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 June 30, 2026
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.)
10500 LIBERTY PARKWAY
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.
MPT
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 August 10, 2026, Medical Properties Trust, Inc. had 597.2 million shares of common stock, par value $0.001, outstanding.
EXPLANATORY NOTE
This report combines the Quarterly Reports on Form 10-Q for the three and six months ended June 30, 2026 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 June 30, 2026
Table of Contents
Page
PART I — FINANCIAL INFORMATION
3
Item 1 Financial Statements
Medical Properties Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets at June 30, 2026 and December 31, 2025
Condensed Consolidated Statements of Net Income for the Three and Six Months Ended June 30, 2026 and 2025
4
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2026 and 2025
5
Condensed Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2026 and 2025
6
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025
7
MPT Operating Partnership, L.P. and Subsidiaries
8
9
10
Condensed Consolidated Statements of Capital for the Three and Six Months Ended June 30, 2026 and 2025
11
12
Medical Properties Trust, Inc. and MPT Operating Partnership, L.P. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
13
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations
30
Item 3 Quantitative and Qualitative Disclosures about Market Risk
43
Item 4 Controls and Procedures
44
PART II — OTHER INFORMATION
45
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
47
SIGNATURE
48
2
Item 1. Financial Statements.
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
June 30,2026
December 31,2025
(In thousands, except per share amounts)
(Unaudited)
(Note 2)
Assets
Real estate assets
Land, buildings and improvements, intangible lease assets, and other
$
12,147,484
12,205,687
Investment in financing leases
382,986
421,684
Mortgage loans
131,157
123,651
Gross investment in real estate assets
12,661,627
12,751,022
Accumulated depreciation and amortization
(1,747,295
)
(1,663,056
Net investment in real estate assets
10,914,332
11,087,966
Cash and cash equivalents
396,558
540,859
Interest and rent receivables
18,391
19,210
Straight-line rent receivables
927,465
881,452
Investments in unconsolidated real estate joint ventures
1,371,657
1,399,777
Investments in unconsolidated operating entities
313,703
322,179
Other loans
286,510
186,292
Other assets
519,124
564,040
Total Assets
14,747,740
15,001,775
Liabilities and Equity
Liabilities
Debt, net
9,704,996
9,697,835
Accounts payable and accrued expenses
430,084
549,105
Deferred revenue
17,052
19,289
Obligations to tenants and other lease liabilities
95,705
128,297
Total Liabilities
10,247,837
10,394,526
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 — 596,786 shares at June 30, 2026 and 597,008 shares at December 31, 2025
597
Additional paid-in capital
8,577,506
8,573,396
Retained deficit
(4,214,216
(4,136,011
Accumulated other comprehensive income
134,962
168,213
Total Medical Properties Trust, Inc. stockholders’ equity
4,498,849
4,606,195
Non-controlling interests
1,054
Total Equity
4,499,903
4,607,249
Total Liabilities and Equity
See accompanying notes to condensed consolidated financial statements.
Condensed Consolidated Statements of Net Income
For the Three MonthsEnded June 30,
For the Six MonthsEnded June 30,
2026
2025
Revenues
Rent billed
203,400
177,860
400,920
343,050
Straight-line rent
33,308
39,665
67,504
79,792
Income from financing leases
10,081
9,923
20,145
19,828
Interest and other income
12,494
12,911
22,779
21,488
Total revenues
259,283
240,359
511,348
464,158
Expenses
Interest
135,262
129,709
268,592
245,510
Real estate depreciation and amortization
69,453
66,717
139,170
131,289
Property-related
11,202
10,863
21,142
17,898
General and administrative
34,771
26,197
66,976
68,108
Total expenses
250,688
233,486
495,880
462,805
Other (expense) income
Gain on sale of real estate
6,462
5,212
5,672
13,271
Real estate and other impairment charges, net
(16,768
(1,421
(35,800
(77,523
Earnings from equity interests
11,408
25,324
27,147
39,310
Debt refinancing and unutilized financing benefit (costs)
181
(3,615
Other (including fair value adjustments on securities)
(1,908
(124,434
(4,413
(169,640
Total other expense
(806
(95,138
(7,394
(198,197
Income (loss) before income tax
7,789
(88,265
8,074
(196,844
Income tax (expense) benefit
(10,077
(9,803
22,745
(19,240
Net (loss) income
(2,288
(98,068
30,819
(216,084
Net income attributable to non-controlling interests
(307
(289
(587
(548
Net (loss) income attributable to MPT common stockholders
(2,595
(98,357
30,232
(216,632
Earnings per common share — basic and diluted
(0.01
(0.16
0.05
(0.36
Weighted average shares outstanding — basic
597,961
600,814
597,838
600,733
Weighted average shares outstanding — diluted
Dividends declared per common share
0.09
0.08
0.18
0.16
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
Other comprehensive income (loss):
Unrealized loss on interest rate hedges, net of tax
(193
(4,208
Foreign currency translation gain (loss)
11,262
210,781
(33,251
304,248
Total comprehensive income (loss)
8,974
112,520
(2,432
83,956
Comprehensive income attributable to non-controlling interests
Comprehensive income (loss) attributable to MPT common stockholders
8,667
112,231
(3,019
83,408
Condensed Consolidated Statements of Equity
Preferred
Common
Shares
ParValue
AdditionalPaid-inCapital
RetainedDeficit
AccumulatedOtherComprehensiveIncome
Non-ControllingInterests
TotalEquity
Balance at December 31, 2025
597,008
Net income
32,827
280
33,107
Foreign currency translation loss
(44,513
Offering costs
(39
Stock vesting and amortization of stock-based compensation
1,063
1
6,281
6,282
Stock vesting - satisfaction of tax withholdings
(356
(1,792
Distributions to non-controlling interests
(280
Dividends declared ($0.09 per common share)
(54,255
Balance at March 31, 2026
597,715
598
8,577,846
(4,157,439
123,700
4,545,759
307
Foreign currency translation gain
(137
Repurchase of common stock
(1,299
(1
(6,122
(6,123
581
6,903
(211
(984
(54,182
Balance at June 30, 2026
596,786
AccumulatedOtherComprehensiveIncome (Loss)
Balance at December 31, 2024
600,403
600
8,584,917
(3,658,516
(94,272
4,833,783
(118,275
259
(118,016
(4,015
93,467
267
5,794
(75
(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
289
(101
306
8,346
8,347
(87
(456
(48,289
Balance at June 30, 2025
601
8,598,211
(3,971,824
205,768
4,833,810
Condensed Consolidated Statements of Cash Flows
Operating activities
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
146,973
133,669
Amortization of deferred financing costs and debt discount
13,548
12,502
Straight-line rent revenue from operating and finance leases
(70,285
(82,758
Stock-based compensation
5,434
18,522
(5,672
(13,271
36,435
81,479
Debt refinancing and unutilized financing costs
3,615
Tax rate changes and other
(45,155
1,121
Non-cash fair value adjustments
5,474
156,843
Other adjustments
(9,334
(26,722
Changes in:
711
4,565
(2,281
(3,301
(56,671
(11,878
(1,811
(6,171
Net cash provided by operating activities
48,185
52,131
Investing activities
Cash paid for acquisitions and other related investments
(29,322
(102,329
Net proceeds from sale of real estate
18,900
47,918
Proceeds received from repayment of loans receivable
62,895
3,000
Investment in loans receivable
(146,001
(52,435
Construction in progress and other
(20,188
(40,623
Capital additions and other investments, net
(45,388
(17,265
Net cash used for investing activities
(159,104
(161,734
Financing activities
Proceeds from term debt
2,512,970
Payments of term debt
(2,252,731
Revolving credit facility, net
85,000
156,530
Dividends paid
(109,606
(96,548
Lease deposits and other obligations to tenants
3,919
1,970
(176
(2,776
(745
Payment of debt refinancing and deferred financing costs and other financing activities
(1,766
(49,822
Net cash (used for) provided by financing activities
(31,528
271,523
(Decrease) increase in cash, cash equivalents, and restricted cash for period
(142,447
161,920
Effect of exchange rate changes
(2,120
15,815
Cash, cash equivalents, and restricted cash at beginning of period
543,995
335,173
Cash, cash equivalents, and restricted cash at end of period
399,428
512,908
Interest paid
279,508
220,281
Supplemental schedule of non-cash investing activities:
Real estate and other assets provided in property exchange
158,706
Real estate acquired in property exchange
165,500
Supplemental schedule of non-cash financing activities:
Dividends declared, unpaid
54,182
48,292
Cash, cash equivalents, and restricted cash are comprised of the following:
Beginning of period:
332,335
Restricted cash, included in Other assets
3,136
2,838
End of period:
509,828
2,870
3,080
MPT OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES
Liabilities and Capital
375,512
493,364
Payable due to Medical Properties Trust, Inc.
55,351
10,247,447
10,394,136
Capital
General Partner — issued and outstanding — 5,969 units at June 30, 2026 and 5,972 units at December 31, 2025
43,716
44,457
Limited Partners — issued and outstanding — 590,817 units at June 30, 2026 and 591,036 units at December 31, 2025
4,320,561
4,393,915
Total MPT Operating Partnership, L.P. capital
4,499,239
4,606,585
Total Capital
4,500,293
4,607,639
Total Liabilities and Capital
(In thousands, except per unit amounts)
Net (loss) income 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 income (loss) attributable to MPT Operating Partnership partners
Condensed Consolidated Statements of Capital
General
Accumulated
Partner
Limited Partners
Other
Units
UnitValue
ComprehensiveIncome
TotalCapital
5,972
591,036
328
32,499
Unit vesting and amortization of unit-based compensation
63
1,052
6,219
Unit vesting - satisfaction of tax withholdings
(4
(18
(352
(1,774
Distributions declared ($0.09 per unit)
(543
(53,712
5,979
44,287
591,736
4,377,108
4,546,149
(26
(2,569
(136
Repurchase of units
(13
(61
(1,286
(6,062
69
575
6,834
(3
(10
(208
(974
(542
(53,640
5,969
590,817
ComprehensiveIncome (Loss)
6,006
49,348
594,397
4,878,043
4,834,173
(1,183
(117,092
58
264
5,736
(74
(286
Distributions declared ($0.08 per unit)
(484
(47,903
6,008
47,736
594,587
4,718,498
4,762,468
(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
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 June 30, 2026, we have investments in 373 facilities in 30 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 six months ended June 30, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. The condensed consolidated balance sheet at December 31, 2025 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 June 30, 2026 (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, 2025 ("2025 Annual Report"). 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 June 30, 2026, we had loans and/or equity investments in certain variable interest entities ("VIEs"), including our international joint venture, Healthcare Systems of America ("HSA"), and NOR Healthcare Systems ("NOR"). 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 June 30, 2026 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
302,871
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 June 30, 2026, 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 shortfalls).
Recent Accounting Developments
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 beginning after December 15, 2027. We are currently evaluating the potential impact of the adoption of this standard on our consolidated financial statements.
14
3. Real Estate and Other Activities
New Investments
We acquired or invested in the following net assets (in thousands):
Land and land improvements
25,028
19,905
Buildings and other
148,095
19,409
Intangible lease assets — subject to amortization (weighted-average useful life of 20.3 years in 2026)
21,699
63,015
Total net assets acquired
194,822
102,329
2026 Activity
On June 1, 2026, we completed a transaction with ScionHealth ("Scion"), Lifepoint Health, Inc. ("Lifepoint"), and Lifepoint Behavioral Health ("Lifepoint Behavioral") (the "Scion/Lifepoint Transaction"), as further described in this same Note 3 under the "Other Leasing Activities" subheading. As part of the transaction, we acquired one property in Kentucky valued at $165.5 million as part of a property exchange described below under the "Disposals" subheading of this Note 3. The property is leased to Lifepoint pursuant to a long-term master lease with annual inflation-based escalators.
During the first quarter of 2026, we closed on the acquisition of one property in Germany for approximately €23 million (along with real estate transfer tax) leased to Median Kliniken S.à r.l ("MEDIAN") pursuant to a long-term lease with annual inflation-based escalators.
2025 Activity
In April 2025, we invested approximately CHF 52 million (or approximately $63 million), inclusive of a CHF 25 million (or approximately $30 million) short-term loan, in the Swiss Medical 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 Switzerland and repayment of debt.
In the first quarter of 2025, we funded approximately $39 million to Steward Health Care System's ("Steward") secured lender in order to obtain control over certain real estate assets for use by our new tenants.
Development and Capital Addition Activities
See table below for a status summary of our current development and capital addition projects (in thousands):
Property
Commitment (1)
CostsPaid as of June 30, 2026
Cost Remaining
IMED Hospitales ("IMED") (Spain)
65,310
55,674
9,636
IMED (Spain)
44,791
44,612
179
HSA (Florida)
43,500
7,171
36,329
NOR (California)
24,333
1,411
22,922
HSA (Louisiana)
19,000
740
18,260
196,934
109,608
87,326
We have two other development projects ongoing in Texas (Texarkana development) and Massachusetts (Norwood redevelopment). These are not highlighted above; however, we have completed 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 June 30, 2026, we estimate that the cost of additional construction that we believe will be more efficient if completed in
15
the near-term (such as electing to accelerate completion of a parking structure and elevators at Norwood) approximates between $5 million and $10 million.
During the first quarter of 2026, we completed construction and began recording rental income on a $10.7 million capital addition project at an Avondale, Arizona facility leased to Lifepoint Behavioral.
During the first quarter of 2025, we completed construction and began recording rental income on a $10.5 million capital addition project at a Gilbert, Arizona facility leased to Lifepoint Behavioral.
Disposals
On June 1, 2026, we completed the Scion/Lifepoint Transaction as further described in this same Note 3 under the "Other Leasing Activities" subheading. As part of the transaction, we completed a property exchange, which resulted in the transfer of three facilities back to Scion in exchange for the Kentucky property noted previously in this same Note 3 under the "New Investments" subheading. The transaction, which included the satisfaction of the lease incentive from the 2025 transaction with the tenant, resulted in a net gain of approximately $6.8 million.
During the first six months of 2026, we also completed the sale of five facilities for total proceeds of approximately $31 million, of which $12 million was received in advance of the sale in the first quarter of 2025, resulting in a loss on real estate of approximately $1 million.
During the first six months of 2025, we completed the sale of three facilities and an ancillary facility for approximately $48 million, resulting in a gain on real estate of $13.3 million.
Leasing Operations (Lessor)
We acquire and develop healthcare facilities and lease the facilities to healthcare operating companies. The initial fixed lease terms of these infrastructure-type assets are typically at least 15 years, and most include renewal options at the election of our tenants, generally in five-year increments. Over 99% of our leases provide annual rent escalations based on increases in the Consumer Price Index ("CPI") (or similar indices outside the U.S.) and/or fixed minimum annual rent escalations. Many of our domestic leases contain purchase options with pricing set at various terms but in no case less than our total initial investment. Our leases typically require the tenant to handle and bear most of the costs associated with our properties including repair/maintenance, property taxes, and insurance.
For all of our properties subject to lease, we are the legal owner of the property and the tenant's right to use and possess such property is guided by the terms of a lease. At June 30, 2026, we account for all of these leases as operating leases, except where GAAP requires alternative classification, including leases on certain Ernest Health, Inc. ("Ernest") 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 June 30, 2026
As of December 31, 2025
Minimum lease payments receivable
559,416
570,150
Estimated unguaranteed residual values
203,818
Less: Unearned income and allowance for credit loss
(511,562
(523,746
Net investment in direct financing leases
251,672
250,222
Other financing leases (net of allowance for credit loss)
131,314
171,462
Total investment in financing leases
Other Leasing Activities
At June 30, 2026, 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
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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 tenants.
Scion/Lifepoint Transaction
On June 1, 2026, we completed the Scion/Lifepoint Transaction which included (i) our acquisition of a new property from Lifepoint (as previously described in this same Note 3 under the "New Investments" subheading) in exchange for three Scion properties (as previously described in this same Note 3 under the "Disposals" subheading), (ii) the transition of hospital operations of two of our other facilities from Scion to Lifepoint, and (iii) the execution of a combined single master lease covering properties leased to Lifepoint and Lifepoint Behavioral. The new master lease has a lease term ending in 2045, annual cash rents approximating 99% of such rents prior to this transaction, and includes lease escalator provisions. After the Scion/Lifepoint Transaction, we have one remaining property leased to Scion, representing less than 0.2% of our total assets.
Prospect
In August 2019, we invested in a portfolio of 14 acute care hospitals in three states (California, Pennsylvania, and Connecticut) operated by and master leased to or mortgaged by Prospect Medical Holdings, Inc. ("Prospect") for a combined investment of approximately $1.6 billion.
On May 23, 2023, Prospect completed a recapitalization plan, which included receiving $375 million in new financing from several lenders. Along with this new capital from third-party lenders, we agreed to the following restructuring of our then $1.7 billion investment including: a) maintaining the master lease covering six California hospitals without any changes in rental rates or escalator provisions, b) transitioning the Pennsylvania properties back to Prospect in return for a $150 million first lien mortgage, c) providing up to $75 million in a loan secured by a first lien on Prospect's accounts receivable and certain other assets, and d) obtaining a non-controlling ownership interest in PHP Holdings in exchange for unpaid rent and interest, among other things.
Prospect filed for Chapter 11 bankruptcy on January 11, 2025 with the United States Bankruptcy Court for the Northern District of Texas. On March 20, 2025, the bankruptcy court approved a global settlement (including a recovery waterfall) between us, Prospect, and other stakeholders. Due to the bankruptcy, 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 2025 and in accordance with the global settlement and the estimated recovery waterfall, we recorded approximately $140 million of additional impairment charges (including $55 million of impairment charges in the 2025 first quarter that further reduced our investment in the Connecticut properties, partially offset by an approximate $18 million impairment recovery in the 2025 second quarter). In determining the 2025 first and second quarter impairment charges and recoveries, we compared the carrying value of our investments to our 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 certain Connecticut real estate, 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 remaining Connecticut real estate, fair value was based on a recent (at the time) bid received for these properties.
In 2025 and through the first quarter of 2026, all the Connecticut and Pennsylvania properties (along with our investment in PHP Holdings discussed below) were sold, and Prospect's bankruptcy plan was deemed effective.
During the first six months of 2026, we received approximately $60 million from these asset sales and collection of Connecticut accounts receivable that serve as collateral for our remaining investment, while funding $62 million of the $65 million bankruptcy court approved funding commitment, as disclosed in our 2025 Annual Report. At June 30, 2026, our remaining investment in Prospect is approximately $67 million inclusive of the remaining $3 million commitment that we expect to fund in the 2026 third quarter. We believe this total investment is fully recoverable from the collection of remaining Connecticut accounts receivable (of which we received $1.5 million subsequent to quarter end) and proceeds from litigation and other causes of action, the ultimate outcome and timing of which are uncertain.
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Re-tenanting Activity
In December 2025, we re-leased the six California properties to NOR as a result of their successful bid to acquire the hospital operations. Terms of the lease include an initial annualized rent almost identical to the previous rent amount due from Prospect in 2025, annual inflation-based escalators starting in the 2027 first quarter, and an initial fixed term of 15 years. All rent was deferred for the first six months (or until mid-June 2026), 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 are accounting for rent revenue associated with the NOR lease on the cash basis and recognized $1 million in the 2026 second quarter. We have committed to fund approximately $24 million for a new emergency department at one facility and up to $60 million in seismic improvements that may be required by California regulators over the next four years, both of which will increase the lease base and result in additional rent.
PHP Investment
In regard to our investment in PHP Holdings, we accounted for this investment using the fair value option method. In the first six months of 2025, we recorded an approximate $147 million negative fair value adjustment ($129 million of which was in the 2025 second quarter). 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.
Other Re-tenanting Activity
As discussed in previous filings, we entered into agreements in September 2024 with six operators (HSA, Honor Health, Insight Health ("Insight"), Quorum, College Health, and Tenor Health ("Tenor")) to lease 18 of the 23 former Steward-operated facilities. Since then, we have sold three of the facilities, including one in the 2026 first quarter. These leases included a rent ramp up period. In the 2025 first quarter, cash rents received from these operators were approximately $3.4 million, ramping up to $11 million in the 2025 second quarter, approximately $12 million in the 2025 third quarter, $26.1 million in the 2025 fourth quarter (including approximately $4 million of September 2025 rent from a cash-basis tenant that was received on October 1, 2025), $24.5 million in the 2026 first quarter, and $29.7 million in the second quarter of 2026. Based on these lease contracts (adjusted for the sales noted above), rent payments are to increase to approximately 100% of contractual rent starting with October 2026. As of June 30, 2026, all of these new operators have paid the rent due under their respective leases, except for cash-basis tenants Insight/Tenor who represent less than 1% of our annual revenues.
As of June 30, 2026, we have approximately $172 million in working capital and other loans related to these operators that were initially advanced to assist in the takeover of these operations and the transition of certain services (such as revenue cycle management). These loans are generally secured by accounts receivables and/or other assets (like personal property). In the 2026 second quarter, we advanced an additional $50 million to HSA due to ongoing revenue cycle management issues, of which we have subsequently received approximately $25 million. In addition, approximately $9 million (including $6 million received in July 2026) of working capital loans have been repaid from the other operators. We have recorded charges of $27.4 million in the first six months of 2026, which impaired the majority of the loans due from Insight/Tenor to equal the fair value of the underlying collateral.
The remaining five former Steward-operated properties (with a net book value of approximately 4% of our total assets), including two developments (see "Development and Capital Addition Activities" above), are in various stages of being re-tenanted or sold.
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.
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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%
607,639
611,347
MEDIAN
50%
463,901
486,695
CommonSpirit (Utah partnership)
25%
170,952
162,278
Policlinico di Monza
78,835
86,091
HM Hospitales
45%
50,330
53,366
Total
For our MEDIAN unconsolidated real estate joint venture, we, along with our joint venture partner, closed on a €702.5 million non-recourse, 10-year nonamortizing secured debt facility on June 17, 2025. The debt carries a 5.1% fixed interest rate, and the majority of the proceeds were used to fund the repayment of the prior €655 million secured loan that carried a lower interest rate.
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 months ended June 30, 2026 and 2025, our share of the Utah partnership's favorable fair value adjustments was approximately $2.0 million and $15.0 million, respectively, while, for the six months ended June 30, 2026 and 2025, our share was approximately $9.0 million and $21.0 million, respectively.
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):
193,666
197,497
Aevis Victoria SA ("Aevis")
58,831
64,859
Priory Group ("Priory")
45,316
43,913
Aspris Children's Services ("Aspris")
15,890
15,910
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
42,772
577,455
Provision for credit loss, net (1)
23,903
(12,659
Expected credit loss reserve written off or related to financial instruments sold, repaid, or satisfied
(411
Balance at end of the period
66,264
564,796
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Balance at beginning of the year
553,297
511,473
38,457
53,323
Expected credit loss reserve written off or related to financial instruments sold, repaid, or satisfied (2)
(525,490
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")
2,060,659
14.0
%
2,121,848
14.1
Priory
1,269,486
8.6
1,301,888
8.7
HSA
1,258,884
8.5
1,200,996
8.0
860,136
5.8
873,703
Lifepoint Behavioral
797,333
5.4
809,492
Other operators
6,639,704
45.1
6,688,287
44.6
1,861,538
12.6
2,005,561
13.4
100.0
Total Assets by U.S. State and Country (1)
U.S. States and Other Countries
Texas
1,379,139
9.4
1,427,391
9.5
California
1,025,370
7.0
977,890
6.5
Florida
903,251
6.1
834,940
5.6
Arizona
325,519
2.2
328,873
Ohio
303,695
2.1
330,189
All other states
2,467,712
16.7
2,480,182
16.5
Other domestic assets
962,378
1,072,900
7.2
Total U.S.
7,367,064
50.0
7,452,365
49.7
United Kingdom
4,069,802
27.6
4,184,188
27.9
Switzerland
Germany
745,882
5.1
751,806
5.0
Spain
309,269
302,323
2.0
All other countries
496,427
3.3
504,729
3.4
Other international assets
899,160
932,661
6.2
Total international
7,380,676
7,549,410
50.3
Grand total
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Total Assets by Facility Type (1)
Facility Types
General acute care hospitals
8,745,376
59.3
8,769,909
58.5
Behavioral health facilities
2,393,777
16.2
2,445,418
16.3
Post acute care facilities
1,651,316
11.2
1,671,616
11.1
Freestanding ER/urgent care facilities
95,733
0.7
109,271
On an individual property basis, our largest investment in any single property was less than 2% of our total assets as of June 30, 2026.
On a revenue basis, concentration in 2026 compared to the same periods of 2025 is as follows:
Total Revenues by Geographic Location
For the Three Months Ended June 30,
Geographic Location
Total Revenues
Percentage ofTotal Revenues
142,846
55.1
126,067
52.4
95,943
37.0
93,924
39.1
20,494
7.9
20,368
Total Revenues by Facility Type
162,523
62.7
147,648
61.4
55,090
21.2
53,545
22.3
39,359
15.2
37,176
15.5
2,311
0.9
1,990
0.8
The following shows those tenants that represented 10% or more of our total revenues for the three and six months ended June 30, 2026 and 2025:
Circle
54,699
21.1
53,725
22.4
27,369
10.6
26,456
11.0
177,215
68.3
160,178
66.6
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For the Six Months Ended June 30,
109,660
21.4
104,436
22.5
54,865
10.7
51,397
346,823
67.9
308,325
66.4
4. Debt
The following is a summary of debt (dollar amounts in thousands):
Secured revolving credit facility(A)
718,544
638,063
Secured term loan
200,000
British pound sterling secured term loan due 2034(B)
837,335
850,784
0.993% Senior Unsecured Notes due 2026(B)
571,100
587,300
5.000% Senior Unsecured Notes due 2027
1,400,000
3.692% Senior Unsecured Notes due 2028(B)
795,720
808,500
4.625% Senior Unsecured Notes due 2029
900,000
3.375% Senior Unsecured Notes due 2030(B)
464,170
471,625
3.500% Senior Unsecured Notes due 2031
1,300,000
7.000% Senior Secured Notes due 2032(B)
1,142,200
1,174,600
8.500% Senior Secured Notes due 2032
1,500,000
9,829,069
9,830,872
Debt issue costs and discount, net
(124,073
(133,037
As of June 30, 2026, 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):
1,289,644
(1)
2027
1,600,000
2028
2029
2030
Thereafter
4,779,535
Credit Facility
We have a multi-currency denominated revolver and a $200 million term loan that make up our Credit Facility (the "Credit Facility"). The maximum borrowings under the revolving portion of the Credit Facility is $1.28 billion.
On February 13, 2025 and concurrent with the closing of our private notes offering discussed previously, we further amended the Credit Facility and (i) removed the Modified Covenant Period and any restrictions related thereto from the existing Credit Facility,
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(ii) permanently removed 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, (iii) amended 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 in February 2025 and set the covenant level at 60%, (iv) reset the interest rate to SOFR plus 225 basis points, (v) provided for the loans thereunder to be secured and guaranteed ratably with the secured notes issued in February 2025, (vi) set the maximum secured leverage ratio at 40%, and (vii) added mandatory prepayments of senior debt or addition of 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 1.30:1.00.
On June 30, 2026, we formally extended the revolving portion of our Credit Facility to December 30, 2026. We can extend the facility another six months to June 30, 2027, subject to the satisfaction of certain conditions with the primary condition of not being in default at the time of the extension option date – and believe we will meet all conditions to do so.
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 and €1.0 billion aggregate principal amount of senior secured notes due 2032.
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.
Debt Refinancing and Unutilized Financing Costs
In the first six 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.
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 June 30, 2026, we were in compliance with all financial and operating covenants.
5. Income Taxes
In the 2026 first quarter, we moved seven additional U.K. property holding legal entities into our U.K. REIT that was formed on July 1, 2023. With this move, we adjusted the deferred tax liabilities associated with these entities, resulting in a one-time tax benefit of approximately $43 million in the first quarter of 2026. Going forward, these U.K. entities (like the others in the U.K. REIT) will be subject only to a withholding tax on earnings upon distribution out of the U.K. REIT.
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6. Common Stock
On October 28, 2025, the Board of Directors of the Company authorized a stock repurchase program (the "Stock Repurchase Program") for up to $150 million of common stock, par value $0.001 per share. Under the Stock Repurchase Program, we may repurchase shares of our common stock from time to time in the open market or in privately negotiated transactions. In the first six months of 2026, we repurchased 1.3 million shares for a total of $6.1 million.
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 June 30, 2026, we have not sold any shares under this ATM Program.
7. Stock Awards
During the second quarter of 2026, our shareholders approved the Second Amended and Restated 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. Among other things, the recent amendment increased the number of shares of common stock registered and reserved for stock awards by 12 million to 40.9 million. As of June 30, 2026 (and adjusted for the August 6, 2026 share registration on Form S-8), 14.0 million shares remain available for future stock awards. Share-based compensation expense totaled $5.4 million and $18.5 million for the six months ended June 30, 2026 and 2025, respectively. Of this expense, a benefit of ($7.8) million and an expense of $4.4 million for the six months ended June 30, 2026 and 2025, 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 June 30, 2026, 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.
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 is estimated by using Level 2 inputs such as discounting the estimated future cash flows using the current rates at 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
19,050
19,907
Loans(1)
713,343
(2)
711,248
624,243
624,369
(9,704,996
(8,864,810
(9,697,835
(8,980,547
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Items Measured at Fair Value on a Recurring Basis
Our equity investment and related loan to the international joint venture and our loan investment in the real estate of three hospitals operated by subsidiaries of the international joint venture in Colombia are measured at fair value on a recurring basis as we elected to account for these investments using the fair value option 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 June 30, 2026 and December 31, 2025, the amounts recorded under the fair value option method were as follows (in thousands):
Fair Value
Original Cost
Asset Type Classification
123,620
166,963
116,113
151,692
Equity investment and other loans
4,759
266,011
4,285
264,160
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 is recorded at fair value by using a market approach, which requires significant estimates of our investee, such as projected revenue, expenses, and working capital, and appropriate consideration of the underlying risk profile of the forecasted assumptions associated with the investee. We classify our valuations of this investment 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.
In addition to investments for which we elected the fair value option, we have other investments from time to time (including our investment in Aevis) that are measured at fair value on a recurring basis.
In the first six months of 2026, we recorded an unfavorable adjustment to the investments accounted for at fair value on a recurring basis of approximately $9 million, primarily related to our investment in Aevis and our investment in three hospitals in Colombia. In the first six months of 2025, we recorded a net unfavorable adjustment to the investments accounted for at fair value on a recurring basis of approximately $173 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.
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 of Real Estate and Non-Real Estate Investments
See the Prospect subheading under "Leasing Operations (Lessor)" in Note 3 for a discussion around the use of fair value and related assumptions in the impairment of our real estate investments. In addition, see “Leasing Operations (Lessor)” in Note 3 for a discussion of loan impairments involving Insight and Tenor.
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9. Earnings Per Share/Unit
Medical Properties Trust, Inc.
Our earnings per share were calculated based on the following (in thousands):
Numerator:
Net loss
Non-controlling interests’ share in net income
Participating securities’ share in earnings
(407
(224
Net loss, less participating securities’ share in earnings
(3,002
(98,581
Denominator:
Basic weighted-average common shares
Dilutive potential common shares(1)
Diluted weighted-average common shares
(868
(341
Net income (loss), less participating securities’ share in earnings
29,364
(216,973
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
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10. Contingencies
As part of the global settlement with Steward discussed in previous filings, 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 established a reserve for certain obligations due to third parties associated with properties formerly leased to Steward, which decreased to approximately $15 million at June 30, 2026.
We are, or were, party to various lawsuits as described below:
Securities and Derivative Litigation
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 alleged 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 was stayed pending further developments in the New York securities action described above. On June 16, 2026, plaintiff in this action filed a notice of voluntary dismissal and the case has now been dismissed without prejudice.
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.
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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 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 for entity-wide disclosures around major customers, geographic areas, and property types.
12. Subsequent Events
Refinancing
On August 10, 2026, we agreed to a privately negotiated issuance of $2.4 billion in new secured notes. These new notes carry a 9.25% fixed coupon rate and mature in 2032. Approximately $1.0 billion of proceeds from these new notes, in the form of cash, will be used to pay off our 0.993% Senior Unsecured Notes due 2026 in full and redeem approximately 27% of our 5.000% Senior Unsecured Notes due 2027. The remaining proceeds will be in the form of a note exchange to retire a portion of our existing 2027, 2028, 2029, 2030, and 2031 senior unsecured notes. We expect the transaction to close imminently and that we will capture a discount of approximately $123 million, net of certain lender fees and incur customary third-party fees and expenses. With that said, given the senior unsecured notes being paid down with cash have set redemption notice periods, we may not be able to settle these notes for 10 to 30 days.
Infracore Investment Monetization
On July 9, 2026, Infracore SA ("Infracore"), a Swiss hospital real estate company in which we held a non-controlling ownership interest, completed an initial public offering and listing of its shares on the SIX Swiss Exchange under the ticker symbol "INFRAC." The initial listing price was CHF 54.00 per share.
In connection with the offering, Infracore issued approximately 3.7 million new shares and received approximately CHF 200 million in gross proceeds. We sold approximately 0.7 million of our Infracore shares in the offering, resulting in total gross proceeds of approximately CHF 38 million. The offering reduced our ownership interest in Infracore from 70% to approximately 48.5%.
On July 13, 2026, we received approximately CHF 46 million from Infracore related to the repayment of outstanding shareholder loans and payment of the 2023 dividend. We expect to receive approximately CHF 28 million for payment of the 2025 dividends in the third quarter of 2026. Proceeds from the monetization activities above have been or will be used to reduce outstanding debt and for other general corporate purposes.
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Property Disposals
On August 10, 2026, we closed on the sale of the five properties in the Utah partnership, which generated approximately $172 million and is reflective of our investment in this partnership at June 30, 2026. We plan to use proceeds from this sale to reduce outstanding debt and for other general corporate purposes.
Subsequent to June 30, 2026, we have entered into agreements for the sale of certain other assets that could generate $200 million to $400 million in 2026, although no assurances can be given on the amount or timing of such proceeds. These property sales are subject to due diligence, regulatory approvals, and other customary closing conditions.
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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 Quarterly Report on Form 10-Q and the consolidated financial statements and notes thereto contained in our 2025 Annual Report.
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 and debt repayment transactions (including the use of proceeds thereof), expected returns on investments and financial performance, and expected trends and performance across our various markets. 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 to be materially different from those expressed or implied by such forward-looking statements, including, but not limited to, the risks described in our 2025 Annual Report and as updated in our Quarterly Reports on Form 10-Q for future periods, and on our Current Reports on Form 8-K filed with the SEC. 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 AND ESTIMATES
Refer to our 2025 Annual Report 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 six months ended June 30, 2026, there were no material changes to these policies and estimates.
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
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assets are owned 100%; however, we do own some leased assets through joint ventures with other partners that share our view that healthcare facilities are part of the infrastructure of any community, which we refer to as investments in unconsolidated real estate joint ventures. We also make mortgage loans to healthcare operators collateralized by their real estate assets. In addition, we may make loans to certain of our operators through our TRS, the proceeds of which are typically used for working capital and other purposes. From time-to-time, we may make noncontrolling investments in our tenants, which we refer to as investments in unconsolidated operating entities. These investments are typically made in conjunction with larger real estate transactions with the tenant that give us a right to share in such tenant’s profits and losses, and provide for certain minority rights and protections. Our business model facilitates acquisitions and recapitalizations, and allows operators of healthcare facilities to serve their communities by unlocking the value of their real estate assets to fund facility improvements, technology upgrades, and other investments in operations.
At June 30, 2026, our portfolio consisted of 373 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 31,2025
Real estate assets - at cost
85.9
85.0
Accumulated real estate depreciation and amortization
(11.9
)%
(11.1
74.0
73.9
2.7
3.6
9.3
1,751,490
11.9
1,650,994
Total assets
Results of Operations
Three Months Ended June 30, 2026 Compared to June 30, 2025
Net loss for the three months ended June 30, 2026 was ($2.6) million, or ($0.01) per share, compared to a net loss of ($98.4) million, or ($0.16) per share, for the three months ended June 30, 2025. This improvement quarter over quarter is primarily driven by an $18.9 million increase in revenue, as discussed in detail below, and a $129 million unfavorable fair value adjustment to our investment in PHP Holdings in the second quarter of 2025, partially offset by more impairment charges, higher interest expense and general and administrative expense, along with lower earnings from equity interests in 2026 compared to 2025. 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 $92.2 million for the 2026 second quarter, or $0.15 per diluted share, as compared to $81.4 million, or $0.14 per diluted share, for the 2025 second quarter.
A comparison of revenues for the three months ended June 30, 2026 and 2025 is as follows (dollar amounts in thousands):
Year overYearChange
78.4
14.4
12.9
(16.0
3.9
4.1
1.6
4.8
(3.2
Our total revenues for the 2026 second quarter increased $18.9 million, or 7.9%, over the same period in the prior year. This increase is made up of the following:
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As discussed in Note 3 to the condensed consolidated financial statements, we combined Lifepoint and Lifepoint Behavioral properties into one single master lease on June 1, 2026. Although cash rent basically stayed the same, the aligning of the initial lease terms is expected to decrease operating lease revenue by approximately $2 million per quarter.
We currently have several tenants on the cash basis from a revenue recognition perspective, which can result in variability of our lease revenue quarter-to-quarter.
Interest Expense
Interest expense for the quarters ended June 30, 2026 and 2025 totaled $135.3 million and $129.7 million, respectively. This increase is primarily related to higher interest expense from the increase in average borrowings on our Credit Facility in the second quarter of 2026, compared to the same period of 2025, as our overall weighted-average interest rate stayed consistent at 5.3% for both periods.
Real Estate Depreciation and Amortization
Real estate depreciation and amortization during the second quarter of 2026 increased to $69.5 million from $66.7 million in 2025. This increase is primarily due to the six California properties, leased to NOR, that were reclassified as operating leases in December 2025, along with net acquisition and disposal activity since the second quarter of 2025 (as disclosed previously).
Property-related expenses totaled $11.2 million and $10.9 million for the quarters ended June 30, 2026 and 2025, respectively. Of the property-related expenses in the second quarter of 2026 and 2025, approximately $4.4 million and $5.1 million, respectively, represent costs that were reimbursed by our tenants and included in the "Interest and other income" line of the condensed consolidated statements of net income. The remaining non-reimbursed property expenses are higher quarter over quarter primarily due to ongoing expenses (such as property taxes, insurance, maintenance, etc.) incurred at our vacant facilities.
General and Administrative
General and administrative expenses were $34.8 million for the 2026 second quarter, compared to $26.2 million for the 2025 second quarter. Of these amounts, share-based compensation expense was $4.9 million for the second quarter of 2026, compared to $0.8 million in the 2025 second quarter, primarily due to less benefit in the 2026 period from the change in fair value of the performance awards that contain a cash-settlement feature and are marked to fair value quarterly, along with additional expense from new stock awards granted in 2025 and the 2026 first quarter.
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 June 30, 2026, 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.
Excluding share-based compensation, general and administrative expenses for the 2026 second quarter were higher than the prior year due to non-cash depreciation and other costs associated with our completed headquarters facility in Birmingham, Alabama and higher travel expenses.
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Gain on Sale of Real Estate
During the three months ended June 30, 2026, the gain on sale of real estate of $6.5 million primarily relates to the Scion/Lifepoint Transaction as described in Note 3 to the condensed consolidated financial statements. During the three months ended June 30, 2025, the gain on sale of real estate of $5.2 million relates to the sale of one facility.
Real Estate and Other Impairment Charges, Net
In the 2026 second quarter, we recognized $16.8 million of real estate and other impairment charges, of which $15.2 million was recorded to further impair our working capital loans to Insight and Tenor. The remaining charges in the quarter consisted of a negative fair value adjustment on our investments in three hospitals in Colombia, along with non-real estate impairment charges for property taxes and other obligations not paid by our cash-basis tenants. In the same period of 2025, we recognized $1.4 million of real estate and other impairment charges, primarily associated with our three hospitals in Colombia and non-real estate impairment charges, primarily property taxes and other obligations not paid by our cash-basis tenants. These charges in the 2025 second quarter were partially offset by an impairment recovery on our Prospect facilities. See Note 3 to the condensed consolidated financial statements for further details of these charges.
Earnings from Equity Interests
Earnings from equity interests was $11.4 million for the quarter ended June 30, 2026, compared to earnings of $25.3 million for the same period in 2025. Our share of income in the Utah partnership included a $1.6 million positive fair value adjustment in the second quarter of 2026, primarily related to its interest rate swap; while, the 2025 second quarter included a $15 million favorable fair value adjustment in real estate.
The remaining change from 2025 to 2026 relates to higher interest incurred in our MEDIAN joint venture from the refinancing in the 2025 second quarter (as discussed in Note 3 of the condensed consolidated financial statements), partially offset by more rent earned in our Italian joint venture.
Other (Including Fair Value Adjustments on Securities)
Other expense for the second quarter of 2026 was $1.9 million, compared to other expense of $124.4 million in the prior year period. For the 2025 second quarter, we recognized approximately $125 million in unfavorable non-cash fair value adjustments from our investments marked to fair value, primarily due to an approximate $129 million unfavorable adjustment to our investment in PHP Holdings, partially offset by a favorable adjustment of approximately $4 million related to our investment in Aevis.
With certain investments accounted for at fair value, we may have positive or negative fair value adjustments from quarter-to-quarter.
Income Tax (Expense) Benefit
We typically incur income tax expense related to 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 $10.1 million income tax expense for the three months ended June 30, 2026 is primarily based on the income generated by our investments in the U.K. and Germany and is in line with the $9.8 million income tax expense in the second quarter of 2025.
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 $541 million should be reflected against certain of our international and domestic net deferred tax assets at June 30, 2026. 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.
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Six Months Ended June 30, 2026 Compared to June 30, 2025
Net income for the six months ended June 30, 2026, was $30.2 million, or $0.05 per share compared to a net loss of ($216.6) million, or ($0.36) per share, for the six months ended June 30, 2025. This increase in net income is primarily driven by (i) a $47.2 million increase in revenue as discussed in detail below, (ii) an approximately $43 million one-time tax benefit in the first quarter of 2026 from moving seven additional U.K. entities into our U.K. REIT as described in Note 5 to the condensed consolidated financial statements, (iii) $77.5 million of impairment charges primarily related to Prospect and certain of our Colombia assets along with $156 million of unfavorable fair value adjustments primarily related to our investments in PHP Holdings and Aevis in the first half of 2025, as compared to $36 million of impairment charges and $6 million of unfavorable non-cash fair value adjustments in the same period of 2026. The increase in net income was partially offset by higher interest expense and depreciation expense period over period. 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 $174.5 million for the first six months of 2026, or $0.29 per diluted share, as compared to $162.5 million, or $0.27 per diluted share, for the same period of 2025.
A comparison of revenues for the six months ended June 30, 2026 and 2025 is as follows (dollar amounts in thousands):
16.9
13.2
17.2
(15.4
4.3
4.5
4.6
6.0
10.2
Our total revenues for the first six months of 2026 are up $47.2 million, or 10.2%, over the same period in the prior year. This increase is made up of the following:
Interest expense for the six months ended June 30, 2026 and 2025 totaled $268.6 million and $245.5 million, respectively. This increase is primarily related to a full six months of interest in 2026 related to our February 2025 debt refinancing activities (see Note 4 to the condensed consolidated financial statements for further details) and from the increase in average borrowings on our Credit Facility in the first half of 2026, compared to the same period of 2025. Overall, our weighted-average interest rate was 5.3% for the six months ended June 30, 2026, compared to 5.1% for the same period in 2025.
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Real estate depreciation and amortization for the first six months of 2026 increased to $139.2 million from $131.3 million for the same period of the prior year. This increase is primarily due to the six California properties, leased to NOR, that were reclassified as operating leases in December 2025, along with capital addition activity and net acquisition and disposal activity during 2025 (as disclosed in previous filings) and the first half of 2026 as more fully described in Note 3 to the condensed consolidated financial statements.
Property-related expenses totaled $21.1 million and $17.9 million for the six months ended June 30, 2026 and 2025, respectively. Of the property-related expenses in the first half of 2026 and 2025, approximately $6.3 million and $7.1 million, respectively, represents costs that were reimbursed by our tenants and included in the "Interest and other income" line on our condensed consolidated statements of net income. The remaining non-reimbursed property expenses are higher period-over-period, primarily due to ongoing expenses (such as property taxes, insurance, maintenance, etc.) incurred at our vacant facilities.
General and administrative expenses were $67.0 million for the first half of 2026, compared to $68.1 million for the same period of 2025. Of these amounts, share-based compensation expense was $5.4 million for the first six months of 2026, compared to $18.5 million for the same period of 2025, primarily due to more benefit in the 2026 period from the change in fair value of the 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 and the 2026 first quarter.
Excluding share-based compensation, general and administrative expenses for the first six months of 2026 were higher than the prior year due to non-cash depreciation and other costs associated with our completed headquarters facility in Birmingham, Alabama and higher travel expenses.
During the six months ended June 30, 2026, the gain on sale of real estate of $5.7 million relates to the Scion/Lifepoint Transaction and the sale of five facilities as described in Note 3 to the condensed consolidated financial statements. During the six months ended June 30, 2025, the gain on sale of real estate of $13.3 million relates to the sale of three facilities.
In the first half of 2026, we recognized $35.8 million of real estate and other impairment charges, primarily associated with our working capital loans to Insight and Tenor and, to a lesser extent, the transition of three vacant properties back to the ground lessor and negative fair value adjustments on our investments in three hospitals in Colombia, along with non-real estate impairment charges for property taxes and other obligations not paid by our cash-basis tenants. In the same period of 2025, we recognized $77.5 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.
Earnings from equity interests was $27.1 million for the six months ended June 30, 2026, compared to $39.3 million for the same period in 2025. Our share of income in the Utah partnership included $9 million of positive fair value adjustments in the first six months of 2026, primarily related to a fair value increase in real estate and interest rate swap, compared to a $21 million positive fair value adjustment in the first half of 2025.
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Our share of income for the MEDIAN joint venture decreased in the first six months of 2026 compared to 2025 due to the refinancing in 2025 as discussed in Note 3 to the condensed consolidated financial statements, but this decrease was offset by additional income earned from our Switzerland and Italian joint ventures.
Debt Refinancing and Unutilized Financing Benefit (Costs)
Debt refinancing and unutilized financing costs were $3.6 million for the first half 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 - see Note 4 to the condensed consolidated financial statements for further discussion.
Other expense for the first six months of 2026 was $4.4 million, compared to expense of $169.6 million in the same period of the prior year. For 2026, we recognized approximately $6 million in unfavorable non-cash fair value adjustments from our investments marked to fair value, primarily due to an approximate $5 million unfavorable adjustment to our investment in Aevis. 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 million related to our investment in Aevis.
We typically incur income tax expense related to 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 $22.7 million income tax benefit for the six months ended June 30, 2026, is largely due to moving seven additional U.K. property holding legal entities into our U.K. REIT that was formed on July 1, 2023. As part of this move, we adjusted the deferred tax liabilities associated with these entities, which resulted in an approximate $43 million one-time tax benefit in the first quarter of 2026. Going forward, these U.K. entities (like the others in the U.K. REIT) will be subject only to a withholding tax on earnings upon distribution out of the U.K. REIT. Excluding this one-time benefit, income tax expense for the first six months of 2026 was in line with the $19.2 million income tax expense in the first half of 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 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
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our tenants) to maintain the operating performance of our properties, which can be significant economic costs that could materially impact our results of operations. FFO and normalized FFO should not be considered an alternative to net income (loss) (computed in accordance with GAAP) as indicators of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.
The following table presents a reconciliation of net (loss) income attributable to MPT common stockholders to FFO and Normalized FFO for the three and six months ended June 30, 2026 and 2025 (in thousands except per share data):
For the Three Months Ended
For the Six Months Ended
June 30, 2026
June 30, 2025
FFO information:
Net (loss) income, less participating securities’ share in earnings
86,021
81,332
171,903
158,223
(6,554
(5,212
(4,538
Real estate impairment charges (recoveries)
1,605
(17,715
10,642
47,968
Funds from operations
78,070
(40,176
207,371
(24,053
Other impairment charges, net
15,324
19,613
25,793
33,511
Litigation, bankruptcy and other costs
1,435
2,156
3,067
12,203
Share-based compensation (fair value adjustments) (1)
(4,825
(9,540
(13,287
2,235
108,827
(3,333
135,436
463
4,259
Normalized funds from operations
92,239
81,362
174,456
162,464
Per diluted share data:
0.15
0.13
0.29
0.26
(0.02
(0.03
0.02
(0.07
0.35
(0.04
0.03
0.04
0.01
0.19
0.23
(0.08
0.14
0.27
LIQUIDITY AND CAPITAL RESOURCES
2026 Cash Flow Activity
During the first six months of 2026, we generated approximately $48 million of cash flows from operating activities, which were slightly lower than the first six months of 2025 primarily due to a $59 million increase in interest paid in the first six months of
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2026 compared to the same period in 2025 due to the February 2025 refinancing activities along with more cash paid for property-related and general and administrative expenses, partially offset by an approximate $58 million increase in rent billed, including $34 million increase in rent received from cash-basis tenants. We used these operating cash flows, cash on-hand, proceeds from the revolving portion of our Credit Facility, and proceeds from repayment of loans receivable and asset sales to fund our dividends and other investing activities.
During the first six months of 2026, our investing and financing activities included:
See below for additional liquidity related activities occurring subsequent to June 30, 2026:
On July 13, 2026, we received approximately CHF 46 million from Infracore related to the repayment of outstanding shareholder loans and payment of the 2023 dividend. We expect to receive approximately CHF 28 million for payment of the 2025 dividends in the third quarter of 2026.
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On August 10, 2026, we closed on the sale of the five properties in the Utah partnership, which generated approximately $172 million.
Debt Covenant Compliance
See Note 4 to the condensed consolidated financial statements for detail of our covenant requirements.
As of August 10, 2026, we are in compliance with all such financial and operating covenants.
2025 Cash Flow Activity
During the first six months of 2025, we generated approximately $52 million of cash flows from operating activities. 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 half 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 pay down our Credit Facility by approximately $800 million.
Short-term Liquidity Requirements:
Our short-term liquidity requirements typically consist of property-related expenses, 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 replaced Steward and the Prospect California facilities, and from the completion of certain development projects. We expect these rent and interest increases to outpace the higher interest cost that may be associated with refinancing maturities coming due within the next twelve months; however, no assurances can be given.
Prior to the completion of the $2.4 billion private secured notes transaction more fully described in Note 12 to the condensed consolidated financial statements, we had $0.3 billion of cash on-hand as of August 10, 2026 and $1.3 billion of debt coming due within the next twelve months, inclusive of the June 30, 2027 maturity of our existing Credit Facility (assuming the second six-month extension of the revolving portion is exercised) and the 0.993% Senior Unsecured Notes due 2026. With the completion of the $2.4 billion secured notes transaction, which is expected to close imminently, we will use a portion of the proceeds to pay off the 0.993% Senior Unsecured Notes due 2026 in full. This will leave only the Credit Facility (current outstanding balance of $0.7 billion) due within the next 12 months. However, we have a plan to address this near-term maturity through a combination of:
In addition to our plan above, we may complete various other strategic property dispositions and access our ATM program for the sale of up to $500 million of our common stock, if needed.
We believe our plan discussed above and routine cash receipts of rent and interest, can fund our short-term liquidity requirements.
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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 cash on-hand of approximately $0.3 billion at August 10, 2026, are typically enough to cover our short-term liquidity requirements. However, to further improve cash flows and to fund future debt maturities, including those coming due in the next 12 months discussed above, we will 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.
Principal payments due on our debt (which exclude the effects of any discounts, premiums, or debt issue costs recorded) as of August 10, 2026 (after completion of the $2.4 billion refinancing transaction discussed previously) are expected to be as follows (in thousands):
475,250
865,397
604,812
581,229
394,304
6,589,509
9,510,501
Contractual Commitments
We presented our contractual commitments in our 2025 Annual Report and have updated our expectations herein for significant changes through August 10, 2026, including after the completion of the $2.4 billion refinancing transaction as further described in Note 12 to the condensed consolidated financial statements.
2026(1)
Senior unsecured notes
30,427
785,248
692,941
645,481
431,674
699,519
3,285,290
Senior secured notes
182,405
430,175
5,624,996
7,528,101
Revolving credit facility
487,338
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Distribution Policy
The table below is a summary of our distributions declared (and paid in cash) during the two-year period ended June 30, 2026:
Declaration Date
Record Date
Date of Distribution
Distributionper Share
May 28, 2026
June 18, 2026
July 16, 2026
February 12, 2026
March 12, 2026
April 9, 2026
November 17, 2025
December 11, 2025
January 8, 2026
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
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 June 30, 2026, 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 $8.9 billion and variable rate debt of $0.9 billion. If market interest rates increase or decrease by 10% on our fixed rate debt, the fair value of our debt at June 30, 2026 would decrease or increase by approximately $216 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 $5.5 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 $5.5 million per year. This assumes that the average amount outstanding under our variable rate debt for a year is $0.9 billion, the balance of such variable rate debt at June 30, 2026.
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 2026 results to-date, a 10% increase or decrease in exchange rates would decrease or increase our net loss by $8.9 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 probable or to estimate reasonably possible losses.
In addition to the foregoing, we are currently and have in the past been subject to various legal proceedings and regulatory actions in connection with our business. We believe that the resolution of any current pending legal or regulatory matters will not have a material adverse effect on our business, financial condition, results of operations, or cash flows. Nonetheless, we cannot predict the outcome of these proceedings, as legal and regulatory matters are subject to inherent uncertainties, and there exists the possibility that the ultimate resolution of such matters could have a material adverse effect on our financial condition, cash flows, results of operations, and the trading price of our common stock.
Item 1A. Risk Factors.
There have been no material changes to the Risk Factors as presented in our 2025 Annual Report.
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 June 30, 2026:
Period
Total number ofshares purchased(1)(in thousands)
Average price paidper share
Total number of sharespurchased as part ofpublicly announcedplans or programs(2)(in thousands)
Approximate dollarvalue of shares thatmay yet bepurchased under theplans or programs(in thousands)
April 1, 2026 - April 30, 2026
211
4.67
126,560
May 1, 2026 - May 31, 2026
June 1, 2026 - June 30, 2026
1,299
4.72
120,430
1,510
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the three months ended June 30, 2026, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the 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).
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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: August 10, 2026