 million for the full repayment of the current senior debtor-in-possession lender, which we funded in the 2025 third quarter; and c) up to $30 million in the form of a backstop facility to cover administrative and priority claims, which remains conditioned on other events occurring including further bankruptcy court approvals. Any funds advanced under the backstop facility will be secured by recoveries, if any, from causes of actions owned by the debtor. Excluding the possible additional $30 million of fundings, we have approximately $100 million of loans outstanding for which we currently expect to recover in excess of from sales of Connecticut properties and Yale proceeds (of which we received $45 million on November 4, 2025), as further described in Note 3 to the condensed consolidated financial statements.
Subsequent to September 30, 2025, we received approximately $23 million in distributions from the Swiss Medical Network joint venture. In addition, we committed to the acquisition of one property in Germany for approximately €23 million to be leased to MEDIAN with closing and funding expected in the 2025 fourth quarter.
Debt Amendments, Restrictions, and Covenant Compliance
On February 13, 2025 and concurrent with the closing of the Senior Secured Notes due 2032 as discussed in Note 4 to the condensed consolidated financial statements, we amended the Credit Facility to among other things: (i) provide for the facility to be secured and guaranteed ratably with the senior notes issued concurrently, (ii) provide notice that we plan to exercise both of our maturity extension options such that the maturity of the revolving portion would move from June 30, 2026 to June 30, 2027, the same maturity date as our term loan facility (subject to the satisfaction of certain conditions), (iii) reset the interest rate to SOFR plus 225 basis points (which had previously been moved to SOFR plus 300 basis points in August 2024), (iv) permanently remove financial covenants regarding minimum consolidated tangible net worth, maximum unsecured indebtedness to unencumbered asset value and minimum unsecured net operating income to unsecured interest expense, (v) amend certain definitions used in the financial covenant regarding maximum total indebtedness to total asset value to conform to corresponding definitions in our existing unsecured indentures and the secured notes issued concurrently and set the covenant level at 60%, (vi) set the maximum secured leverage ratio at 40%, and (vii) add mandatory prepayments of senior debt or additional collateral in connection with any failure to (x) maintain a 65% maximum ratio of secured first lien debt to the undepreciated real estate value of the secured pool properties or (y) maintain a minimum senior secured debt service coverage ratio of 1.15:1.00 (increasing to 1.30:1.00 in 12 months).
As of November 4, 2025, we are in compliance with all such financial and operating covenants.
2024 Cash Flow Activity
During the first nine months of 2024, we generated approximately $169 million of cash flows from operating activities, primarily consisting of rent and interest from mortgage and other loans. In addition to operating cash flows, we received approximately $1.8 billion during the first nine months of 2024 from the Utah Transaction and the sale of 25 properties (as further discussed in Note 3 to the condensed consolidated financial statements), along with approximately $130 million from the sale of our interest in the syndicated Priory term loan and remaining minority interest in Lifepoint Behavioral. In May 2024, we closed on a new secured term loan, generating proceeds of approximately $800 million. We used our operating cash flows, asset sale proceeds, and term loan proceeds to fund our dividends of $273 million, pay down over $1 billion of our Credit Facility and British pound sterling term loan due 2025, and to pay off our British pound sterling secured term loan due 2024.
See below for further details of these transactions along with additional liquidity activity in the first nine months of 2024:
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Short-term Liquidity Requirements:
Our short-term liquidity requirements typically consist of general and administrative expenses, dividends in order to comply with REIT requirements, interest payments on our debt, and planned funding commitments on development and capital improvement projects for the next twelve months. Our monthly rent and interest receipts and distributions from our joint venture arrangements are typically enough to cover our short-term liquidity requirements.
Over the next twelve months, we expect our monthly rent and interest receipts to increase with our contractually required annual escalations, from the ramp up of cash rents from the tenants that last year replaced Steward, and expected rent revenue from the replacement tenant of the Prospect California facilities. We would expect these rent and interest increases to outpace the higher interest cost from the recent refinancings.
At November 4, 2025, we only have the €500 million, 0.993% Senior Unsecured Notes due 2026, coming due in the next twelve months, as we have provided notice of our intent to extend the revolving portion of our Credit Facility to 2027. In addition, we have liquidity of $1.1 billion (including cash on hand and availability under the $1.28 billion revolving portion of our Credit Facility). We believe this liquidity along with the expected cash receipts of rent and interest pursuant to our contractual agreements with our tenants/borrowers is sufficient to fund our short-term liquidity requirements.
Long-term Liquidity Requirements:
Our long-term liquidity requirements generally consist of the same requirements described above under “Short-term Liquidity Requirements” along with investments in real estate and the funding of debt maturities coming due after the next twelve months. At this time, we do not expect any material new investments of real estate in the foreseeable future.
As described previously, our monthly rent and interest receipts and distributions from our joint venture arrangements along with our current liquidity of approximately $1.1 billion at November 4, 2025, are typically enough to cover our short-term liquidity requirements. However, to further improve cash flows and to fund future debt maturities, we may need to look to other sources, which may include one or a combination of the following:
However, there is no assurance that conditions will be favorable for such possible transactions or that our plans will be successful. In addition, the Prospect bankruptcy related proceedings discussed previously could result in additional cash outflows as discussed above and/or negatively impact the timing, value, and/or our ability to sell or re-lease certain Prospect assets, which could negatively impact our liquidity.
46
Principal payments due on our debt (which exclude the effects of any discounts, premiums, or debt issue costs recorded) as of November 4, 2025 are as follows (in thousands):
1,008,104
781,260
5,226,054
9,515,418
Contractual Commitments
We presented our contractual commitments in our 2024 Annual Report on Form 10-K, which factored in our debt refinancing activities in February 2025, and we provided an update to our commitment schedule in our Form 10-Q for the quarter ended June 30, 2025. There have been no further significant changes through November 4, 2025.
Distribution Policy
The table below is a summary of our distributions declared (and paid in cash) during the two year period ended September 30, 2025:
Declaration Date
Record Date
Date of Distribution
Distributionper Share
August 14, 2025
September 11, 2025
October 9, 2025
May 29, 2025
June 18, 2025
July 17, 2025
February 13, 2025
March 10, 2025
April 10, 2025
November 21, 2024
December 12, 2024
January 9, 2025
August 22, 2024
September 9, 2024
October 10, 2024
May 30, 2024
June 10, 2024
July 9, 2024
April 12, 2024
April 22, 2024
May 1, 2024
November 9, 2023
December 7, 2023
January 11, 2024
It is our policy to make sufficient distributions to stockholders in order for us to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended, and to efficiently manage corporate income and excise taxes on undistributed income. Although we have only made cash distributions historically, we may consider making stock dividends in the future for liquidity purposes, while still complying with REIT requirements. In addition, our Credit Facility limits the amount of cash dividends we can make- see Note 4 to the condensed consolidated financial statements for further information.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices, and other market changes that affect market sensitive instruments. We seek to mitigate the effects of fluctuations in interest rates by matching the terms of new investments with new long-term fixed rate borrowings to the extent possible. We may or may not elect to use financial derivative instruments to hedge interest rate or foreign currency exposure. For interest rate hedging, these decisions are principally based on our policy to match investments with comparable borrowings, but are also based on the general trend in interest rates at the applicable dates and our perception of the future volatility of interest rates. For foreign currency hedging, these decisions are principally based on how our investments are financed, the long-term nature of our investments, the need to repatriate earnings back to the U.S., and the general trend in foreign currency exchange rates.
In addition, the value of our facilities will be subject to fluctuations based on changes in local and regional economic conditions and changes in the ability of our tenants to generate profits.
Our primary exposure to market risks relates to fluctuations in interest rates and foreign currency. The following analyses present the sensitivity of the market value, earnings, and cash flows of our significant financial instruments to hypothetical changes in
interest rates and exchange rates as if these changes had occurred. The hypothetical changes chosen for these analyses reflect our view of changes that are reasonably possible over a one-year period. These forward-looking disclosures are selective in nature and only address the potential impact from these hypothetical changes. They do not include other potential effects which could impact our business as a result of changes in market conditions. In addition, they do not include measures we may take to minimize our exposure such as entering into future interest rate swaps to hedge against interest rate increases on our variable rate debt.
Interest Rate Sensitivity
For fixed rate debt, interest rate changes affect the fair market value but do not impact net income to common stockholders or cash flows. Conversely, for floating rate debt, interest rate changes generally do not affect the fair market value but do impact net income to common stockholders and cash flows, assuming other factors are held constant. At September 30, 2025, our outstanding debt totaled $9.8 billion (excluding the effects of any discount or debt issue costs recorded), which consisted of fixed-rate debt of approximately $9.0 billion and variable rate debt of $0.8 billion. If market interest rates increase by 10% on our fixed rate debt, the fair value of our debt at September 30, 2025 would decrease by approximately $228 million. Changes in the fair value of our fixed rate debt will not have any impact on us unless we decided to repurchase the debt in the open market.
If market rates of interest on our variable rate debt increase by 10%, the increase in annual interest expense on our variable rate debt would decrease future earnings and cash flows by $4.8 million per year. If market rates of interest on our variable rate debt decrease by 10%, the decrease in interest expense on our variable rate debt would increase future earnings and cash flows by $4.8 million per year. This assumes that the average amount outstanding under our variable rate debt for a year is $0.8 billion, the balance of such variable rate debt at September 30, 2025.
Foreign Currency Sensitivity
With our investments in the U.K., Germany, Spain, Italy, Portugal, Switzerland, Finland, and Colombia, we are subject to fluctuations in the British pound, euro, Swiss franc, and Colombian peso to U.S. dollar currency exchange rates. Although we generally deem investments in these countries to be of a long-term nature, are typically able to match any non-U.S. dollar borrowings with investments in such currencies, and historically have not needed to repatriate a material amount of earnings back to the U.S., increases or decreases in the value of the respective non-U.S. dollar currencies to U.S. dollar exchange rates may impact our financial condition and/or our results of operations. Based on our 2025 results to-date, a 10% increase or decrease in exchange rates would have impacted our net loss by $5.4 million.
Item 4. Controls and Procedures.
Medical Properties Trust, Inc. and MPT Operating Partnership, L.P.
We have adopted and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by Rule 13a-15(b), under the Securities Exchange Act of 1934, as amended, we have carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the quarter covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by us in the reports that we file under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.
There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 1. Legal Proceedings.
We are party to various lawsuits as further described in Note 10 “Contingencies” to the condensed consolidated financial statements. We have not recorded a liability related to these lawsuits because, at this time, we are unable to determine whether an unfavorable outcome is possible or to estimate reasonably possible losses.
In addition to the foregoing, we are currently and have in the past been subject to various legal proceedings and regulatory actions in connection with our business. We believe that the resolution of any current pending legal or regulatory matters will not have a material adverse effect on our business, financial condition, results of operations, or cash flows. Nonetheless, we cannot predict the outcome of these proceedings, as legal and regulatory matters are subject to inherent uncertainties, and there exists the possibility that the ultimate resolution of such matters could have a material adverse effect on our financial condition, cash flows, results of operations, and the trading price of our common stock.
Item 1A. Risk Factors.
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, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The table below summarizes repurchases of our common stock made during the quarter ended September 30, 2025:
Period
Total number ofshares purchased(1)(in thousands)
Average price paidper share
Total number of sharespurchased as part ofpublicly announcedplans or programs
Approximate dollarvalue of shares thatmay yet bepurchased under theplans or programs(in thousands)
July 1, 2025-July 31, 2025
169
4.35
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
During the three months ended September 30, 2025, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Securities and Exchange Act) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).
Item 6. Exhibits
Exhibit Number
Description
31.1*
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (Medical Properties Trust, Inc.)
31.2*
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (Medical Properties Trust, Inc.)
31.3*
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (MPT Operating Partnership, L.P.)
31.4*
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. (MPT Operating Partnership, L.P.)
32.1**
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Medical Properties Trust, Inc.)
32.2**
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (MPT Operating Partnership, L.P.)
Exhibit 101.INS*
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH*
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
Exhibit 104*
Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)
* Filed herewith.
** Furnished herewith.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.
By:
/s/ J. Kevin Hanna
J. Kevin Hanna
Senior Vice President, Controller, Assistant Treasurer, and Chief Accounting Officer
(Principal Accounting Officer)
of the sole member of the general partner
of MPT Operating Partnership, L.P.
Date: November 7, 2025